1 TABLE OF CONTENTS

CHAPTER 8 ECONOMIC A ND EMPLOYMENT IMPACT S

................................ .............. 2 8.7 Climate Benefits

................................ ................................ ................................ ...................... 2 8.7.1 Cl imate Science and Climate Benefits

................................ ................................ ................ 2 8.7.2 Monetized Climate Benefits

................................ ................................ .............................. 27 8.8 Health and Air Quality Co

- Benefits

................................ ................................ .................... 85 8.9 Reliable affordable electricity

................................ ................................ ............................ 130 8.9.1 Changes in operational capacity

................................ ................................ ..................... 295 8.9.2 Reduction in excess reserves

................................ ................................ ........................... 296 8.9.3 Changes in retirements

................................ ................................ ................................ .... 304 8.9.4 Chan ges in new capacity additions

................................ ................................ ................. 304 8.9.5 Reserve transfers

................................ ................................ ................................ .............. 306 8.9. 6 Alternative case

................................ ................................ ................................ ................ 306 8.9.7 Other

................................ ................................ ................................ ................................ . 306 8.10 Other

................................ ................................ ................................ ................................ .. 3142 CHAPTER 8 ECONOMIC A ND EMPLOYMENT IMPACT S

Part 2

- Sections 8.7 Through 8.10

8.7 CLIMATE BENEFITS

8.7.1 Climate Science and Climate Benefits

Comment 1: Several commenters expressed concern about ways in which climate change could lead to increased exposure to various pollutants. Commenters discussed several major avenues in which this could occur, citing several peer

- reviewed studies. First, that climate

- change induced damage to vegetation and biological soil crusts in Utah and Nevada would lead to soil disturbances which would increase dust

- borne transport of the carcinogen erionite, potentially aggravated by desertification due to increased demand for w ater from Las Vegas. Second, the commenters had similar concerns regarding the potential for dust

- borne radionuclides from Nevada’s nuclear testing sites. Third, the commenters expressed concerns regarding several avenues by which there would be increased release of mercury into the environment: that mercury currently trapped in Arctic ice would be released as the ice melts, that increasing numbers and intensity of wildfire would aerosolize mercury that had been deposited there, and that dropping lake level s due to increased heat and drought in Utah would expose mercury contaminated lake beds to windstorms. Fourth, the commenters expressed concern that desertification of the Great Basin due to heat, drought, and land use mismanagement would lead to creation of dust

- bowl conditions, and noted that PM10 from dust has been associated with increased death rates from cardiac, respiratory, and cerebrovascular causes. Fifth, the commenters expressed concern that hotter temperatures and dust storms would provide cond itions that would be advantageous for the spread of fungal spores, SARS, meningitis, influenza, and foot and mouth disease. Finally, the commenters stated that ecosystem collapse due to climate change could lead to future pandemics of infectious diseases. Commenters stated that due to higher temperatures and more stagnant air masses, and given constant emissions, that climate change will lead to higher ozone concentrations in urban areas. The commenters noted that increased ozone concentrations will lead to reduced air quality and public health issues related to pediatric respiratory health and some major diseases.

In contrast, commenters stated that ozone levels have declined dramatically in the last few decades because the ozone

- precursor emissions have d eclined. The commenters said that ozone formation is becoming less and less sensitive to temperature because there are fewer exceedances per hot day in recent years than there were in previous decades. The commenters said that ozone levels will continue de clining regardless of climate warming because EPA will eliminate most

ozone

- precursor emissions in the upcoming decades. The commenters stated that the studies that EPA is using to predict future ozone levels use unrealistically high emissions of ozone
pre cursors, which lead to an overestimate of future ozone levels and therefore the effects of3 climate warming on ozone. The commenters said that climate warming will have substantially less effect on future ozone levels than what EPA claims.

Response 1: The EPA recognizes that there are a number of mechanisms by which climate change can increase exposure to various kinds of pollutants. The scientific literature supports EPA’s conclusion that climate change will lead to increased exposure to tropospheric o zone levels that will negatively impact human health, due to increased temperatures and more frequent stagnant air conditions, among other factors. The net impact of climate change on particulate matter is less clear, although a climate change driven incre ase in wildfires would lead to an increase in particulate emissions in areas impacted by such fires. The various effects of climate change on dust

- related health impacts like the ones summarized by the commenters are active areas of research. As stated, i n section II.A of the preamble, the NCA3 indicates that human health in the United States will also be impacted by " increased extreme weather events, wildfire, decreased air quality, threats to mental health, and illnesses transmitted by food, water, and d isease

- carriers such as mosquitoes and ticks. "

Commenters noted that ozone levels have declined historically and will continue to decline due to reductions in ozone precursor emissions. The EPA is aware of the decline in ozone concentrations due to the age ncy’s air quality regulations. Regarding the historical and possible future decline in ozone concentrations, the EPA stated in the 2009 GHG Endangerment Finding that climate change is expected to increase ozone pollutions " relative to air quality levels wi thout climate change " , not necessarily the absolute ozone levels. As noted in the 2009 GHG Endangerment Finding, the existence of a National Ambient Air Quality Standard (NAAQS ) to prevent exceedances of ozone concentration thresholds does not preclude the possibility of public health endangerment due to climate change (see the 2009 Endangerment Finding, p 66530, where it is noted that the effects of climate on ozone are relevant to public health despite the existence of the NAAQS for several reasons: that the NAAQS takes effect only after exceedances are detected, that despite the NAAQS, there are some regions where ozone exceedances still occur, and that even in regions in attainment an increase in ozone may increase the risk to some individuals).

Commen t 2: C ommenters discussed the science of climate change, noting that CO2 has increased from 280 to 400 ppm, the highest in 800,000 years, and that methane concentrations are 2.5 times their concentration in the last 800,000 years. The commenters stated tha t it is clear that these increases are due to human activities, and that the elevated concentrations will lead to a warming of the planet.

Response 2: The EPA agrees and refers to the IPCC AR5, the NCA, and more scientific assessments that conclude that C O2 and CH4 concentrations are likely higher than they have been in at least 800,000 years, that these elevated concentrations are unambiguously due to human activities, and that these elevated concentrations are leading to global warming and climate change . These conclusions are based on critical examination of the relevant assessment literature that was subject to rigorous and exacting peer review by the expert community.4 Comment 3: A number of commenters argued that the proposal will have minimal impact o n climate change, or that EPA has not demonstrated that there is a connection between the proposal and any particular impact. Several supporting arguments are made.

One assertion is that the rule covers only a portion of the power generation sector in a si ngle country, and that therefore emission reductions must represent less than 5 percent of global GHG emissions. Comparing a reduction in CO2 of 555 million tons (based on Option 1 State Compliance Approach. RIA at 3

- 20, Tbl. 3

- 5) to global anthropogenic e missions of GHGs estimated at 49 gigatons per year according to the IPCC AR5, the commenters argued that a reduction of 1 to 2 percent is not sufficient to significantly impact climate change, and that the rule should therefore be discarded. Commenters not ed that the proposal does not directly reduce emissions in India or China, and discuss the rapid rate of growth of emissions in those nations.

Several commenters referenced an analysis of the proposal that used the MAGICC model and found that the temperat ure benefits of the rule in 2100 would be about 0.02 degrees C. The commenters stated that this magnitude of temperature change is undetectable and therefore inconsequential. Commenters stated the benefit would have been even smaller if they had used the c limate sensitivity that the commenters preferred. Some commenters objected that the agency has not presented its own calculations of global temperature change resulting from the rule and requested more detail.

Several commenters asserted global temperatur e reduction will be negligible because the sensitivity of the climate to increased CO2 concentrations is small. Commenters cited recent papers and other sources to assert that the best estimate of transient climate sensitivity is 1.33 degrees C compared to 1.8 degrees C or higher in most climate models, and that the best estimate of equilibrium climate sensitivity is close to 2 degrees C, 40 percent lower than the climate assessment best estimate. Commenters calculated their own value for equilibrium climat e sensitivity, and finds that the equilibrium climate sensitivity for greenhouse gases should be 2.9 degrees C, but for CO2 should be only 1.8 degrees C.

Commenters stated that future climate change will be much smaller than projected, arguing that histor ical climate change projections from CEQ and Dr. Hansen have proved to be exaggerated and therefore the current projections are also likely to be exaggerated. The commenters also argued that reduced solar activity may be leading to a cooling trend, that so lar impacts are underestimated, and that the medieval warm period was warmer than today. Commenters referenced Dr. Koonin who states that GHG emissions can affect the climate by only 1

- 2 percent, and therefore there is a high standard of proof to show that GHG reductions can have an impact.

Some commenters recognized that there will be an effect on climate change, but argued that the impact will be small compared to the costs of implementation.

Response 3: The Clean Power Plan will result in the largest re ductions of carbon dioxide emissions from a single regulatory action in U.S. history. However, EPA has been clear that, as stated in the 2009 GHG Endangerment Finding under Section 202 of the CAA, " the global nature of the air pollution problem and the bre adth of countries and sources emitting greenhouse gases means that no single country and no single source category dominate or are even close to dominating on a global scale. " EGUs are the largest contributors of CO2 in the US, and the5 reductions achieved in this rule are an unprecedented and necessary first step towards slowing the rate of climate change.

A number of commenters also specifically suggested that the EPA was overestimating the climate sensitivity and that EPA is relying on exaggerated projec tions of future climate change. The EPA relies on the best available science and does not create its own estimate of climate sensitivity. Specifically for climate sensitivity, the EPA relies on the major assessment reports, including the recent IPCC 5th As sessment Report. These assessment reports consider the entire literature in context, rather than a selection of a small number of individual studies. The likely range for the climate system response to a doubling of carbon dioxide concentrations (i.e., the climate sensitivity) described by the IPCC AR5 assessment of 1.5 to 4.5 degrees represents a sound interpretation of the literature, and EPA has determined is the appropriate range on which to base EPA’s decisions. Estimating climate sensitivity is an are a of ongoing research. Many of the studies cited by commenters are based on a method of using simple models and recent observed temperatures. It is important to also give appropriate weight to other methodologies, such as paleoclimate and theoretical appro aches, as was in the IPCC assessment process. Many of the studies cited by the commenters were also considered by the IPCC, and a number of authors of the cited studies were also IPCC authors. Therefore, EPA finds the IPCC process appropriately accounted f or the full spectrum of the literature that relates to climate sensitivity estimation. The IPCC range does include the possibility that climate sensitivity is below 3 degrees C, but also acknowledges the possibility that the climate sensitivity is higher t han 3 degrees C. EPA previously responded to a number of similar comments in 2009, in Section 4.3 of the EPA’s Response to Comments on the 2009 Endangerment Finding. At that time, EPA also explained how the approach of the major assessments to determine th e Earth’s climate sensitivity was sound, and considered the entire body of science in context, rather than relying on individual studies that were often sensitive to a choice of specific temperature dataset or single methodology. This approach has since be en upheld by the Courts.

Some commenters criticized EPA for not quantifying the temperature impacts of the rule referenced a temperature analysis using the MAGICC model. While the MAGICC model is a reasonable tool to use to provide estimations of the temp erature impacts of mitigation scenarios, the analysis referenced by the commenters made several assumptions regarding model inputs that results in lower benefits of mitigation compared to other reasonable assumptions. For example, the 0.02 degree number ci ted by most commenters is based on an emissions scenario where the U.S., in the absence of any climate policy, peaks in CO2 emissions in 2010 and then declines. Assuming that the U.S. will reduce emissions in the absence of climate policy leads to a future in which the emission reductions needed to meet the Clean Power plan target are smaller than they would otherwise be. This makes the benefits of an emissions target appear smaller than they would be compared to a future where emissions continue to grow. W hile the EPA did not analyze the temperature benefits directly, the Social Cost of Carbon was used to determine the monetized benefits of the rule for reducing the rate of climate change.

Therefore, EPA has considered these comments, and finds that they do not provide credible evidence of flaws in the EPA’s approach of relying upon the best estimates of the major peer reviewed climate change assessments, or that the assessments did not take into account the new literature, nor do the comments demonstrate that the impacts of the regulation will be negligible.6 Comment 4: Several commenters argue that observed warming in the troposphere is lower than projected by climate models, and that therefore the proposal should be discarded.

Commenters stated that low er and middle troposphere warming trends over the time period 1958

- 2012 are indistinguishable from zero, and that the inconsistency with model trends is statistically significant. Including a correction term the commenters asserted that models are rejected at smaller significance levels. The commenters also quoted a published review paper that states that a lack of tropospheric warming would have fundamental implications for understanding of the climate system. Commenters also cited the 1958

- 2012 tropospher ic data, arguing that the only warming in the record was due to a step

- change in the late 1970s due to the Pacific Climate Shift, which means that the historical CO2 influence was small and therefore future CO2 influence would also likely be small.

Comme nters also critiqued a Santer et al (2008) paper which they claimed was the science basis of the EPA’s RIA. The commenters stated that Santer et al claims agreement/consistency between observed tropospheric temperature trends and trend values derived from IPCC greenhouse models which they believe is inadequate. Commenters provided 3 critiques of Figure 7 of the Santer paper: that two of the observations fall outside the model range, that the 7 observational trends differ from each other and that 5 of the da tasets might be flawed, and that if the modeled trends were adjusted to be consistent, the observed surface trend that any agreement with observations would disappear and that the width of the model uncertainty band is due more to model chaotic variability than to model differences.

Commenters plotted the results of all 102 RCP4.5 IPCC AR5 climate model runs available as of August 2014 for a layer of the tropical atmosphere, where according to the commenters, climate impacts should be the largest. The comm enters then anchored the linear trends for 1979

- 2014 (observations through October 2014) for all models and for observations to the year 1979. The commenters noted that the results demonstrate that the models do not yet have the ability to discern why a cl imate variation may have occurred simply because they cannot even reproduce what has occurred. The commenters claimed that this makes the models inadmissible according to the Daubert Standard. The commenters claimed that therefore the proposal should be wi thdrawn.

Commenters stated that the tropospheric temperature trends were irrefutable and invalidated the global surface temperature measurements, and therefore disprove the contention that CO2 causes atmospheric temperatures to rise.

Response 4: The EPA has previously responded to arguments that observed temperature trends in the tropical troposphere differ too much from modeled trends: Volume 1.2.1 of the Denial of the Petitions to Reconsider the Endangerment and Cause or Contribute Findings (http://www .epa.gov/climatechange/endangerment/petitions.html) and Response 3

- 7 in Volume 3 of the Response to Comments in the 2009 GHG Endangerment Finding (http://www.epa.gov/climatechange/endangerment/comments/volume3.html) both address these issues. In previous r esponses, EPA cited Karl et al. (2009) which stated that when uncertainties in models and observations are properly accounted for, newer observational data sets are in7 agreement with climate model results. Commenters on this proposal restate points which w ere previously addressed, and for which the previous responses still hold.

The most recent discussion of this issue in the assessment literature can be found in Chapter 9.4.1.4.2 of the IPCC Fifth Assessment Report (AR5). The AR5 does find that most clim ate models show a larger warming in the tropical troposphere than is found in the observational datasets, with some of the difference explained by models showing faster sea surface temperature warming than has been observed in that region. However, the IPC C AR5 also noted that appropriate treatment of uncertainty in the observational and model datasets leads to more agreement than was observed in some previous studies. The IPCC also cautions that there is low confidence in the observed trends, and indeed, s everal more recent studies have been published indicating that trends in the region may have been underestimated (Sherwood and Nisant, ERL, 2015, doi:10.1088/1748

- 9326/10/5/054007 and Po

- Chedley et al., Journal of Climate, 2015, DOI: 10.1175/JCLI

- D

- 13

- 0076 7.1). Generally, model

- observation agreement will be best for large regions and long time periods, because for small regions, natural variability and fewer observations make trends more difficult to observe.

The EPA did not rely on a single paper ( e .g. , S anter et al. 2008), nor do some differences between models and observations in a small region disprove all results from all climate models. The IPCC finds that " [c]limate and Earth System models are based on physical principles, and they reproduce many imp ortant aspects of observed climate. Both aspects contribute to our confidence in the models’ suitability for their application in detection and attribution studies and for quantitative future predictions and projections. " Therefore, EPA has considered thes e comments and determined that they do not provide credible evidence of flaws in the conclusions of the scientific assessment reports upon which EPA relies.

Comment 5: Several commenters stated that a lack of warming for the past 17

- 26 years despite rising CO2 levels indicated that there was no need to regulate CO2. Commenters further argued that there has been no observed increase in the rate of sea level rise, but that subsidence can give the appearance of sea level rise. Commenters cited 7 articles that conclude that any sea level rise has been overstated and is not linked to warming and will not pose a threat. The commenters also noted a lack of warming below 1.24 mil es in the oceans, and also cited a study that shows that natural swing in temperature can explain temperature change in the Northeast Pacific from 1900 to 2012.

Response 5: Commenters provided a limited characterization of the available scientific eviden ce. For example, commenters discussed a recent 17 or 26 year pause in the rate of global surface temperature rise, but mischaracterize or do not consider a number of important factors that put this " pause " in context within observed, long term climatologic al trends. The first factor is that this is not actually a pause but rather a reduction in the rate of surface temperature rise. The second is that observations of the slower rate during this pause depends on which dataset is chosen, but, according to the IPCC, all global surface temperature datasets do exhibit a warming trend over the period 1998

- 2012. The third is that this reduction in rate is mostly evident only in atmospheric temperatures, and that ocean heat content and sea level rise (which can be a proxy for ocean heat content) both continue to increase rapidly. Other measures of climate change, such8 as Arctic sea ice retreat, glacial melt, and reductions in snow cover similarly show no pause or even demonstrate an acceleration during this time perio d. A final important factor is that trends based on short time periods such as one or two decades often do not adequately reflect larger scale factors that are considered when evaluating long

- term global change and climate

- related trends.

Regarding argume nts that sea level rise is overstated, the IPCC found that recent rates of sea level rise have been at the upper end of the model projections (see Figure 13.7 in Chapter 13 of Working Group I of the IPCC Fifth Assessment AR5 Report), and that recent rates of sea level rise have been higher than the rates over the past century. EPA has examined the papers submitted by the commenters, and found that some of the papers only concern small regions, and therefore are not evidence against global sea level rise, bu t that the other papers have all been considered by the IPCC in reaching its conclusions. For example, groundwater loss is a part of the IPCC sea level rise budget. Claims that some part of the deep ocean has not warmed, or that some portion of temperature changes in one ocean region are related to natural variability are subject to argument. However, even if these claims were true, they do not contradict the conclusion that the oceans as a whole are warming due to the energy imbalance from elevated greenho use gas concentrations.

The EPA has considered these comments, and finds that the assessment literature has adequately explained variations in the rate of surface warming in the past few decades, has accurately portrayed the rate of sea level rise and rel ated increases in ocean heat content, and that the comments do not provide credible evidence of flaws in the assessment literature.

Comment 6: Several commenters argued that the climate is too complex for computer models or EPA to be able to predict the impact of greenhouse gas mitigation. Commenters argued that the complexity of the ocean system and the paucity of data older than a few decades ( citing Dr. Koonin) imply that there is little understanding of the oceans, and that because the importance of the oceans in holding heat and influencing the atmosphere, that therefore there is little understanding of the climate. The commenters also argued that natural feedback mechanisms like clouds and water vapor are too complex to model, because they can only be understood through observations not deductions from the laws of chemistry and physics, and because key aspects occur at smaller resolutions tha n models can achieve.

Commenters argued that if IPCC models cannot hindcast yesterday accurately despite all the available data, how can they be expected to forecast the future? C ommenters also discussed discrepancies between hindcasts and observations, c iting precipitation in the tropics and subtropics, monsoons, and rainfall over China as examples of poor model performance. The commenters argued that the flaws in the models make them unfit for supporting decision making.

Response 6: The issues raised he re are very similar to those previously raised and addressed in detail by the Agency. Issues regarding climate models were responded to in Volume 1.2.3 of the 2010 Denial of the Petitions to Reconsider the Endangerment and Cause or Contribute Findings for Greenhouse Gases Under section 202(a) of the Clean Air Act as well as Volume 4.1 of the 2009 Response to Comments for the EPA Endangerment Finding. As stated in both the Denial of9 the Petitions (http://www.epa.gov/climatechange/endangerment/#petitions) an d the Response to Comments (http://www.epa.gov/climatechange/endangerment/#comments):

With respect to the issues commenters raised concerning flaws in the models used for projections and attribution studies, it is well recognized that models are represent ations of complex systems and may not be able to perfectly represent all interactions in the system being modeled. For example, clouds are too difficult to model computationally because the physics involved in cloud formation occurs at scales smaller than the resolution of most climate models. Although model

based results are subject to some degree of inherent uncertainty, as reflected in the assessment literature and in the TSD, these uncertainties are acknowledged; uncertainties do not mean that the model s are fatally flawed or unreliable representations of the climate system. Climate models have been demonstrated to successfully simulate a number of climatic properties, as documented in the IPCC, CCSP, NRC, and USGCRP reports on which the TSD primarily re lies.

The Responses further quoted the IPCC, CCSP, and USGCRP reports to support this description. The most recent IPCC report evaluated climate models in Chapter 9 of Working Group I, finding that " Climate and Earth System models are based on physical pri nciples, and they reproduce many important aspects of observed climate. Both aspects contribute to our confidence in the models’ suitability for their application in detection and attribution studies and for quantitative future predictions and projections. "

Therefore, the EPA has considered these comments, and finds that despite the complexity of the climate system and some differences between models and observations (which are well characterized in the scientific literature), models remain a useful tool fo r understanding the climate system. The understanding of the climate system that arises from climate modeling supplements theory and evidence from historical observations to support EPA’s continued reliance on the results of the major scientific assessment s which look across many models and address issues pertaining to uncertainty and the characterization of the degree of certainty.

Comment 7: Several commenters expressed concern that the rule could lead to increased emissions of methane by encouraging i ncreased use of natural gas. These commenters were concerned that the methane impacts were being underestimated because the climate impacts of methane are greater than those accounted for by the EPA.

Commenters claiming that EPA i s underestimating the imp acts of methane focused on the use of a 100

- year GWP of 25, stating this is based on an outdated IPCC assessment. Some claim that EPA should be using the 100

- yr GWP of 36 in IPCC's AR5, released in 2013, since it includes methodolo gical improvements in the GWP calculation by accounting for carbon cycle feedbacks. Others expressed concern over the use of 100

- year timescale rather than the 20

- year timescale, arguing that the next 20 years are critical to climate change, that key decad al impacts of short

lived climate forcers are lost when considering impacts on a 100

- year timescale, or that the timescale used should be on the same timescale as the rule implementation timescale (e.g., by 2030). Commenters noted that over 20 years, methane emissions are estimate d to be 87 times more disruptive to the climate than carbon emissions. Commenters also noted that " [a]t the 20

- year timescale, total global emissions of methane are equivalent to over 80% of global carbon10 dioxide emissions. Several commenters cited a 2011 Cornell (Howarth, et al.) study that concludes that " [a] complete consideration of all emissions from using natural gas seems likely to make natural gas far less attractive than other fossil fuels in terms of the consequences for
g lobal warming " , this study used a 20 year GWP of 105. Commenters added that another 2014 Howarth report concluded that " both shale gas and conventional natural gas have a larger GHG footprint than do coal or oil, for any possible use of natural gas. " Some commenters cit ed studies that show that GWPs are inconsistent with temperature targets.

Some commenters complimented EPA on updating the methane GWP from the IPCC Second Assessment Repo rt to the AR4 value, but still argued that EPA should update to AR5 as well as
prese nt 20 year GWPs besides the 100 year GWPs. Commenters asserted that consistency with international reporting requirements under the UN Framework Convention on Climate Change (UNFCC) to employ 100

- year AR4 GWPs should not govern substantive, d omestic rulema kings because they state that using values known to be inaccurate is arbitrary and capricious.

Response 7: See the RIA, Chapter 3 and Appendix 3A, and R esponse to Comments section 8.2 for details about EPA’s estimates of methane emissions from natural gas systems. Here, we address the appropriate metric with which to compare methane to carbon dioxide and other greenhouse gases. EPA believes that the rationale for using a GWP of 25 for methane is valid, and thus that methane emissions are appropriately char acterized.

EP A has chosen to use the IPCC Fourth Assessment Report (AR4) 100

- year GWP value of 25 for calculating methane inventories. This is consistent with international reporting standards. More recent 100

- year GWP values of 28

- 36 have been reported i n the IPCC 5th Assessment Report (AR5). W hile there is no single optimal metric (see discussions in Chapter 2 of the IPCC AR5), the EPA considers the 100

- year GWP a reasonable measure of the relative importance of different greenhouse gases. Regarding the use of 20

- year GWPs or other short timeframes , the EPA disagrees that these are superior metrics to the 100 year GWP , although they do provide additional perspectives. The 20

- year GWP assigns no value to any forcing reductions more than 20 years in the future, whereas the 100

- year GWP considers both near

- term and long

- term impacts. Given that climate change is both a ne ar

- term and a long

- term threat, a metric that captures both time periods is more appropriate than one that only acknowledges near

- term impacts. The EPA a lso disagrees with commenters who advocate for discarding GWPs because GWPs are not designed for meetin g any given temperature target. Metrics that are optimally designed for achieving a given temperature target are an interesting academic problem, but are often not practical as they assume single global policy structures with universal adoption, and their theoretical advantages are not clear.

Comment 8: Commenters believed the EPA is ignoring the benefits of increased atmospheric CO2. Commenters note that greenhouses keep CO2 levels at 2,000 ppm to enhance plant growth. Commenters stated that increased CO 2 levels have and will continue to increase growth rates of crops and claims that greenhouse CO2 fertilization experiments have proven that crop yields increase under higher CO2 concentrations, when grown under well

- watered conditions with adequate nutrien ts and light. Commenters further stated that previously unsuitable areas may become available for agriculture as a result of warmer temperatures, reduced incidence of frosts,11 and longer growing seasons, which would offset declines elsewhere. The commenters also noted that increased atmospheric CO2 would offset negative effects, even if precipitation decreased because of improved water usage by plants. The commenters further commented that many models do not properly represent the relationship between plant growth, CO2 fertilization, and warming. The commenters believed recent studies show that the CO2 fertilization effect and changes in plant water use help explain why models have been incorrect, with plant absorption of CO2 being much higher than expected. Commenters stated that if CO2 concentrations were too low, life would not be able to exist, and therefore the higher the concentration the safer life on this planet will be.
Response 8: The EPA has never disputed that CO2 is a required ingredient for plant growth and survival, or that CO2 can stimulate plant growth. This comment was put forth previously and responded to in the Response to Public Comments Document of the Endangerment Finding. The 2009 Endangerment Finding Technical Support Document (TSD) sum marizes the scientific assessment literature on the stimulatory, or fertilization effect of CO2 on plant growth and productivity. For example, Section 3 states that CO2, " can have a stimulatory or fertilization effect on plant growth " and " studies have dem onstrated increases in CO2 affects water use and water use efficiency in plants " (EPA 2009). Section 9 focuses specifically on U.S. agriculture and shows that for grain and oilseed crops, increased CO2 and temperature will likely speed plant growth in the near

- term future (USDA CCSP 2008). The Endangerment Finding also indicated that elevated CO2 can improve water use efficiency, stating " ... elevated CO2 causes partial stomatal closure, which decreases conductance, and reduces loss of water vapor from leaves to the atmosphere. "

However, the EPA considers the stimulatory effects or beneficial influences of elevated CO 2 on plants alongside other climate change impacts. Many aspects of climate change can negatively affect plant growth and crop yields and can ou tweigh the benefits of CO 2 fertilization. For instance, the USCGRP found that high temperatures, extreme weather events (i.e., heavy downpours, droughts), enhanced pest and weed growth, and ozone exposure can significantly limit the benefits of the direct stimulatory CO 2 response on plant growth. The UGCRP also concluded that as temperature rises beyond a certain threshold in the future, grain and oilseed crops will increasingly begin to experience failure, especially if climate variability increases and
pr ecipitation lessens or becomes more variable. The IPCC (2007) concluded that the global price of cereals may decrease with warming below 2 o C, but above this temperature, prices could increase by 30%. Further, USGCRP concludes that the marketable yield of m any horticultural crops (e.g., tomatoes, onions, fruits) is very likely to be more sensitive to climate change than grain and oilseed crops. With respect to increases in vegetation biomass, the 2009 Endangerment Finding reiterates the IPCC (2007) that for North America, " Although recent climate trends have increased vegetation growth, continuing increases in disturbances are likely to limit carbon storage, facilitate invasive species, and disrupt ecosystem services. " More recent assessments released by the IPCC (AR5) in 2013, and the USGCRP in 2014, reaffirm these findings. For instance, the IPCC states, " based on many studies covering a wide range of regions and crops, negative impacts of climate change on crop yields have been more common than positive imp acts " . The USGCRP states that " By mid

- century, when temperature increases are projected to be between 1.8 o F and 5.4 o F and precipitation extremes are further intensified, yields of major U.S. crops and farm profits are expected to decline. "12 With regard to the treatment of CO 2 fertilization in climate modeling, the EPA continues to rely on the best available science presented in the assessment literature. These assessment reports consider the entire literature in context, rather than selecting a small number of individual studies, as the commenters have done. The IPCC (2013) notes that CO 2 fertilization already

" plays a dominant role in terrestrial biogeochemical models to explain the global land carbon sink " . The IPCC’s conclusions regarding climate impacts therefore incorporate estimates of CO2 fertilization, including accounting for associated uncertainties.

EPA has considered the comments regarding the effects of elevated CO 2 concentrations on plants, and determined that they do not provide credible evidence of flaws in the EPA’s approach of relying upon the conclusions of the assessment literature which already take into account these effects. In particular, the commenters did not recognize that EPA had a lready considered the effects of CO 2 fertilization when originally finding that greenhouse gases endanger public health and welfare, and had responded to a number of related comments. The commenters generally rely on individual studies or news articles pre senting benefits of elevated CO 2 in the absence of any other climate changes and do not present a comprehensive picture of impacts of CO 2 on the agricultural sector specifically. In contrast, EPA relies on the assessment literature, which demonstrates that the net impacts of elevated GHG concentrations on agriculture will likely be negative, when considering relevant factors such as temperature, precipitation, weather variability, and ground level ozone, and that in the broader context of all climate impact s, it is even more clear that climate change represents a threat to public health and welfare.

Comment 9: Commenters argued that CO2 is not a pollutant because current levels of 400 ppm are much lower than safe levels as defined by either the concentrati on that humans can tolerate (10,000

- 15,000 ppm) or levels previously seen in Earth’s history (6000 ppm), and that EPA has not provided scientific evidence of direct health effects of CO2 in order to justify the proposal.

Response 9: In 2009, the EPA Admin istrator found that the current and projected concentrations of the six key well

- mixed greenhouse gases (GHGs), including carbon dioxide (CO 2 )

– the GHG emitted in largest quantity

– threaten the public health and welfare of current and future generations. The 2009 Endangerment Finding clearly states that, " Current ambient air concentrations of CO 2 and other GHGs remain well below published exposure thresholds for any direct adverse health effects, such as respiratory or toxic effects. " However, climate ch ange resulting from current, and future human

- driven increases in CO 2 and other GHG emissions fuel a broad range of adverse effects that directly impact human health and welfare.

The EPA evaluated and considered scientific information on observed and projected health impacts during the development of the 2009 Endangerment Finding. The specific health effects of climate change have been described in the scientific assessments that t he Agency relied upon in making the Endangerment Finding. These include effects such as exposure to increased temperatures, extreme weather events, higher levels of ozone pollution, and changes in climate

sensitive diseases. For more specific information r egarding EPA’s consideration of these health effects, see Volume 5 of the Response to Comments document supporting the 2009 Endangerment Finding. More recent assessments, including the 2014 USGCRP National Climate13 Assessment and the 2013 IPCC reaffirm the findings that human health is affected by climate change.

Regarding the comment stating that higher CO 2 concentration were present in Earth’s history, the EPA does not dispute that CO 2 concentrations have been higher in the distant past. However, the Enda ngerment Finding considers the impacts of climate change on human health and welfare under current and projected future atmospheric CO 2 concentrations and finds them to be considerable, irrespective of past CO 2 concentrations. Additionally, as noted in the section II.A of the preamble, current CO2 concentrations are already higher than they have been in at least 800,000 years, and that without a reduction in emissions, may reach levels not seen for 30 million years by the end of the century. Further, the ra te of change may be one of the largest in Earth’s history.

Comment 10: Many commenters described numerous climate change impacts that threaten the health and welfare of individuals, communities, the United States, and the world, ranging from changes in w eather and extremes, to ecologica l shifts and environmental degradation, to economic and cultural losses and social disruptions. Several commenters noted the negative health impacts of climate change, particularly from heat waves and worsened air quality b ut also increases in vectorborne disease, water quality concerns, and food insecurity. Commenters listed impacts encompassing all sectors of the American economy, including damages from natural disasters, erosion and coastal/wetland destruction, losses in agriculture and fishing yields and jobs, property damage and insurance losses, threats to our energy, transportation, wastewater, and water resource infrastructure, lost tourism, humanitarian relief costs, increased healthcare and energy costs, and slower economic growth.

The majority of the commenters stated that these climate change impacts, many of which the United States and other countries have already begun to feel, are a direct consequence of the increasing concentrations of greenhouse gases in the atmosphere. Commenters also stated that the authors of the USGCRP's Third National Climate Assessment note 'continued warming and increased understanding of the U.S. temperature record, as well as multiple other sources of evidence, have strengthened our c onfidence in the conclusions that the warming trend is clear and primarily the result of human activities.' Commenters stated that continued emission of greenhouse gases, primarily CO 2 , will cause further warming and long

- lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems. These commenters noted that failure to make deep reductions in carbon emissions will greatly increase the risk of serious economic, h ealth, and environmental consequences of climate change. For these reasons, many commenters urged EPA to act now and to strengthen carbon emission standards and implement the CPP. Some commenters noted that limiting climate change requires substantial and sustained reductions in greenhouse gas emissions which, together with adaptation, can limit climate change risks. Commenters claimed that the Clean Air Act requires binding limits on any pollutant that threatens human health and welfare, making it an appro priate means by which to reduce greenhouse gases and avoid climate impacts on health and welfare. Some commenters stated power plants are the largest single source of CO 2 emissions in the US, representing about 40 percent of the total, and that reducing em issions from the electric power sector is crucial to tackle14 climate change. Several commenters asserted the proposal represents a historic opportunity for the U.S. to take meaningful action to address global climate change while simultaneously advancing a modernized and more efficient electricity grid. Additionally, many commenters requested EPA to do even more and do it faster to move this nation along the transition away from fossil fuels to clean, renewable energy.

Response 10: The EPA has not changed i ts view as articulated in the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare.

The EPA continues to rely on the best technical and scientific information, primarily based upon the recent, major assessme nts by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessment reports consider the entire peer

- reviewed literature in conte xt to draw conclusions based on the entire body of findings from the literature.

Section II.A of t he preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate A ssessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) and IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). These new assessments provide further evidence supporting the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare.

A number of comments described observations of climate change. While local observed changes can be of great concern to individuals and communities, E PA cautions that they must be assessed in the context of the broader science, as it is more difficult to draw robust conclusions regarding climate change over short time scales and in small geographic regions.

EPA agrees that rising concentrations of GHGs currently endanger human health and welfare, and will continue to do so in the future as atmospheric concentrations continue to rise. Thus, EPA agrees that action should be taken to reduce GHG emissions.

Comment 11: Multiple commenters noted the observed and projected human health impacts of climate change in the United States, stating that carbon pollution:

• Worsens air quality by increasing ground level ozone, particulates from wildfires and dust storms, and allergens. Exposure to these pollutants resul t in more hospitalizations; asthma attacks and allergic responses; diminished lung function, cardiovascular and respiratory complications, illnesses, and premature death. Several commenters also noted that climate change can also make ozone attainment more difficult to manage for certain areas.

• Increases health threats from warmer t emperatures and extreme heat. Hotter temperatures can increase the risk of heat stroke and heat exhaustion and can increase the risk of hospitalization for cardiovascular and respiratory diseases.15 • Expands exposure to vectorborne, waterborne, and foodborne pathogens and contaminants, leading to great risk of short

- term and chronic gastrointestinal and infectious diseases (e.g. Lyme disease, dengue, etc

. ).

• Results in more extreme weather events, such as drought, heat waves, wildfires, storms, heavy rainfall, and flooding which can cause in juries and death during the event and also damage soil quality, agricultural yields, and food supplies and access; homes, schools, and energy, w ater, and transportation infrastructure; and health infrastructure or access to healthcare services.

• May lead to mental health issues, particularly related to disasters, with increased risk of post

- traumatic stress disorder; depression and anxiety; increas es in violence; social maldevelopment; and stress due to relocation.

Commenters note d that certain populations, particularly children, the elderly, people with pre

existing health conditions, certain communities of color, low income communities, and certai n occupational groups are at increased risk from health threats. Several commenters stated that carbon pollution will not only affect people’s health, but will be costly in terms of damages and healthcare costs.

Response 11: The EPA has not changed its vi ew, as articulated in the 2009 Endangerment Finding, that climate change will have a negative impact on human health and welfare.

EPA acknowledges the health effects listed by the commenters and recognizes the rapid emergence of research and published lite rature on health effects associated with climate change. The EPA continues to rely on the best technical and scientific information, primarily based upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernment al Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessment reports consider the entire peer

- reviewed literature in context to draw conclusions based on the entire body of findings from the literat ure. The Endangerment Finding TSD summarizes key conclusions of IPCC (2007), based on their review of over 500 articles on the effects of heat and cold; wind, storms, and floods; drought, nutrition, and food security; food safety; water and disease; air qu ality and aeroallergens and disease;
vector

- borne, rodent

- borne, and other infectious diseases; occupational health; and ultraviolet radiation. The TSD also summarizes the conclusions of the USGCRP second National Climate Assessment (Karl et al., 2009), wh ich describes global climate change impacts for the United States. This report provides further evidence of the scope and magnitude of health effects, both direct (e.g., increased morbidity from heat waves or floods) and non

- direct (e.g., increased or alte ration in the spread and transmission rates of infectious diseases). As noted by the commenters, the literature shows poor countries and communities are likely to be disproportionately impacted by climate change health risks. For example, IPCC notes that

a dverse health impacts will be greatest in low

- income countries and those at greatest risk include

— in all countries

— the urban poor, the elderly and children, traditional societies, subsistence farmers, and coastal populations (high confidence, Confalonieri et al. 2007).

Section II.A of the p reamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate16 Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) an d IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). These new assessments provide further evidence supporting the 2009 Endangerment Finding that climate change poses a risk to human health and welfare now and in the future. A number of comments described observations of climate change; EPA agrees
t hat these types of observations of climate change are consistent with and provide supporting evidence of the effects of climate change on human health and welfare. However, though local observed changes can be of great concern to individuals and communitie s, EPA cautions that they must be assessed in the context of the broader science, as it is more difficult to draw robust conclusions regarding climate change over short time scales and in small geographic regions.

EPA agrees that rising GHGs currently enda nger human health and welfare, and will continue to do so in the future as atmospheric concentrations continue to rise. Thus, EPA agrees that action should be taken to reduce GHG emissions.

Comment 12: Commenters stated that t he proposed EPA standard on carbon emissions is a positive step toward both reducing the impacts of climate change on agriculture and creating a dynamic where farmers use our land and know

- how to develop clean energy

- producing technologies and to develop practices that can pull incre asing amounts of carbon out of the atmosphere. The commenters asserted American farmers are not victims of climate change, but part of the solution because they can also play a huge role in reducing emissions and actually putting carbon back in the ground. The commenters stated that farmers are developing cover crops, using no till, and buying higher efficiency equipment. The commenters also noted that farmers can also generate clean energy. As an example the commenters discussed that Pennsylvania and Iowa are leaders in wind energy; dairy farmers developing methane digesters, turning manure into electricity; and farmers that have developed the biofuels industry.

Commenters stated that the climate science that forms the basis of the Endangerment Finding
pro vides a legally sufficient and scientifically compelling justification for curbing greenhouse gas emissions from power plants. The commenters further stated that global greenhouse gas emissions and atmospheric concentrations, as well as the risk of catastr ophic damage, have increased since EPA issued the Endangerment Finding, which supports the need for emission controls.

Commenters stated the Clean Air Act requires the EPA to develop regulations for categories of sources which cause or significantly contri bute to air pollution which may endanger the public health or welfare, and greenhouse gas emissions endanger the public health and welfare.

Response 12: EPA agrees with the commenters that climate change will have impacts on agriculture, as concluded in the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare. In the finding, the Administrator considered bo th adverse and beneficial effects of climate change on the current and future agricultural sector,

ove r different regions of the United States stating:17 " There is a potential for a net benefit in the near term for certain crops, but there is significant

un certainty about whether this benefit will be achieved given the various potential adverse impacts of c limate change on crop yield, such as the increasing risk of extreme weather events. Other aspects of this sector may be adversely affected by climate change, including livestock management and irrigation requirements, and there is a risk of adverse effect on a large segment of the total crop market. For the near term, the concern over the potential for adverse effects in certain parts of the agriculture sector appears generally comparable to the potential for benefits for certain crops. However, the body of evidence points towards increasing risk of net adverse impacts on U.S. food production and agriculture over time, with the potential for significant disruptions and crop failure in the future. "

Section II.A of the preamble summarizes new assessment report s published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate Assessment (NCA3), which provides further evidence supporting the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare. The NCA3 finds that:

" Climate disruptions to agriculture have increased. Many regions will experience declines in crop and livestock production from increased stress due to weeds, diseases, insect pests, and other climate change induced stresses. "

EPA also agrees with the commenter s ’ statement that American farmers are part of the climate solution. Many of the mitigation and adaptation measures mentioned in the comment are also outlined in the NCA3 chapter on agriculture. EPA’s own AgSTAR program is an outreach program designed to reduce methane emissions from livestock waste management operations by promoting the use of biogas recovery systems. Despite advances towards reducing emissions and producing clean energy in the agriculture sectors, there is still more work to be done to avoid the most severe threats from climate change. NCA3 finds that:

" Agriculture has been able to adapt to recent changes in climate; however, increased innovation will be needed to ensure the rate of adapta tion of agriculture and the associated socioeconomic system can keep pace with climate change over the next 25 years. "

Comment 13: Commenters stated that as part of an endangerment analysis, the EPA must consider how the proposed standards will have a " de tectable, quantifiable, and meaningful effect " on the 30 indicators highlighted in the EPA report entitled, Climate Change Indicators in the United States . The commenters argued that the EPA uses these indicators for climate change assessment and as placeh olders for the claimed dangers of global warming in general. The commenters further argued that the 30 indicators cannot reasonably represent the dangers attributable to new or modified/reconstructed EGUs subject to EPA jurisdiction without more analysis, and that because EPA failed to do such an analysis, those claimed dangers do not provide the statutorily required endangerment determination.18 Response 13: For information regarding the climate and health benefits of the final rule, see the Regulatory Impa ct Analysis (RIA), which is available in the docket for this action. In the RIA, the EPA uses the social cost of carbon as its methodological approach for calculating climate benefits. The EPA disagrees that he effect of the final rule on the thirty indica tors in its report, Climate Change Indicators in the United States must be quantified.
The EPA’s climate change indicators are not intended to serve as programmatic measures of the EPA’s efforts to address the climate change problem but rather to communica te the climate change problem in an easy to understand manner using long

- term observed data trends. The EPA’s thirty climate change indicators depict observed trends over time; such trends are best understood over long time periods (e.g., multiple decades ) and large geographic areas. The indicators show that the climate is changing and effects are already happening, here in the United States. The scientific connection between each indicator and climate change is strong.

Compiling and reporting these indic ators helps inform EPA, other organizations, and the public of the various observed changes and effects related to climate change, particularly in the United States. The fact that the effects of climate change are already being observed across the U.S. rei nforces the need for continued, sensible steps to address emissions of GHGs.

Comment 14: Commenters argued that climate change will have benefits that outweigh the harm and that the Endangerment Finding is invalid. The commenters suggested the IPCC report implies that warming will not exceed 2 degrees until 2083, and that warming of less than 2 degrees will be beneficial. The commenters included examples of benefits in the agricultural sector and in the number of deaths that occur in winter.
Response 14: T he commenters incorrectly argued that the IPCC projections imply a 50/50 chance of not exceeding 2 degrees until 2083, and that warming of less than 2 degrees will be beneficial. The comment is based only on the lower bound of a range of likely temperature values which are based on a high level of global emissions reductions. It also appears that basic mathematical errors may have occurred when the commenters represented the concept of climate sensitivity. These very same issues were previously addressed in depth in the 2009 Endangerment Response to Comment Volume 4. See specifically Comment 4

- 46 for more information on equilibrium climate sensitivity. See also NCA3 page 754 for more information on the difference between equilibrium climate sensitivity and t ransient climate response. EPA has considered the information provided by the commenters and finds that it does not provide credible evidence of flaws in the EPA’s approach of relying upon the synthesis conclusions of the major assessments, nor does it de monstrate that the benefits of climate change will outweigh the harm.

EPA’s consideration of net (adverse and beneficial) effects can be found in the 2009 Endangerment Finding response to comments (RTC) Volume 1, Section 1.4. Specific positive impacts of c limate change (for example on warm

- water fisheries, on the increased growth and survival of crops and forests through carbon fertilization, and on fewer deaths from cold exposure) were discussed in the Endangerment Finding (pages 66948, 66524, 66529 e.g.), sections 3, 7, 9, and 10 of the TSD, and throughout the RTC, but particularly in volumes 5 and 6.19 As stated in the Endangerment Finding (page 66947), " The Administrator is using her judgment, based on existing science, to weigh the threat for each of the identifiable risks, to weigh the potential benefits where relevant, and ultimately to assess whether these risks and effects, when viewed in total, endanger public health or welfare. "

Impacts of a warming climate are well

- documented in numerous vetted scie ntific documents including those from the National Academies of Science. While limited short

- term benefits may occur in certain regions and sectors in the U.S. (like increases in some agricultural crops), there is increasing risk of net adverse impacts in the long

- term. Concluding that climate change, even less than or equal to two degrees warming by 2083, is beneficial ignores the scientific consensus represented in the assessment literature. Thus, the information provided by the commenters does not alter the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare.

Section II.A of the preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate Assessment (NCA3), which provides further evidence supporting the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare. The NCA3 includes a Frequently Asked Question on whether there are benefits of climate change, and finds that:

" Some climate changes currently have beneficial effects or specific sectors or regions. For example, current benefits of warming include longer growing seasons for agriculture and longer ice

- free periods for shipping on the Great Lakes. At the same time, however, longer growing seasons, along with higher temperatures and carbon dioxide, can increase pollen production, intensifying and lengthening the allergy season. Longer ice

- free periods on the Great Lakes c an result in more lake

- effect snowfalls.

Many analyses of this question have concluded that there will be more negative effects than positive ones. This is largely because our society and infrastructure have been built for the climate of the past, and any rapid change from that climate imposes difficulties and costs. For example, many major cities are located on the coasts where they are now vulnerable to sea level rise. And there has been rapid population growth in the U.S. Southwest, where increasing heat and drought threaten water supplies and cause increased wildfires. In addition, ecosystems that we rely on for our food and water are adapted to the cooler climate that our planet has experienced over recent centuries. "

Specifically in regards to agricult ure, the NCA3 finds:

" Climate disruptions to agriculture have increased. Many regions will experience declines in crop and livestock production from increased stress due to weeds, diseases, insect pests, and other climate change induced stresses. "

In regar ds to reducing the number of deaths that occur in winter, the NCA3 agrees with EPA’s previous responses to this same comment, stating that:20 " Milder winters resulting from a warming climate can reduce illness, injuries, and deaths associated with cold and s now. Vulnerability to winter weather depends on many non

- climate factors, including housing, age, and baseline health, while deaths and injuries related to extreme cold events are projected to decline due to climate change, these reductions are not expecte d to compensate for the increase in heat

- related deaths. "

Comment 15: Commenters claimed that " humans would flourish in a warmer climate, and adaptation will increase the benefits even more " , listing several papers. Commenters specifically highlight decli ning trends in heat

- related mortality across the U.S from 1987 to 2005.
Response 15: The EPA continues to rely on the best technical and scientific information, primarily based upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessment reports consider the entire peer

- reviewed literature in context to draw synthesis conclusions based on the b ody of findings from the literature. In contrast, the commenters chose to highlight isolated points from a limited set of papers, and these papers often address only individual cities, and mostly outside the United States. In addition, the commenters did n ot synthesize the literature that they provided nor did they show how this literature contradicts the assessments which already take into account issues such as adaptation.

Section II.A of the preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) and IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Cl imate Change Adaptation " (SREX). These new assessments provide additional evidence consistent with the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare, including reaffirming the linkages between climate change and extreme temp eratures. The NCA3 states:

Some of the risks of heat

- related sickness and death have diminished in recent decades, possibly due to better forecasting, heat

- health early warning systems, and/or increased access to air conditioning for the U.S. population. H owever, extreme heat events remain a cause of preventable death nationwide.

As noted in EPA’s 2009 Endangerment Finding RTC, Volume 5 (comments 5

- 5, 5

- 7 and 5

- 36), risks to human health can be reduced by technology and adaptive measures, but heat presently causes substantial mortality in the Unites States and adaptive measures do not eliminate risk. In fact, decreased sensitivity or decline in heat

- related mortality may not be as pronounced in the future since access to air conditioning is already high in m ost regions (Ebi et al., 2008) (see also RTC 5

- 45, 5

- 48, 5

- 51). The major scientific assessments on which EPA relies, including the NCA3, IPCC AR5, and the IPCC SREX, all project negative impacts of climate change, and the subsequent increase in frequency or severity of extreme events, on human health. EPA has considered the comment and finds that it does not provide credible evidence of flaws in the EPA’s approach of relying upon the synthesis conclusions of the major assessments.21 Comment 16: Commenters su ggested warming seas result in flourishing ocean vegetation, which acts as a carbon sink and that studies of impacts of acidification and warming on ocean life show adaptability and resilience.
Response 16: The EPA continues to rely on the best technical a nd scientific information, primarily based upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. Thes e assessment reports consider the entire peer

- reviewed literature in context to draw synthesis conclusions based on the body of findings from the literature. In contrast, the commenters do not cite any specific scientific evidence or studies to support his /her argument.

Section II.A of the preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) a nd IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). These new assessments provide additional evidence consistent with the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare, including reaffirming the linkages between rising CO2 levels, ocean acidification, and impacts to ocean ecosystems.

The major scientific assessments on which EPA relies, including the NCA3, IPCC AR5, and the IPCC SREX, all project net negative impacts of ocean acidification. EPA has considered the comment and finds that it does not provide credible evidence of flaws in the EPA’s approach of relying upon the synthesis conclusions of the major assessments.

Comm ent 17: Several commenters stated that EPA’s concerns regarding the impacts of rising CO2 levels and climate change are not merited because the scientific literature does not support arguments that extreme weather is increasing or being affected by increas ed CO2. The commenters argued that extreme weather is not increasing.
Response 17: The EPA continues to rely on the best technical and scientific information, primarily based upon the recent, major assessments by the U.S. Global Change Research Program (U SGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessment reports consider the entire peer

- reviewed literature, including literature referred to in the comments receive d, in context to draw synthesis conclusions based on the body of findings from the literature.

Section II.A of the preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third Natio nal Climate Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) and IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). These new assessments provide additional evid ence consistent with the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare, including reaffirming the linkages between climate change and extreme weather, while acknowledging the uncertainties involved in projections of complex phenomena.22 The NCA3 concludes that " Certain types of extreme weather events with links to climate change have become more frequent and/or intense, including prolonged periods of heat, heavy downpours, and, in some regions, floods a nd droughts " . In contrast to the commenters’ argument regarding lack of observational evidence of extreme weather trends, additional findings of the NCA3 state:

Some extreme weather and climate events have increased in recent decades, and new and stronger evidence confirms that some of these increases are related to human activities.

Changes in extreme weather events are the primary way that most people experien ce climate change. Human

- induced climate change has already increased the number and strength of some of these extreme events. Over the last 50 years, much of the United States has seen an increase in prolonged periods of excessively high temperatures, more heavy downpours, and in some regions, more severe droughts (NCA3 pg 24).

The IPCC also finds observed changes in climate extremes related to temperature, precipitation, tropical cyclones, and sea level. As noted in the TSD for the 2009 Endangerment Finding , these changes " apply generally to all parts of the globe, including the United States, although there are some regional and local exceptions due to patterns of natural climate variability " . The IPCC SREX assessment report (IPCC 2012) further supports the Administrator’s finding regarding extreme weather and climate events:

A changing climate leads to changes in the frequency, intensity, spatial extent, duration, and timing of extreme weather and climate events, and can result in unprecedented extreme weather and climate events. [...] There is evidence that some extremes have changed as a result of anthropogenic influences, including increases in atmospheric concentrations of greenhouse gases. [...] Extreme events will have greater impacts on sectors with closer links to clim ate, such as water, agriculture and food security, forestry, health, and tourism.

In light of these conclusions, EPA has considered the information provided by the commenters and found that it does not provide credible evidence of flaws in the EPA’s approa ch of relying upon the synthesis conclusions of the major assessments, nor does it demonstrate that no observational evidence exists to support a global increase in extreme weather events.

Comment 18: Several commenters expressed concern over the impact o f climate change on Indian Tribes and Alaska Natives. Commenters cited a May 2013 NTAA Status of Tribal Air Report and listed many types of climate

- related changes that are associated with tribal impacts: increased aridity, droughts, temperature, acid rain , dust storms, flooding, forest fires, and pests; and changes in precipitation, crop changes, wildlife, ocean acidification, etc.

Other commenters discussed adverse effects on traditional food supplies and health, traditional cultures, tribal economie s, an d tribal treaty rights. Specifically, commenters noted that many tribal cultural identities are deeply rooted in the natural environment. Commenters stated that as climate change disrupts biological communities, the survival of some tribes as distinct cult ures may be at risk; the loss of traditional cultural practices, due to climate

- driven die

- off or range23 shift of culturally significant plant and animal species, may prove to be too much for some tribal cultures to withstand on top of other external pressu res. Commenters stated that some tribes are finding that the animals and/or plants on which they depend for their cultural practices and identity have either migrated to lands not under their control or have disappeared altogether. Commenters stated that m any tribal communities are heavily dependent on the use of fish, wildlife, and native plants, and may face threats to food supplies from climate change. Commenters stated that even where tribes are integrated into the national economy, climate

driven disru ption of biological communities is also having a considerable effect on the treaty rights which preserve hunting, fishing, and gathering rights for tribes on their lands and in the usual and accustomed areas. Commenters also noted that some tribal communit ies may face difficulty relocating due to tribal land limitations.

Regarding climate impacts to Alaska Natives, commenters noted adverse effects on traditional food supplies and infrastructure (due to erosion) in Alaska Native Villages, which has already

r esulted in the relocation of several villages away from the eroding coastline. Specifically, commenters noted that Alaska Natives may suffer shortages of fresh water and the food they have historically hunted or fished, and that food security is threatened as underground food cellars thaw. Commenters cited a May 2013 NTAA Status of Tribal Air Report and a 2003 U.S. General Accountability Office study as evidence that coastal erosion and thawing permafrost threatens civil infrastructure in remote villages. T he commenters noted that more than 200 Alaska Native Villages are affected to some degree by flooding and erosion, 31 villages facing imminent threats that are compelling them to consider permanent relocation, and at least 12 of the 31 threatened villages have decided to relocate

— in part or entirely

— or to explore relocation options. The commenters stated that Alaska Native Villages are unique because they face firsthand the effects of climate change.

Response 18: The EPA continues to rely on the best techn ical and scientific information, primarily based upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies . These assessment reports consider the entire peer

- reviewed literature in context to draw synthesis conclusions based on the body of findings from the literature.

Section II.A of the preamble summarizes many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third National Climate Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) and IPCC’s 2012

" Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). These new assessments provide additional evidence consistent with the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare, including reaffirming the linkages between climate change and impacts on Native American Tribes, including Alaska Natives.

EPA has considered the information provided by the commenters and finds that it is generally consistent with the conclu sions of the assessment literature. The USGCRP NCA3 finds climate change impacts such as the rapid pace of temperature rise, coastal erosion and inundation related to sea level rise and storms, ice and snow melt, and permafrost thaw are affecting indigenou s people in the United States. The NCA3 also concluded that climate change, in addition to24 chronic stresses such as extreme poverty, is affecting indigenous peoples’ health in the United States through impacts such as reduced access to traditional foods, d ecreased water quality, and increasing exposure to health and safety hazards. The IPCC AR5 notes, " Climate

- related hazards exacerbate other stressors, often with negative outcomes for livelihoods, especially for people living in poverty (high confidence). Climate

- related hazards affect poor people’s lives directly through impacts on livelihoods, reductions in crop yields, or destruction of homes and indirectly through, for example, increased food prices and food insecurity. "

The NCA3 notes that particular ly in Alaska, critical infrastructure and traditional livelihoods are threatened by climate change and, " [i]n parts of Alaska, Louisiana, the Pacific Islands, and other coastal locations, climate change impacts (through erosion and inundation) are so sever e that some communities are already relocating from historical homelands to which their traditions and cultural identities are tied. " The IPCC AR5 finds that climate change

- induced warming in the Arctic and resultant changes in environment (e.g., permafros t thaw, effects on traditional food sources) have significant observed and projected impacts on the health and well

- being of Arctic residents, especially indigenous peoples. Small, remote, predominantly

- indigenous communities are especially vulnerable give n their " strong dependence on the environment for food, culture, and way of life; their political and economic marginalization; existing social, health, and poverty disparities; as well as their frequent close proximity to exposed locations along ocean, la ke, or river shorelines. " 1 In addition, increasing temperatures and loss of Arctic sea ice increases the risk of drowning for those engaged in traditional hunting and fishing.

Overall, the EPA finds that the information provided by the commenters are gener ally consistent with and does not alter the 2009 Endangerment Finding that climate change will have a negative impact on human health and welfare.

Comment 19: Commenters cited 28 articles claiming that any Arctic and Antarctic impacts (including ice and non

- arctic glaciers) have been overstated and are not linked to warming.
Response 19 : There is clear evidence of climate change impacts in the Arctic and Antarc tic. EPA has described these impacts previously in the 2009 Endangerment Finding, and more recent impacts are described in Section II.A of the preamble of this rule based on more recent climate change assessment reports. Notable impacts in these regions di scussed in the preamble include an accelerating rate of ice loss from the Greenland and Antarctic ice sheets (since 2002, 215 gigatons per year and 147 gigatons per year respectively, contributing to global sea level rise),

1 IPCC, 2014: Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Barros, V.R., C.B. Field, D.J. Dokken, M.D. Mastrandrea, K.J. Mach, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N . Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.)]. Cambridge University Press, Cambridge, p. 1581.25 continued decline of Arctic sea ice (3.5 to 4.1 percent per decade, including a record low extent in 2012 at 40 percent below the 1979

- 2000 median), increasing permafrost temperatures in most regions including Alaska, and decreasing annually

- averaged Northern Hemisphere snow cover
extent . These observations are not in dispute in the scientific community. These trends are strong evidence of warming in these regions, which is further confirmed by surface, ocean, and satellite based temperature measures. Articles provided by the commenters generally addressed small regions such as the Karkoram glaciers rather than global glacier trends, address individual mechanisms such as the surface mass balance of an ice sheet rather than the net change in ice sheet mass which is the result of the sum of all relevant mechanisms, or are irrelevant to detecting and attributing trends or making projections. Additionally, the articles provided by the commenters have been considered in the process of developing the conclusions presented in the assessment liter ature.

Comment 20: Several commenters criticized the EPA’s approach of relying on the major scientific assessments, arguing that the IPCC and the USGCRP assessments are deeply flawed. Commenters recommended withdrawing the rule until the EPA can make a n ew scientific assessment of the impacts of climate change. Alleged flaws in the IPCC that were highlighted by the commenters included the argument that the IPCC does not present a complete picture of the scientific understanding of climate change or the ab ility of the environment and humans to adapt to changes, that the IPCC has retracted findings, arguments that the IPCC process is not scientifically rigorous and may be biased, and quotes from IPCC authors that expressed concern over the politicized nature of the IPCC. Regarding the USGCRP, commenters stated that during the public comment period for the National Climate Assessment they had submitted overwhelming evidence that the USGCRP report was biased and incomplete, especially regarding the ability of A mericans to adapt to climate change. Therefore, the commenters argued that the NCA should not be relied upon by the EPA.

Response 20: The major scientific assessments of the USGCRP, IPCC, and the NRC are comprehensive in their coverage of GHG and climate change issues, have gone through rigorous and exacting peer review by the expert community, and have gone through rigorous levels of U.S. government review. Therefore, it is appropriate for the EPA and the Administrator to rely on these assessments to prov ide the technical and scientific information that informs the Administrator’s judgment regarding the question of whether GHGs endanger public health and welfare.

The EPA has previously responded at length to critiques of the IPCC and the reliance upon the assessments in both the Response to Comments for the 2009 Endangerment Finding (Volume 1 in particular) and the 2010 Response to Petitions (Volumes 2 and 3). The EPA has reviewed alleged errors in the IPCC assessments and found that the limited examples of documented errors from the Fourth Assessment Report did not call into question the fundamental and broad evidence on which the Endangerment Finding rests. Multip le independent reviews of the IPCC by external organizations found no evidence that the scientific conclusions of the IPCC were flawed. The USGCRP assessments go through a formal peer review by the National Research Council of the National Academies of Sci ence, a public comment review process and interagency review. The National Climate Assessment appropriately addressed public comments26 received, adhering to transparency requirements for a major assessment document and the EPA finds that the final product i s an accurate and unbiased synthesis of the scientific literature.

In 2009, the EPA described the review and development processes that each of the assessments go through, and the numerous levels of review that these assessments undergo make them appropri ate sources of scientific information. The approach taken by the EPA of relying on these assessments was validated in 2012 by the U.S. Court of Appeals for the D.C. Circuit (684 F.3d 102).

Since the 2012 decision, several new assessments have been release d which improve understanding of the climate system, projected climate change impacts, and the significant human contribution to climate change. The new assessments strengthen the case that GHGs endanger public health and welfare both for current and futur e generations, as summarized in Section II.A of the preamble. The agreement between assessments developed by three different national and international scientific organizations is further evidence for the strength of the science upon which the EPA relies.

The commenters have raised no arguments different from those already considered and rejected previously. Therefore, the EPA will continue to rely on the major scientific assessments to support its scientific determinations.

Comment 21: Several commente rs called attention to the role of CPP in meeting global climate targets, expressed as either global average temperature thresholds or atmospheric concentration levels; in particular, these commenters questioned whether CPP goes far enough given what may b e needed, globally, to achieve targets that have either been identified in the scientific literature or in international negotiations.
Different commenters cited different targets that they argue need to be met. Several commenters discussed the 2 degree t arget based on the 2009 Copenhagen Accord and other sources. Other commenters cited a 450 ppm CO2 target (some of whom state that this concentration is consistent with the 2 degree target). Some commenters argued for a tighter target of 350 ppm CO2 and, re lated, a 1 degree long

- term temperature rise. These commenters argued that a failure to meet the appropriate temperature or concentrati on targets will lead to exceeding safe temperature levels with potentially catastrophic consequences. Commenters stated t hat a World Bank study concluded that humans might not be able to adapt to a 4 degree temperature increase.

The commenters then discussed which emissions pathways the globe would need to meet in order to achieve the targets, with several commenters citing an 80 percent decrease in CO2 emis sions from industrialized nations by 2050 or a 40

- 70 percent decrease globally. Commenters als o noted that emission levels near zero would be necessary by 2100. Commenters discussed the importance of the power sector in te rms of its contributions to CO2 em issions. Commenters requested that the EPA compare the CPP to these emissions trajectories, and some commenters urged the agency to strengthen the CPP in order to align the future emissions trajectories with some of these stabilization scenarios.27 Response 21: EPA agrees that the climate change problem is global in nature, very serious, and that actions on the part of the United States and other countries around the world are needed to avoid the most serious and long

- term r isks associated with human

- induced climate change. EPA also thinks that the CPP is a major, but not the only, component of what the United States must do to do its part to tackle global climate change. The CPP is addressing the largest source of U.S. CO 2 e missions. In fact, EPA views the CPP as a major element of the U.S. domestic strategy that will in turn make the U.S. a credible world leader in addressing climate change.

We disagree with some of comments, however, that judge the CPP as inadequate by meas uring its ambition level against what we view as an unfair yardstick

– global

- scale climate targets. We are of course aware of the global 2 degree Celsius goal that has been put forward under the UNFCCC negotiations. However, the CPP falls under a specific section, 111(d), of the Clean Air Act and therefore meets requirements of that section. As such, CPP addresses the electric power sector of the U.S. Commenters failed to note requirements of the Act and any additional actions that EPA is already undertaki ng to reduce GHG emissions in other important source sectors of the U.S. (e.g., stronger fuel economy standards for cars and trucks, and actions to reduce HFC and methane emissions). Furthermore, commenters failed to acknowledge the broader U.S. Government ’s role in tackling climate change (see, for example, the President’s Climate Change Action Plan), including efforts to achieve a robust international agreement under the UNFCCC in Paris at the end of this year.

EPA does not

- and is not required to, unde r the Clean Air Act

- hold a position on what specific level of atmospheric CO 2 concentrations represents a specific threshold or safe versus unsafe levels. Similar questions and comments arose in response to EPA’s proposed GHG endangerment finding under S ection 202 of the Act in 2009. EPA stated then that the Agency does not need to define a specific level below which there is not endangerment

– the issue before EPA for that finding was to judge whether the current and projected future air pollution of ele vated concentrations of GHGs endangers. EPA did so and made the endangerment finding in 2009 under Section 202 of the Act. Here, tying CPP to specific global atmospheric CO 2 targets is not germane or required.

8.7.2 Monetized Climate Benefits

Comment 1: Many commenters discussed the methodology used to develop the SCC estimates, in particular the integrated assessment modes (IAMs) used to estimate the SCC, and provided a wide range of perspectives and technical input on how to further refine the SCC estim ates. In particular, some commenters recommended improvements to the existing IAMs and their damage functions, which monetize the damages associated with the physical impacts of climate change.

Choice of IAMs used to estimate the SCC

Some commenters were g enerally supportive of the choice of the three IAMs used in developing the SCC. For example, a letter signed by several commenters noted that these IAMs are

" reasonably based on current scientific and economic knowledge " and are " widely cited and28 accepted in the academic community. " Some c ommenter s said the models reflect " the best available, peer

- reviewed science to tally the benefits and costs of specific regulations with impacts on CO2 emissions. The IAMs include benefits and costs that have been quantif ied to date. " O ther c ommenter s stated that the three IAMs used to estimate the SCC " represent the best tools currently available for determining an appropriate SCC. "

C ommenters voiced concern that the economic damages estimated by the IAMs are too uncert ain to be useful for policy analysis. Several of these commenters included quotations from Pindyck (2013) and argued that the current IAMs and their damage functions lack sufficient theoretical or empirical foundations , and concluded that the damage functi ons are arbitrary. C ommenters suggested that one or more of the models should be rejected.

Finally, a few commenters suggested that other IAMs should be considered for any future SCC updates, specifically the Environmental Impact and Sustainability Appl ied General Equilibrium (ENVISAGE) model and also the Climate and Regional Economics of Development (CRED) model.

Recommendations for improving the IAMs or damage functions

C ommenters suggested improvements to one or more of the models , including the models’ damage functions, before future SCC updates. In particular, c ommenters believe d that the current SCC estimates underestimate the damages and that the potential benefits of the rulemaking should be higher. These commenters attributed the underestim ation to incomplete or missing treatment of a number of damage categories in the IAMs

. Commenters added s uggestions for additional damage categories include: ocean acidification, spillover effects from displaced persons, increased variability in weather pa tterns, wildfires, " catastrophic " damages stemming from exceedance of various " tipping points, " loss of species and habitat diversity, cultural impacts, health effects from increased air pollution, and impacts on global security, among others.

C ommenters recommended re

- evaluating the specific functional form assumptions in IAMs, for example, the assumption of substitutability across economic sectors rather than limited substitutability.

C ommenters further noted that " The damage function used in the modeli ng platforms calculates the loss of GDP as a quadratic function of increased global surface temperature but does not properly account for economic damages that are likely to intensify at a much faster rate once the global surface temperature increases past approximately 3 degrees Celsius above pre

- industrial levels. "

C ommenter s stated

, " It is also important to recognize that many climate change impacts are difficult or impossible to quantify in a meaningful way, and it is critical that future estimates

acc ount for the non

- monetizeable costs of CO2 emissions. " As an example, the commenter s cite d IPCC research indicating dramatic decline in global biodiversity and states " This would not

o nly have dire economic consequences by drastically disrupting the food supply, but would also have immense non

- monetizable consequences to our natural world and ecological heritage. "29 C ommenters, however, stated that the SCC estimates do not accurately characterize the damage functions included in the models and that the model ing does not provide an acceptable range of accuracy for use in policymaking. For example, commenters submitted a joint letter that stated the modeling overestimates the probability of extreme events.

C ommenter s state d that the results from the IAMs are highly sensitive not only to the model input parameters but also to how the models have been developed and what processes they try to include. Commenters also referenced a study that concluded IAMs and SCC cannot account for thre shold effects or nonlinear changes that might be ascribed to additional em issions or emission reductions. These commenters disagreed with EPA’s use of the SCC estimates.

C ommenter s discussed a recent EPRI report titled ‘ Understanding the Social Cost of C arbon: A Technical Assessment ’ . The commenter s stated that the USG SCC estimates are difficult to interpret and evaluate because the USG SCC estimates are the result of significant aggregation of global socioeconomic, climate, and damage modeling over 300 years and aggregation of results across three models (DICE, FUND, PAGE), over time, across scenarios, and across impact categories and regions. The commenter s discussed how the EPRI report has evaluated each component of the SCC modeling causal chain as we ll as the overall experimental design, and how it aims to improve understanding of SCC modeling and estimates to inform public discussion and facilitate improved SCC analyses and climate change research broadly. The
commenter s provided the following recomm endations:

• Development of a new framework given the challenges associated with a multi

model approach, including inconsistencies, comparability, and independence.

• External peer review of the modeling, uncertainties, results aggregation, and other element s to improve methods and provide the public with greater confidence in the resulting estimates.

• Explicit peer review of the individual models, as is commonly done for other models used for regulatory processes.

Evaluation of the robustness of the USG SCC estimates to alternatives to establish confidence in the final estimates.

Response 1: The comments mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SCC (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO 2 , EPA has carefully examined and evaluated comments submitted to OMB’s separate solicitation . EPA has also carefully examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the SC

- CO 2 methodology, including the models used to estimate the SC

- CO 2

. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates30 them by reference. 2 The remainder of this section elaborates on these comments in the context of this rulemaking.

EPA appreciates the commenters’ recommendations for potential opportunities to improve the SC

- CO 2 estimates and has considered each one in the context of this rulemaking. EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best available science and economics. Furthermore, EPA has determined that the SC

- CO 2 methodological recommendations require additional research, review, and public comment before it can apply them to a rulemaking context.

To help synthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC

- CO 2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC

- CO 2 estimates, including the approaches suggested by co mmenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to imp roving the SC

- CO 2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer

reviewed literature, will help to ensure that the SC

- CO 2 estimates used by EPA continue to reflect the best availabl e science and methodologies.

After careful evaluat ion of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- CO 2 estimates until further updates can be made t o reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incrementa l CO 2 emissions changes into regulatory analysis. There fore, EPA has presented the
current SC

- CO 2 estimates in this rulemaking. 3 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Aca demies
process.
The remainder of this section provides more detailed responses to the comments and recommendations.

C hoice of IAMs used to estimate the SC

- CO 2

. EPA agrees with the commenters who regard the selection of the three IAMs

— DICE, FUND, and PAGE

— as the most appropriate for the purpose of estimating the SC

- CO 2

. EPA and all of

2 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 6 to 11 at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf

. 3 See https://www.whitehouse.go v/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf31 the other IWG members made this determination when they began developing the SCC estimates in 2009

- 2010. DICE, FUND, and PAGE are the most widely used and widely cited models in the economic literature that link physical impacts to economic damages for the purposes of estimating the SCC. As stated in the 2010 TSD:

These models are frequently cited in the peer

- reviewed literature and used in the IPCC assessment. ... These models are useful because they combine climate processes, economic growth, and feedbacks between the climate and the global economy into a single modeling framework. ... Other IAMs may better reflect the complexity of the science in their modeling frameworks but do not link physical impacts to economic damages. 4

In addition, the National Academies of Science (NAS) identified these three models as " the most widely used impact assessment models " in a 2010 report (NAS, 20 10). Furthermore, in a comprehensive literature review and meta

- analysis conducted in 2008, the vast majority of the independent impact estimates that appeared in the peer

- reviewed literature were derived from FUND, DICE, or PAGE (Tol, 2008).

While the dev elopment of the DICE, FUND and PAGE models necessarily involved assumptions and judgments on the part of the modelers, the damage functions are not simply arbitrary representations of the modelers’ opinions about climate damages. Rather they are based

on a review by the modelers of the currently available literature on the effects of climate change on society. The conclusions that the modelers draw from the literature, and the bases for these conclusions are documented, and all three models are continually updated as new information becomes available. While EPA recognize s that there are limitations with these models, including some of those discussed in Pindyck (2013), nonetheless IAMs provide valuable information for regulatory impact analysis. In a recent article in the peer

- reviewed literature, Weyant (2014) addressed this issue as follows:

While Pindyck’s observations about the empirical weaknesses of IAMs or calculations of the SCC are worthy of careful study, the conclusion that IAMs are therefore usel ess fundamentally misconceives the enterprise. IAMs and the [ SC

- C O 2 ] are conceptual frameworks for dealing with highly complex, non

- linear, dynamic, and uncertain systems. The human mind is incapable of solving all the equations simultaneously, and modelin g allows making " If..., then... " analyses of the impacts of different factors. The models have provided important insights into many aspects of climate

- change policy.

EPA thus believes that it was appropriate for the IWG to base the SC

- CO 2 estimates on the DICE, FUND and PAGE models. Moving forward, EPA will continue to follow and evaluate the latest peer reviewed literature applying IAMs. As previously noted, EPA and all of the other IWG members will seek external expert advice on the tech nical merits and challenges of using

4 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/for

- ag encies/Social

- Cost

- of

Carbon

- for

- RIA.pdf32 additional models (e.g., CRED, ENVISAGE) to estimate the SC

- CO 2 and/or removing existing models from the ensemble (DICE, FUND, and PAGE) used to estimate the SCC.

Improving the IAMs or damage functions

To date, EPA and the other members of the IWG have accepted the models as currently constituted, and omitted any damages or beneficial effects that the model developers themselves do not include. EPA recognizes that none of the three IAMs fully incorporates all climate ch ange impacts, either positive or negative. Some of the effects referenced by commenters (e.g.,

" catastrophic " effects, disease, and CO 2 fertilization) are explicitly modeled in the damage functions of one or more of the current models (although the treatme nt may not be complete), and the model developers continue to update their models as new research becomes available. In fact, EPA and all of the other IWG members undertook the 2013 revision because of updates to the models, which include new or enhanced r epresentation of certain impacts, such as sea level rise damages. In addition, some of the categories mentioned by commenters are currently speculative or cannot be incorporated into the damage function for lack of appropriate data. Using an ensemble of th ree different models was intended to, at least partially, address the fact that no single model includes all of the impacts. EPA recognize s that there may be effects that none of the three selected models addresses (e.g., impacts from ocean acidification) or that are likely not fully captured (e.g. catastrophic effects).

EPA agrees that it is important to update the SC

- CO 2 periodically to incorporate improvements in the understanding of greenhouse gas emissions impacts and will continue to follow and evalu ate the latest science on impact categories that are omitted or not fully addressed in the IAMs. Also, EPA and all of the other IWG members will seek external expert advice on the technical merits and challenges of potential approaches to update the damage functions in future revisions to the SC

- CO 2 estimates.

For EPA’s more detailed response to comments on treatment of CO 2 fertilization in the IAMs, see 8.7.2, comment 6.

For EPA’s more detailed response to comments on peer review, see 8.7.2, comment 5.

For EPA’s more detailed response to comments on aggregation issues, see 8.7.2, comment 8.

Recommendations and comments regarding socioeconomic scenarios.

The rationale for using the EMF

- 22 scenarios is explained in the 2010 TSD. In addition to the fact tha t they were recent, peer

- reviewed, and publicly available, they had the key advantage that GDP, population, and emissions trajectories are internally consistent for each model and scenario evaluated. As noted in the 2010 TSD, the scenarios used " span a wide range, from the more optimistic (e.g. abundant low

- cost, low

- carbon energy) to more pessimistic (e.g. constraints on the availability of nuclear and renewables). "

Regarding the inclusion of a scenario associated with stabilization of atmospheric conce ntrations of GHGs at 550 ppm CO 2 - e, the 2010 TSD clearly notes that this is " not derived from an assessment of what policy is optimal from a benefit

- cost standpoint. Rather, it is indicative of33 one possible future outcome. " As noted above, OMB guidance in Circular A

- 4 states that the correct baseline for regulatory impact analysis is an agency’s best assessment of the state of the world without the regulation, and specifically states that this may include the potential for new domestic and foreign policies that would occur absent the regulation. Including a scenario representative of future mitigation actions is consistent with this guidance, as long as those future policy actions are expected to occur with or without the regulation under examination. As
exp lained in the 2010 TSD, the IWG aimed to select scenarios that span most of the plausible range of outcomes for the socioeconomic variables. Given the level of uncertainty in these trajectories, the IWG felt that it was appropriate to consider a trajectory with significant global mitigation, assuming that this is a distinct possibility even in the absence of U.S. actions. Because there were five scenarios, and each received equal weighting, the stabilization scenario received 20% of the total probability we ight.

Regarding potential inconsistencies between scenarios and IAMs, given the nature of estimating the SC

- CO 2 and available data/resources, a full harmonization along all possible dimensions of the three IAMs used to estimate the SC

- CO 2 with the four mo dels used to develop the scenarios was not possible. Therefore, the IWG chose to harmonize the models with respect to the scenario variables to which SC

- CO 2 estimates are most sensitive (GDP, population, and emissions) using common techniques in the litera ture. The scenarios used were developed by highly respected international modeling groups and published in the peer

- reviewed literature. In terms of potential inconsistencies across scenario variables past 2100, an effort was made to account for some basic correlations among scenario variables in the post

- 2100 extrapolation. For example, extrapolations were based on GDP per capita growth, which implicitly correlates population and GDP growth, rather than GDP levels or growth alone. Similarly, extrapolations were based on CO 2 emissions intensity with respect to GDP, which correlates emissions and GDP growth, rather than CO 2 emissions levels or growth alone.

Consistent with historical observations, it is expected that growth rates of rapidly developing

econom ies will exceed those of already developed economies in the near term. Scenarios with projections of global economic growth that exceed recent trends in developed economies are consistent with this expectation.

The chosen scenarios capture a wide range of potential future states of the world, but were not intended to represent a comprehensive accounting of the full range of uncertainty, and therefore it is possible that future outcomes will fall outside of this range. EPA and the members of the IWG have ack nowledged that the projection of the scenarios beyond 2100 has greater uncertainty than shorter

- term projections and will continue to monitor the literature, including the development of extended RCP/SSP scenarios, for ways to improve the estimated traject ories and improve internal consistency.

Comment 2: Most of the c omments on the climate science components of the SC

- CO 2 modeling addressed the specification of the equilibrium climate sensitivity parameter though some others discussed the formulation and parameterization of other physical science components in the IAMs . In addition, a number of the commenters generally encouraged continued updating of the SC

- CO 2 to maintain the best scientific understanding of the relevant earth system processes as34 new findings emerge. Some c ommenter s stated that EPA did not use the latest climate science findings from the IPCC as part of its assessment of the proposal’s benefits and costs and, in one commenter’s view, there are significant differences between AR5 and AR5 related to climate impacts

. In particular, th ese commenter s stated that " AR5 moderates many of the key findings of AR4 which drives the damage functions used in t he integrated assessment models " and presents excerpts from AR5 and AR4 about five findings (anthropogenic global warming, rate of warming extreme temperatures, equilibrium climate sensitivity, and tropical cyclone activity).

Climate sensitivity. The equ ilibrium climate sensitivity (ECS) parameter is a measure of the climate’s responsiveness to increased concentrations of greenhouse gases in the atmosphere. Specifically, the ECS is the long

- term increase in the annual global

- average surface temperature fr om a sustained doubling of the atmospheric CO2 concentration relative to pre

- industrial levels. C ommenters supported the I nteragency W orking G roup (IWG) approach of calibrating the distribution of Roe and Baker (2007) to the IPCC (2007) Fourth Assessment R eport (AR4) consensus statement on the ECS. However, commenters suggest ed updating this modeling input. C ommenters suggest ed incorporating new research published since the 2010 TSD was released. C ommenters noted that in its Fifth Assessment Report the IPCC has revised its discussion of the likely range of climate sensitivity compared to AR4 (IPC C 2013). C ommenter s said that use of the ECS from AR4 does not satisfy EO 12866 requirements for proposed rules to be based on the best science available. C ommenters pointed to individual papers, such as Otto et al. (2013), which present lower and more constrained probability density functions (pdfs) than either the AR4 or AR5 consensus statements, in support of the commenters’ suggestion that the pdf used by the IWG was biased high. Several commenters noted in a joint letter that the treatment of climate sensitivity was appropriate but that the IWG could go further in highlighting the costs of fundamental uncertainties.

C ommenters voiced general criticisms of the IWG approach to the ECS due to the uncertainty about the shape of the climate sensitivity distribution and the sensitivity of the SCC estimates to the specification of the ECS distribution. C ommenter s suggested that the IPCC has not made progress in r educing uncertainty about climate sensitivity and therefore the IPCC consensus should not be used. C ommenters objected to the IWG use of the Roe and Baker (2007) distribution for the ECS. C ommenters cited Pindyck (2013), stating that feedback loops within the climate system are largely unknown and therefore the shape of the distribution is unknown. C ommenter s suggested that Roe and Baker’s assumption of a normally distributed climate feedback factor may not be theoretically correct, and suggested the use of alternative distributions. The commenter s w ere particularly concerned that the use of a right

- skewed distribution for the ECS would lead to an overestimate of the mean SCC if the ECS distribution would be more appropriately modeled as symmetric, though so me commenter s suggested that the Roe and Baker approach correctly captured the right

- skewed nature of the distribution.

C ommenter s expressed concern about uncertainty and ECS stated that OMB and the IWG should reconsider the substance of its social cost of carbon TSDs as a whole and to take a closer look at the transparency, methodology, and assumptions that th ese commenter s believe create a high level of uncertainty in the resulting estimates of the social cost of carbon.

Other physical science components of the integrated assessment models. We define the physical science components of the models to include the modeling of physical impacts, such as changes35 in mean global temperature or sea level rise. This definition excludes the functions in the models th at translate those physical endpoints into economic damages, which is addressed in the discussion of damage functions in 8.7.2, comment #1

. C ommenters expressed approval of the physical science components of the models but others criticized specific compon ents as being overly simplified or incomplete. For example, some commenter s suggested that the version of the DICE model used may overestimate sea level rise relative to AR5 projections or estimates projected by the MAGICC climate model because of DICE’s r eliance on an outdated semi

empirical methodology that uses models of reduced complexity in conjunction with statistical relationships between sea level and climate forcing. 5 C ommenter s therefore concluded that the DICE overestimates the SCC. The commenter s did not investigate the sea level rise projections from the FUND or the PAGE model, but suggested that such an analysis be carried out prior to making any judgments about the SCC est imates from those models.

A group of commenters noted the need for more explicit representation of the potential for low

probability, high impact " catastrophes, " calling for better modeling of multiple " tipping points " at the climatic thresholds indicated by the most recent scientific literature.

Response 2: All of the comments on the climate science components of the modeling underlying the SC

- CO 2 estimates mirror those submitted to the Office of Management and Budget’s separate comment solicitation on t he SCC (78 FR 70586; November 26, 2013). As a member of the interagency working group ( IWG ) on SC

- CO 2 , EPA has carefully examined and evaluated
comments submitted to OMB’s separate solicitation . EPA has also carefully examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and determined that the IWG response s to the comments on the OMB solicitation address the comments on the climate science components of the modeling underlying the SC

- CO 2

. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates them by reference

. 6 The remainder of this section elaborates on these comments in the context of this rulemaking.

EPA appreciates the commenters’ recommendations for potential opportunitie s to improve the SC

- CO 2 estimates and has considered each one in the context of this rulemaking. EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best ava ilable science and economics. Furthermore, EPA and the other members of the IWG have determined that the SC

CO 2 methodological recommendations require additional research, review, and public comment before it can apply them to a rulemaking context.

5 MAGICC is the Model for the Assessment of Greenhouse Gas Induced Climate Change. For more information see Meinshausen et al. (2011).

6 Referred to as the "OMB Response to Comments on SC

- CO2." See pgs 11 to 17 at ht tps://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf

.36 To help synthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC

- CO 2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to impro ve the SC

- CO 2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine t he technical merits and challenges of potential approaches to improving the SC

- CO 2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer

reviewed literature, will help to ensure that the S C

- CO 2 estimates used by EPA continue to reflect the best available science and methodologies.

After careful evaluation of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- CO 2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO 2 emissions changes into regulatory analysis. Therefore, EPA has presented the current SC

- CO 2 estimates in this rulemaking. 7 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Academies
process.
The remainder of this section provides more detailed responses to the comments and recommendations.

Regarding comments on equilibrium climate sensitivity (ECS), t he EPA is aw are that this is an active area of research and as stated in OMB’s Response to Comments on the SC

- CO 2 , the IWG remains committed to updating the SC

- CO 2 estimates to incorporate new scientific information and accurately reflect the current state of scientif ic uncertainty regarding the ECS. While EPA
agree s with commenters that the ECS distribution, along with other climate modeling inputs to the SCC calculation, should be updated periodically to reflect the latest scientific consensus, care must be exercised in selecting an appropriate range of estimates for this important parameter. Many studies estimating climate sensitivity have been published, based on a variety of approaches (instrumental record, paleoclimate observations, models, etc.). These individual studies report differing values and provide different information. Picking a single study from the high or low end of the range, or even in the middle, will exclude relevant information. A valid representation of uncertainty regarding climate sensitivity should be obtained from a synthesis exercise such as that done by the IPCC that considers the full range of relevant studies.

At the time the 2013 SC

- C O 2 update was released, the most authoritative statement about ECS appeared in the IPCC’s AR4. Since that time, as several commenters noted, the IPCC issued a Fifth Assessment Report that updated its discussion of the likely range of climate sensitivity
comp ared to AR4. The new assessment reduced the low end of the assessed likely range (high

7 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf37 confidence) from 2°C to 1.5°C, but retained the high end of the range at 4.5°C. Unlike in AR4, the new assessment refrained from indicating a central estimate of ECS. Th is assessment is based on a comprehensive review of the scientific literature and reflects improved understanding, the extended temperature record for the atmosphere and oceans, and new estimates of radiative forcing.

Several of the post

- AR4 studies highl ighted by some commenters were cited in the AR5 assessment. In particular, both Aldrin et al. (2012) and Otto et al. (2013) were cited in both Chapter 10 and Chapter 12 of the AR5 Working Group I assessment. Eight of the authors of Otto et al. (2013), incl uding the lead author, were authors of Chapter 12 for AR5’s Working Group I and one was a lead author for the chapter. Hence it is clear that the IPCC considered Otto et al. (2013) in its synthesis of literature on the ECS. More broadly, the AR5 climate se nsitivity distribution likely incorporates much of the literature identified by the commenters. EPA will continue to follow and evaluate the latest science on the equilibrium climate sensitivity

. Furthermore, EPA and the other members of the IWG are seek i ng external expert advice on the technical merits and challenges of potential approaches prior to updating the ECS distribution in future revisions to the SC

- CO 2 estimates, including (but not limited to) using the AR5 climate sensitivity distribution for t he next update of the SC

- CO2

. 8

As discussed in Section II.A of the preamble, RTC section 8.7.1, the 2009 Endangerment Finding, and in the OMB RTC, among other resources, the l inks between CO 2 and temperature are established beyond question by laboratory me asurements, physical theory, paleoclimate observations, instrumental observations, and observations of other planets. Climate change and its impacts, such as sea level rise, have been exhaustively documented, and synthesized internationally by the IPCC and domestically by the U.S. National Climate Assessment. Based on the wide acceptance of these conclusions in the scientific community, EPA believes that: (1) anthropogenic emissions of greenhouse gases are causing atmospheric levels of greenhouse gases in o ur atmosphere to rise to levels unprecedented in human history; (2) the accumulation of greenhouse gases in our atmosphere is exerting a warming effect on the global climate; (3) there are multiple lines of evidence, including increasing average global sur face temperatures, rising ocean temperatures and sea levels, and shrinking ice in glaciers, ice sheets, and the Arctic, all showing that climate change is occurring, and that the rate of climate change in the past few decades has been unusual in the contex t of the past 1000 years; (4) there is compelling evidence that anthropogenic emissions of greenhouse gases are the primary driver of recent observed increases in average global temperature; (5) atmospheric levels of most greenhouse gases are expected to c ontinue to rise for the foreseeable future; and (6) risks and impacts to public health

8 The IWG announced plans to seek independent expert advic e from National Academies of Sciences, Engineering, and Medicine in July 2015, https://www.whitehouse.gov/blog/2015/07/02/estimating

- benefits

- carbon

- dioxide

- emissions

reductions.38 and welfare are expected to grow as climate change continues, and that climate change over this century is expected to be greater compared to observed climate change ove r the past century.

While there are inherent uncertainties associated with modeling climate systems over long time spans, the general circulation models (GCMs) upon which estimates of ECS and other climate science research are based have been extensively evaluated. For example, since 1989 the DOE has had a large program (The Program for Climate Model Diagnosis and Intercomparison) dedicated to evaluating these models.

The ECS parameter is a useful parameter for summarizing the strength of the climate syste m’s response to accumulating GHG concentrations in the atmosphere. However, it is influenced by many highly complex and uncertain natural processes, some of which adjust over very long periods of time. Therefore, persistent uncertainty about the ECS is not surprising. Furthermore, persistent uncertainty does not suggest an absence of useful information. However, EPA does not agree that progress has not been made in reducing this uncertainty. Over the last 30 years the scientific community has elucidated man y aspects of the climate system’s response to GHGs accumulating in the atmosphere. While the AR5 " likely " range is slightly larger than that of AR4, the assessment presented greater confidence in the tails. AR5 found that climate sensitivity is very unlike ly to be greater than 6°C, whereas AR4 stated that the " lack of strong constraints limiting high climate sensitivities prevents the specification of a 95 th percentile bound. " Similarly, while the AR5 and the IPCC’s (2001) Third Assessment Report (TAR) boun ds look similar, the TAR bounds were presented as a range without estimated probabilities.

In response to the commenter s citing Pindyck on climate feedbacks and the shape of the ECS distribution , we agree that potential climate feedbacks and their strength are uncertain. However, the IWG chose a distribution from the peer

- reviewed literature based on its evaluation of the scientific literature and the relatio nship between this distribution and IPCC range of the ECS

. Regarding the skewness of the calibrated ECS distribution, this characteristic is common among the many approaches that have been used to study the ECS distribution and is not unique to the theoret ical approach used by Roe and Baker to define the functional form of their distribution. Consistent with the AR4 dis cussion on limiting the distribution to a range considered possible by experts, such as from 0°C to 10°C, the IWG truncated the distribution at 10 o C (Hegerl 2007, p 719).

EPA disagrees with the comment that " AR5 moderates many of the key findings of AR4. " This response (8.7.2, comment 2) has already discussed in detail EPA’s assessment of the AR5 findings on climate sensitivity and the implications for the SC

- CO2 estimates. The other examples given by the commenter s

— anthropogenic warming, rate of warming, extreme temperatures, and tropical cyclone activity

— are not findings that have been moderated in AR5. In fact, AR5 strengthened the conclusions about attribution of anthropogenic global warming by accounting for pollutants with a cooling effect and by strengthening the likelihood of warming ( " very likely " in AR4 to " extremely likely " in AR5). Similarly, the AR5 findings on tropical cyclone activity strengthened from " suggestions " in AR4 to " virtually certain " increases in frequency and i ntensity of the strongest tropical cyclones in the North Atlantic basin . The remaining two examples given by the commenter s highlight historical information, not projections. EPA further notes that the commenter s ha ve not identified or discussed whether a nd how these particular AR5 findings would affect the SC

- CO 2 estimates.39 In addition, EPA notes that Section II of the preamble discusses many new assessment reports published since the 2009 Endangerment Finding, including the recent USGCRP’s 2014 Third N ational Climate Assessment (NCA3), the IPCC’s 2013

- 4 Fifth Assessment Report (AR5) and IPCC’s 2012 " Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation " (SREX). Section II of the preamble highlights cha nges, such as sea level rise, and cites the confidence in human attribution. The preamble concludes that the " findings of the recent scientific assessments confirm and strengthen the conclusion that greenhouse gases endanger public health, now and in the future. " See also section 8.7.1, comment 3, of this RTC for EPA’s response to comments about use of the latest climate science, including AR5 findings, in analyses separate from the IWG SC

- CO 2 estimates. Section 8.7.2, comment 1, provides a detailed resp onse to comments on the methodology, including the damage functions in the integrated assessment models, used to estimate the SC

- CO 2 . Section 8.7.2, comment 5 provides a detailed response to comments regarding the transparency of the SC

- CO 2 process.

Other physical science components of the integrated assessment models.

A key objective of the IWG was to draw from the insights of the three models while respecting the different approaches to linking GHG emissions and monetized damages taken by modelers in the published literature. After conducting an extensive literature review, the interagency group selected three sets of input parameters (climate sensitivity, socioeconomic and emissions trajectories, and discount rates) to use consistently in each model. All other model features were left unchanged, relying on the model developers’ best estimates and judgments, as informed by the then

- current literature. While the IAMs are periodically updated, the rapid pace of research in the area of climate science means th at at any given time there may be new research that has not yet been incorporated into one or more models. Thus, while a given model may not always reflect the most recent research regarding any given climate subsystem, the IWG concluded that, at the time, the IAMs collectively represented the state of the science by bringing all these systems together into a single framework. 9

A benefit of using an ensemble of three models is that they cover a range of potential outcomes as expressed in the literature. For example the three models used collectively span a range of carbon cycle and climate change responsiveness that reflects the uncertainty in the literature.

With regards to comments on the temperature response function, the past 15 years of observed atmospheric temperatures cannot be compared directly to climate model simulations because (1) observed temperatures were influenced by volcanic eruptions that were not included in simulations because the timing and spatial distribution of eruptions are not known in advance; and (2) the last 15 years of atmospheric temperatures have been strongly influenced by natural

9 As previously noted, EPA is a member of the IWG and has reviewed the IWG modeling decisions in the context of this rulemaking. EPA concurs with the IWG’s conclusion that it is reasonable, and scientifically appropriate, to use the current SC

- CO2 estimates for purposes of regulatory impact analysis, including for this proceeding

.40 climate variability due to oceanic fluctuations, such as the El Niño Southern

- Oscillation; models include this variability, but no attempt is made to synchronize the models’ timing of this variability with observed variability. In other words, while the models incorporate variability around a trend over time, they cannot predict how that variability affects measured temperatures in a specific year.

Regarding the criticisms by commenters of the sea level rise projections in DICE, EPA recognizes that sea level rise projections are also an area of ongoing re search. One key issue involves projections of melt from the Greenland and West Antarctic ice sheets. The IPCC AR5 report notes there is a possibility of sea level rise " substantially above " their best estimate of a likely range because of uncertainties reg arding the response of the Antarctic ice sheet (AR5 Working Group I, Chapter 13). In AR5 the IPCC also discusses semi

- empirical methods, stating a low confidence in projections based on such methods, which calibrate a mathematical model against observation s rather than projecting individual processes. However, the IPCC did not entirely discount these methods. Further supporting the use of semi

- empirical methods, the U.S. National Climate Assessment uses an average of the high end of semi

- empirical projectio ns in order to define their " Intermediate

- High " Scenario (Parris et al., 2012). Therefore, it is reasonable for one out of three models used by the IWG to include some reliance upon semi

empirical methods.

EPA is aware that more sophisticated yet still rel atively simplified climate models, such as MAGICC, could be used to replace the highly simplified climate science components of the three IAMs. However, given the range of climate models available and the technical issues associated with such a change, rep lacing the climate modules or other structural features of the IAMs requires additional investigation before it can be applied to SCC estimation. EPA will continue to follow and evaluate the latest science on climate modeling and, along with other members of the IWG, is seek ing external expert advice on the technical merits and challenges of potential approaches to updating this component of the IAMs in future revisions to the SCC estimates.

We agree with the commenters who suggested the IAMs do not fully capture the impacts associated with changes in climate variability and weather extremes. For example, as discussed in the 2010 TSD, the calibrations in FUND and DICE do not account for increases in climate variability that may occur and would affect the ag ricultural sector . Similarly, we agree that the models’ functional forms may not adequately capture potentially discontinuous " tipping point " behavior in Earth systems. In fact, large

- scale earth system feedback effects (e.g., Arctic sea ice loss, melting permafrost, large scale forest dieback, changing ocean circulation patterns) are not modeled at all in one IAM, and are imperfectly captured in the others. This limitation of the three IAMs is discussed extensively in the 2010 TSD, and again in the 2013 up date. The SC

- CO 2 estimate associated with the 95 th percentile of the distribution based on the 3 percent discount rate is included in the recommended range partly to address this concern. EPA and the other members of the IWG will continue to follow and eva luate the latest science on climate variability and potential tipping points, and seek external expert advice on the technical merits and challenges of potential approaches to improve the representation of these components of the modeling in future revisi ons.41 Comment 3: Many commenters discussed the scope of the SCC estimates, specifically whether damages experienced outside U.S. borders should be considered in domestic regulatory analysis. Commenters that supported use of global SCC estimates explained t hat climate change is a global commons problem because carbon pollution does not remain within one country's borders, and that the use of global damages in the SCC is consistent with the economic theory of the commons. These commenters further stated that if damage estimates are limited to only those within each country's borders, any actions based on those estimates would lead to a collective failure to optimally mitigate GHG emissions. Commenters referred to the importance of this effect by stating that t he consideration of global damages in domestic rulemaking can be based on an expectation of reciprocity from other countries. Commenters stressed the importance of the use of global SCC estimates as a tool in international negotiations. Finally, commenters offered other reasons for considering damages in regions outside of the United States, including liability, national security concerns, trade

- related " spillover effects

, " and the principle in international environmental law of reducing cross

- border harm.

In addition, commenters interpreted use of a global SCC as consistent with Clean Air Act 115. Commenters stated " The U.S. National Environmental Policy Act recognizes 'the worldwide and long

- range character of environmental problems' and requires federal a gencies to include reasonably foreseeable transboundary effects in their environmental impact statements. " " Section 115 of the CAA directs EPA and the states to mitigate U.S. emissions that endanger foreign health and welfare. The global perspective on cli mate costs and benefits required by that provision should inform all regulatory actions developed under the CAA. "

C ommenters, h owever, disagreed with the use of a global SCC estimate and stated that domestic damage estimates should be used instead. Some c ommenters stated that use of a global SCC to compare international benefits and domestic costs was arbitrary and capricious and contrary to law and federal policy. C ommenter s stated they " do not believe EPA has the authority to regulate GHG emissions outs ide the fenceline

. " Some commenters presented assumptions about the U.S. fraction of a global SCC estimate (e.g., U.S. SCC as 7 percent of the global SCC) and used those assumptions to recalculate the climate benefits of the proposal.

Several commenters s tated that use of the global SCC violated section 115 of the Clean Air Act. For example, commenter s stated that Section 115(a) specifically requires that when the Administrator of the EPA " has reason to believe that any air pollutant or pollutants emitted in the U.S. cause or contribute to air pollution which may be reasonably anticipated to endanger public health or welfare in a foreign country or whenever the Secretary of State requests him to do so with respect to pollution which the Secretary of State alleges is of such a nature, the Administrator shall give formal notification thereof to the Governors of the State in which such emissions originate. " " Without such actions, EPA is forbidden from counting these harms or benefits in its analysis. "

Similarl y, other c ommenter s stated that Section 115 of the Clean Air Act outlines EPA's required steps for addressing U.S.

- originated pollution for the purpose of mitigating impact on public health and welfare in foreign countries. The commenter s said that Sectio n 115 clearly states that EPA must formally notify the Governors of the offending States to submit a plan under section 110. The commenter s said that in order for EPA to count international benefits under 111(d) and thus justify its rulemaking, the plain l anguage of Act requires EPA to first list CO2 (and/or other42 GHGs) as a criteria pollutant, establish a limit and then direct States to develop plans and that no such steps have been taken by EPA. The commenter s clarified that as per Section 115, EPA may

on ly proceed with mitigating impacts on countries with which the U.S. has established reciprocity agreements.

In addition, commenters stated that domestic SCC estimates must be used in RIAs to ensure consistency with OMB Circu lar A

- 4 requirements.

Additiona l excerpts from commenters that disagreed with use of a global SCC:

Commenter s also state d " In a statutory purpose statement accompanying the subchapter of which CAA Section 111(d) is a part, Congress made clear that its purpose is to benefit the national environment

- not the world at large. " The commenter s also stated " EPA's reliance on global climate change effects to justify its rule is inconsistent with the agency's former acknowledgment that for rulemaking under the CAA, foreign effects are not releva nt in themselves but only insofar as they impact the U.S. "

Commenter s also state d " EPA attempts to justify its reliance on foreign benefits by the observation that 'we expect other governments to consider the global consequences of their greenhouse gas em issions when setting their own domestic policies.' But of course EPA has no power to control whether foreign countries regulate greenhouse gases at all, much less how they calculate the benefits of their own regulation. " " In the absence of... reciprocal ac tion by other nations... the global benefits of SCC cannot be regarded as a legitimate entry in the benefit

- cost ledger. "

Response 3: The comments regarding the scope of the SC

- CO 2 estimates mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- CO 2 (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO 2 , EPA has carefully examined and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefully examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the scope of SC

- CO 2 estimates and use of the estimates in this RIA. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates them by reference. 10

After careful evaluation of the full range of comments an d associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- CO 2 estimates

10 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 30 to 32 at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf .43 until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current esti mates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO 2 emissions changes into regulatory analysis. Therefore, EPA has presented the

cu rrent SC

- CO 2 estimates in this rulemaking. 11

In addition, the comments regarding consistency with OMB Circular A

- 4 are addressed in 8.7.2, comment 5. The remainder of this section elaborates on these comments in the context of this rulemaking.

EPA agrees with the commenters stating that a focus on global SC

- CO 2 estimates in RIAs is appropriate. As discussed in the 2010 TSD, the IWG determined that a global measure of SC

CO 2 is appropriate in this context because emissions of most greenhouse gases contribut e to damages around the world and the world’s economies are now highly interconnected. To reflect the global nature of the problem, the SC

- CO 2 incorporates the full damages caused by CO 2 emissions and other governments are expected to consider the global c onsequences of their greenhouse gas emissions when setting their own domestic policies.

As stated in the OMB R esponse t o C omments on SC

- CO 2 , if all countries acted independently to set policies based only on the domestic costs and benefits of carbon emiss ions, it would lead to an economically inefficient level of emissions reductions which could be harmful to all countries, including the United States, because each country would be underestimating the full value of its own reductions. This is a classic pub lic goods problem because each country’s reductions benefit everyone else and no country can be excluded from enjoying the benefits of other countries’ reductions, even if it provides no reductions itself. In this situation, the only way to achieve an econ omically efficient level of emissions reductions is for countries to cooperate in providing mutually beneficial reductions beyond the level that would be justified only by their own domestic benefits. By adopting a global estimate of the SC

- CO 2 , the U.S. government can signal its leadership in this effort. In reference to the public good nature of mitigation and its role in foreign relations, thirteen prominent academics noted that these " are compelling reasons to focus on a global [ SC

- C O 2 ] " in a recent article on the SC

- CO 2 (Pizer et al., 2014). In addition, as noted by commenters, there is no bright line between domestic and global damages. Adverse impacts on other countries can have spillover effects on the United States, particularly in the

a reas of national security, international trade, public health and humanitarian concerns.

GHG emissions in the United States will have impacts abroad, some of which may, in turn, affect the United States. For this reason, a purely domestic measure is likel y to understate actual impacts to the United States. Also, as stated above, the EPA and the other members of IWG believes that accounting for global benefits can encourage reciprocal action by other nations, leading ultimately to international cooperation that increases both global and U.S. net benefits

11 See https://www.whitehouse.gov/sites/default/files/om b/inforeg/scc

- tsd

- final

- july

- 2015.pdf44 relative to what could be achieved if each nation considered only its own domestic costs and benefits when determining its climate policies.

Further, as explained in the 2010 TSD, from a technical perspecti ve, the development of a domestic SC

- CO 2 was greatly complicated by the relatively few region

- or country

- specific estimates of the SC

- CO 2 in the literature, and impacts beyond our borders have spillover effects on the United States, particularly in the ar eas of national security, international trade, and public health. As a result, it was only possible to include an " approximate, provisional, and highly speculative " range of 7 to 23 percent for the share of domestic benefits in the 2010 TSD. This
range was based on two strands of evidence: direct domestic estimates resulting from the FUND model, and an alternative approach under which the fraction of GDP lost due to climate change is assumed to be similar across countries.

Regarding the comments on Clean A ir Act Section 115 and the implications for use of a global SC

- CO 2 , EPA notes that these commenters read into section 115 limitations and requirements that do not appear in the statutory text.

Section 115(a) of the Clean Air Act requires the Administrator to give formal notification to the Governor of a State in a very specific and limited circumstances. Specifically, the provision provides: " Whenever the Administrator, upon receipt of reports, surveys or studies from any duly constituted international agency has reason to believe that any air pollutant or pollutants emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country or whenever the Secretary of State requests [her] to do so with respect to such pollution which the Secretary of State alleges is of such a nature, the Administrator shall give formal notification thereof to the Governor of t he State in which such emissions originate. " Section 115(b) further provides that notices issued under 115(a) are deemed to be findings under section 110(a)(2)(H)(ii) of the Clean Air Act and thus any state receiving such a notice must revise its state im plementation plan to address the offending emissions.

Section 115(c), in turn, provides that the section only applies " to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the pre vention or control of air pollution occurring in that country as is given that country by this section. " In other words, unless the Administrator determines a foreign country has given the United States the same rights section 115 gives to foreign countrie s, the Administrator is not required issue any notification that would otherwise be required under 115(a). Contrary to the
commenter s ’ assertion, section 115 does not mention or refer to " reciprocity agreements. " Moreover, section 115(c) does not in any way limit the Administrator’s discretion to act under other statutory provisions. It simply limits the reach of 115(a) by defining which countries are covered by the requirement for the Administrator to give formal notification under that section regardin g pollution originating in the United States that affects health and welfare in a foreign country.

There is also no support in section 115 or any provision of the Clean Air Act for the
commenter s ’ assertion that EPA is forbidden from counting harms or be nefits occurring in other countries without first taking action under section 115. Section 115 requires the Administrator to issue a formal notification in the limited set of specific circumstances outlined above and45 identifies the obligations that flow f rom the issuance of such notifications. It does not, as the
commenter s suggest, include language prohibiting the EPA from considering the impact of U.S. emissions on foreign countries in other contexts. Indeed, the United States has a long history of

wor king together with other countries to address air quality issues. As explained above, the reciprocity provision in section 115(c) merely defines the applicability of section 115. Nothing in the text of the section addresses the extent to which EPA may co nsider or address the impacts beyond its borders that are related to air pollution originating in the United States, or suggests that action under section 115 is a prerequisite to counting international harms and benefits in any analysis.

Finally, there is no support for the assertion that section 115 requires EPA to list CO 2 and/or other GHGs as criteria pollutants and notify state Governors to submit plans under section 110 before taking any action to mitigate the impact of U.S. emissions on public health and welfare in foreign countries or counting international benefits in other rulemaking contexts. Not only does the limitation commenters identify simply not appear in the statutory text, but section 115(d) explicitly retains certain prior recommendation s with respect to pollutants for which NAAQS have not been established. It would be absurd to interpret a section that explicitly retains recommendations relating to the impact of non

- NAAQS pollutants on foreign countries as prohibiting the Administrator f rom considering such impacts unless a NAAQS has been established for the pollutant.

Regarding the comment that EPA lacks authority to regulate GHG emissions outside the fenceline, EPA notes that application of the SC

- CO 2 to estimate the social benefits of emission reductions is entirely separate from regulating emissions. Conducting an economic analysis does not confer any legal or regulatory obligations. See the preamble , including section IV, for discussion about the scope of the final rule and the le gal justification.

As stated in the OMB Response to Comments on SC

- CO2, the IWG concluded that the only way to achieve an efficient allocation of resources for emissions reduction on a global basis is for all countries to base their policies on global es timates of damages

. T he IWG has therefore continue d to recommend the use of global SC

- CO 2 estimates in regulatory impact analyses . EPA agrees with the IWG conclusion and has used the global SC

- CO 2 estimates in the RIA for this rulemaking

.

Comment 4: EP A received comments on the analyses and presentation of uncertainty in the TSD as well as comments regarding the implications of uncertainty for the use of SC

- CO 2 estimates in the RIA.

• Commenter s stated " The [ SC

- C O2] is an important and accepted tool for regulatory policy

- making based on well

- established law and fundamental economics. " " The legal and analytic basis for using the [ SC

- C O2] is clear and well

- established. As a matter of law and economics, uncertainty in the benefits estimates does not mean they should be excluded from regulatory impact analyses. "46 • Commenter s stated that the SC

- CO2 estimates reflect an inadequate treatment of uncertainty and that the modeling does not provide an acceptable range of
accuracy for use in policymaking.

• Commenter s recommended re

- considering the approach used to treat uncertainty in the estimation of the SC

- CO 2 , and referred to the EPRI report, Understanding the Social Cost of Carbon: A Technical Assessment, for details. The re port highlights concerns with the treatment of uncertainties standardized across models (socioeconomic and emissions scenarios, equilibrium climate sensitivity) as well as treatment of model structure uncertainty via use of multiple models and the analysis of model

- specific parameteric uncertainties. Regarding model structure uncertainty, the commenter s found " significant differences in responses across models (e.g., climate change, climate damages, and response sensitivity) that need to be further evaluate d to establish that they are legitimate reflections of uncertainty " . For model specific parametric uncertainties, the report finds substantial inconsistency in the climate change and damage uncertainties considered across models. The models explore very di fferent parametric uncertainty in both components and therefore represent different uncertainty spaces. The USG modeling uses the means from these uncertainties, yet these means do not appear to come from the same statistical population, which is required for averaging. " The commenter s stated that the report finds that there are also additional categories of uncertainty to consider in the modeling (e.g., socioeconomic structure, alternative climate modeling, alternative specifications for 2013 revisions, an d alternative 2300 extrapolations).

• Commenter s recommended a robustnes s evaluation to test the sensitivity of modeling results to alternatives, develop an experimental design that produces results that are robust to alternatives, and to p rovide the public with greater confidence in final SCC estimates. The commenter s stated that they have identified reasonable alternatives to the current modeling and that robustness was not evaluated in the USG SCC exercise.

• The wide range of SC

- CO2 values that EPA and the other IWG members developed is too broad to be useful, but still does not reflect the full range of uncertainty associated with measuring the impacts (both positive and negative) of climate change; and

• Ther e are serious questions regarding the usefulness of a single dollar amount to represent the asserted climate benefits o f rulemakings, particularly given the severe limitations of climate science and the associated uncertainties with estimating the future c osts and benefits of a regulati on's impact on climate change

. "

Response 4: The comments regarding the consideration of uncertainty in SC

- CO 2 estimates mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- C O2 (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO 2 , EPA has carefully examined and evaluated comments submitted to47 OMB’s separate solicitation. EPA has also carefully examined and evaluated all comments

rece ived regarding SC

- CO 2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the process comments summarized in this section. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates them by reference. 12

After careful evaluation of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- CO2 estimates until further upd ates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damag es from incremental CO2 emissions changes into regulatory analysis. Therefore, EPA has presented the current SC

- CO2 estimates in this rulemaking. 13 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves fo rward with the Academies
process.
The remainder of this section elaborates on the uncertainty comments in the context of this rulemaking.

EPA agrees with the comments that supported the rigor of its uncertainty analysis. Uncertainty is inherent in all re gulatory impact analysis. It is especially salient in regards to the SC

- CO2 estimates because of their broad spatial and temporal dimensions. In addition to conducting Monte Carlo analysis for a subset of key parameters, the EPA and the other members of th e IWG included extensive discussion of uncertainty in the TSDs, and the documentation for the individual IAMs themselves contains additional discussion of the assumptions and uncertainties in the models. The 2010 TSD and the updated 2013 TSD provided visua l depictions of the distributions of the SC

- CO2 estimates in addition to detailed statistics including percentiles and higher order moments. In addition to the extensive information provided in the TSDs, EPA has provided the full range of model results to outside researchers upon request and will continue to do so.

Regarding comments on uncertainty in the context of the socioeconomic

- emission scenarios, see 8.7.2, comment 1.

The 2010 TSD reports SC

- CO2 estimates out to one decimal place (i.e., at least two significant digits) and the current TSD reports to the nearest dollar (i.e., two or three significant digits, depending on the year and discount rate/statistic). EPA and the other members of the IWG chose not to use decimal places in the 2013 TSD to avoid the impression of artificial precision but will

12 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 28 to 30

at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf

.

13 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf48 also explore presentation with a consistent number of significant digits. EPA and the other IWG members welcome the recommend ations to strengthen the character ization of uncertainty and plan to seek external expert advice on the technical merits and challenges of potential approaches to improve the characterization and analysis of uncertainty in future updates.

Regarding comment s on the modeling of uncertainty in the SC

- CO 2 analysis, including the uncertainty expl icitly represented in the IAMs and whether it capture s the full range of uncertainty of the " true " value of the SC

- CO 2 , see section 8.7.2, comment 8

. EPA disagrees with the comments stating that the SC

- CO 2 is neither useful nor appropriate because of uncertainty, the broad range of estimates. EPA also disagrees that it is inappropriate to try to value the impacts of reductions in CO 2 emissions. EPA notes that in 2007, the Ninth Circuit Court remanded a fuel economy rule to DOT for failing to monetize the benefits of the CO2 emissions reductions in its regulatory impact analysis, noting that " the value of carbon emissions reduction is certainly not zero. "

All regulatory impact analysis involves uncertainty. EPA acknowledges uncertainty in the SC

C O 2 estimates but disagrees that the uncertainty is so great as to undermine use of the SC

- C O 2 estimates in regulatory impact analysis. The uncertainty in the SC

- C O 2 estimates is fully acknowledged and comprehensively discussed in the TSDs and supporting academic literature. While uncertainty must be acknowledged and addressed in regulatory impact analyses, even an uncertain analysis provides useful information to decision makers and the public. For example, if an analysis shows that benefits of a policy option consistently do (or do not) justify costs even over a broad range of estimates, this may increase confidence in the robustness of this conclusion. Conversely, if choices amo ng parameter estimates within a plausible range significantly affect the conclusions of the analysis, this is an important consideration in deciding how to weigh the analytical results in the decision making process. The presence of uncertainty is thus not a reason to exclude the best available estimates of quantified/monetized benefits, as long as it is appropriately characterized. Rather, good regulatory practice requires that agencies use the best available scientific, technical and economic information to derive the best estimates of costs and benefits that they can, and then communicate to the public the limitations and uncertainties of the analyses. The RIA for this rulemaking and the SC

- C O 2 TSDs clearly discuss the limitations and uncertainties of the analysis. As noted in the RIA and TSDs, EPA is committed to periodic updates in the estimates to reflect ongoing developments in our understanding of the science and economics of climate change, including the treatment of uncertainty.

Comment 5: Commenters either voiced support for or criticized particular aspects of the interagency process used to develop the SC

- CO2 estimates. Process issues raised included legal/statutory authority for issuing the estimates and consistency with applicable OMB gu idance documents, transparency, opportunity for public comment. The commenter s that criticized the49 process used to develop the SC

- CO2 estimates incorporated by reference the SC

- CO2 comments it had submitted to OMB in response to the OMB SC

- CO 2 comment soli citation. 14

Legal/statutory authority for issuing the SC

- CO2 estimates

• Commenters stated that the SCC is an " agency action " as defined by 5 USC 551(13) of the APA and by itself can be considered a " rule " as defined by 5 USC 551(4).

• Commenters stated that given EPA's usage of the SCC, the commenter recommended that the new Congress use procedural mechanisms of the Congressional Review Act (CRA) to enable effective oversight of the SC

- C O2

.

• Commenters noted that the CRA explicitly establishes that it is the C ongress that determines the scope of its provisions to rules, not EPA, and that it may do so without interference from the Executive or the Judiciary. Commenters noted that the CRA can enable deliberation by both Houses of Congress and floor votes on ident ifiable rules by way of joint resolutions of disapproval and that filibusters in the Senate may be avoided. Commenters also noted that while such resolutions may be approved or vetoed by the President, the respective floor votes may be used by the Congress in its deliberations over what appropriations may or may not be used by corresponding agency actions to administer and enforce the respective rule.

Consistency with applicable OMB guidance documents, transparency, opportunity for public
comment

• Commenter s stated " The analytic work of the IWG has been transparent. The 2010 TSD set out in detail the IWG's decision

- making process with respect to how it ass essed and employed the models. " " The 2013 TSD also establishes that the increase in the SCC estimate from 2010 to 2013 resulted solely from updates to three underlying IAMs. " " Furthermore, the GAO found that 'the working group's processes and methods refle cted the following three principles: Used

consensus

- based decision making, Relied on existing academi c literature and models, and Took steps to disclose limitations and incorporate new information. "

" The OMB last year created a further opportunity for publ ic comments and transparent review specifically on the SCC. "

• Other c ommenters objected to EPA's use o f SCC estimates to justify regulation because of the nontransparent manner and methodology as well as the inconclusive results of the analysis. The commenter s stated that the choice of non

reviewed IAMs and associated input assumptions used to develop the SCC are

14 See OMB

- 2013

- 0007

- 009150 arbitrary, and that discount rates were also applied inconsistently. The
commenter s , in conjunction with other entities, identified the following issues with the SCC estimates:

− " The estimates were derived from a closed and nontransparent process;

− The process deviated from established OMB guidelines by not analyzing a seven percent discount rate and by not providing domestic SCC values;

− The government's choice of inputs to the IAMs, and the choice of IAMs themselves, that were used to derive the SC C estimates did not undergo peer review or public c omment and are highly uncertain. Commenters stated that EPA's use of the 2013 Technical support Document for the Social Cost of Carbon for Regulatory Impact Analysis (SCC) under E.O. 12866 is foundational and unacceptably flawed.

• Commenter s stated that stakeholder engagement has been absent at critical definitional stages, such as initial modeling parameters and assumptions used to develop SCC values, and that must allow stakeholders the opportunity to provide public comments during the entir e development of SCC values.

• Commenter s state d " The EPA's cost benefit analysis is also problematic because it is based in part upon SCC estimates which have not gone through a rulemaking process or been subject to the rigors of notice, public comment, an d peer review. "

• Commenter s stated that " the proposed rule is a violation of federal law and is counter to the public's interest " because " Executive Order 12866 clearly states, that among other things, agencies should assess all costs and benefits. " " First

, EPA has incorporated OMB draft estimates of the SCC for use in the CPP but they have yet to go through either public or peer review. "

• Commenter s stated " EPA must forego use of the SCC until there is full peer review and an opportunity for public comment on all aspects of the SCC. "

" Throughout the 2009

- 2013 process, the IWG repeatedly notes the tremendous uncertainties involved with trying to assess future damages from climate change and how to assess the true environmental costs in order to assign a value to the SCC to address potential future damages. Yet, the IWG proceeded without reaching out for greater public and stakeholder input on how to appropriately address these great uncertainties. "

• " Second, in terms of practical implementation, use of the SCC has lacked transparency and has violated long

- standing OMB guidelines. "

• Commenter s stated the reliance on SCC to estimate the benefits of reducing CO2 emissions " is arbitrary and capricious due to multiple flaws in OMB's analysis. Among the flaws in the [SCC] are the government's opaque process and lack of transparency in formulating the [SCC] estimates, reliance upon modeling with51 inputs that lacked peer review, the failure to disclose and quantify key uncertainties involved in the modeling, the failure to incorporate benefits associated with increased temperature, the reliance on low discount rates that inflate benefits compared to the 7

- 10% discount rates at which many business decisions are made, the failure to apply present value adjustments to future costs and benefits, and the sue of a global benefit estimate that severely limits the SCC's utility to determining possible costs to the United States. "

• Commenter s expressed concern that this modeling analysis lacks transparency and grossly overstates the benefit of this action on the global environment. "

• Commenter s state d " Further, the SCC is predicated upon as assumptions of global rather than domestic benefits, which a recent GAO report indicated was contrary to guidance requiring domestic estimates. "

• Commenter s state d that " EPA's SCC estimates fail in terms of process and transparency. EPA's SCC estimates fail to comply with guidance for developing influential policy

- relevant information under the IQA. EPA's SCC estimates are the product of an opaque process and any pretensions to their supposed accuracy (and therefore usefulness in policy

- making) are unsupportable. "

• Commenter s state d " EPA personnel made the SCC estimates modeling runs and it is the EPA that is reviewing and compiling the comments whi le shielding itself behind an ad hoc IWG being resourced almost entirely by EPA. " " EPA deprives the IWG, OMB and the other executive rulemaking agencies of the benefit of any public input on the critical decisions, inputs, and assumptions that form the bas is of the SCC estimates. " " The SCC estimates are inconsistent with the Administration's stated goals for transparency in scientific information. "

• Commenter s state d

, " The need for external peer review is even more compelling due to EPA's use of its own unsu bstantiated methodology in the SCC estimates. " The IAM damage functions, which drive the estimates, are entirely speculative. It is not clear which model EPA prefers and why it is preferable. " " EPA's process of selecting the models and input assumptions, i ncluding much of the basic information underlying these decisions, has been shielded from public scrutiny. "

" Because it is a highly influential scientific document , EPA's SCC estimates are subject to the highest standards under its own peer review handbook under the IQA. Further, EPA combined three separate IAMs into a distinct methodology in its SCC estimates. EPA should comply with the IQA and President Obama's Scientific Integrity directive by submitting its SCC estimates and inputs and assumptions for external and independent peer review. "

• Commenter s state d " EPA in appropriately relied on questionable SCC estimates to justify the proposal. The estimates were derived throu gh an opaque process and used IAMs that were not peer reviewed or subject to publi c comment. "52 • Commenter s state d " The EPA's cost

- benefit analysis is also problematic because it is based in part upon SCC estimates which have not gone through a rulemaking process or been subject to the rigors of notice, public comment, and peer review. The lack of transparency and data quality surrounding the SCC estimates should automatically disqualify them from use in any rulemaking process until th ese problems can be a ddressed. "

• Commenter s claim ed " EPA overestimates the climate benefits of the propos ed ESPS regulation " and provided the following criticism of the SCC estimates: (1) Lack of transparency and peer review in the process by whi ch the estimates were generated and (2) IWG should provide all data, models, assumptions, and analysis relied on to arrive at the SCC estimates

. Response 5: The comments regarding the process issues mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- CO 2 (78 FR 70586; November 26, 2013). As a member of the interagenc y working group (IWG) on SC

- CO 2 , EPA has carefully examined and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefully examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and determine d that the IWG responses to the comments on the OMB solicitation address the process comments summarized in this section. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates them by reference. 15

After careful evalua tion of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- C O 2 estimates until further updates can be made to reflect forthcoming guidance from the Academies . EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO 2 emissions changes into regulatory analysis. Therefore, EPA has presented the
current SC

- CO 2 estimates in this rulemaking. 16 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Academies
process.
See section 8.7.2, comment 3, for EPA’s detailed response to comments on the use of a global versus domestic SCC. See section 8.7.2, comment 7, for EPA’s detailed response to comments about the selection of the discount rate. See also EPA’s detailed resp onse to comments on the IAMs and damage functions in 8.7.2, comment 1, EPA’s response to comments on uncertainty in

15 Referred to as the "OMB Respon se to Comments on SC

- CO2." In particular, see pgs 34 to 41 at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf

. 16 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 201 5.pdf53 8.7.2, comment 4

, and EPA’s response to comments regarding the application of the SC

- CO2 estimates to this rulemaking in 8.7.2, comment 8.

T he remainder of this section elaborates on the process comments in the context of this rulemaking.

Legal/statutory authority for issuing the SC

- CO2 estimates

EPA agrees with commenters who believe that federal agencies have legal authority to develop these estimates, and notes that the IWG was cognizant of the Ninth Circuit decision referenced by these commenters when it decided to do so. EPA does not agree that the IWG’s issuance of the SC

- CO2 estimates constituted an APA r ulemaking. As noted in the OMB Response to Comments on SC

- CO2, t he IWG did not agree with comments that issuance of the SCC estimates constitutes an APA rule making (page 34). The APA definition of a rule is " an agency statement of general or particular a pplicability and future effect designed to implement, interpret, or prescribe law or policy. " The SCC estimates are not designed to implement, interpret, or prescribe law or policy. Rather they are intended to provide guidance to agencies on a science

base d methodology for estimating the benefits of CO2 reductions in regulatory impact analysis.

EPA notes that OMB has long

- established authority to oversee the regulatory review process, including preparation of regulatory impact analyses. OMB’s authority in this area is contained in Executive Orders 12866 and 13563, among others, and has been acknowledged by Congress in a series of statutes, including the Small Business Regulatory Enforcement and Fairness Act, the Congressional Review Act, the Information Qua lity Act, and the Regulatory Right to Know Act. It is fully consistent with this authority for OMB to offer guidance to agencies on best practices for conducting regulatory impact analysis, as it did, for example, in issuing Circular A

- 4. In the case of th e SC

- CO2 estimates and underlying TSDs, OMB determined that it was appropriate to exercise this authority through a consensus

- based process involving a broad range of agencies that may issue rules affecting CO2 emissions.

The TSDs explain in detail the fac tual and policy basis for all of the various methodological choices involved in developing the SCC estimates. The IAMs are documented in the scientific literature. In addition, EPA has assisted interested members of the public in obtaining additional infor mation on the workings of the models. It has also provided full technical details of its own use of the models, including output of model runs, to interested parties upon request. However, because the SC

- C O 2 estimates are not a rule, as a legal matter they are not subject to the arbitrary and capricious standard of the APA.

Consistency with applicable OMB guidance documents, transparency, opportunity for public

comment
EPA agrees with the commenters that concluded the analytic work of the IWG has been
trans parent and provided clear examples in support of this conclusion. As discussed below, EPA disagrees with the comments that (1) the process to develop the SC

- CO2 was non

- transparent and (2) that this process was inconsistent with the Administration’s goals for transparency in scientific information.54 Furthermore, EPA strongly disagrees with the claim that the Agency has not provided information necessary to understand the SC

- CO2 estimates and that it " deprives the IWG, OMB and other executive rulemaking agencies of the benefit of any public input on the critical decisions, inputs, and assumptions that form the basis of the SCC estimates. " First, EPA notes that the estimates and supporting TSDs are developed and issued through a consensus based process in volving the entire working group. Second, EPA has assisted individual requestors in obtaining more detailed information about the modeling. For example, one requestor noted publically that the EPA " modelers have been very open, collegial, and helpful. " 17 EP A has also responded to numerous letters from members of Congress regarding the SC

- CO2 estimates as well as requests under FOIA. 18

In particular

, EPA believes that the process was inclusive, transparent, and appropriately considered public input. The TSDs f ully document the methodology used to develop the estimates and the considerations that led the IWG to adopt this methodology. While the details of the IWG’s internal processes were not discussed in the TSDs, this is common for most government (and non

- gov ernment) documents. Such details were not considered germane to the public’s understanding of the SC

- CO2 estimates and the methodology used to produce them, but a general overview is provided here.

In developing the 2010 estimates, the EPA and other member s of the IWG met frequently in the year preceding the release of the February 2010 TSD. For the 2013 update, only a few meetings were needed because the group decided to make no changes beyond incorporating the most recent versions of the IAMs. IWG members , in particular professional economic staff with modeling expertise oversaw the primary modeling and calculations for both the 2010 and 2013 SCC estimates using the most recent versions of the three IAMs available at the time. To develop the 2010 estimates , the staff members ran two of the three models and contracted with the developer of the third model to perform those runs. The contractor did not participate in any of the interagency meetings but rather received instructions for how to conduct the model runs (e.g., specification of the three sets of input assumptions as determined by the working group). The staff members ran all three models to develop the 2013 estimates. Decision making for both the 2010 and 2013 processes was by consensus of IWG members . The details of internal discussions are deliberative, but the discussions were generally technical in nature and the issues discussed and conclusions reached are well documented in the TSDs. Regarding the transparency of the

17 See http://dailysignal.com/2013/11/06/white

- house

- reopens

- the

- scc/

18 For example, January 16, 2014 letter from Joel Beauvais, Associate Administrator, to Senator Vitter. EPA also responded to FOIA requests submitted by Sidley and Austin (EPA

- HQ

- 20 13

- 009517, EPA

- HQ

- 2013

- 009518, EPA

- HQ

- 2013

- 009523).55 underlying models themselves, the IWG notes that they are well documented in the academic literature.

The Government Accountability Office (GAO) also completed a review of the process used to develop the SCC estimates. In its 2014 report, GAO concluded that according to IWG participan ts, all major issues discussed were documented in the TSDs, which is consistent with Federal standards for internal control, and the processes and methods used were based on the principles of (1) consensus

- based decision

- making, (2) reliance on existing ac ademic literature and modeling, and (3) disclosure of limitations and incorporation of new information through consideration of public comments and revision of the estimates as updated research became available. 19 Furthermore, the level of documentation fo r this interagency exercise was not found to be unique to this working group. The GAO report confirms that interagency working groups use a variety of mechanisms to implement interagency collaborative efforts, including temporary working groups, and that not all collaborative arrangements, particularly those that are informal, need to be documented through written guidance and agreements.

Regarding the explanation in the TSD for the 2013 revisions, no changes were made to the input assumptions developed by the IWG between the 2010 and 2013 estimates. The only changes were those made by the model developers themselves to the underlying models, which are documented in the academic literature. To assist the public in understanding these changes, the 2013 TSD p rovides a summary of the most important ones, as well as references to the relevant literature where more detailed information can be found. As with the 2010 TSD, the IWG did not attempt to evaluate the modeling choices made by the modelers. Rather, by sel ecting the three

" most widely used impact assessment models " (NAS, 2010), the IWG intended to reflect a reasonable range of modeling choices and approaches that collectively reflect the current literature on the estimation of damages from CO2 emissions. As explained in the 2010 TSD:

The parameters and assumptions embedded in the three models vary widely. A key objective of the interagency process was to enable a consistent exploration of the three models while respecting the different approaches to quantif ying damages taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: climate sensitivity, socio

- economic and emissions trajectories, and discount rates...All other model features were left unchanged, relying on the model developers’ best estimates and judgments...The sensitivity of the results to other aspects of the models (e.g. the carbon cycle or damage function) is also important to explore in the context of futur e revisions to the SCC but has not been incorporated into these estimates.

Accordingly, the IWG did not attempt to explain in detail how the damage functions in the models were constructed or their strengths and weaknesses, either for the earlier model ver sions used in the 2010 estimates or for the updated versions used for the 2013 estimates. Rather, stakeholders who are interested in these details are encouraged to consult the model

19 See http://www.gao.gov/products/GAO

- 14

- 663

.56 documentation and the related academic literature referenced in the TSDs, as well as the model developers themselves. As noted in the OMB Response to Comments on SC

- CO2, t he IWG accepts the point that clearer citations to specific model versions and revisions would be helpful and will attempt to address this in the next update of the TSD.

Regarding opportunities for public comment, EPA notes that such opportunities have been provided on all aspects of the SCC estimates in the interim estimates (2009) selected by the IWG and in the numerous proposed rules, including the proposal for this rulemaking, issued by EPA since February 2010 that made use of the estimates. As a general practice, EPA requests comments on all aspects of the regulatory impact analysis, thereby providing ample opportunity for the public to comment on SC

- CO2 es timates used in these analyses. These comments helped inform the development of the 2013 revised estimates. In addition, OMB provided a stand

- alone comment period on the 2013 estimates.

Regarding the adequacy of the information provided to the public as a basis for comment, the TSDs provide a complete record of the methodology and assumptions used to develop the SCC estimates, including references to the academic literature. As previously noted, independent analysts have sought and received information fro m EPA allowing them to implement the IWG’s SC

- CO2 approach and modify it further if they choose. Additional documentation is available in the academic literature on the IAMs themselves.

W ith regard to peer review, the assumptions and models employed in gen erating the SC

- C O2 estimates are all drawn from the peer

- reviewed academic literature. To further strengthen the robu stness of the SCC estimate, EPA and the other members of the IWG plan to seek external expert advice on technical opportunities to improve the SCC estimates in future updates, including many of the approaches suggested by commenters and peer

- reviewed literature, and summarized in this document.

Regarding comments that the estimates not be used until a future update that corrects the
commenter s’ perceived flaws is completed, EPA does not feel that it is appropriate to withdraw the current estimates. As previously noted, EPA has carefully examined and evaluated the full range of comments and associated technical issues described in section 8.7. 2, and determined that it will continue to use the current SC

- CO2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO2 emissions changes into regulatory analysis. EPA will continue to consider these comments and will share the recommendations with the IWG a s it moves forward with the Academies process.

EPA disagrees that the TSDs and SC

- CO2 estimates are inconsistent with OMB and EPA guidance, including OMB Circular A

- 4 and guidelines under the Information Quality Act. To ensure that the SC

- CO2 methodology is transparent, the TSDs are comprehensive and technically rigorous in explaining the sources of data, the assumptions employed, the analytic methods applied, and the statistical assumptions employed. To ensure that the results are reproducible, EPA and ot her IWG members have provided technical assistance and modeling results to external stakeholders upon request.57 Circular A

- 4 is a living document, which may be updated as appropriate to reflect new developments and unforeseen issues. OMB was fully involved in the development of the SC

CO2 estimates as a working group co

- chair and supports the recommendations regarding the discount rate and the focus on global damages. The departure from the standard discount rate recommendations in Circular A

- 4 is explained in detail in the TSDs and in Section 8.7.2, comment 7, of this document. Briefly, the use of 7 percent is not considered appropriate for intergenerational discounting. There is wide support for this view in the academic literature, and it is recognized in Circular A

- 4 itself. The emphasis on global rather than domestic damages is also explained in detail in the TSDs. Beyond the fact that good methodologies for estimating domestic damages do not currently exist, basing decisions on only the domestic damages from carbon emissions will lead to an inefficient allocation of resources to reducing them, especially if all countries adopt a similarly short

- sighted approach. An efficient outcome can only be achieved if all countries consider the full costs and benefi ts of their actions; the United States continues to be a leader in working to establish such a regime internationally.

In addition, consistent EPA

- wide implementation of its peer review and information quality act guidelines has been an agency priority for many years. The most recent document describing this EPA guidance, Guidance for Evaluating and Documenting the Quality of Existing Scientific and Technical Information , was issued in December 2012 as an addendum to a 2003 EPA guidance document entitled, A Summary of General Assessment Factors for Evaluating the Quality of Scientific and Technical Information . The December 2012 addendum does not create new standards for assessing and accepting data from other organizations

– the Agency’s existing informati on quality guidance continues to be applied to previous and future actions. Rather, the December 2012 addendum references EPA’s comprehensive existing information quality guidance and creates a consistent Agency

- wide approach for reviewing and documenting the use of existing scientific and technical information from other organizations.

The 2010 TSD for the SC

- CO2 estimates provides documentation of the interagency decisions and the 2013 TSD documents the technical update. Consistent with EPA’s 2003 data q uality guidance document and the December 2012 addendum referenced above, the 2010 and 2013 TSDs for the SC

- CO2 estimates describe the type and quality of information used to estimate the social cost of carbon as well as the sources for the information use d (documentation of modeling inputs

— e.g., climate sensitivity and socioeconomic scenarios

— in the peer reviewed literature). The 2010 and 2013 TSDs also provide exhaustive documentation of how the IWG ’s review identified, evaluated, and adopted the data, as sumptions, and analytical framework used to develop the SC

- C O2 estimates. Furthermore, the IAMs used to develop the IWG SC

- C O2 estimates are documented within the peer reviewed literature and source code is available on the model developers’ websites or u pon request from the relevant developer.

Finally, commenters significantly misstate the law regarding both the rights afforded under the Data Quality Act and the nature of guidance implementing it. First, Prime Time Int’l Inc. v. Vilsack, 599 F.3d 678, 685 (D.C. Cir. 2010) does not stand for the proposition that IQA claims are judicially reviewable, contrary to commenters’ assertions. The case makes no such statement, and the D.C. Circuit has indicated otherwise by its citation, in State of Mississippi, of Salt Institute’s holding that such clai ms are not reviewable (see text above). See also Mississippi Comm’n on Environmental Quality v. EPA, No. 12

- 1309 at n. 29, 2015 WL 3461262, (D.C. Cir.58 June 2, 2015) noting that Prime Time dismissed an IQA challenge " without addressing argument that the st atute creates no legal rights in third parties " , and, as quoted above, stated that " almost every court that has addressed an Information Quality Act challenge has held that the statute ‘creates no legal rights in any third parties’ " (quoting Salt Institute) ). The commenter s also fail to acknowledge all of the other cases uniformly rejecting this claim, and indeed, fail to acknowledge the text of the IQA itself. See Styrene Info. & Research Ctr., Inc. v. Sebelius, 944 F. Supp. 2d 71, at 82 (D.D.C. 2013) (co ncluding " that the IQA and OMB guidelines do not provide judicially manageable standards); Harkonen v. U.S. Dept. of Justice, 2012 U.S. Dist. LEXIS 171415, at **30

– 36 (N.D. Cal. 2012) (dismissing argument that D.C. Circuit reached the merits of an IQA clai m in Prime Time); Family Farm Alliance v. Salazar, 749 F. Supp. 2d 1083, 1096

– 1100 (E.D. Cal. 2010) (rejecting argument that D.C. Circuit in Prime Time found an implicit right of action under the IQA).

The commenter s also read Prime Time as holding that the OMB Guidelines are binding legislative rules. Guidelines are just that: they provide assistance and are not binding. Describing these OMB Guidelines, the D.C. Circuit noted that the Guidelines provide " ‘policy and procedural guidance’ " , are meant to be " flexible " and are to be implemented differently by different agencies accounting for circumstances. State of Mississippi, 744 F.3d at 1347; see Styrene Info. & Research Ctr, Inc., 944 F. Supp. 2d at 82. State of Mississippi antedates Prime Time. EPA consequently believes that the OMB Guidelines are not binding legislative rules.

Nor are EPA’s Peer Review guidelines binding legislative rules. EPA first issued its Peer Review Policy in 1993, and in 1998 issued its Peer Review Handbook to provide non

- binding guidance for implementation of the Peer Review Policy. In 2004, OMB issued its Final Information Quality Bulletin for Peer Review (OMB Bulletin) to provide government

- wide guidance to enhance the practice of peer review. EPA subsequently updated i ts Peer Review Policy and Peer Review Handbook to incorporate the provisions of the OMB Bulletin. EPA’s IQGs, Peer Review Policy, and Peer Review Handbook do not bind the Agency, but instead guide EPA’s exercise of discretion when making decisions about in formation quality and peer review. API v. EPA, 684 F. 3d 1342, 1348 (D.C. Cir. 2012) (chastising industry petitioners for characterizing the EPA peer review guidance as binding ( " perhaps the API should have had its brief peer

- reviewed " ); State of Mississip pi v. EPA, 744 F.3d at 1347 (D.C. Cir. 2013). The suggestion in the comments that EPA’s Inspector General has decreed that the Peer Review guidance is binding both mischaracterizes the IG’s statements and that Office’s function. It does not determine the legal status of agency documents, much less countermand the holding of the D.C. Circuit just cited.

Comment 6: Commenters disagreed about whether the integrated assessment models overestimate or underestimate CO 2 fertilization effects in the agriculture and forestry sectors. For example, commenter s wrote " only one of the three IAMs used by the IWG has any substantial impact from CO 2 fertilization, and the one that does, underestimates the effect by approximately 2

- 3 times, " referencing Idso (2013). Howeve r , other commenter s argued that " the models do not reflect recent research on agricultural changes, which suggests that CO 2 fertilization is overestimated, particularly in the FUND model, and that much, if not all, of the fertilization benefits may be canc elled out by negative impacts on agriculture. "59 Some commenter s also stated that the SCC severely underestimates the " greening " effect and that only one of the three models included in the SCC even addresses it.

Response 6: The comments regarding CO 2 fertilization effects in the agriculture and forestry
sectors and " greening effect " issues mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- CO 2 (78 FR 70586; November 26, 2013). As a member of the in teragency working group (IWG) on SC

- CO 2 , EPA has carefully examined and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefully examined and evaluated all comments received regarding SC

- CO 2 through this rulemaking process and d etermined that the IWG responses to the comments on the OMB solicitation address the CO 2 fertilization effects in the agriculture and forestry sectors and " greening effect " issues summarized in this section. Specifically, EPA concurs with the IWG’s interag ency working group’s response to these comments and hereby incorporates them by reference. 20

After careful evaluation of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- CO 2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO 2 emissions changes into regulatory analysis. Therefore, EPA has presented the current SC

- CO 2 estimates in this rulemaking. 21 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Academies
process.
The remainder of this section elaborates on the comments in the context of this rulemaking.

As noted in the OMB Response to Comments on SC

- CO2, t o date, the IWG has accepted the models as currently constituted, and omitted any damages or beneficial effects that the model developers themselves do not include. The IWG recognizes that none of the three IAMs fully incorporates all climate change impacts, either positive or negativ e. Some of the effects referenced by commenters (e.g., " catastrophic " effects, disease, and CO2 fertilization) are explicitly modeled in the damage functions of one or more of the current models (although the treatment may not be complete), and the model d evelopers continue to update their models as new research becomes available. In fact, the IWG undertook the 2013 revision because of updates to the models, which include new or enhanced representation of certain impacts, such as sea level rise damages. In addition, some of the categories mentioned by commenters are currently speculative or cannot be incorporated into the damage function for lack of appropriate data. Using an ensemble of three different models was intended to, at least partially, address the

20 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 7

- 11 at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- re sponse

- to

- comments

- final

july

- 2015.pdf.

21 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf60 fact that no single model includes all of the impacts. We recognize that there may be effects that none of the three selected models addresses (e.g., impacts from ocean acidification) or that are likely not fully captured (e.g. catastrophic effects).

EPA also recognizes that the impacts of climate change on agriculture is an area of active research and that methodological and data challenges persist. As a result there is uncertainty as to the magnitude of these impacts and the role of interactions between changes in the climate and other factors, such as CO 2 fertilization, temperature, precipitation, ozone, pests, etc. Additionally, these effects are likely to vary widely across regions and crops. However, with high confidence the IPCC (2013) stated in its Fifth Assessment Report (AR5) that " [b]ased on
many s tudies covering a wide range of regions and crops, negative impacts of climate change on crop yields have been more common than positive impacts. " As noted above, the IWG’s approach to date has been to rely on the damage functions included in the three IAM s by their developers.

EPA agrees that it is important to update the SC

- C O2 periodically to incorporate improvements in the understanding of greenhouse gas emissions impacts and will continue to follow and evaluate the latest science on impact categories t hat are omitted or not fully addressed in the IAMs. Also, EPA and the other members of the IWG will seek external expert advice on the technical merits and challenges of potential approaches to update the damage functions in future revisions to the SC

- C O2 estimates.

See also 8.7.1, comment 8, for EPA’s response to comments about carbon fertilization, including EPA’s general treatment of the impact of increased CO2 on plant growth and about treatment of CO2 fertilization in models.

Comment 7: Numerous comme nters discussed the discount rates used to estimate the SC

- CO2. Some commenters stated that it would be appropriate to include a 7 percent discount rate in the range used to estimate the SCC while others stated that the central SC

- CO2 estimate should be ba sed on a discount rate lower than 3 percent or on a rate that declines over time

. Recommendations for a 7 percent discount rate

Most commenters who made this comment cited OMB’s Circular A

- 4, which identifies 3 percent and 7 percent as appropriate discount rates for regulatory impact analysis conducted pursuant to Executive Order 12866. A few commenters offered more specific rationales for using a higher discount rate. Some commenter s noted that in the United States market interest rates of around 7 percent per year have typically been associated with per capita GDP growth rates of around 1.5 percent per year, and the socio

- economic scenarios used in estimating the SCC assume per capita GDP growth rates at least this high. O ther commenter s noted that low dis count rates place relatively more weight on outcomes further in the future, which are more uncertain than near term outcomes. Several commenters indicated that a 7 percent discount rate is appropriate because it represents a better estimate of the opportun ity cost of capital investments that would be displaced under compliance with a potential regulation to mitigate CO2 emissions.61 A couple of commenters claimed that EPA presents climate benefits figures in the preamble at only the 3 percent discount rate ra ther than at all four discount rates , including the 5 percent rate, recommended by the IWG.

Recommendations for lower discount rates

Some commenters recommended a declining discount rate; they emphasized discount rate uncertainty and cited research by Weitzman (2001), Newell and Pizer (2003), and Arrow et al. (2013) on this topic, noting that these studies show that under persistent uncertainty about the discount rate, and/or economic growth, the maximization of expected net present value implies a disc ount rate that declines over time.

Commenter also state d " the discount rates used in the modeling platforms minimize the SCC estimates, as they do not accord a sufficient measure of equity between current and future generations. Rather, presume a constant measure of positive economic growth even though the models predict significant GDP losses due to climate change. "

Several commenters noted that uncertainty about future economic growth rates implies that future benefits and costs should be discounted to th e present at a rate lower than what would be appropriate in t he absence of uncertainty

. Other discounting comments

Some commenter s disagreed with applying different discount rates to benefit estimates for CO2 emission reductions than to the estimates for other emissions, concluding that this treatment causes a bias in the economic analysis.

Response 7: The comments regarding discount rates applied to the SC

- CO2 estimates mirror those submitted to the Office of Management and Budget’s separate comment sol icitation on the SCC (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO2, EPA has carefully examined and evaluated comments submitted to OMB’s separate solicitation. EPA has also carefully examined and evaluated all comments received regarding SC

- CO2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the discount rates applied to the SC

- CO2 estimates. Specifically, EPA concurs wit h the IWG’s response to these comments and hereby incorporates them by reference. 22 The remainder of this section elaborates on these comments in the context of this rulemaking.

EPA and other members of the IWG have reconfirmed their commitment to periodi c review and update of the methodology and estimates to ensure that they continue to reflect the best available

22 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 20 to 25 at https://www.whitehouse.gov/ sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 2015.pdf .62 science and economics. Furthermore, EPA has determined that the SCC methodological recommendations require additional research, review, and publ ic comment before it can apply them to a rulemaking context.

To help synthesize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC

- C O2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC

- C O2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academ ies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SCC estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer

- reviewed literature, will help to ensure that the SCC estimates used by EPA continue to reflect the best available science and methodologies.

After careful evaluation of the full range of comments and associated technical issues described in s ection 8.7.2, EPA has determined that it will continue to use the current SC

- C O2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scienti fic information on the impacts of climate change available in a form appropriate for incorporating the damages from incremental CO2 emissions changes into regulatory analysis. Therefore, EPA has presented the current SC

- C O2 estimates in this rulemaking. 23 EPA will continue to consider these comments and will share the recommendations with the IWG as it moves forward with the Academies
process.
The remainder of this section provides more detailed responses to the comments and recommendations.

Recommendations to use a 7 percent discount rate

OMB guidance in Circular A

- 4 recommends that discount rates of 3 percent and 7 percent be used in regulatory impact analysis. The 7 percent rate is an estimate of the average before

- tax real rate of return t o private capital in the U.S. economy. It is a broad measure that reflects the returns to real estate and small business and corporate capital and is meant to approximate the opportunity cost of capital in the United States. The 3 percent rate is an estima te of the real rate at which consumers discount future consumption flows to their present value, often referred to as the social rate of time preference or the consumption rate of interest. As stated in the 2010 TSD, in a market with no distortions, the re turn to savings would equal the private return on investment, and the market rate of interest would be the appropriate choice for the social discount rate. In the real world, however, risk, taxes, and other market imperfections drive a wedge between the ri sk

- free rate of return on capital and the consumption rate of interest.

23 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf63 While most regulatory impact analysis is conducted over a time frame in the range of 20 to 50 years, OMB guidance in Circular A

- 4 recognizes that special ethical considerations arise when comparing benefits and costs across generations. Although most people demonstrate time preference in their own consumption behavior, it may not be appropriate for society to demonstrate a similar preference when deciding between the well

- being of curr ent and future generations. Future citizens who are affected by such choices cannot take part in making them, and today's society must act with some consideration of their interest. Even in an intergenerational context, however, it would still be correct t o discount future costs and benefits generally (though perhaps at a lower rate than for intragenerational analysis), due to the expectation that future generations will be wealthier and thus will value a marginal dollar of benefits or costs less than the c urrent generation. Therefore, it is appropriate to discount future benefits and costs relative to current benefits and costs, even if the welfare of future generations is not being discounted. Estimates of the discount rate appropriate in this case, from t he 1990s, ranged from 1 to 3 percent. After reviewing those considerations, Circular A

- 4 states that if a rule will have important intergenerational benefits or costs, agencies should consider a further sensitivity analysis using a lower but positive disco unt rate in addition to calculating net benefits using discount rates of 3 and 7 percent.

EPA and the other members of the IWG examined the economics literature and concluded that the consumption rate of interest is the correct concept to use in evaluating the net social costs of a marginal change in CO2 emissions, as the impacts of climate change are measured in consumption

- equivalent units in the three IAMs used to estimate the SCC. This is consistent with OMB’s guidance in Circular A

- 4, which states that when a regulation is expected to primarily affect private consumption

— for instance, via higher prices for goods and services

-- it is appropriate to use the consumption rate of interest to reflect how private individuals trade

- off current and future consump tion.

As explained in the 2010 TSD, after a thorough review of the discounting literature, the IWG chose to use three discount rates to span a plausible range of constant discount rates: 2.5, 3, and 5 percent per year. The central value, 3 percent, is cons istent with estimates provided in the economics literature and OMB’s Circular A

- 4 guidance for the consumption rate of interest. The upper value of 5 percent represents the possibility that climate damages are positively correlated with market returns, whi ch would suggest a rate higher than the risk

- free rate of 3 percent. Additionally, this discount rate may be justified by the high interest rates that many consumers use to smooth consumption across periods. The low value, 2.5 percent, is included to incorporate the concern that interest rates are highly uncertain over time. It represents the average rate after adjusting for uncertainty using a mean

- reverting and random walk approach as described in Newell and Pizer (2003), starting at a discount rate of 3 percent. Further, a rate below the riskless rate would be justified if climate investments are negatively correlated with the overall market rate of return. Use of this lower value also responds to the ethical concerns discussed above regarding intergenera tional discounting.

EPA recognizes that disagreement remains in the academic literature over the appropriate discount rate to use for regulatory analysis of actions with significant intergenerational impacts, such as CO2 emissions changes that affect the global climate on long t ime scales. EPA and the members of the IWG will continue to follow and evaluate the latest science on intergenerational64 discounting and seek external expert advice on issues related to discounting in the context of climate change.

EPA notes that the commen t that EPA only presents climate benefits figures in the preamble at only the 3 percent discount rate rather than at all four discount rates recommended by the IWG is incorrect. The tables clearly present climate benefits based on all 4 recommended SC

- CO2 estimates; see, for example, Tables 12 and 13 at 79 FR 34936; June 18, 2014. The summary tables presented in the beginning of the preamble use the central SC

- CO2 estimate and clearly note that additional SC

- CO2 estimates were considered and presented in the RIA.

Recommendations for lower discount rates or a declining rate

As noted above, the EPA and the other members of the IWG selected a range of discount rates from 2.5 to 5 percent; a review of the literature and the reasoning that led to the selection of this range are discussed in detail in the 2010 TSD. Several of the issues raised by commenters were explicitly considered and were part of the rationale for the selected range.

The TSD discusses both descriptive and prescriptive approaches to selectin g discount rates. A descriptive approach reflects a positive (non

- normative) perspective based on observations of people’s actual choices (e.g., savings versus consumption and allocation of savings over more and less risky investments). The prescriptive ap proach adds a normative component and incorporates judgments that decision makers believe should be reflected in the policy choices that the discount rate is intended to inform. For example, some have argued on ethical grounds that in the Ramsey formula

— wh ich dissects market rates into three components, the pure rate of time preference (ρ), growth rate of per

- capita consumption (g), and coefficient of relative risk aversion (η)

— the ρ component should be set to zero so that the welfare of all generations is valued equally. After considering a range of plausible values from the literature for g and η, the IWG concluded that setting a very low ρ (e.g., 0.1 percent per year) could yield rates in the range of 1.4 to 3.1 percent.

The TSD also discussed uncertaint y and its effects on discount rates. The certainty equivalent values of the future benefits of reducing current CO2 emissions will be lower than the expected value if the benefits and future consumption are positively correlated, assuming people are risk

a verse on average. This in turn implies that when discounting expected future benefits a discount rate that accounts for uncertainty should exceed a riskless rate. As explained in the TSD, this consideration was part of the logic for setting the upper end o f the selected range at 5 percent.

EPA and other members of the IWG also considered the issue of " climate catastrophes. " To the extent that such outcomes may not be adequately represented in the IAMs, the central tendency estimates from these models may no t capture the full range of potential damages from CO2 emissions. For this reason, in addition to the three mean SCC estimates using discount rates of 2.5, 3 and 5 percent, EPA and other members of the IWG recommended including a rate based on the 95th per centile damage estimate (with a 3 percent discount rate) for the upper end of the range of plausible SC

- C O2 estimates.

W ith respect to declining discount rates, EPA and other members of the IWG agrees that this is an important area of emerging research. H owever, no widely

- accepted declining discount rate65 schedule has yet been developed. Some key technical issues warrant careful consideration before adopting a declining discount rate schedule, such as determining how to update the discount rate schedule as uncertainty is resolved over time and ensuring that the use of declining discount rates does not lead to the possibility of time

- inconsistent choices. A recent workshop sponsored by the federal government resulted in a paper in Science authored by thirteen prominent economists who concluded that a declining discount rate would be appropriate to analyze impacts that occur far into the future (Arrow et al., 2014 ). However, additional research and analysis is still needed to develop a methodology for implement ing a declining discount rate and to understand the implications of applying these theoretical lessons in practice. The EPA and other members of the IWG will continue to follow and evaluate the latest science on the use of declining discount rates in inter generational contexts and seek external expert advice on issues related to discounting in the context of climate change.

Finally, regarding the comment about the consistency of discount rates applied to the climate benefits versus other monetized impacts: while EPA continues to find the discount rates applied to the SC

- CO2 estimates to be appropriate, it recognizes that different discount rates are applied to other impacts. The workshop mentioned in the preceding paragraph discussed how to apply discountin g in a regulation where some costs and benefits accrue intra

- generationally while others accrue inter

- generationally. The experts noted that one solution to this problem is to apply a declining discount rate schedule to all regulations. 24 As previously no ted, additional research and analysis is needed to develop a methodology for implementing a declining discount rate. The EPA and other members of the IWG will continue to follow and evaluate the latest science on the use of declining discount rates in int ergenerational contexts and seek external expert advice on issues related to discounting in the context of climate change.

Comment 8: Commenters discussed the aggregation of IAM results and the selection of the final range of SCC estimates as well as the application of the SCC estimates to proposed rulemaking.

Aggregation and selection of SCC estimates

Some commenters were concerned that pooling the SCC estimates across scenarios and models ignores variability and uncertainties in the estimates and inappropriately implies that the " true " value of the SCC falls within the range of estimates calculated by the three models. Other
commenter s argued that pooling the results across models and scenarios should be abandoned given the uncertainty around t he factors that drive the estimates. A few commenters suggested that the median of the distribution of SCC estimates rather than the mean, as used by the IWG, would be a more appropriate measure of the central tendency of the SCC estimates.

24 See http://rff.org/Documents/Events/Workshops%20and%20Conferences/110922

- Discounting/Main_Points.pdf66 C ommenter s st ated that the SCC estimates are difficult to interpret and evaluate because the y are the result of significant aggregation of global socioeconomic, climate, and damage modeling over 300 years and aggregation of results across three models (DICE, FUND, PAGE ), over time, across scenarios, and across impact categories and regions. The commenter s provided the following recommendations:

• A detailed review of modeling differences, alternatives, and uncertainties represented would be beneficial to resolve or justi fy differences, improve comparability and uncertainties represented, and enhance robustness.

• Estimates of global CO2 changes associated with the rule for proper use of the SCC for CO2 reduction benefits calculations.

• Resolution of inconsistencies in the es timated compliance costs and CO2 benefits for proper comparison.

• Guidance regarding use of the four USG SCC estimates.

Application to the Clean Power Plan RIA

Commenters supported the application of SCC to estimate the benefits of the rulemaking, though some offered recommendations.

• Commenter s stated, " The SCC provides an important, if conservative, estimate of the costs of climate change and the benefits of reducing carbon pollution. " " In the context of agency rulemakings, the SCC provides the best avail able means to factor those costs into benefit

- cost analyses. "

• Some c ommenter s stated that " In the final Clean Power Plan and the final regulatory impact analysis, EPA should detail all significant, unquantified climate effects, as consistent with adminis tration

- wide policy, the IWG's instructions, EPA's best practices, and best economic practices. "

Commenter s stated that the IWG's " efforts pass legal muster from a standpoint of federal regulatory law and policy. Moreover, the IWG's most recently updated estimates utilized accepted science, economics, and technical modeling. EPA's reliance on those estimates in support of the proposed rule was therefore reasonable and justified. "

• O ther commenter s stated that EPA does not fully detail all of the qualitativ e climate benefits from carbon dioxide reductions that are not currently included in the monetized estimate of the social cost of carbon. The commenter s said that in the final CPP and the final regulatory impact analysis, EPA should detail all significant, unquantified climate effects, as consistent with administration

- wide policy, the Interagency Working Group's instructions, EPA's past practices, and best economic practices.67 Other commenters disagreed with application of the SCC t o the Clean Power Plan R IA stating that EPA's reliance on SCC is arbitrary and capricious and that the SCC overstates the benefits associated with reducing CO2 emissions from electric generating units ( " EGUs " ). Many of these
commenters disagreed with the use of a global SCC estimate and with the selection of discount rates, and therefore concluded that they should not form the basis of the rulemaking’s benefit estimates. C commenter s also stated that EPA must first appropriately review a ll public comments related to the federal government's SCC values prior to using them in a rulemaking, which were submitted in early 2014. Excerpts from the commenters that disagreed with the use of SCC in this rulemaking are as follows:

• Commenter s noted t hat SCC is meant to analyze impacts of regulations with a

ma rginal effect on CO2 emissions. Commenter s concluded that while the proposal would have a marginal effect on emissions, it would have a large effect on the industry and competitiveness, and theref ore should not use the SCC as basis. Commenter s also stated that the SCC should " go through a rigorous public notice process with appropriate revisions made based on public comment " before being used as the basis for a proposed rule.

• Commenter s stated SC C values are " speculative, selective, based on untested and inconsistent economic models, based on climate models that grossly over

- predict, and are not tied to domestic policy and results. " Commenter s also stated, " If the benefits of the proposed guideli nes are properly characterized

- that is, which inappropriately claiming benefits from the U.S. Government's SCC estimates and the benefits of reducing pollutants that are regulated to protective levels by other rules, there are no benefits to weigh agains t the exorbitant costs. Therefore, the proposed guidelines cannot be justified and are unlawful. "

• Commenter s state d " The CPP's climate benefits are illusory. " The commenter s cite three primary reasons: 1) The SCC is a " guestimate " and " an unknown quantity, discernible in neither physical nor economic data. " By fiddling with

non

- validated climate parameters, made

- up damage functions, and below

- market discounts rates, SCC analysts can get almost any result they desire. 2) " EPA uses global rather tha n domestic SCC values to calculate climate benefits. 3) " Most importantly, the rule's climate benefits are not actually an estimate of the damages avoided in 2030. " The climate benefits are the product of CO2 avoided and estimates of the present value of a ll cumulative damages caused by each incremental ton of CO2 emission over an immense time span

- from 2010 to 2300. " In other words, none of the rule's alleged climate benefits will be discernible in 2030 and likely not even in 2100. "

• Commenter s state d th e " alleged benefits are wholly unsubstantiated, " and that some have stated the benefits of avoided climate change (as calculated by SCC)

are " both unpredictable and unpriceable. " Commenter s also state d that SCC values are not trusted because " they have increased dramatically in recent years " due in part to the many assumptions required for calculating SCC. Commenter s also believe SCC values are easily manipulated.68 • Commenter s stated that " The EPA has not provided a single quantifiable climate benefit of the proposed rule. The EPA's purported climate benefits of the rule are based solely on the Office of Management and Budget's Social Cost of Carbon (SCC). Furthermore, the EPA used the global SCC yet did not consider the potential global impacts of the r ule or other international changes in CO2 emissions. "

• Commenter s stated " The RIA for the proposed rule states that the impact of 'reduced climate effects' has been 'monetized' but not 'quantified.' In other words, EPA does not claim that the Proposed Rule would affect the climate.

Commenter s stated

, " EPA cites its recently updated SCC document as a foundational basis for assessing the costs and benefits associated with GHG emissions reductions. This is a document that is significantly flawed and was/is sub ject to opposition by GCLC, its members, and many others. It should not be used in any rulemaking, including this Rule Proposal. "

Commenter s stated that analyses performed by NERA indicate the maximum temperature increase avoided by the CPP is about 0.00 3 degrees C which occurs several decades after the CPP's emission reductions. Commenter s state d

, " This is about a 0.2% change in the baseline temperature increase projected by that time. This sort of very small deviation from baseline temperature change must be viewed as a very tenuous basis for any projected amount of global damage. "

• Commenter s stated " Our research team found that the SCC calculation process, as well as input data assumptions for the process, and resulting published values for SCC, are obviously biased to yield high values of SCC.

• " Our investigation of the SCC calculation process reveals that it violates several provisions of EPA's own document No. EPA/260R

- 02

- 008. Certainly using the results of un

- validated and obviously inaccurate co mplex computer models on which the IPCC ECS uncertainty range is based, cannot be claimed to be consistent with the intent of these guidelines. "

• Commenter s co nclude d with " All proposed rule making related to CO2 emissions should be halted until such time as the current SCC calculation process can be reviewed by an independent scientific review team and critical scientific flaws in the current SCC computation process are corrected. "

Several commenters discussed concerns about emissions leakage in the context of SCC.

• C ommenter s stated that the RIA estimates CO2 benefits by multiplying the USG SCC values by estimated CO2 reductions within the power sector only, which is problematic because the SCC should only be applied to estimated net changes in global CO2 em issions. The commenter s stated that the RIA applications should be sure to estimate changes in net global emissions associated with a proposed rule, or justify why it is unnecessary and that emission reduction effects beyond the69 boundaries of the power sec tor should be accounted for to properly estimate CO2 benefits.

• " ...the SCC failed to include any consideration of industrial GHG leakage " that could result in movement of production facilities offshore. "

• Commenter stated the CO2 reduction benefits have not been adjusted for the increased emissions from new exempt fossil fueled sources that will be built due to the proposal.

C ommenter s stated that " The proposed rule's base case is inconsistent with the socioeconomic/emissions scenarios used in the SCC calcula tions. Specifically, the U.S. CO2 emissions, energy system, and economic condition underlying the estimated CO2 reductions and compliance costs are inconsistent with the socioeconomic and emissions futures underlying the USG SCC estimates used to value the proposed rules CO2 reduction benefits. The SCC estimates are computed using five alternative global socioeconomic and GHG emissions futures designed to span a range of possible global futures, with each future considered equally likely. Compliance costs a nd CO2 reductions in the RIA, on the other hand, assume a single, U.S. power sector projection (based on the AEO 2013 Reference Case). This is an issue because the underlying USG modeling shows that SCC values vary across socioeconomic and emissions
assump tions (USG, 2014). Therefore, one would want the same reference case assumptions for the SCC, CO2 reductions, and compliance costs, or an argument for why it is unnecessary. "

C ommenter s found that when comparing the USG SCC and AEO2013 Reference Case soci oeconomic and emissions projections, " the AEO2013 projections do not compare well with any of the USG SCC input scenarios, with lower projected U.S. energy sector CO2 emissions and higher GDP that are based on much lower assumptions regarding the emissions and energy intensity of output (CO2/GDP and Btu/GDP respectively) "

.

C ommenter s stated that " USG SCC technical documentation recommends using all four of the USG time profiles of SCC values. The four have meaningful differences in discounting and what they represent probabilistically. However, there is no USG guidance on how agencies should apply the different SCC values jointly and consistently in rulemaking. " Commenter s stated that

" EPA overestimates the climate benefits of the proposed ESPS regulatio n " and that the SCC estimates are projected for excessively long model time horizons. Commenter s stated, " Global warming (now climate change) is an artifact of modeling and SCC is therefore a model of models. "

Commenter s stated " the SCC's models make assum ptions about the vulnerability of society to climate change, which is primarily driven by levels of economic development. Ironically, the economic damage inflicted by the Proposed Rule would increase society's vulnerability to the very impacts that EPA cl aims it wishes to avoid. "

Commenter stated " the estimates of the SCC have no connection to the real world, nor do the Global Circulation Models. Physics may tell us that increasing greenhouse gases will increase global temperature but it tells us nothing at this point in our knowledge about what that increase will do to global temperatures and climate. "70 C ommenter s stated that EPA's assessment of the costs of the Proposed Rule is arbitrary as it fails to accurately account for the benefits of greenhouse ga s reduction by understating the climate costs of fossil methane combustion and the social cost of carbon, and omitting any calculation of the consequences of the rule's proposed compliance delay.

Commenter s cited the study by Bobb et al., 2014, which exami ned the trends in heat

- related mortality across the U.S. using data from 1987 through 2005. The commenter s said the study provides strong evidence that acute (e.g., same

- day) heat

- related mortality risk has declined over time in the US, even in more recent years. The commenter s also cited different studies with similar results on community

- specific mortality rates in the U.S., using earlier data from 1960s through mid

- 1990s (e.g. Davis et al. 2003a; Davis et al. 2003b). The commenter s also cited European st udies that found temporal declines in heat

- related mortality risk (Carson et al. 2006; Donaldson et al. 2003; Kysely and Plavcova 2011; Schifano et al. 2012). The commenter s added these studies support the hypothesis that the population is continually adap ting to heat, despite the rise in temperature leading to an increased magnitude and frequency of heat events. The
commenter s said that sensitivity to heat is declining and the cause for this is likely found in a collection of adaptations including increase d access to air

- conditioning, better medical care, community response programs, heat watch/warning systems, and biophysical changes. The
commenter s said that there is no reason to think that such response measures won't continue to exist and be improved up on into the future. The commenter s concluded stating that through the collective adaptive response, climate change not only does not result in negative human health outcomes, but may, in fact, spur positive ones. The commenter s said these findings render t he EPA's contention to the contrary to be shallow and misleading and unfit to justify this regulation.

Response 8: The comments regarding the aggregation of the SC

- C O2 estimates and general application in a rulemaking context mirror those submitted to the Office of Management and Budget’s separate comment solicitation on the SC

- C O2 (78 FR 70586; November 26, 2013). As a member of the interagency working group (IWG) on SC

- CO2, EPA has carefully examined and evaluated comments submitted to OMB’s separate so licitation. EPA has also carefully examined and evaluated all comments received regarding SC

- CO2 through this rulemaking process and determined that the IWG responses to the comments on the OMB solicitation address the comments on the aggregation of SC

- CO 2 estimates and use of the estimates in this RIA. Specifically, EPA concurs with the IWG’s response to these comments and hereby incorporates them by reference. 25 The remainder of this section elaborates on these comments in the context of this rulemaking.

EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the methodology and estimates to ensure that they continue to reflect the best available science and economics. Furthermore, EPA has determined that the SC

- C O2 methodological

25 Referred to as the "OMB Response to Comments on SC

- CO2." In particular, see pgs 25 to 28, 40

- 41 at https://www.whitehouse.gov/sites/default/files/omb/infore g/scc

- response

- to

- comments

final

- july

- 2015.pdf .71 recommendations require additional research, review, and public comment before it can apply them to a rulemaking context.

To help synthes ize the technical information and input reflected in the comments, and to add additional rigor to the next update of the SC

- C O2 , the EPA and all of the other IWG members plan to seek independent expert advice on technical opportunities to improve the SC

- C O 2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SC

- C O2 estimates in future updates. Input from the Academies, informed by the comments submitted to this rulemaking and the peer

reviewed literature, will help to ensure that the SC

- C O2 estima tes used by EPA continue to reflect the best available science and methodologies.

After careful evaluation of the full range of comments and associated technical issues described in section 8.7.2, EPA has determined that it will continue to use the current SC

- C O2 estimates until further updates can be made to reflect forthcoming guidance from the Academies. EPA believes that the current estimates continue to represent the best scientific information on the impacts of climate change available in a form appr opriate for incorporating the damages from incremental CO2 emissions changes into regulatory analysis. Therefore, EPA has presented the
current SC

- C O2 estimates in this rulemaking. 26 EPA will continue to consider these comments and will share the recommen dations with the IWG as it moves forward with the Academies
process.
The remainder of this section provides more detailed responses to the comments and recommendations.

Aggregation and selection of SC

- CO2 estimates

Some comments discussed the aggregation of model results and the selection of the final range of SC

- CO 2 estimates. Both the 2010 TSD and the current TSD present information about the full distribution of SC

- CO 2 estimates within and across possible combinations of the three models and five socio economic

- emissions scenarios, for each of three discount rates (45 combinations in total) (see tables A2

- A4 in Appendix A of the TSDs). Additional summary statistics for the distributions of the SC

- CO 2 estimates are also provided for each of the three mode ls (see Table A5 in Appendix A). EPA believes that the information presented in the TSDs is sufficiently disaggregated to reflect the variability of the SC

- CO 2 estimates across models, input assumptions, and discount rates. In addition, EPA has provided th e full set of Monte Carlo modeling results (10,000 model runs for each combination, for a total of 450,000 observations per emissions year) to outside researchers upon request and will continue to do so.

26 See https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- tsd

- final

- july

- 2015.pdf72 As discussed in the 2010 TSD, using the full distrib ution of the SC

- CO 2 estimates from the 45 scenarios would be impractical in a regulatory impact analysis. To produce a range of plausible estimates that still reflects the uncertainty about the SCC estimates, the results from the various model and scenario combinations (150,000 observations per emissions year for each of the three discount rates) were pooled to produce three separate probability distributions for the SC

- CO 2 for emissions in a given year, one for each assumed discount rate (2.5, 3 and 5 perc ent). Three point estimates were then derived from these pooled distributions representing the mean at each discount rate. EPA considers this approach for presenting expected SC

- CO 2 values across a range of discount rates to be appropriate for representing the central tendency of the SC

- CO 2 estimates across scenarios. The fourth value, the 95 th percentile of the pooled distribution using a 3 percent discount rate, is included to represent higher

- than

- expected economic impacts from climate change further out in the tail of the SC

- CO 2 distribution

- i.e., impacts that may have lower probability of occurring but relatively high damages. For purposes of representing the uncertainties involved, the TSDs emphasized the importance of considering and presenting the full range of these four estimates in regulatory impact analysis.

EPA agrees that the modeling of uncertainty in our analysis, including the uncertainty explicitly represented in the IAMs, may not capture the full range of uncertainty of the " true " value of the SC

- C O2 . This concern is common to most quantitative assessments of uncertainty. By definition, the modeling of uncertainty requires a model, and therefore cannot capture the uncertainty associated with model selection. However, EPA does not a gree that pooling results across models implies that the estimates capture the full range of uncertainty, nor is such a claim made in the TSDs or the rulemaking’s supporting documents. Rather, EPA attempted to capture a reasonable range of uncertainty usin g information available in the peer

- reviewed literature and the uncertainty analysis built into the models themselves. Using three models rather than one helps address, but does not eliminate, uncertainty associated with model choice.

Along with the four selected SC

- CO 2 estimates for each emissions year, the IWG presented more detailed information about the full distribution of SC

- CO 2 estimates for emissions in the year 2020. Specifically, the 2013 TSD reports information on the full distribution of the SC C estimates for emissions in year 2020 for each model, scenario, and discount rate combination , including the low

- end percentiles (i.e., 1 st , 5 th and 10 th percentiles). 27 In addition, as noted above, complete distributions for all emissions years are avail able upon request. While the TSDs did not present a summary 5 th percentile estimate (i.e., pooling results across the models and scenarios) for use in regulatory impact analysis, for reasons discussed below, the model and scenario specific statistics for 2020 provide a general sense of how the 5 th percentile relates to the mean. Furthermore, as we note above

, EPA has provided the full set of Monte Carlo modeling results to outside researchers upon request and will continue to do so. This information may be used to

27 The 2010 TSD including information on the full distribution of SCC estimates for the emission year 2010, howev er the 2013 TSD presented this information for the 2020 emissions year as 2010 was then a historical year.73 calculate a full set of 5 th percentile summary statistics that are comparable to the 95 th percentile estimates provided in the TSDs.

As the 2010 TSD discusses, the SC

- CO 2 estimates derived from the three integrated assessment models have several significant limitations that could lead to a substantial underestimation of the SC

- CO 2 . These limitations include the incomplete treatment and monetization of non

catastrophic damages, the incomplete treatment of potential " catastrophic " damages, and

unce rtainty in extrapolation of damages to high temperatures. The IPCC Fourth Assessment Report, which was the most current IPCC assessment available at the time of the IWG’s 2009

- 2010 review, discussed these limitations and concluded that it was " very likely that [SCC] underestimates " climate change damages. Based on the current scientific understanding of climate change and its impacts, and on the limitations of the IAMs in quantifying and monetizing the full array of potential " catastrophic " and non

- catastro phic damages, EPA and the other members of the IWG concluded that the distribution of SCC estimates may be biased downwards. Since then, the peer

- reviewed literature has continued to support this conclusion. For example, the IPCC Fifth Assessment report ob served that SC

- C O 2 estimates continue to omit various impacts that would likely increase damages. The 95 th percentile estimate was included in the recommended range for regulatory impact analysis to address these concerns.

In addition, as acknowledged in t he 2010 TSD, the SC

- C O 2 estimates derived from the three IAMs did not take into consideration the possibility of risk aversion. That is, individuals may have a higher willingness

- to

- pay to reduce the likelihood of low

- probability, high

- impact damages than they do to reduce the likelihood of higher

- probability, lower

- impact damages with the same expected cost. The inclusion of the 95 th percentile estimate in the SC

- C O 2 values was also motivated by this concern. In contrast, EPA is not aware of systematic upw ard biases in the estimates comparable to the downward biases discussed above. For this reason, while EPA and other members of the IWG have been fully transparent regarding the entire range of uncertainty reflected in the probability distributions, EPA did not include a 5 th percentile estimate in the selected range for regulatory impact analysis.

The choice of the mean or the median as a measure of central tendency depends on the context. In skewed distributions, such as for the SC

- CO 2 estimates, the median will often give a more

" typical " outcome, while the mean will give full weight to the tails of the distribution. In some cases, the typical outcome is of most interest. For example, in describing household incomes the median is most often used because the focus is on understanding the income of the typical household, and using the mean might distort this picture by giving undue weight to a small number of very wealthy households. In the climate change context, however, sound decision

making requires consideration of not only the typical or most likely outcomes, but also less likely outcomes that could have very large (or small, or even negative) damages (the tails of the distribution). Use of the median to represent the SC

- CO 2 in a reg ulatory impact analysis would not necessarily lead to the most efficient policy choice that uses resources wisely to mitigate potential climate impacts (e.g., maximize the expected net benefits). In this case, EPA believes that the mean is the appropriate measure of central tendency.

Application to the Clean Power Plan74 EPA agrees with those supportive of the application of the estimates. Commenters who stated that the benefits do not exceed the costs base d this conclusion on use of a domestic estimate and different discount rates. See section 8.7.2, comment 3, for EPA’s detailed response to comments on the use of a global versus domestic SC

- C O 2 . See section 8.7.2, comment 7, for EPA’s detailed response to comments about the selection of the discount rate. See also EPA’s detailed response to comments on the IAMs and damage functions in 8.7.2, comment 1, and EPA’s response to comments regarding peer review and other process

- related issues for SC

- C O 2 , including the documentation discussing SC

- CO2 methodology

, in 8.7.2, comment 5. See section 8.7.2, comment 11, for EPA’s response to comments regarding the time horizon included in the benefits analysis.

Regarding the recommendation to detail the significant and unquantified climate effects in the RIA, i.e. th e impacts currently omitted from the IAMs used to estimate the SC

- CO 2 , EPA has updated the RIA discussion to reference several publications that identify and discuss some of the important, unquantified climate effects. EPA notes, however, that it is not p ossible at this time to provide a precise list of each model’s treatment (i.e., included, excluded) of climate impacts. Instead, the TSDs present a robust discussion of this key analytical issue, e.g., how each model estimates climate impacts, the known p arameters and assumptions underlying those models, and the implications of incomplete treatment of impacts (catastrophic and non

catastrophic) for the SC

- CO 2 estimates. Moreover, the discussion in the SC

- CO 2 TSD underscores the difficulty in accurately di stilling the models’ treatment of impacts in table

- form. Most notably, the use of aggregate damage functions

— which consolidate information about impacts from multiple studies

— in two of the models poses a challenge in listing included impacts. For example, within the broad agricultural impacts category, some of the sub

- grouped impacts are not explicitly modeled but are highly correlated to other subcategories that are explicitly modeled. EPA agrees that it is important to update the SC

- CO 2 periodically to i ncorporate improvements in the understanding of greenhouse gas emissions impacts and will continue to follow and evaluate the latest science on impact categories that are omitted or not fully addressed in the IAMs. As previously noted, EPA and the other IW G members will seek external expert advice on the technical merits and challenges of potential approaches to update the damage functions in future revisions to the SCC estimates. Finally, the RIA also continues to discuss climate change impacts, specifica lly an overview of the 2009 Endangerment Finding and climate science assessments released since then (see RIA, Chapter 4).

EPA disagrees with the comment that EPA should not apply the SC

- CO 2 to marginal emission impacts because of the rulemaking’s potenti al impact on industry and competitiveness, and notes that the commenter s ha ve misunderstood the discussion about the applicability of SC

- CO 2 estimates. The SC

- CO 2 is an estimate of the marginal benefit of a net one

- ton reduction in CO 2 emissions. The SC

- CO 2 estimates are multiplied by estimates of net CO 2 emissions changes in a given year to calculate the value of the benefits associated with the policy action that achieves the emissions reductions. Given that the definition of marginal in this context rela tes to the change in CO 2 emissions relative to the global level of CO 2 emissions, the SC

- CO 2 is the appropriate metric to use in estimating the benefits of emissions changes as a result of this rulemaking. The applicability of the SC

- C O 2 to monetizing the benefits of an emissions change is not related to rulemaking’s costs or economic impacts. These factors are independent of the SC

- CO 2 estimates and are therefore not related to the applicability of the SC

- CO 2 . The75 estimation of the social benefits of avoid ing or reducing CO 2 emissions is a separate and independent calculation from the analysis of the policy’s compliance costs and impacts on industry competitiveness. See section V of the final rule preamble for a discussion of the costs of the final guidelin es and RIA Ch apter 3 for a discussion of the cost estimates of the rulemaking for illustrative compliance scenarios and Ch apter 5 and RTC section 8.7.6 for a discussion of secondary market impacts.

EPA disagrees with the comments that characterize the SC

- CO 2 as an illusory or otherwise unsupportable metric. EPA acknowledges uncertainty in the SC

- C O2 estimates but disagrees that the uncertainty is so great as to undermine use of the SC

- C O2 estimates in regulatory impact analysis. The uncertainty in the SC

- C O2 estimates is fully acknowledged and comprehensively discussed in the TSDs and supporting academic literature. While uncertainty must be acknowledged and addressed in regulatory impact analyses, even an uncertain analysis provides useful information to decision makers and the public. For example, if an analysis shows that benefits of a policy option consistently do (or do not) justify costs even over a broad range of estimates, this may increase confidence in the robustness of this conclusion. Conversely , if choices among parameter estimates within a plausible range significantly affect the conclusions of the analysis, this is an important consideration in deciding how to weigh the analytical results in the decision making process. The presence of uncerta inty is thus not a reason to exclude the best available estimates of quantified/monetized benefits, as long as it is appropriately characterized. Rather, good regulatory practice requires that agencies use the best available scientific, technical and econo mic information to derive the best estimates of costs and benefits that they can, and then communicate to the public the limitations and uncertainties of the analyses. This is what EPA and all of the members of the IWG have attempted to do in developing and discussing the SC

- C O2 estimates. As noted in the SC

- C O2 TSDs, the EPA and the other IWG members are committed to periodic updates in the estimates to reflect ongoing developments in our understanding of the science and ec onomics of climate change, including the treatment of uncertainty. Moreover, a s previously stated, EPA has determined that the current SC

- C O2 estimates continue to represent the best scientific information on the impacts of climate change available in a fo rm appropriate for incorporating the damages from incremental CO2 emissions changes into regulatory analyses. See also Coalition for Responsible Regulation v. EPA, No. 09

- 1322 (D.C. Cir. June 26, 2012) slip op. p. 27 ( " State and Industry Petitioners assert that EPA ‘delegated’ its judgment to the IPCC, USGCRP, and NRC by relying on these assessments of clime

- change science. This argument is little more than a semantic trick....EPA simply did here what it and other decision

- makers often must do to make a scie nce

- based judgment: it sought out and reviewed existing scientific evidence to determine whether a particular finding was warranted. It makes no difference that much of the scientific evidence in large part consisted of ‘syntheses’ of individual studies a nd research. Even individual studies and research papers often synthesize past work in an area and then build upon it. This is how science works. EPA is not required to re

- prove the existence of the atom every time it approaches a scientific question. " )

EPA disagrees with the comment that SC

- C O2 values are not trusted because " they have increased dramatically in recent years " due in part to the many assumptions required for calculating SC

- C O2 . Commenter s also believe SC

- C O2 values are easily manipulated

. EPA and other federal agencies had received multiple public comments urging them to update the76 estimates. In response to these comments and consistent with the 2010 commitment to periodically revise the SC

- C O2 estimates, in 2013 the IWG released an updat e to the SC

- C O2 estimates that maintained the same methodology underpinning the previous estimates, but applied the most current versions of the three IAMs. The science underlying the assessment and valuation of climate change impacts is constantly evolvin g. Since the publication of the initial SC

- C O 2 estimates in 2010, the representation of the science and economic consequences of climate change in the three IAMs has improved. The 2013 SC

- C O 2 technical update allowed the SC

- C O 2 estimates to reflect these improvements. Some of the model revisions tend ed to increase the value of SC

- C O 2 while others tended decrease d it. The updated values reflect ed the net effect of all of those changes. None of interagency working group’s 2010 mo deling decisions were revisited as a part of the 2013 update. The 2013 update used the same approach and assumptions as the 2010 analysis, but with the latest version of each of the three models available. In addition, the TSDs fully discuss the sensitivi ties of the SC

- C O 2 and how the interagency working group explored those sensitivities. See also 8 .7.2, comment 4 for discussion about treatment of uncertainty.

EPA strongly disagrees with the comment that climate change is an artifact of modeling, Global Circulation Models have no connection to the real world, and SCC is therefore a model of models. See 8.7.2, comment 1, for detailed response to comments criticizing the IAMs and section 8.7.1, comment 6 for response to comments arguing that climate is too complex for computer models or EPA to be able to predict the impact of GHG mitigation.

Regarding the comments about quantification versus monetization of the climate benefits and the comment that the Agency has not provided a single quantifiable climate b enefit of the proposed rule , EPA disagrees and notes that it has in fact provided the estimated value of climate benefits

. The climate benefits estimates have been calculated using the estimated values of marginal climate impacts, known as the social cost of carbon (SC

- CO2), presented in the Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866. The SC

- CO2 is a metric that estimates the monetary value of impacts associated wi th marginal changes in CO2 emissions in a given year. It includes a wide range of anticipated climate impacts, such as net changes in agricultural productivity and human health, property damage from increased flood risk, and changes in energy system costs, such as reduced costs for heating and increased costs for air conditioning. It is typically used to assess the avoided damages as a result of regulatory actions (i.e., benefits of rulemakings that have an incremental impact on cumulative global CO2 emissi ons). In order to calculate the dollar value for emission reductions, the SC

- CO2 estimate for each emissions year is applied to changes in CO2 emissions for that year, and then discounted back to the analysis year using the same discount rate used to estim ate the SC

- CO2. While the impacts of CO2 emissions changes, such as sea level rise, are estimated within each integrated assessment model as part of the calculation of the SC

- CO2, it is the resulting monetized damages that are relevant for conducting the benefit

- cost analysis. As such, it is the SC

- CO2 estimates that are used in the RIA to estimate the welfare effects of quantified changes in CO2 emissions.

Regarding the comments on leakage, specifically that multiplying the SC

- C O 2 values by estimated C O2 reductions within the power sector only is problematic because the SC

- C O 2 should only be applied to estimated net changes in global CO2 emissions, EPA notes that it has77 applied the SC

- CO2 estimates to the best available estimat e of the net emissions impact and includes emissions from the new fossil fuel sources subject to the final 111(b) standard (see RIA Ch apter 3 and the final rule for 111(b) ). As discussed in RIA Ch apter 5, EPA has not quantified the emissions leakage, if a ny, that may result from secondary market impacts . The final 111(d) emission guidelines cover existing fossil fuel

- fired EGUs, and the EPA does not see evidence that notable changes would result from secondary markets, including industry, given the relati vely modest changes in electricity prices ; see also the RTC, Section 8.6, comment 18

. EPA recognizes that this is an important issue for analysts to consider in determining the net CO2 reductions to be valued in an RIA but notes that it does not affect th e calculation of the SC

- C O 2 itself, which is an estimate of the marginal benefit of a net one

- ton reduction in CO2 emissions. The SC

- C O 2 estimates are multiplied by estimates of net GHG emissions changes to calculate the value of benefits associated with a policy action in a given year. It is in the estimation of net GHG emissions, and not the SC

- C O 2 , that any leakage should be accounted for.

Regarding the comment about inconsistencies in the scenarios underlying the rulemaking’s base

case (AEO) and the SC C estimates (EMF

- 22) , and specifically the recommendation to use the same scenarios in the calculation of the SC

- C O 2 , EPA has determined that updating the scenarios underlying the SC

- C O 2 estimates requires additional research. The selection and harmonizati on of scenario variables among the IAMs used to estimate the SC

- C O 2 involved extensive discussion and analysis by EPA and other members of the IWG. Given the time and resources required to run the IAMs in addition to the difficulty in incorporating new scenarios to the IAMs, it is not feasible to change the scenarios and re

- estimate the SC

- C O 2 for every rulemaking at every agency. The EMF

- 22 scenarios were peer

- reviewed, and publicly available, they had the key advantage that GDP, population, and emissions trajectories are internally consistent for each model and scenario evaluated. As noted in the 2010 TSD, the scenarios used " span a wide range, from the more optimistic (e.g. abundant low

- cost, low

- carbon energy) to more pessimistic (e.g. constraints on the availability of nuclear and renewables). " EPA will continue to fo llow and evaluate the latest science on socioeconomic

- emissions scenarios and along with all the members of the IWG, is seeking external expert advice on the technical merits and challenges of potential approaches to update these scenarios in future revisi ons to the SC

- C O 2 estimates. See the OMB Response to Comments document on SC

- CO2 for a full discussion about the EMF

- 22 scenarios and consideration of potential inconsistencies between the scenarios and IAMs

. 28

Regarding the recommendation for USG guidance on the application of the SC

- C O 2 , specifically guidance that would clarify the TSD’s recommendation to use all four SC

- CO2 estimates in rulemaking analyses, EPA first notes that it has followed the current guidance to consider all four values in regulatory impact analysis. EPA agrees that consistent and appropriate application of the SC

- CO2 estimates is important. EPA will inform OMB of this comment requesting additional guidance of the application of the SC

- CO2 to regulatory impact analysis.

28 See the OMB Response to Comments, pgs 17

- 20, at https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc

- response

- to

- comments

- final

july

- 20 15.pdf78 EPA disagree s with the comment that the rulemaking would increase society’s vulnerability to climate change. See RIA for complete discussion of the rulemakings estimated benefits and
costs for illustrative implementation scenarios and section XI.D of the final rule p reamble for discu ssion of the costs of the emission guidelines . See RTC section 8.7.2, comment 1, for additional responses to comments about the IAMs.

EPA disagrees with the comment that the Agency has not accurately accounted for greenhouse
gas impacts by " understating the climate costs of fossil methane combustion and the social cost of carbon, and omitting any calculation of the consequences of the rule's proposed compliance delay

. " S ee the following sections:

• Fossil methane combustion: EPA has analyzed the potential changes in upstream methane emissions from the natural gas and coal production sectors that may result from the illustrative approaches examined in the RIA. See RIA, Chapter 3 and Appendix 3A , and Response to Comments sectio n 8.2, comment 18, for details about EPA’s estimates of methane emissions from natural gas systems

.

• Social cost of carbon: regarding the treatment of climate change impacts consideration from CO2 emissions, see 8.7.2, comment 1, for broad discussion about the integrated assessmen t models’ treat ment of climate change impacts and 8.7.2, comment 6, for discussion specific to the integrated assessment models’ treatment of carbon fertilization in the agriculture and forestry sectors.

• Proposed compliance delay : EPA disagrees with the commenter s ’ conclusion that the RIA should have calculated the impact of a " proposed compliance delay " because there is no delay relative to the baseline scenario, i.e., a world without the proposed rulemaking. Rather

, t he final rule making establishes an 8

- year interim compliance period that begins in 2022 with a glide path for meeting interim CO2 emission performance rates separate d into three steps: 2022

- 2024, 2025

- 2027, and 2028

- 2029. This results in interim and final statewide goal values unique to each state’s historical blend of fossil steam and stationary combustion turbine generation. States and tribes with one or more affe cted EGUs will be required to develop and implement plans to ensure that their affected EGUs, individually, in aggregate, or in combination with other measures undertaken by the state, achieve the equivalent of the final CO 2 emission performance rates by 2 030. See preamble section VIII.B, " Timeline for state plan performance and Provisions to Encourage Early Action " for detailed discussion about the timing of achieving the emission guidelines and state plan performance periods. Consistent with EPA ’s econom ic guidelines and OMB’ s guidance for RIAs, EPA analyzed the potential benefits and costs of approaches states may take to achieve the interim and final CO2 emission performance rates and compared them to a baseline that reflects the

wor ld without this rule making. G iven the flexibilities afforded states in complying with the emission guidelines, the benefits, cost and economic impacts reported in this RIA are not definitive estimates. The impact estimates are instead illustrative of approaches that states ma y take ; see RIA Chapter 3 for details about79 the baseline and illustrative scenarios

. See section V of the preamble for a discussion of the costs of the final guidelines.

For comments regarding the studies on heat

- related mortality, see RTC 8.7.1, comment 1 5.

Comment 9: Value of goods and services whose production is associated with CO2 emissions

Some commenters felt that the SC

- C O 2 estimates should include the value to society of the goods and services whose production is associated with CO2 emissions. Many of these commenters mentioned goods produced using fossil fuels, such as " plastics, chemicals, nitrogen fertilizer, steel, alumi num, synthetic rubber for tires, glass, pharmaceuticals, and paper. " Some
commenter s argued for including the benefits to " regions that depend on employment from energy intensive industry, regions dependent on fossil fuels for heating, cooling, food produc tion and other components associated with preserving their standard of living and regions that are in need of low cost fossil fuels to enable the economic development improving their standard of living. " Similarly, other commenters focused on the negative consequences of regulating CO2 emissions, such as the potential effect on energy prices, economic growth, or international competitiveness. C ommenter s suggested the inclusion of " ... the social costs and economic dislocations that could result from carbon re duction policies that would eliminate fuel options such as coal, the social costs associated with higher electricity prices, and the economic and security risks associated with electric reliability problems. "

Response 9: Rigorous evaluation of benefits and costs is a core tenet of the rulemaking process. EPA agrees that these are important issues that may be relevant to assessing the impacts of policies that reduce CO 2 emissions. However, these issues are not relevant to the SC

- C O 2 itself. The SC

- C O 2 is an estimate of the net economic damages resulting from CO2 emissions, and therefore is used to estimate the benefit of reducing those emissions.

A rule that affects CO2 emissions may also affect the production or consumption of goods and services, in which case it could create costs and benefits for businesses and households that either produce or use those goods and services. These costs and benefits are important to include in an analysis of the rule’s impacts, but are not a result of changes in CO 2 emissi ons. The SC

C O 2 is not a measure of social welfare from the consumption of goods and services whose production results in CO 2 emissions, or other positive or negative externalities associated with the production of those goods and services. In other words , the SC

- C O 2 is just one component of a larger analysis that includes consideration of many other potential impacts, including labor market changes, energy security, electricity reliability, and changes in emissions of other pollutants, among others.

Comment 10: Commenters stated general agreement that the costs and benefits associated with coal

- fired power plants and climate change (social or otherwise) are real. Commenters provided the following citations and statements:80 Some c ommenter s cite d the Na tional Climatic Data Center which reported the U.S. experienced nine climate or weather disasters that each caused more than a billion dollars of damage in 2013.

Other c ommenter state d " The cost of doing nothing is huge. Arguments that the EPA regulations will be too costly today ignore the future economic costs of climate change. Sea level rise, changes in temperature, and increases in hurricanes and other extreme events will wreak havoc on the economies across the country, and even worker productivity. C limate and weather disasters in 2012 alone cost the American economy more than $100 billion. "

Other c ommenter s state d

, " Over the last decade, the winter tourism industry has lost an estimated $1 billion and as many as 27,000 jobs. "

O ther c ommenter s stated " The costs of climate change are already proving to be staggering. In 2012, global costs from natural catastrophes were $160 billion. Domestically, studies have found that over the last 30 years weather

- related loss events in North America have quintuple d. In the U.S., 11 weather events costing more than $1 billion each occurred in 2012 with the cost of Superstorm Sandy alone exceeding $60 billion and the drought which afflicted half the country costing $11 billion. These costs are expected to rise as c limate change continues. "

O ther c ommenter s cite d several climate

- related impact projections from a study by Dr. Katherine Hayhoe of Texas Tech University and goes on to state the " Cost of inaction exceeds the cost of action. " " In the future, agriculture a round the San Antonio Texas Edwards Aquifer region is likely to suffer enormously because of climate change induced water shortages and extreme heat. The regional impact may reach losses for $3.6 to $6.5 billion by 2030. Meanwhile, with even a small incre ase of carbon, health care costs in Texas could increase from $79 million to $1.7 billion annually because of subsequent rise in all kinds of heat

- related illnesses, medical conditions, and diseases. "

Other c ommenter s stated " Climate change is projected to cause tremendous harm as a matter of economic cost alone. A 2008 analysis estimating the U.S. costs of climate change... found costs ranging from $271 billion in 2025 to $1.9 trillion in 2100. A 2014 analysis projects costs of $525 billion of the next 15 years just from damage to coastal property and infrastructure. It also projects at 10% decline in crop yield in some Midwestern and Southern counties over the next 5 to 25 years and up to $300 billion in costs over the same period for new electric generat ion to meet increased demand for cooling. "

C ommenter s stated that the rulemaking’s benefits analysis showed that the " benefits of EPA's CPP proposal are substantial and far exceed its costs. "

C ommenter s voiced general agreement with the climate benefits o f the proposed rule and stated

" For Virginia to avoid the spiraling consequences of climate change, carbon emissions must be reduced significantly. " The commenter s noted " Rising sea levels have already forced the Navy to implement a $60 million replacemen t of 14 piers in Norfolk, to protect the Navy's ship repair facilities. " Also, the commenter s stated " Rising sea levels and increased storm surges attributed to climate change have caused increasingly severe and widespread property damage nationally. In 2 012 alone, insured losses in the U.S. totaled $58 billion. The effects of climate change have been felt strongly in Virginia, particularly in the Virginia Beach/Norfolk/Ha mpton Roads81 region. " Commenter s also stated " EPA determined the carbon reduction bene fits of the CPP by using its SCC which measures these benefits on a global, rather than state

- specific scale. " " We applied EPA's SCC assumptions to the Virginia

- specific carbon reductions to calculate the carbon reduction benefits of the proposal. "

C ommenter s stated that " Climate change poses immense risks to public health, infrastructure, and economic vitality of New York City. " " The high winds and unprecedented storm surge that accompanied Sandy left 45 people dead in the City with countless others injured, with at least $19 billion in damages and lost economic activity in New York City alone. "

C ommenter reference d a study by the faculty of Harvard Medical School in 2011 which quantified social costs incurred in the U.S. by using coal to generate ele ctricity. The commenter s stated that study " estimates that the life cycle effects of coal and the waste stream generated are costing the American public from one

- third to over one

- half of a trillion dollars annually. The cost of complying with EPA's prop osed standard is trivial in comparison. " Commenter s also
state d " The Harvard study conservatively estimates that if all of the external costs of coal were accounted for, they would double or triple the price of coal. "

Some c ommenter s cited recent studies from Lawrence Berkeley National Laboratory, the National Institute of Environmental Health Sciences and the University of Washington that indicate that emission reductions from plant efficiency improvements, building infrastructure improvements, and substi tutions for lower carbon energy sources will generate between $6 and $30 billion in economic benefits due to reduced exposure to harmful emissions, equivalent to $40 and $198 per metric ton of CO2 generated. The commenter s also cited a 2013 IWG on the Soci al Cost of Carbon report which provided updated values on the cost of each metric ton of CO2 at $12, $43, $65, and $129 for the year 2020. The commenter s stated that while these figures may underestimate the true cost of carbon, the reports to illustrate t he potential impact of carbon emissions and highlight the urgency to act to protect public health and welfare from climate change.

Response 10: EPA thanks the commenters for submitting this information and agrees that the public health and climate benefits of the rulemaking far outweigh the estimate d annual costs of meeting the standards. Implementing the standards will generate climate benefits by reducing CO2 emissions. Carbon pollution leads to long

- lasting changes in our climate, such as rising global t emperatures; rising sea level; and changes in weather and precipitation patterns. These impacts lead to changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services, among other ef fects. The RIA presents a complete and detailed analysis of the final rulemaking’s benefits and costs of illustrative implementation scenarios

. See section V of the final rule preamble for a discussion of the costs of the final guidelines.

Comment 11: So me c ommenters discussed the comparison of costs and benefits and concluded that the RIA has incorrectly compared annualized costs to climate benefits . These commenters recommended comparing the present value of costs to the present value of benefits

.82 • Some commenter s stated that " The RIA compares levelized (or annualized) compliance costs to annual CO2 benefits. This is an inconsistent comparison with no practical meaning. The proper comparison is a comparison of the net present value streams of fixed and v ariable compliance costs and estimated benefits (both for CO2 and air pollution reductions). "

• Commenter s stated that the tons of reduction that are achieved in the three annualized years in the RIA (2020, 2025 and 2030) result from the full expenditure of the capital investments that enable those reductions, and that capital spending occurs entirely in the years before, not after, the emissions reductions can be achieved. The commenter s therefore stated that the values do not reflect the spending in the yea rs in which the society actually makes those investments of capital and labor. The commenter s presented an alternative comparison of the costs and benefits that omits the stream of benefits occurring beyond the year 2030. The commenters stated t his altern ative analysis showed smaller benefits relative to those presented in EPA’s RIA. Commenter s stated that

" the RIA's cost analysis indicates that the U.S. will have spent approximately $182 billion to comply with the CPP through 2030, yet the that will have globally accumulated by that time are estimated to be only $3.5 to 4.6 billion. The
commenter s concluded that any RIA that involves large upfront spending with delayed benefits should report the temporal patterns in the estimated benefits and costs in this manner.

• Other commenter s stated that readers may incorrectly assume the benefits presented for the years 2020, 2025, and 2030 will actually be experienced in those
years.

Commenter s stated that SC

- CO 2 estimates are projected for excessively long model time horizons.

Commenter s reiterated that the SCC is an estimate of the total benefits through 2300 of a ton of avoided incremental CO 2 emissions in any given year, stated as a present value in the year of emission. The commenter s described a few " aspects of the IAM calculations that cause most of that present value to be associated with benefits far in the future. "

Commenter s discussed the distributional impacts of the proposed rule's costs and benefits, stating that the RIA should discuss a " distributional question of who pays and who gains from the regulation from an income distribution perspective. " Commenter s also disagreed with use of the global SC

- CO 2

.

Re sponse 11: EPA disagrees with the comment that there is " no practical meaning " in the comparison between the levelized compliance costs and year

- specific benefit estimates. RIA, Chapter 3, discusses the basis for using levelized costs, stating that the power sector modeling and analysis reflect the EPA’s best assessment of likely impacts of the Clean Power Plan ( CPP ) under a range of approaches that states may adopt

, but due to uncertainty over the ultimate approaches adopted by states are " intended to be illustrative in nature " . The modeling is designed to reflect the rule’s requirements, including the timing, applicability to sources, and flexibilities83 across the power system as accurately as possible to represent the nature and scope of the CPP. The analysis is a reasonable expectation of the incremental effects of the rule and cost to t he power sector (inclusive of the cost of demand

- side energy efficiency), and is consistent with past EPA analyses of power sector regulatory requirements (and estimates of the costs and benefits). " The RIA, Chapter 3, concludes that " Although the analysis of the CPP does not include estimates of the costs and benefits of the CPP across each year of the rule in a year

- by

- year manner, the EPA has reflected the structure of the rule, including the interim and the final state goals of the CPP, in a manner that is consistent with the regulatory requirements. " Chapter 4 of the RIA likewise provides a robust discussion of the SC

- CO2 estimates used to estimate the benefits. Furthermore, it is not feasible to develop a stream of the benefits estimates for reductions in non

CO2 pollutant emissions as would be required for a net present value calculation given that emissions reductions for non

- CO2 pollutants are o nly available for certain years; thus quantified benefits from reductions of non

- CO2 pollutan ts are only available for those years. It is not appropriate to interpolate the benefits of reductions in non

- CO2 pollutant emissions between the years analyzed because regional power sector non

- CO2 emissions vary non

- systematically between years, making linear interpolation methods invalid.

EPA disagrees with the alternative benefit

- cost comparison presented by the commenter s that truncated benefits to the year 2030. EPA likewise disagrees with comment s that the rule's climate benefits do not represent an estimate of the damages avoided and with comments that the time horizon modeled is excessively long. The commenter s have misunderstood the basis for the benefit calculation and the nature of damages resulting from CO 2 emissions. The SC

- C O 2 estimate fo r the year 2030 represents the estimated present value of additional damages expected to be borne by society from the year 2030 through the year 2300 as a result of an incremental ton being emitted in 2030, not additional damages from the year 2010 to 2300 as incorrectly stated by some commenter s . Consistent with standard economic theory and practice, the SC

- CO 2 represents the present value of the stream of damages associated with forgone emissions in a given year, accounting for the long

- lived nature of gr eenhouse gases. The damages that result from a ton of CO 2 emitted in the year 2030, for example, accrue over time, and focusing only on the year of the CO 2 emissions change

— or the subset of years covered by the rulemaking 29

— would be inconsistent with standa rd economic theory and practice as it would fail to account for a substantial portion of the benefits associated with the emissions reduction. The 2010 TSD explains that each IAM was run through 2300 because of the long atmospheric lifetime of CO 2 ; using t oo short a time horizon could miss a significant fraction of damages under certain assumptions about the growth of marginal damages.

29 Note that this refers to SC

- CO2, i.e., the damages associated with an incremental change in emissions. The total benefits, i.e., the monetized value of all emission changes attributed to this rulemaking, are calculated based on emissions changes within the rulemaking time period, which in this case is through the year 2030.84 Regarding the comment that readers may not understand how to interpret present values, EPA notes that the preamble impacts discussion (Section XI) clearly defines the benefit estimates and references the RIA, which provides a detailed explanation to enhance readers’ understanding.

See section 8.7.2, comment 1, for additional discussion about the integrated assessment models ( IAMs) used to estimate the SC

- CO 2 ; section 8.7.2, comment 2 for discussion about the climate science components of the IAMs; section 8.7.2, comment 3 for discussion about the use of a global SC

- CO 2 rather than a domestic SC

- CO 2 ; and section 8.7.2, comment 8 for discussion about the application of the SC

- CO 2 estimates to the Clean Power Plan RIA.

See s ection V of the final rule preamble for discussion of costs of the emission guidelines and RIA Chapter 3 and RTC section 8. 5 for discussi on of the costs of the illustrative implementation scenarios analyzed by EPA

.
See section 8.6, comments 2 and 9, for discussion about distributional impacts.

Comment 12: Commenter stated that IAMs do not recognize the possibility that we will adapt to climate change, or that a reduction in GHG emissions in the United States might result in an increase in GHG emissions elsewhere and it is not possible to accurately measure the contribution of a regulation to climate change in isolation because other emissions and change factor s are not held constant.

Response 12 : EPA disagrees with the comment that the IAMs used to estimate the SC

- CO 2 do not recognize the possibility of adaptation to climate change. The 2010 TSD clearly states that each of the three IAMs assumes a certain degre e of low or no

- cost adaptation (page 31) and the current TSD discusses updates to treatment of adaptation in one of the models (page 11). 30 The 2010 TSD, however, acknowledges that the treatment of adaptation in the three models is incomplete. EPA and other members of the IWG have reconfirmed their commitment to periodic review and update of the SC

- CO 2 methodology and estimates to ensure tha t they continue to reflect the best available science and economics. To help synthesize the technical information and input reflected in SC

- CO 2 comments, including those on treatment of adaptation in the IAMs, and to add additional rigor to the next update of the SC

- CO 2 , the EPA and all of the other IWG members plan to seek indepen dent expert advice on technical opportunities to improve the SC

- CO 2 estimates, including the approaches suggested by commenters and summarized in this document. Specifically, EPA and all of the other IWG members plan to ask the National Academies of Sciences, Engineering, and Medicine (Academies) to examine the technical merits and challenges of potential approaches to improving the SC

- CO 2 estimates in future updates. Input from th e Academies, informed by the comments submitted to this

30 See https://www.whitehouse.gov/omb/oira/social

- cost

- of

- carbon for both TSDs

.85 rulemaking and the peer

- reviewed literature, will help to ensure that the SC

- C O 2 estimates used by EPA continue to reflect the best available science and methodologies.

8.8 HEALTH AND AIR Q UALITY CO

- BENEFITS

Comment 1: General Health C o

- B enefits

Commenters in this summary discussed the health benefits purported by the rule by avoiding illnesses and death.

Commenters stated support for the rule and the limits proposed for the reduction of carbon and other air pollutants emitted by power plants. The commenters said that the emission s reduction s of toxic air pollutants will prevent risk of hospitalization and emergency room visits, reduce health risks, premature deaths, and avoid diseases and missing s chool/work days.

Commenter s stated that according to the American Lung Association, nearly half of Americans live in counties that have unhealthy levels of dirty air. The commenter s said that dirty air caused by carbon pollution disproportionately affect s low

- income communities, children, seniors and those who work or play outdoors. The commenter s added dirty air can also lead to hundreds of missed work and low activity days.

Commenter s stated that the proposed rule will reduce the pollution that leads to soot and smog (ground

- level ozone) by more than 25 % . The commenter s said that pollution reductions in 2030 are projected to avoid thousands of premature deaths, heart attacks and hospital admissions, up to 150,000 asthma attacks in children, and almost 50 0,000 missed school and work days.

Commenter s state d that lifesaving benefits to public health can begin immediately, explaining that in addition to reducing the longer

- term risks from climate change, steps to cut carbon pollution will cut other toxic emis sions as well. Commenter s offer ed estimated reductions that include: 54,000 to 56,000 tons of PM 2.5 ; 424,000 to 471,000 tons of sulfur dioxide; and 407,000 to 428,000 tons of nitrogen dioxide. Those pollutants directly form particulate matter and ozone tha t cause widespread harm and premature death as described earlier. Commenter s state d that based on those reductions, EPA estimated that implementing the Clean Power Plan could avoid 2,700 to 6,600 premature deaths in 2030. In 2030, children would suffer 140 ,000 to 150,000 fewer asthma attacks. People with cardiovascular disease would have 340 to 3,300 fewer heart attacks, and hospital admissions for cardiovascular and respiratory conditions would drop, with 2,700 to 2,800 fewer admissions in 2030. Commenter s note d that it is important to recognize that the modeling actually minimizes the real

- world benefits of these reductions, explaining that the EPA's use of established BenMAP modeling is appropriate to make these estimates, but the predictions focus on fin dings from certain studies looking at specific outcomes. Commenter s note d that the BenMAP model cannot estimate the impact on other, also demonstrated, benefits; for example, although the World Health Organization has determined that particulate matter

cau ses lung cancer, science currently lacks appropriate modeling to estimate how many fewer cases of lung cancer would occur in 2030 with the reductions in particulate matter.86 Commenter s stated that combustion from fossil fuels, particularly from coal, emits numerous air pollutants into the atmosphere that have serious ramifications for public health and well

- being, including SO 2 and NOx. The commenter s said that coal plants are the leading source of SO 2 and NOx emissions in the United States, with an average controlled unit emitting between 7,000 and 3,000 tons per year, respectively; while if uncontrolled, the unit can emit an average of 14,000 and 10,000 tons per year, respectively. The commenter s also said that once emitted into the atmosphere, SO 2 forms PM 2.5 , or soot, which can cause asthma attacks, chronic obstructive pulmonary disease (COPD) , stunted lung development, lung cancer, stroke, heart attack, and congestive heart failure. The commenter s said that fossil plants also emit PM 2.5 and PM 2.5 precur sors directly into the atmosphere, and while control technologies exist to limit these emissions, substantial emissions still result from the operation of well

- controlled units. The
commenter s said that NOx compounds interact with volatile organic compounds (VOCs) in the presence of sunlight to form ground

- level ozone, a highly toxic and reactive pollutant and that at times ozone can also interact with other atmospheric matter to form a smoky f og of deadly pollutants known as smog.

Commenter s stated that until the U.S. can get a handle on the dirty air, exacerbated by the climate change caused by carbon pollution, we will continue to see thousands of premature deaths, respiratory disease, and a higher risk of asthma attacks.

Commenter s stated that the benefits of reducing carbon emissions will not only be to ameliorate climate change but also to improve public health as we clean up our air and water.

Commenter s cited statistics by American Lung Association that 47 % of Americans " live where pollution levels are too often dangerous to breathe " and that ozone was much worse in 2010 and 2012 due potentially to warmer temperatures. The commenter s said the proposed rule is a critical piece in reducing dangerous pollution levels.

Commenter s similarly stated that s tandards limiting carbon dioxide (CO 2 ) emissions from existing power plants can also decrease emissions of non

- carbon pollutants (co

- pollutants) from the electric utility sector such as sulfur dioxide (SO 2 ), nitrogen oxides (NOx), and directly emitted particulate matter (PM). The commenter s said that as a result, the standards can contribute to improved air quality, public health co

- benefits, and environmental improvements.

Commenter s stated that fine particles and ground

- level ozone are serious health pollutants. The
commenter s provided a list of respiratory diseases as a result of breathing ground

- level ozone.

Commenter s stated that the projected electric power price increase of 6

- 7% by th e proposal is a paltry price to pay, especially when considering the existential threat from GHG. The
commenter s added that the health co

- benefits are larger than the costs.

Commenter s stated concerns with regard to higher temperatures and harmful air pol lution in public health. The commenter s said that we need to have a strong CPP in place to cut carbon pollution and lessen the burdens on the health of millions of Americans. The commenter s urged EPA to adopt standards that will ensure we do as much as we can to fight these threats and protect public health.87 Commenter s stated that by cleaning up and modernizing power plants we will begin to clean up our air and curb climate disruption. The commenter s said that by reducing carbon pollution from power plant s we will save billions of dollars each year.

Commenter s stated that re

- dispatching from less efficient EGUs (presumably older) to more efficient EGUs (presumably newer) would also result in less emissions of other pollutants, as the newer units are likely to have greater and more effective pollution controls. The commenter s added that any reduction in the use of coal

- fired EGUs or improvement in the ef ficiency of coal

fired EGUs has significant and quantifiable impacts on environmental and public health.

C ommenter s stated that based on EPA's estimates the proposed rule will have a real and

measur e able positive impact on air quality and public health across the nation. The commenter s further stated that if EPA strengthens the state targets, the health benefi ts, in terms of the number of lives saved and asthma attacks avoided, will increase markedly.

Commenters stated that EPA's proposed limits on carbon pollution from power plants will lead to significant health benefits, including " prevent up to 4,000 premature deaths and 100,000 asthma attacks in the first year they are in place, and prevent up to 6,600 premature deaths and 150,000 asthma attacks in 2030 " as stated by Harold Wimmer, National President and CEO of the American Lung Association. Commenter s said that when some of the big polluters try to persuade EPA to weaken the standards so they can continue to profit while putting the health of all Missourians at risk, they hope EPA will stand strong and require them do their part to make
our state a sa fer place to live and breathe.

Commenter s stated that the financial benefits of this rule are undeniable. The commenter s said that climate and health benefits are estimated to be $55 billion to $93 billion by 2030 and that these monetary benefits outweig h annual costs of the plan, which are estimated to be $7.3 billion to $8.8 billion in 2030. The commenter s said that the rule is also expected to reduce electricity costs, and that by 2030 electricity bills are expected to be roughly 8 % lower than would be the case under " business as usual, " and this will save Americans about $8.00 on an average monthly residential electricity bill.

Commenter s stated that based on soot and smog reductions alone (25% by 2030 as projected by EPA), for every dollar invested t o comply with the proposed regulations, American families will see up to $7 in health benefits

.

Commenter s stated that reducing carbon pollution will result in less illness and less days lost at work and school, less disability, fewer deaths, reduced hospi talizations, and other related healthcare costs which all equate to a savings to our economy of over $1.3 trillion or 9.6% of GDP

.

Commenter s urged the states and national leaders to respond positively to the proposed carbon rules with investments in great er energy efficiency to move to a carbon free and toxin free energy development program. The commenter s said that we need to move swiftly to approve this Clean Power Plan, to slow down our carbon pollution and to make sure dirty energy does not cause physi cal harm to more generations of Americans.88 Commenter s stated that they would like to see the EPA demonstrate how each of their proposed methods for carbon reduction in the Clean Power Plan protects human health. The commenter s said the Clean Power Plan does not address all these environmental impacts to human health and externalities of the whole fuel

- cycle as the basis for decision

- making, and as such, it is assumed that human costs are acceptable even though alternatives exis t that will not expose people to harm.

Commenter s stated combusting fossil fuels

- - particularly coal

- - not only drives global climate change, but also emits numerous air pollutants into the atmosphere that have serious ramifications for public health and well

- being. The commenter s said that as components of the overall PM 2.5 mix, emissions of fine nitrate and sulfate particles cause significant pulmonary and cardiovascular ailments and lead to increased rates of missed work, hospitalization, and prematur e death. The commenter s added that coal

- fired EGUs are responsible for more than half of the human

- made emissions of mercury. The commente rs also said that coal

- fired plants that are not properly controlled can emit significant quantities of other hazardo us air pollutants, including toxic heavy metals such as lead and cadmium, carbon monoxide, volatile organic compounds, and arsenic. The commenter s said that pollution from coal plants causes tens of thousands of premature deaths, emergency room visits, and heart attacks each year, and hundreds of thousands of asthma attacks, which amounts to over $100 billion in annual health care costs. The commenter s said that EPA has issued regulations to reduce these emissions, but until we transition to genuinely clean energy, the lives and health of countless Americans remain at risk.

Commenter s also stated that Alpine Geophysics, LLC and ENVIRON International Corporation analyzed ambient air quality data on regional and state geographic scales. The commenter s said th at the report, which tracked the trends of PM 2.5 and ozone emissions, found that emissions have significantly decreased and air quality is significantly improved as a result of recently adopted regulations, and is expected to continue to improve as existin g regulations are fully implemented in the upcoming years.

C ommenter s said that other recent proposed and final federal rule

- makings will act in concert with the proposed rule to reduce air pollution, and provided examples of other recent EPA rules that w ill improve air quality. The commenter s requested that EPA finalize health standards for ozone at 60 parts per billion in its 2015 NAAQS review and draft a future transport rule to address the 2011 PM 2.5 NAAQS and 2008 ozone NAAQS.

Commenter s stated that EE and RE have multi

- pollutant benefits, and as EE and RE programs reduce demand for fossil fuel

- fired generation, states can achieve emission s reductions of GHGs, criteria air pollutants and hazardous air pollutants. The commenter s said that this is particularly true on high energy demand days

, which often coincide with poor air quality.

Response 1: The EPA agree s that poor air quality results in negative health effects and that reducing levels of fine particles and ozone will lead to signifi cant human health benefit s

. EPA estimates the benefits of reductions in of SO2, NOx, and fine particles using methods based on the best available peer

- reviewed science that have been reviewed by the EPA’s independent Science Advisory Board and the Nationa l Academy of Sciences (NRC, 2002). These benefits estimates indicate that the Clean Power Plan will result in substantial health benefits beyond those expected to result from other EPA regulations.89 National Research Council (NRC). 2002

. Estimating the Pub lic Health Benefits of Proposed Air Pollution Regulations. Washington, DC: The National Academies Press. Washington, DC.

Comment 2: Including Co

- Benefits

Commenters in this summary raised issues related to assumptions and methods used for the determination of health benefits associated with the rule.

Commenter s argued against the comments that state that EPA's consideration of indirect and qualitative benefits from the rule is inappropriat e. The commenters stated that EPA's treatment of these co

- benefits and qualitative benefits is well

- justified based upon agency practice and Office of Management and Budget ( OMB ) guidance stretching back decades. The commenter s said that if anything, EPA should give even more consideration to qualitative benefits in its final rule and regulatory impact analysis.

Commenter s stated that EPA's cost

- benefit analysis for this proposed regulation is troublesome. The commenter s said that EPA continues to justify a regulation with benefits that are derived not from the pollutant that EPA cites as the justification for promulgating the regulation (carbon dioxide), but from pollutants incidentally reduced by the primary regulatory requirements (ozone and particulate matter).

Commenter s also argued that the new rule is promulgated to solve many problems such as fine particles pollution. The commenter s said that according to EPA, PM 2.5 levels have decreased nationally by 34 % since 2000, and raised the question of why additional regulations on this pollutant are necessary.

Commenter s stated that i ncluding co

- benefits obscures the impact of the rule on the targeted pollutant (CO 2 ) and hinders both the public's ability to understand the a ge ncy's policies and to hold the a gency accountable for those policies. The commenter s said this also hinders EPA's own ability to improve the analysis underlying its regulatory initiatives.

Commenter s stated that EPA's justification for double

- regulation with regard to criteria pollutant s is not sufficient because the agency is also working on tightening standards on current rules, so therefore, they are not static like this proposed rule implies. The commenter s said that EPA fails to explain whether further emissions reductions are desir able or feasible and that EPA should justify the proposed rule based on climate benefits alone.

Commenters stated that EPA has improperly included co

- benefits from reductions of pollutants other than CO 2 (e.g. fine particulates, ozone, sulfur dioxide and n itrogen oxides) that are regulated to levels protective of public health under other regulations. Commenter s said that EPA's estimate of as much as $62 billion in 2030 in " air pollution " co

- benefits is irrelevant, inappropriate, and should not be included.

Commenters stated, " The EPA should not be claiming co

- benefits from reductions in other pollutants such as sulfur dioxide (SO 2 ) and nitrogen oxides (NOx) from the proposed rule. " " Not only are criteria pollutants not the purpose of the proposed rule, the EPA’s claimed co

- benefits90 from the proposed rule are likely overestimated. " " It is in appropriate for the EPA to claim a benefit from reducing a criteria pollutant in a nonattainment area for this proposed rule when that reduction is already required to occur under separate CAA obligations regardless of whether the EPA adopts the proposed carbon pollution emission guidelines for existing power plants. "

Commenters stated that EPA’s reli ance on co

- benefits from simultaneous reductions in pollutants other than GHGs is misplaced and must be revised to more appropriately reflect the health benefits that would actually be attributable to this proposed rule.

Commenter s stated that including cr i teria pollutants, SOx, NOx and p articulate m atter (PM), already regulated by a variety of regulations, double counts those benefits attributed to CPP. The
commenter s added that if the existing regulations are effective at protecting human health to the
st andards established by the EPA, then it is not clear that further reductions would provide additional health benefits. The commenter s added that in the case that the existing regulations are not sufficient to protect human health, then, there may be a case for the EPA to consider cost

effective measures that will further reduce the pollutants without the need for measures targeting reductions in carbon dioxide. The commenters stated that the inclusion of " co

- benefits " in the RIA results in massive overestim ation of the benefits of the CPP. The commenter s said that if

co

- benefits are removed, it is most unlikely that the benefits of the CPP would exceed the costs.

Commenter s stated that the inclusion of co

- benefits exposes two structural deficiencies in the RIA: 1) inclusion of global benefits compared to domestic costs, and 2) the use of different time horizons for estimated costs and for estimated benefits. The commenter s said that both are conflicting with OMB direction, and further distort the cost and be nefit calculations in the RIA.

Commenters said that nearly 40% of EPA's assumed benefits are international carbon benefits, and 60% are health co

- benefits from reductions of other emissions, not CO 2 . The commenter s added that over 90% of these assumed glob al carbon benefits accrue outside the U.S., while the costs are borne only in the U.S. The commenter s said that these perceived co

- benefits are not related to carbon dioxide removal, and their claimed value, reliable or not, result from other EPA rules th at address those emissions directly.

Commenter s stated that EPA uses a cost/benefit analysis in justification of the rule that improperly calculates the rule's expected benefits and fails to account for the global nature of climate change. The commenter s also stated that the cost/benefits analysis is flawed since on average 60% of the claimed monetary benefit used in EPA's cost/benefit analysis for this rule relies on non

- GHG emission s

- r elated health claims. The commenter s said that it is unsupportable an d bordering on disingenuous for EPA to make its claims for the health benefits of the 111(d) rule using this " double

- counting " method.

Commenter s stated that EPA is double

- counting benefits of the proposed rule because reducing particulates is governed by other regulations. The commenter s stated that the technique skews the cost

- benefits and imposes unnecessary costs which have impacts on human health due to higher electricity prices and economic constraints on the U.S. economy that have not been addressed and weighed against the speculati ve benefit conclusions presented by EPA.91 Commenter s suggested that EPA should focus on calculating the benefits of reduce d carbon emissions because the proposed rule regulates carbon and that the proposed rule should not be used as a catch all for a desir ed air quality scheme. The commenter s remarked that there is no relationship between reduced carbon emissions and improved human health aside from the indirect effect on climate. The commenter s added that experts at the Harvard School for Public Health hav e estimated that expensive environmental rules save 100 times fewer lives than when the federal government redeployed those assets to address higher risks and stated that EPA should not be so cavalier in its benefits analysis.

Commenter s stated that EPA is mistaken in asserting that this rule would result in net benefits from avoided negative health effects. The commenter s said that based on CDC data more people are dying each year, but stated that this is because of an increase in the population and peopl e getting older. The commenter s said that when the increase in the population size and age is factored into the death rate, the overall trend is that the death rate is declining. The commenter s said that anthropogenic climate change does not seem have slow ed the decline of the death rate, but may have actually increased the speed of the decline.

Commenter s argued EPA estimates that in order to achieve their building blocks, concurrent reductions in criteria pollutants will occur, but the rule contains no en forceable standards for criteria pollutants. Commenters stated i f compliance with the rule does not need to follow EPA's building block approach, EPA cannot claim the concurrent reductions of an estimated path to a building block that they will not enforce . In other words, the rule claims a side

- benefit that won't necessarily occur.

Commenter s stated that EPA's reliance on co

- benefits violated the CAA. The commenter s said the majority of the alleged net benefits of the rule proposal are derived from co

- benefits of reducing non

- GHG pollutants, primarily PM 2.5 and ozone. The commenter s said this approach is flawed because: 1) there is no basis in CAA Section 111(d) to i nclude the co

- benefits of emissions reductions from pollutants not targeted by the rule, 2) any inclusion of co

- benefits effectively double

- counts the benefits of these reductions that are already regulated by other rules, 3) EPA is counting the benefits o f these reductions in criteria pollutants in areas that have already achieved attainment with NAAQS and these areas are not shown to receive any additional benefits, and 4) calculation of the benefits uses a no

- threshold linear

- regression

- to

zero model des ign, which counts the benefits of even the smallest reduction in PM 2.5 . The
commenter s said this contradicts all standard procedures for health analysis, by not establishing a threshold

- cut off to determine benefits of reductions.

Commenter s stated that em ission trading mechanisms such as the Regional Greenhouse Gas Initiative (RGGI) have proven very successful at cost

- effectively reducing carbon dioxide emissions and simultaneously generating funds can be used to promote renewable energy and energy efficie ncy. Commenters stated that, however, to the extent they allow coal

- fired power plants to continue operating at full capacity and purchase emissions credits, such trading programs ignore the co

- benefits that occur when a power plant actually reduces its ca rbon dioxide emissions. Commenters stated that these co

- benefits include reductions in emissions of heavy metals and smog

- creating air pollution. Commenters stated that the EPA should be cognizant of the problem and strive to generate a rule that not only addresses climate change but also ensures that communities near power plants actually breathe cleaner air.92 Commenter s stated that efforts for carbon emissions reductions also cut emissions of nitrogen oxide, sulfur dioxide and mercury, which affect public health.

Commenter s stated that the rule will have the substantial co

- benefit of bringing about significant additional reductions in other air pollutants that are subject to NAAQS. The commenter s said there will be significant reductions in sulfur dioxide, nitrogen oxides, and fine particulate matter (PM 2.5 ) pollution, and that mercury emissions will probably also be reduced. The commenter s said that overall it is expected there will be a 25 % reduction in soot and smog (ozone) pollution.

Commenter s stated that p rivate sector

- delivered energy efficiency projects produce significant

non

- GHG air quality benefits by reducing the level of needed electric generation and, therefore, the associated emission s of criteria pollutants. The commenter s said EPA has ident ified energy efficiency as an eligible tool to be used in SIPs to comply with NAAQS. The commenter s said that as NAAQS are tightened in future years, and more areas are placed in nonattainment, the co

benefit of reducin g criteria pollutants through energy efficiency will be highly valued. The
commenter s added that whether projects are pursued for cost savings, GHG reductions, or energy savings, the benefits of reducing criteria pollutants are always present.

Commenter s stated that the benefits identified by EPA are derived from the reductions of criteria pollutants and not CO 2 reductions, and that depending on the discount rate that is applied, these

co

- benefits can be as much as an order of magnitude greater than the benefits associated with reducing CO 2 em issions alone. The commenter s said that it is arbitrary, capricious, and unreasonable for EPA to justify the rule based on ancillary or unintended benefits. The
commenter s said that if EPA seeks to regulate a pollutant under Section 111, it must demonstra te that health and environmental benefits from reducing emissions of that pollutant will be cost

effective. The commenter s also added that EPA's reliance on co

- benefits from reducing emissions of criteria pollutants is particularly problematic because EPA is barred from directly regulating criteria pollutants under Section 111(d). The commenter s said that EPA's approach here would allow it to indirectly regulate criteria pollutants from a source category by finding a surrogate air pollutant that can be re gulated under Section 111(d), and added that if EPA moves forward with this rule, it must justify it solely on the domestic benefits of reducing CO 2 emissions, a standard that EPA is unlikely to meet.

Commenter s stated that EPA inappropriately relies on th e benefits of reductions in criteria pollutant levels for economic ju stification of the proposed r ule. The commenter s said that in evaluating the economic benefits of the proposed rule, EPA not only quantified the climate benefits from reduced emissions of CO 2 but also added in the health co

- benefits from reduced exposure to fine particulate matter (PM 2.5 ) and ozone. The commenter s said that between 45

- 69% of all of the benefits said to be related to this proposal are in the form of co

- benefits related to h ealth

- based standards.

Commenter s argued EPA's statement with regard to " the net climate and health benefits of $48 billion to $82 billion " of the rule, stating that in order for EPA to assert that this rule will r esult in America expanding its economy by billions of dollars, the benefits must be real, must be attributable to the requirements of this rule only, and must be enforceable. The commenter s said that since the vast majority of EPA's calculated " benefit " is based on estimated health benefits from other rules such as CS A PR, it urges the EPA to assign true co

- benefit from the rule for an93 appropriate evaluation of the regulatory benefit. The commenter s said that not only should EPA refrain from double

- counting co

- benefit s , the health benefit can only be attributed to a rule that will enforce the claimed criteria pollutant reduction s

.

Commenter s stated that EPA has provided no legal basis for relying on " health co

- benefits " and that EPA has provided little quantitative evidence to support these values. Commenter s stated that NAAQS should be properly set to achieve and maintain public health so there should not be a substantial number of avoidable deaths and illnesses attribu table to the proposed rule. The
commenter s further stated that the exorbitant costs of the proposal and unproven benefits mandate withdrawal of the proposed rule.

Commenter s stated that the majority of the alleged net benefits of the r ule p roposal are der ived from co

- benefits of reducing non

- GHG pollutants, primarily PM 2.5 and ozone. The commenters stated that is flawed and provided arguments for this as follows. The commenter s said that there is no basis in CAA Section 111(d) to include the co

- benefits o f emissions reductions from pollutants not targeted by the rule. The commenter s said that there is certainly no endangerment finding related to these co

- benefit pollutants and that the listed NAAQS criteria pollutants are specifically excluded from Section 111(d) rulemaking; therefore, these pollutants have no basis to be considered in the cost

- benefit analysis in this rulemaking. The commenter s also stated that any inclusion of co

- benefits effectively double

- counts the benefits of these reductions. The

com menter s said that co

- benefits from the reduction of ozone, and particularly PM 2.5 , are already counted in numerous other rules. The commenter s also stated that EPA is counting the benefits of these reductions in criteria pollutants in areas that have alrea dy achieved attainment with the relevant NAAQS; therefore, these areas are not shown to, statutorily, receive any additional benefit from reductions in those attainment areas.

Commenter s stated that a ttempting to overhaul the entire electricity market to a ddress the same acute health impacts already more thoroughly regulated as criteria pollutants is the wrong approach. The commenter s said that by justifying this rule based almost entirely on secondary criteria pollutant reductions of pollutants already reg ulated, U.S. EPA has overstepped logical regulatory authority. U.S. EPA cannot ride the coat tails of reductions applicable under other Clean Air Act (CAA) programs as justification for a proposal to reduce CO 2 emissions.

Response 2: The EPA agrees with th e commenters that it is appropriate to evaluate all of the direct and indirect benefits of the proposed rule, including the air quality co

- benefits resulting from anticipated reductions in SO2, NOx, and fine particle emissions. The EPA disagrees that it is double

- counting the benefits of this proposal . A ll of the estimated health benefits are attributable to the emissions reductions associated with this rule . The estimated health benefits

are incremental to a baseline that includes existing regulations. C onsistent with OMB (OMB, 2003) and EPA guidance (U.S. EPA, 2010a) the EPA estimates all of the anticipated costs and benefits associated with a regulatory action, to the extent feasible, for the purpose of determining the likely impacts, not to justify an action. Accounting for ancillary benefits is standard practice in benefit

- cost analysis, regardless of the rule’s intended purpose. The EPA disagrees with the
comment ers that PM 2.5 health co

- benefits should be excluded in e stimati ng the health benefits

a nticipated by this proposal

. As a direct result of the actions needed to meet the CO 2 requirements of the proposed rule, the proposed rule is expected to achieve substantial PM 2.594 health benefits resulting from primary PM and SO 2 emission s reductions

, and these co

- benefits are an important and real benefit to quantify.

Consider ing ancillary benefits in benefit

- cost analysis is directed by OMB Circular A

- 4 ( OMB 2003, p. 26)

-- " Your analysis should look beyond the direct benefits and direct costs of yo ur rulemaking and consider any important ancillary benefits and countervailing risks. An ancillary benefit is a favorable impact of the rule that is typically unrelated or secondary to the statutory purpose of the rulemaking (e.g., reduced refinery emissio ns due to more stringent fuel economy standards for light trucks) while a countervailing risk is an adverse economic, health, safety, or environmental consequence that occurs due to a rule and is not already accounted for in the direct cost of the rule (e. g., adverse safety impacts from more stringent fuel

- economy standards for light trucks). " Considering ancillary benefits is also directed by the EPA’s Guidelines for Preparation of Economic Analyses ( U.S. EPA, 2010a p. 11

- 2 )

-- " An economic analysis of
reg ulatory or policy options should present all identifiable costs and benefits that are incremental to the regulation or policy under consideration. These should include directly intended effects and associated costs, as well as ancillary (or co

- ) benefits a nd costs. "

EPA also disagrees with the commenters that it is inappropriate to use a log

- linear no

- threshold model in calculating the benefits of PM2.5 reductions. The most recent review of the PM.25 scientific literature contained in the peer

- reviewed Int egrated Science Assessment for PM2.5 (U.S. EPA, 2009) concluded that " Overall, the studies evaluated further support the use of a no

threshold log

- linear model. "

In addition, t he EPA disagrees with the commenters that the benefits of the proposed rule do not exceed the costs. The benefits of this proposed rule include the benefits of CO 2 reductions and the co

- benefits to human health achieved by PM 2.5 and ozone precursor emissions reductions. As the analyses presented in the RIA indicate for the illustrati ve implementation scenarios analyzed

, the benefits outweigh the costs by a large margin. We further note that we were unable to monetize other important benefits, including additional health benefits of reductions in ozone and PM 2.5 , direct health benefits associated with reducing NOx and SO 2 emissions, and benefits of reducing mercury emissions. If we were able to fully monetize these benefits, the benefits would exceed the costs by an even greater margin

. Office of Management and Budget (OMB). 2003. Circular A

- 4: Regulatory Analysis. Washington, DC. Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a

4.html.

U.S. Environmental Protection Agency (U.S. EPA). 2010a. Guidelines for Preparing Economic Analyses. E PA 240

- R

- 10

- 001. National Center for Environmental Economics, Office of Policy Economics and Innovation. Washington, DC. December. Available on the Internet at http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE

- 0568

- 50.pdf/$file/EE

- 0568

- 50.pdf.

Comment 3: R elation to NAAQS and Effects at Low Concentrations95 Commenters in this summary discussed the overlap between the benefits attributed to the proposed rule and the pollutant reductions related to NAAQS.

Commenter s stated that nearly all of the health benefit s that EPA claims are from reductions in ozone and particulate matter emissions, which are already a result of regulations under NAAQS and other recent stringent regulatory actions. The commenter s said that further reducing carbon dioxide emissions does no t prevent asthma or reduce incidents of heart attacks, but these are the health benefits pedaled to the public.

Commenters stated " Section 111(d) excludes regulation of NAAQS pollutants like PM 2.5 and

ozone. " " Although the proposed rule does not purport t o regulate PM 2.5 and ozone directly, a significant majority of projected benefits of the proposed rule come from reducing those NAAQS pollutants. " " Counting PM 2.5 and ozone reductions as benefits of the rule violates the statutory prohibition on regulatin g NAAQS pollutants through Section 111(d). "

The commenter s said that currently historically low levels of ozone are not a significant concern for human health, and future levels will be even lower. The commenter s said that EPA uses selective characterizat ion of evidence. The commenter s added that laboratory studies with human volunteers indicate that an 8

- hour ozone standard of 85 ppb is protective of human health with room to spare.

Commenter s stated that EPA counts the benefits associated with reductions in criteria pollutants in locations that attain the NAAQS, when EPA has not shown that the emissions reductions that will flow from this rule are necessary to achieve any NAAQS.

Commenter s stated that i n addition to counting benefits from PM 2.5 and ozone reductions already mandated by the relevant NAAQS, the proposed rule counts benefits of reducing emissions of these pollutants even below the level required by the NAAQS. The commenter s said that specifically, the RIA asserts that its benefits " estimates i nclude health co

- benefits from reducing fine particles in areas that are in attainment with the PM 2.5 NAAQS, down to the lowest modeled concentrations. " The commenter s said that including these benefits is contrary to the NAAQS regulations' premise that th ese " benefits " are inconsequential.

Commenter s stated that it is improper for the proposed rule to count PM 2.5 and ozone reductions below the NAAQS as benefits, because the NAAQS represent the level of pollution control EPA deems " requisite to protect the public health " with " an adequate margin of safety. "

Commenter s cited a statement by a former Chairman of the Texas Commission on Environmental Quality which stated that " If reducing particulate matter had the enormous benefits that EPA's analysis claims, it has a legal responsibility to lower the national ambient standard to a level that is actually protective of human health. The fact that it has not done so suggests that the EPA does not really believe its own numbers. The EPA set the new NAAQS for

annu al PM 2.5 at 12 ug/m 3 , an ambient level still far above the lowest measured levels (LMLs) that the EPA used to identify risk of death in cost

- benefit analyses... This...gives a misleading picture of the relative costs and benefits of EPA regulations " . Kathl een Hartnett White & Josiah Neeley, WHO REGULATES THE REGULATOR?: COST

- EFFECTIVENESS ANALYSIS IN TEXAS STATE AGENCY RULEMAKING, 14 Tex. Tech. Admin. L.J. 401, 412 (2013).96 Commenter s added that to avoid the implication that the proposed rule is claiming ben efits from reducing emissions of pollutants below the levels at which they have a significant effect on human health, the RIA improperly jettisons the assumptions and models on which EPA relied in setting the NAAQS. The commenter s said the RIA explicitly " assume[s] that the health impact function for fine particles is log

- linear without a threshold in this analysis. " The commenter s said that this assumption violates the best available science on which EPA relied when it updated the PM 2.5 NAAQS in 2013. The commenter s said that in that rulemaking, the agency selected a threshold of 12.0 ug/m 3 because " it was somewhat below the lowest long

- term mean concentration shown by certain key epidemiologic studies to cause adverse health effects. " Nat'l Ass'n of Mfrs. v. EPA, 750 F.3d 921, 924 (D.C. Cir. 2014). The commenter s said that by counting PM 2.5 reductions in areas that are already in attainment with the NAAQS, " down to the lowest modeled concentrations, " the proposed rule assigns mortality

- avoidance benefits to reducing PM 2.5 below the level at which that pollutant has a measurable effect on mortality.

Commenter s stated that the proposed rule contradicts the 2013 PM 2.5 NAAQS rule's determination that " an annual standard level of 12 ug/m 3 would be requisite to protect the public health with an adequate margin of safety from effects associated with long

- and short

- term PM 2.5 exposures, " because that level is " somewhat below the lowest long

- term mean concentration in the full set of studies considered. " The commenter s said that in the PM 2.5 NAAQS rule, EPA explicitly considered and rejected proposals to mandate lower levels of PM 2.5 , because such a standard is not necessary to adequately protect human health. The commenter s said that the
pro posed rule ignores these conclusions and treats all emissions reductions alike, whether or not they occur below the NAAQS level.

Commenter s stated that EPA provides no adequate explanation for its decision to count PM 2.5 mortality benefits all the way down to the lowest measured level (LML). The commenter s added that decision contradicts the PM 2.5 NAAQS rule's conclusion that the limited evidence of PM 2.5 's contribution to adverse health effects at low concentrations " does not justify " a more stringent
stan dard.

Commenter s proposed several reasons why the co

- benefit estimates are overstated and should also not be included in the RIA. First, the commenters stated that many of the estimated benefits are associated with PM 2.5 and ozone reductions that are alrea dy at levels below the Federal health standards for those pollutants that are set at a level that protects the public health with an adequate margin of safety. The commenter s discussed the review process used to set and accept confident and protective NAAQ S standards by EPA and the District Court, and the uncertainties associated with levels below the set standard. Therefore, the commenters stated that the RIA is only able to generate large co

- benefits estimates by assuming that EPA has full confidence in t he existence of the health effects associations all the way to zero ambient concentrations, but benefits may be de minimis. The commenter s noted that these reductions may be enforced without the proposed rule by implementation of other regulations, and th ese benefits have nothing to do with climate change

.

Commenter s recommended counting only exposure above the scientifically established National Ambient Air Quality Standard when calculating reduced premature deaths, which drops the health benefits from $6 2 billion to $3 billion. The commenter s said that the rationale for this is that the scientifically established National Ambient Air Quality Standards are set to a level that97 will not cause harm in even sensitive groups, such as asthmatics. The commenter s also said that $59 billion of the $62 billion, or 95%, in estimated annualized health cost savings is based on the misguided assumption that exposure to fine particle pollution (PM 2.5 ) levels below the Air Quality Standard is harmful.

Commenter s stated that the EPA estimated health co

- benefits are based almost entirely (greater than 98%) on premature deaths avoided by reducing PM 2.5 emissions. The commenter s said that since the average PM 2.5 levels in the US are 25% below the National Ambient Air Quality Standard (NAAQS), there should be no premature deaths avoided due to reduced ambient levels of PM 2.5 . The commenter s also said that they believe the ESPS costs ( $ 8.8 billion annually in 2030) will likely greatly exceed the monetized benefits (between $27 billion to $62 billion annually) as estimated by EPA.

Commenter s stated that EPA does not reflect the increasing uncertainty in claiming mortality benefits from reductions in PM 2.5 at lower ambient concentrations, where much of EPA's claimed mortality ben efits occur. The commenter s said that OMB Circular A

- 4 requires a quantitative analysis of uncertainty for rules as costly as the proposed ESPS regulation and that in the RIA, EPA adds the highly uncertain mortality benefits calculated by applying the conc entration

response functions ( CRFs ) at lower ambient concentrations to the less uncertain benefits calculated by applying the same CRFs at higher levels. The commenter s expressed concerns in applying the selected CRFs at " lower levels " in either of two wa ys: 1) At levels lower than the primary NAAQS for PM 2.5 , which presumably establishes an ambient concentration below which
exposures are " safe; " and 2) At levels lower than most of those considered in the epidemiology studies underlying the CRFs; at these lower levels the CRFs estimated in the studies become highly uncertain. The commenter s said EPA has not estimated in this RIA the fraction of PM 2.5 mortalities avoided due to the proposed rule that will occur among individuals exposed at less than the curr ent NAAQS, but assumed that this fraction is high. The commenter s added that one would think that EPA would somehow reflect in the benefits analysis the uncertainty of benefits estimates at lower ambient concentrations if 65

- 95% of EPA's total calculated b enefits accrue to individuals who are exposed at levels deemed to be " safe "

.

Commenter s stated that there is another sort of uncertainty when EPA calculates mortality benefits at ambient PM 2.5 concentrations approaching the lower extreme of the concentrati ons analyzed in the epidemiological studies from which EPA selected the CRFs. The commenter s said the statistical uncertainty of a slope relationship (e.g., a CRF) estimated from a scatter of data points will typically widen substantially as one moves tow ard the extremes of the underlying data. The commenter s said that uncertainty about the magnitude of the CRFs estimated in the two selected studies increases as one approaches the lowest measured levels (LMLs) of ambient average PM 2.5 concentrations that prevailed in the cities comprising the datasets analyzed in the two studies. The commenter s said the confidence interval may even widen sufficiently so that the estimated CRF is not statistically significantly different from zero at or near the LML, even though the average slope over the full range of the underlying data is statistically significant. The commenter s added that the a gency does nothing in any quantitative way in the benefits analysis in the ESPS RIA to reflect this increasing uncertainty at lower concentration levels.98 Commenter s added that EPA calculated that 89% of the U.S. population modeled in the ESPS RIA is exposed at PM 2.5 concentrations below 1 standard deviation below the mean air quality in the Krewski et al (ACS) data set. The co mmenter s said that based on Lepeule et al (2012), they estimated that 93% of the population considered in the ESPS RIA is exposed at levels below 1 standard deviation below the mean for this extended cohort. The commenter s added that based on this their conclusion is nearly identical for both of the two epidemiological studies that EPA chooses to provide the lower and upper benefits estimates for avoided PM 2.5 mortality, and added that the vast majority (89

- 93%) of PM 2.5 ex posures that will be affected by the proposed ESPS regulation occur at concentrations below the levels at which EPA has " appreciably less confidence in the associations observed in the epidemiological studies. " The commenter s added that neither the Krewsk i et al (2006) nor Lepeule et al (2012) studies can be used confidently to assess risks at PM 2.5 concentrations of less than about 12 ug/m 3 , and virtually all of the air quality improvements projected as resulting from the proposed ESPS regulation will occ ur at these lower concentrations. The commenter s said EPA should acknowledge in the RIA this large source of uncertainty, and should consider alternative risk assessment approaches that might yield more confident risk estimates at the lower ambient concen tration s that are at issue for this regulation.

Commenter s presented concerns with EPA's assumptions on causal relationship and the use of the no

- threshold linear model between PM 2.5 and mortality rates, and stated that the literature demonstrate s these a re inaccurate. The commenter s said that the linear no

- threshold model is faulty and unreliable, and presents the hormesis model as an alternative. The commenter s said that hormesis model is superior as a representation of these toxicological concentration

- response functions, and that recent research demonstrates that an observable hormetic dose

- response relationship exists specifically between fine particulate matter (PM2.5) and mortality ( http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1299203/ ).

Commenters stated that the benefits due to reductions in pollutants other than CO 2 are independently regulated under the NAAQS program and cannot be attributed to or double

counted by the proposed rule. The commenters further stated that the NAAQS reflects a level of air pollution deemed by EPA to protect public health and welfare. Commenter s noted that the Clean Air Scientific Advisory Committee and EPA " (a) has y et to identify a discernible PM 2.5 threshold and (b) indicates significant increases in uncertainty of th e dose

- response at lower concentrations "

.

Commenter s stated that the EPA estimated health co

- benefits are based almost entirely (97% plus) on premature deaths avoided by reducing PM 2.5 emissions, but since the average PM 2.5 levels in the U

. S

. are 25% below the National Ambient Air Quality Standard (NAAQS), there should be no premature deaths avoided due to reduced ambient levels PM 2.5 . The commenters stated that while EPA estimates that the CPP will cost $8.8 billion annually in 2030, the

mone tized benefits in 2030 are estimated to be between $27 billion to $62 billion annually.

Commenters added that it is disingenuous for EPA attribute public health benefits to reducing concentrations of these pollutants below levels for which EPA recently det ermined the uncertainty of health risks were too great to warrant regulation, especially when these highly uncertain benefits are used to justify a rule targeting a different pollutant altogether. Commenter s99 stated that EPA should either address any issues with NAAQS not sufficiently protecting public health through NAAQS, not through the back door via CO 2 regulations.

Commenters stated that most of the health co

- benefits are attributable to exposures to pollutants at levels below those EPA has found prote ctive of public health, and even those fictional benefits are largely due to emission s reductions that will occur even in the absence of the proposed guidelines.

Commenter s cited comments by EPRI, which stated that EPA essentially double counts benefits

o f pollution reduction s resulting from the rule. The commenter s added that EPRI points out that EPA's own data in the RIA demonstrates that approximately 95% of the U.S. population experiences fine particulate matter levels that are already at or below the National Ambient Air Quality Standard of 12 ug/m 3 before implementation of the proposed r ule. However, commenters added, these same populations are included in EPA's benefits calculations for the proposed rule. The commenter s said that it is not appropriat e for health benefits to accrue at levels of particulate matter that are already deemed to be protective of human health.

Commenter s stated that EPA improperly attributes public health benefits to the proposed r ule in
two main ways: 1) by crediting the p ro posed r ule with public health benefits from reductions in PM 2.5 and ozone (O3) already mandated by existing regulatory programs, including NAAQS; and 2) by attributing public health benefits to the rule that stem from reduction s in concentrations of PM 2.5 and O3 below what is already required under the NAAQS. The commenter s said that EPA already set the NAAQS at levels that the a gency determined are protective of public health, and which incorporate an adequate margin of safety. The commenter s said that th e agency cannot fairly credit the proposed r ule with the health benefits of emissions reductions that will occur regardless of the implemen tation of EPA's Section 111(d) p roposal. The commenter s said that it is improper for the a gency to credit health bene fits to the p roposed r ule based on exposure to PM 2.5 and O3 at levels below the thresholds that EPA has already deemed protective of public health.

Commenter s stated that C lean Air Act expressly excludes NAAQS pollutants from those that can be regulated un der section 111(d) and the benefits of reducing emissions from PM 2.5 and ozone have already been quantified and used to justify EPA's costly NAAQS regulations. The
commenter s said that EPA's RIA asserted that its benefits calculation " include[s] health co

benefits from reducing fine particles in areas with varied concentrations of PM 2.5 , including areas that do not meet " the PM 2.5 NAAQS. The commenter s said that the extent of this problem is unclear, because EPA fails to estimate the portion of the proje cted emissions reductions that will occur in nonattainment areas. The commenter s said that to whatever extent the proposed rule counts in its cost

- benefit analysis the effects of reducing PM 2.5 and ozone to the levels already required by their respective N AAQS, the agency is improperly double

- counting those benefits to justify two sets of regulations. The commenter s said that the benefits of achieving the NAAQS standards cannot rationally be counted as benefits of other rules.

Commenter s stated that EPA inf lates the benefits of the p roposal by including reductions in fine particulate matter and ozone th at cannot be attributed to the p roposal, these reductions are already required and projected to be attained under the NAAQS program and other rules. The

comme nter s said that since the NAAQS are already set at levels that are supposed to be100 protective of public health, it is not clear how EPA can assert that reducing emissions below levels that are protective of public health actually benefits public health. The commenter s added that under a proper, un

- inflated cost

- bene fit analysis, the costs of the p roposal outweigh the benefits, thus the proposal is unjustified and should be withdrawn.

Commenter s stated that EPA cannot take credit for emissions reductions in t his rule that Congress specifically defined EPA could not regulate under Section 111(d). The commenter s said that the reason for this exclusion is that Congress already requires regulation of criteria pollutants from these sources in other areas of the Cle an Air Act. The commenter s added that EPA has already promulgated regulations to this effect, and taken credit for the estimated health benefits through those separate rules. The commenter s added that the EPA uses quantification f or health co

- benefit s that consider none of the required reductions from other rules, nor do es it compare to the health

- based thresholds that serve as the foundation of the Clean Air Act: the NAAQS. The commenter s said the EPA is required to establish the NAAQS at a level that prot ects public health without consideration of cost and that the entire state of Florida is designated attainment/unclassifiable for both PM 2.5 and ozone. The commenter s then said that as such, there are no possible health co

- benefits that can be quantified i n Florida from the Clean Power Plan as the state is already meeting the protective thresholds. The commenter s said that if the EPA quantifies health co

- benefit s in Florida and other attaining areas, they undermine the protective level of the NAAQS they def end in court. The commenter s added that if the EPA claims that reductions in Florida from the proposed rule lead to significant reductions in out

- of

state nonattainment areas, then they undermine the effectiveness of CSAPR to already achieve the necessary reductions, and admit to duplicative regulation.

Commenter s also stated that i n order to avoid these contradictory claims, EPA develop a proposed GHG rule that rests on the merits of its meaningful GHG reductions alone, and allow the regulations required b y other sections of the Clean Air Act to work as intended for criteria pollutant reductions.

Commenter s stated that most of the co

- benefits in the RIA would be attributed to changes in the criteria pollutants in areas already in compliance with the health

- based NAAQS. The
commenter s said that those co

- benefits must be viewed as overstated and potentially non

existent, and that the question should be what should be done with co

- benefits in areas that the baseline regulatory scenario does not find to be attai ning the NAAQS. The commenter s said that although the RIA does not provide the requisite data, this must be an exceedingly small portion of the co

- benefits, if any, because the baseline for the CPP contains all existing regulations. The
commenters stated that only a few areas in California would not attain that NAAQS by 2020, and cited analyses by Smith (2014b) which showed that only a very small geographic portion of those areas would actually be above the NAAQS level. The commenter s said that the small quantity of the co

- benefits that the RIA attributes to the CPP are associated with changes in areas not already attaining each NAAQS and that those reductions are going to occur even if the CPP were not to be implemented. The commenter s added that state im plementation plans (SIPs) will be required and enforced in those areas during the same time period, whether or not the CPP exists. The commenter s also said that even if individuals other than the EPA Administrator were to have confidence in the continued existence of such substantial health effects associations for101 PM 2.5 and ozone, to let a climate

- related regulation take credit for those reductions is a recipe for unnecessary regulations that result in economically inefficient management of the public health.

Commenter s stated the benefits that EPA asserts are produced at ambient air concentrations that are lower than the NAAQS, even though EPA set the NAAQS at a level it deemed requisite to protect the public health with an adequate margin of safety and without considering compliance
costs.

Commenter s stated that EPA relies on a series of conjectures that infer rises in ozone and PM 2.5 concentrations, as a result of increased heat waves and drought. However, ozone and PM 2.5 are criteria pollutants reg ulated through the establishment of NAAQS under CAA Section 110. The
commenter s said that these health

- based standards must, by law, adequately protect human health, including that of sensitive populations; therefore, it is inappropriate for EPA to conside r further reductions in criteria pollutants as a justification for additional GHG regulation in this situation. The commenter s said that EPA has not identified any GHG as a criteria pollutant nor has the agency established a related primary NAAQS which is associated with human health. The commenter s said that EPA has failed to make a direct correlation to specific concentrations of GHG, including CO 2 , that would directly affect ground

- level ozone or PM 2.5 concentrations and that otherwise, EPA would be comp elled to consider these substances as pollutant precursors and regulate them under a NAAQS.

Commenter s stated that NOx and SO 2 are currently regulated by the EPA. The commenter s said that as of October 2012, no area of the country has been found to be out of compliance for NOx and that since 1980, SO 2 concentrations have decreased by 71%. The commenter s questioned why is the EPA touting any increased air quality benefits now, when these gases are alre ady being adequately regulated.

Commenter s stated that t he methodology EPA uses to calculate benefits, particularly from PM 2.5 reductions, is fundamentally flawed. The commenter s said that EPA uses a no

- threshold linear

regression

- to

- zero model design; which counts the benefits of even the smallest reduction in PM 2.5 . The commenter s said that this contradicts all standard procedures for health analysis, by not establishing a threshold

- cut off to determine benefits of reductions.

Response 3: The proposed rule is not based on the estimates of air quality co

- benefi ts provided in the RIA. The benefit

- cost analysis included in the RIA accompanying the proposed rule was conducted in compliance with Executive Order 12866, which requires a cost

- benefit analysis for major regulations with an expected impact of greater th an $100 million annually

. Consistent with OMB (OMB, 2003) and EPA guidance (U.S. EPA, 2010a), when conducting a cost

- benefit analysis to meet the requirements of EO 12866, the EPA estimates all of the anticipated costs and benefits associated with a regul atory action to the extent feasible, including benefits anticipated to occur from reducing air pollution to below the NAAQS levels. As EPA has consistently stated, the NAAQS are not risk free, and as a result, consistent with scientific evidence and CASAC review, EPA includes benefits of reductions in air pollution at levels below the NAAQS and in areas that attain the NAAQS, even if there is potentially reduced confidence in the specific magnitude or those benefits. The most recent Integrated Science Assessments (ISA) for ozone and PM 2.5 indicate that the science supports use of log

- linear no

threshold concentration

- response functions for both ozone and PM 2.5 (U.S. EPA, 2009, 2013).102 Our use of no

- threshold models directly follows this science. The EP A disagrees with commenters who suggest it is inappropriate to use no

- threshold models, and disagree that these models are not reliable. The EPA also disagrees with the commenters who suggested use of a Hormesis based model. The scientific literature for PM 2.5 does not support this type of model, and the literature cited by the commenters is not directly relevant to air pollution exposures or PM 2.5 and ozone specifically.

The EPA believes that the best estimate of benefits includes benefits both above and below the levels of the NAAQS and maintains it is not double

- counting benefits simply because the magnitude of the health benefits that occur at lower concentrations are more uncertain.

The EPA’s standard practice for its rules is to estimate, to the e xtent data and time allow, all benefits of the emissions reductions achieved by a rule beyond control requirements for other rules

, i.e., establish a baseline

. While it can be difficult to account for concurrent rulemakings in

a baseline, the EPA clearly i dentifies what is and what is not in the baseline for each analysis. If this proposed rule was duplicative of other rules, then there would be no additional costs or benefits attributable to this proposed rule. Prior to estimating the health benefits of t his proposed rule (and any other rule), we simulate d what PM 2.5 concentrations would be in the future to account for the air quality benefits that would occur due to other regulations (e.g., MATS) or economic factors in th is baseline. Any emission s changes expected as a result of this proposed rule are additional emission s reductions beyond the other regulations included in the baseline (e.g., MATS) . Therefore, the benefits from particle reductions are not double

- count ed

– they are real health benefits from emissions reductions anticipated to be achieved by this proposed rule.

Further, the PM 2.5 and ozone health co

- benefits expected from this proposed rule are not double

counted with benefits estimated in the NAAQS RIAs. NAAQS RIAs illustrate , but do not
pr edict, the emission s reduction s strategies that States may choose to enact when implementing a revised NAAQS. Subsequent Federal and State implementation rules will be reflected in future baseline s for PM and ozone NAAQS review s

. Also, b ecause it is not possible to accurately account for rules that have not yet been promulgated, RIA s prepared for a future rulemaking will likely include any additional rulemakings in the baseline. For example, the baseline in this RIA reflects many recently promulgated rulemakings, including MATS, CSAPR, and CCR.

Office of Management and Budget (OMB). 2003. Circular A

- 4: Regulatory Analysis. Washington, DC. Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a

4.html.

U.S. Environmental Protection Agency (U.S. EPA). 2010a. Guidelines for Preparing Economic Analyses . EPA 240

- R

- 10

- 001. National Center for Environmental Economics, Office of Policy Economics and Innovation. Washington, DC. December. Available on the Interne t at <http://yosemite.epa.gov/ee/epa/eerm.nsf/vwAN/EE

- 0568

- 50.pdf/$file/EE

- 0568

- 50.pdf>.

U.S. EPA. 2009 Final Report: Integrated Science Assessment for Particulate Matter. U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F, 2009.103 U.S. EPA. 2013 Final Report: Integrated Science Assessment of Ozone and Related Photochemical Oxidants. U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

10/076F, 2013.

Comment 4: Epi Studies and Burden Analysis

Commenter s stated that the estima tes that attribute 90% of the health benefits in 2030 (estimated $23 billion to $59 billion) to the reduction in premature fatalities as a result of reducing ozone and fine particulate (PM 2.5 ) pollution are erroneous. The commenter s argued that EPA claims that the propose rule can avoid thousands of American deaths due to PM 2.5 pollution are based on

" cherry

- picked studies " . The commenter s said that these claims also conflict with toxicological studies that show that PM 2.5 concentration in U.S. cities are too low to cause significant disease or death. The commenter s also said that the rule's purported health benefits for ozone reduction and asthma are less plausible, since according to the EPA, ozone concentrations have decline d by 25%, while asthma rates have increased since 1980.

Commenters stated that EPA should use the study by Cao et al. (2012) to replace the epidemiologic population study from Harvard Six Cities (Lepuele et al. 2012) used to determine the health impacts of PM2.5, especially mortality rates. The commenters said that the Cao el al. study performed in Xi'an, China covered 1,000 times more people, and Xi'an is the second most polluted city on earth where exposure to PM2.5 ranged up to 25 times higher than the Six Cities study. The commen ters said the study used the same methodology as the Six Cities and ACS studies, but that EPA ignored anomalies in both studies that show a relationship between pollution and premature deaths for people with an education of high school or less but not for people with education above high school. The commenters said the studies concluded that a 14% (Six City), and 7% (ACS) increase in death rates would occur linearly for each 10 ug/m3 of added PM2.5 exposure, while the Cao et al. study found a 0.27% increase in death rates for each 10 ug/m3, and a lower threshold for pre

- mature deaths for each 25 ug/m3.

Commenters stated that EPA's estimate of annual benefits associated with public health from $55 to $93 billion is totally unsupported by clinical studies or t oxicological data. The commenters said the EPA admits in its regulatory impact analysis that such benefits are not possible to quantify or monetize, and stated that CO2 emissions, which we cause by exhaling, have no direct impact on human health. The comme nters said EPA did not follow all of the required steps to prepare an adequate scientific assessment of alleged health benefits. The commenters stated that the EPA's methodology is in violation of the Federal Data Quality Act.

Commenters stated that in t he benefits analysis, EPA ignores the significant share of long

- term PM2.5 mortality studies that find either no statistically significant increase in mortality with increasing PM2.5 concentrations or an inverse relationship. The commenters said EPA shoul d reflect this uncertainty about whether long

- term PM2.5 exposure increases mortality by adopting a lower estimate for PM2.5 mortality benefits that assumes no causal relationship between PM2.5 exposure and mortality. The commenters said that EPA's chosen lower and upper estimates for the PM2.5 concentration

- response function both appear to be too high to fairly characterize the range of findings across most long

- term mortality studies in the U.S.104 Commenters cited the study by Fann, Gilmore and Walker (20 13), a recent quantitative meta

analysis that pooled the results of recent epidemiological studies through 2012 for each of the 12 U.S. cohorts. The analysis examined the relationship between long

- term exposure to PM2.5 and the risk of premature mortality among adults. The commenters said that the study did not find a statistically significant positive relationship between PM2.5 concentration and mortality. The commenters also said that these negative findings are sufficiently frequent (42% of the twelve

s tudies/cohorts) as to warrant a lower estimate in the RIA to the effect that there is no causal relationship between long

- term PM2.5 exposure and increased mortality. The commenters said that in the ESPS RIA, EPA has established a lower mortality benefits estimate by applying the concentration

- response relationship estimated in Krewski et al. (2009) (ACS cohort) of 6% per 10 ug/m3. The commenters said that four of the ten cohorts (excluding ACS and Harvard Six Cities) included in the meta

- analysis obtain estimates that are at or below the agency's lower estimate. The commenters said in the RIA, EPA has established an upper mortality benefits estimate by applying the concentration

- response estimate derived in Lepeule et al. (2012) (H6C cohort) of 14% per 1 0 ug/m3. The commenters said that nine of the ten cohorts (again excluding ACS and H6C) considered in the meta

- analysis obtain estimates that are approximately at or below the agency's upper estimate. The commenters said that both EPA's chosen lower esti mate and upper estimate are too high to fairly represent the range of findings across most of the studies. The commenters added that the pooled estimate from the meta

- analysis, obtained after considering both the sample size and uncertainty of the individu al studies, appeared to be about 7% per 10 ug/m3 of PM2.5. This is very close to the 6% estimate obtained by Krewski et al. (2009) and posed by EPA as the lower estimate.

Commenters stated that EPA has chosen concentration

- response functions for PM2.5 a nd ozone mortality that result in estimates of total excess deaths from exposure to these pollutants that are implausibly large when compared against aggregate national mortality statistics and other reference information. The commenters said that in order to show that EPA's chosen concentration

- response functions for these pollutants yield mortality estimates that are unreasonably large, they made two sets of comparisons between EPA's estimates of mortality attributable to PM2.5 and ozone and other figures . The commenters also said that in the first of these sets of comparisons, they compared an EPA estimate of mortality due to these pollutants against nationwide data on deaths and cause of death as reported for the year 2005 in the Centers for Disease Cont rol and Prevention's (CDC's) National Vital Statistics reports.

Commenters cited a study by Fann, et al (2012), which developed estimates, using nearly identical CRFs as those that EPA has applied in estimating ESPS co

- benefits, for the national public he alth burden associated with exposure to ambient PM2.5 and ozone at their 2005 concentrations. The commenters said that this study found that PM2.5 alone is responsible for 97.8% of premature mortalities, in comparison to ozone. The commenters said that usi ng the results by Fann et al. (2010), they compared only the PM2.5 mortality based on EPA's chosen CRFs and aggregate mortality figures from the CDC for the identical population. The commenters stated that several of these comparisons suggested that EPA's estimate for the number of premature fatalities due to PM2.5 is too high and provided a detailed discussion on the effects of PM2.5 on cancer and cardiovascular deaths, as well as accidental and intentional fatalities.105 Commenters stated that synergistic e ffects of a mixture of pollutants are not being considered during the EPA's estimated of health benefits for the rule. The commenters cited epidemiologic studies in Europe and a project called Euroheat, which looked at health impacts of air pollution in co mbination with heat waves. The commenters said that toxic interactions can have significant effects on public health and that there is evidence of high temperatures enhancing particulate matter toxicity, and for PM enhancing ozone toxicity. The commenters said they have not modeled the three

- way interaction nor the four

- way combination that includes stress and questioned the inclusion of interactions in the dose

- response model. The commenters urged EPA to take interaction of pollutants into consideration f or health benefits analyses.

Commenters cited the work by Cox (2013) which addressed the assumption of causal relationship between PM 2.5 and mortality rates. The commenters noted that the study found that after the application of different statistical techniques and tests to the data supporting this assumption, the seemingly causal relationship between PM2.5 exposure and mortality disappears, and other factors, most notably temperature, emerge as the likely causes of increased mortality. ( http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3748846/#!po=1.72414 ). The commenters said that in all the scenarios with 5% climate benefit future discount rate, net benefits range from around one to two billion dollars in net costs (negative benefits) to less than a half billion dollars in net benefits, and stated that more rigorous review is necessary before finalization of these rules. The commenters said that at the very least, presen tation and serious consideration of alternatives, if not abandonment of the log linear no

- threshold model and adoption of a superior hormetic model altogether, is crucial.

Commenters stated that EPA's assumptions to generate the premature deaths avoided u sed to monetize the health co

- benefits are unreasonable and unsuitable for justifying a rule with such far

- reaching impacts on the U.S. economy. The commenters discussed the three assumptions, and stated that EPA's assumptions have a tendency to overestima te the health co

- benefits of the ESPS rule. The commenters said that the agency first assumed that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality. The commenters said that the scientific evi dence is not yet sufficient to allow differentiation of the effects estimated by particle type. The commenters said that the agency also assumes that the health impact function for fine particulates is log

- linear without a threshold in this analysis. The

c ommenters said the estimates include health co

- benefits from reducing fine particulates in areas with varied concentrations of PM2.5, including both areas that do not meet the fine particulate standard and those areas that are in attainment, down to the lo west model concentrations. Finally, the commenters said that the agency also assumes that there is a

" cessation " lag between the change in PM exposures and the total realization of changes in mortality effects. The commenters said that specifically, the agency assumes that some of the incidents of premature mortality related to PM2.5 exposures occur in a distributed fashion over the 20 years following the exposure based on the advice of the SAB

- HES, which affects the valuation of the mortality co

- benefits at different discount rates. The commenters said that the assumption that health impact function for fine particulates is log

- linear without a threshold in this analysis, has the greatest impact in that the vast majority of the U.S. population is exposed to PM levels well below the National Ambient Air Quality Standards (NAAQS).106 Response 4: The U.S. EPA follows a highly structured, transparent and peer

- reviewed process for estimating the human health impacts attributable to poor air quality. As a first st ep, the Agency identifies the health endpoints to quantify by consulting the Integrated Science Assessment, a systematic review of the clinical, toxicological and epidemiological literature. This document is reviewed by the independent Clean Air Scientific Advisory Committee. The Agency quantifies those endpoints classified by the ISA as being causal or likely causal, selecting concentration

- response relationships from studies that satisfy a host of criteria

— most notably whether the population characteristi cs match those affected by the regulation, thus excluding studies performed outside of the U.S. and Canada. The Agency’s approach for characterizing the benefits of air quality changes has been extensively reviewed by independent scientific bodies includin g the National Academies of Sciences and the U.S. EPA Science Advisory Board (SAB). The EPA represents the uncertainty in the magnitude of the benefits of reducing PM 2.5 concentrations by including a range of estimates reflecting the most appropriate available scientific studies, and by including additional ranges based on the statistical uncertainty in each of those studies, as well as estimates based on the results of a n expert elicitation conducted by the EPA. The U.S. EPA SAB has consistently advised the EPA to base its benefits estimates on application of the concentration

- response functions derived from the two highest quality, most representative U.S. cohorts, the American Cancer Society cohort and the Harvard 6

- cities cohort. EPA has implemented this advice in all recent RIAs, presenting a range of primary estimates using concentration

- response functions based on the most recent analysis of the American Cancer Soc iety cohort provided in Krewski et al, 2009, and the most recent analysis of the Harvard 6

- cities cohort provided in Lepeule et al, 2012. The EPA notes that the study by Fann, Gilmore, and Walker (2013) cited by commenters is unpublished, and thus is not appropriate to inform the RIA, and even if it were published, has not been subjected to review by the Science Advisory Board and thus would not be included as part of regulatory impact analyses.

Consistent with the findings of the PM ISA, which found tha t the log

- linear no

- threshold model best estimates PM

- related premature death, the Agency quantifies PM impacts resulting from changes in ambient concentrations at all levels. The RIA provides information on the distribution of PM 2.5 concentrations across the populations for the air quality modeling used to support the benefits estimates to allow readers to better understand how benefits are distributed across the range of PM 2.5 concentrations. The RIA acknowledges that there is reduced confidence in bene fits that occur due to reductions at lower PM 2.5 concentration levels.

Comment 5: Asthma

Commenters in this summary discussed the contribution of power plants to air pollution, and how this has an effect o n asthma. They also discussed economic impacts as sociated with asthma and how the rule can improve conditions for people suffering from asthma. Commenters raise questions about the link between ozone and asthma.

Commenter s cited some statistics that stated the proportion of people with asthma in the Uni ted States ha s grown by nearly 15 % in the last decade, and that the mortality rate of asthma sufferers is about nine lives lost each day. The commenter s said that even one death related to107 environmental causes is unacceptable, and that with climate change, we can expect an increase in air contaminant triggers, which will impact environmental justice communities disproportionately.

Commenter s stated that coal

- fired power plants are the largest sources of carbon emission s in the nation. The commenter s said t hat warmer temperatures can lead to ozone formation, which is a trigger for asthma and poor air quality. The commenter s said asthma is one of the leading chronic illnesses among children and adolescents in the U.S., and it is one of the leading causes of s chool absenteeism. The commenter s also said c hildren who regularly breathe in ozone pollution may face reduced lung function in adulthood, and a reduction in lung function increases the risk of respiratory disease later in life.

Commenter s stated that Ken tucky has some of the highest rates of asthma in the nation, and that according to the CDC, an estimated 312,561 adults in Kentucky had asthma in 2008. The
commenter s said that adult lifetime asthma prevalence was 14.7% and adult current asthma prevalence was 9.7% compared with U.S. rates of 13.3% and 8.5%, respectively.

Commenter s stated that any increase in ozone will lead to more childhood asthma attacks and complications for those with lung diseases.

Commenter s stated that coal

- fired power plant polluti on is affecting the quality of life of children with asthma and their families.

Commenter s stated that asthma in children can be the result of respiratory infections, often caused by exposure to harmful air pollutants in the regions in which they live. Th e commenter s said this exposure is especially problematic when issues of environmental justice arise, where socioeconomically diverse and disadvantaged children are living and/or playing in close proximity to polluting power plants.

Commenter s stated their experience as a family with a child who suffer s asthma and how this condition affected school and work attendance, and therefore, their economy.

Commenter s stated that targeting fossil

- fuel fired power plants will benefit the health and safety of our most vulnerable populations and drive a 25% cut in soot and smog causing pollution. The
commenter s said asthma is especially prevalent in New York, with an estimated 1.7 million people suffering from the disease. The commenter s cited that according to the New York State Comptroller, the state's asthma

- related Medicaid expenditures rose more than 26% in the last five years adding up to $1.3 billion in health care costs and lost workforce productivity.

Commenter s stated that over 25 million Americans live with a sthma and that almost 1.9 million asthma attacks make up the approximately one

- fourth of all emergency room visits. The
commenter s said that U.S. spends almost $56 billion on asthma annually. The commenter s said no one should have to sacrifice their health for dirty energy.

Commenter s stated that it is estimated that by lowering of the coal

- fired power plant emissions, there will be lowering of deaths from asthma and respiratory illnesses.108 Commenter s stated that th e proposed Clean Power Plan provides an o pportunity for us to improve public health such as these threats from childhood asthma (exposure to ozone and particulate matter), by cleaning up the region's air and helping to address climate disruption.

Commenter s stated that 40 % of carbon dioxide emiss ions come from the smoke stacks of coal burning power stations and it is essential to regulate these pollutants. The commenter s said that until EPA establishes these regulations and begins to require compliance, untold numbers of children and adults will s uffer needlessly from asthma.

Commenter s stated that ozone pollution on the delicate lining of the lungs is analogous to the effects of sunburn on the skin. The commenter s said ozone aggravates respiratory diseases like asthma, and impairs lung function i n the population. The commenter s cited a study led by Brigham Young University's Arden Pope which demonstrated that ozone exposure increases rates of respiratory death by about 25% along the Wasatch Front, Utah's Uinta Basin. The
commenter s said other stud ies have established that ground

- level ozone negatively impacts lung function across all segments of the population, including young, healthy adults, even at levels below current national ambient air quality standards.

Commenters also argued the purported benefit that the rule will also reduce ozone levels and prevent asthma attacks, and stated that it is extremely unclear about the exact nature of the relationship between ozone and asthma. The commenter s cited that the Texas Commission on Environmental Qua lity (TCEQ) recently reviewed EPA's Health Risk and Exposure Assessment (HREA) for the Ozone NAAQs and pointed out that EPA's own Clean Air Scientific Advisory Committee (CASAC) has " repeatedly indicated that the limited evidence on new

- onset asthma should not contribute greatly to the consideration of the strength of evidence for respiratory

related effects. " The commenter s added that ozone levels have declined by 25 % between 1980 and 2012 (according to EPA itself), but that asthma levels have been increas ing. The commenter s questioned, " If ozone worsens asthma, then why do the data run in opposite directions? " The
commenter s also said that until EPA can clearly point to a causal relationship between its rulemakings and reductions in the number of people su ffering from asthma, it is inappropriate for the agency to claim this as a benefit.

Response 5: We agree that poor air quality aggravates asthma, and that reducing levels of fine particles and ozone will benefit asthmatic populations. We disagree with the conclusion of commenters that increased overall asthma during a period of ozone declines is evidence of no association between ozone and asthma. A number of environmental and genetic factors contribute to the development of asthma and these are well char acterized in the medical literature. Improved air quality over the past several decades has directly benefited asthmatic populations, but factors unrelated to poor air quality have contributed to the growth in the measured prevalence of the size of this p opulation. E pidemiologic and toxicological studies reviewed as part of the most recent ozone Integrated Science Assessment (U.S. EPA, 2013) provide s cientific evidence that exposure to ozone is likely to cause respiratory effects, and studies include associations between ozone and new onset of asthma. In addition, ozone is linked with asthma exacerbations in children who already have asthma, and reducing ozone is expected to reduce symptoms, including emergenc y room visits, in these asthmatic childre n

.109 Comment 6: State

- Specific

Commenters in this summary discussed the public health effects from power plant emissions in specific states

.

Commenter s stated that health impacts alone are a powerful reason for adv ancing the EPA's Clean Power Plan in Missouri. The commenter s said that the White House estimated that 7,700 asthma related hospital visits occurred in Missouri in 2011 alone, and although it is nearly impossible to quantify the number of these visits that occurred as a direct result of air pollution from burning fossil fuels, we do know that asthma attacks are higher when chemical particulates

cause d by burning coal and other fossil fuels (specifically particulate matter, ground

- level ozone, sulfur dioxide , and nitrogen oxide) are more concentrated in the air. The commenter s said that reducing the pollution in our air will surely mean lessening the severity of respiratory issues for thousands of Missourians who will then be more free to live their lives how they see fit.

Commenter s stated that any attempt to mitigate the asthma

- related hospital visits will have far reaching impacts on Missouri communities. The commenter s said that each hospital visit costs an average of $14,300 according to the White House's study, totaling $110 million and that a portion of that $110 million would never have occurred if Missouri wasn't so heavily dependent upon coal

- fired energy. The commenter s said that as the cost of health care continues to rise, the amount of money that carbon

- based energy is costing Missouri in health care will become an ever larger drag on our economy. The commenter s added that from a purely economic standpoint, the impact that the Clean Power Plan will have on Missourians' healthcare is dramatic. The c ommenter s cited the Harvard School of Public Health and the estimate that over 1,200 Missourians would be spared from a premature death between now and 2030 due to the Clean Power Plan. The commenters stated that even if this estimate is overstated and onl y 600 lives are spared by moving towards clean energy by 2030, Missouri would still have more than enough reason to move forward.

Commenter s indicated that the state of Colorado ha s done significant changes to limit carbon emission and ha s achieved dramati c multi

- pollutant emission s reductions; however, even with these efforts, the air pollution from coal

- fired power plants contributes to 53 deaths, 81 heart attacks, over 1,000 asthma attacks, and over $400 million in health care costs every year.

Commenter s stated that Kentucky is a state that has elevated asthma rates and cardiovascular disease, both of which are linked to carbon pollution. The commenters said the Clean Power Plan does not address all these environmental impacts to human health within its decision

- making process, and that EPA's proposed clean air standards for industrial carbon pollution from power plants could protect our citizens more by reducing the smog that triggers asthma attacks and other health threats. The commenters added the stat e's history with coal as a singular source of energy has resulted in an environment where state standards that protect human health from coal pollution are not strongly enforced.

Commenter s stated that Kentucky has high levels of small

- particulates pollution both from vehicle emissions and from power plant emissions.110 Commenter s cited a report by Kentucky Environmental Foundation called a " Health Impact Assessment of Coal and Clean Energy Op tions in Kentucky

, " which outlined sources of data showing the relationships between the extraction, processing, transportation, burning, and disposal of coal combustion waste and health. The commenter s said the report outlines the wide range of health imp acts that coal

- based energy can create while also outlining the health benefits of cleaner energy sources.

C ommenter s also cited the report by Kentucky Environmental Foundation called a " Health Impact Assessment of Coal and Clean Energy Options in Kentucky " , which outlined the wide range of health impacts that coal based energy can create while also outlining the health benefits of cleaner energy sources. The commenter s also cited their own report on the Shawnee Health Impact Assessment, which outlined the more imminent challenges of continuing to support the aging, carbon

- based power system at the expense of human health instead of transitioning to cleaner power sources.

Commenter s also stated that air pollution can affect cardiovascular diseases, and tha t Kentuckians have significantly higher rates of diseases affecting the heart and circulatory system than other states across the country. The commenter s said that according to Kentucky's Cabinet for Health and Family Services, cardiovascular disease acco unted for 30% (12,547) of all deaths in Kentucky in 2009 and Kentucky ranked 8th out of 50 states for death rates due to cardiovascular disease. The commenters stated that EPA's proposed clean air standards for industrial carbon pollution from power plants could protect our citizens more by reducing the smog that triggers asthma attacks and other health threats, but that efforts by our state regulators and state enforcement efforts still leave Kentuckians near the bottom of every indicator compared to what is actually possible, or being achieved in other states.

Commenter s stated that by reducing the need for fossil

- fuel generation, the Clean Power Plan will benefit the health and welfare of people across North Carolina. Cleaner air and cleaner water will r esult in lower incidences of illness and disease and fewer deaths from pollution

- related illnesses. The commenter s said that the proposal encouragement for energy efficiency and renewable energy will have many additional co

- benefits. The commenter s said th at EPA's expectation that the rule would avoid 2,700

- 6,600 premature deaths and 140,000

- 150,000 asthma attacks every year, translate to North Carolina's benefits of 1,300 lives saved from 2020 to 2030, as well as hundreds of avoided hospitalizations and he art attacks.

Commenter s stated that smog in the District of Columbia impacts the health and welfare of over 600,000 residents, up to half a million commuters, and millions of tourists on an annual basis.

Commenter s stated that the p roposed r ule could have significant benefits for the District of Columbia's air quality and the magnitude of those benefits will depend on the stringency of the emissions goals established by EPA and the approach taken by states to meet them. The
commenter s said that the air qua lity in the District, including concentrations of particulate pollution and ground

- level ozone precursors, is heavily influenced by emissions from power plants in upwind states. The commenter s cited the Harvard School of Public Health study, which highligh ts the particular air quality benefits to the region surrounding the District when regulating carbon pollution from existing power plants. The commenter s added that this study also found that the magnitude and extent of the health and air quality co

- benef its of the p roposed111 r ule will depend on critical policy decisions in the final standards and state plans; and that an approach similar to what is proposed by EPA, will result in the greatest co

- benefits.

Commenter s stated that Georgia's air quality is poo r and how this affect s the life style of people that love the outdoors.

Commenter s also stated that the rule could also help the District of Columbia to attain F ederal air quality standards and protect public health. The commenter s said that this is especi ally important in light of recommendations from EPA's Clean Air Scien tific Advisory Co mmittee (CASAC) that the ozone standard be lowered from the current level of 75 parts per billion to 60 to 70 parts per billion.

Commenter s stated that Wisconsin recognizes that EPA's proposal will likely result in co

benefits for criteria pollutant emissions such as NOx, VOCs, and SO 2

. The commenter s said that based on this EPA should ensure that any reductions in these emissions as a result from the rule can be counted by states towards meeting their statutory and regulatory requirements for criteria pollutants.

Commenter s stated that the proposed r ule provides only incidental benefit s and ignores the effect s of cross

- state air pollution. The commenter s said that targeting all air pollutant emissions would produce much greater environmental and public health benefits than a focus on CO 2 emissions alone. The commenter s said that EPA has failed to adequately address nitrogen oxide emissions from other states, result ing in violations of the ozone health standard in New Jersey. The commenter s said the proposed r ule continues the inequity by approving less stringent CO 2 goals for some of the very states that remain the source of high nitrogen oxide emissions, and,

conse quently, the source of serious health issues, both in New Jersey and within their own state.

Commenter s stated that EPA should measure the benefits of emission s reductions from PM 2.5 , NOx, SO 2 and ozone on a regional, rather than state

- specific scale.

Com menter s felt being considered a sacrifice because of where he lives because of dealing with emissions that create the energy to supply some of the major cities in the Four Corner states, including Phoenix but has to deal with the suffering of those emissio ns directly. Commenters stated that EPA's mission is to ensure that all Americans are protected from significant risks to human health and the environment where they live, learn, and work, and as a human and American, wished to be treated equally.

Commenters understood the industries are conducting an environment impact statement, but these studies do not include impact on the health of the people or the impact on the water. Commenters stated that there has been no health impact study on the Navajo

-- on Navajo land. Commenters stated that a recent survey conducted by the Navajo Nation states that asthma and respiratory illness on the Navajo land is almost at the same rate as the United States and with the high rate of respiratory illness on Navajo land, many are in poor health already with little resources to address the rising health costs. Commenters stated that the emissions from coal power plants must also include other pollutant, not just carbon. Commenters stated that coal plants add millions of tons of pollutant to the air that we breathe every day and we deserve112 nothing less than the same eco

- protection that's being granted to every American across the Country.

Response 6: The EPA agrees that poor air quality results in negative health effec ts and that reducing levels of fine particles

, ozone , and other emissions will lead to significant human health benefits and improvements in quality of life. The broad reductions in air pollution emissions expected to result from implementing the propose d rule are expected to improve air quality across the U.S., and improve health and environmental quality for the U.S. population.

Comment 7: Benefit

- Per

- Ton and Air Quality Modeling

Commenter s stated that EPA has relied on very simplistic dollar per ton estimates for the criteria pollutant precursor emissions

, which don’t account for the levels of criteria pollutant in the areas where emissions are reduced and that EPA has not developed a basel ine projection for PM 2.5 and ozone levels to compare with precursor emissions. The commenter s cited Smith and Gans (2014) and stated that these issues create large uncertainties.

Commenter s stated that the EPA use of a " benefit

- per

- ton " approach for PM 2.5 when calculating the health benefits of the proposed rule is irreconcilable with its recently

- promulgated rule reducing the annual PM 2.5 NAAQS to 12.0 ug/m 3 and that the available evidence does not justify a standard level set below 12 ug/m 3 as necessary to protect public health with an adequate margin of safety. The commenters stated that EPA must reassess the health benefits of the proposed rule.

Commenter s stated that EPA's " benefit

- per

- ton " figures were estimated based on a particular inventory of prec ursor emissions from EGUs and use of " source apportionment " techniques to identify the air quality impacts of this emissions inventory at receptor points. The commenter s said the inventory of changes in EGU precursor emissions expected from the proposed E SPS regulation will likely differ in ways that EPA has not examined from the inventory underlying the benefit

- per

- ton estimates.

Commenter s stated that the application of the benefit

- per

- ton estimate derived from one inventory of EGU precursor emission s s hould not be applied to an inventory of EGU precursor emissions or emission s reductions that is substantially different from the first inventory. The
commenter s added that this will lead to inaccuracy in using the benefit

- per

- ton approach for estimating be nefits rather than conducting new, policy

- specific air quality modeling. The
commenter s said that as one would not want to apply a benefit

- per

- ton estimate developed for EGU precursor emissions in the southeast to a policy situation where precursor emissio ns would be reduced in the northeast, one might also not want to apply an estimate developed for precursors from a mix of coal

- and gas

- fired EGUs to a set of emissions reductions from coal

fired EGUs only. The commenters stated that EPA used inventories that were either national or regional inventories, and applied these to a much smaller set of projected precursor emissions reductions from only some of these EGUs, and that the a gency assumed these inventories were similar. The commenter s argued these inventories differ in important ways such as: 1) the distribution of precursor emissions reductions across individual s tates will likely be substantially113 different from the distribution of inventoried basel ine precursor emissions across s tate s, and 2) the proposed ESPS regulation will likely elicit reductions in precursor emissions mostly from older, coal

- fired units, while the inventory for which the benefit

- per

- ton figures were derived consists of emissions from many newer and/or gas

- fired u nits. The commenter s said that EPA should examine this issue in order to determine if these differences are sufficient to result in meaningful revisions to the co

- benefits estimates. The commenter s added that other attributes of the inventory can be impor tant, in addition to location, such as:

1. The release characteristics of the EGUs (e.g.

, stack height, exit velocity)

-- this affect s the mix of air quality impacts that the inventoried emissions will cause and whether the resulting air quality impacts will tend to be more local or more distant.

2. The meteorologies around the inventoried EGUs.

3. The distances of the inventoried EGUs from population centers

-- this will determine whether the share of these EGUs' precursor emissions that have more local impacts wi ll affect sparsely populated areas or more densely populated areas.

4. The air quality and concentrations of air pollutants from other sources currently surrounding the particular EGUs likely to be affected by the ESPS regulation.

Commenter s stated that the source apportionment approach evidently introduces increased inaccuracy when the relevant atmospheric chemistry involves nonlinear processes and/or multiple pollutant species. The commenters stated that EPA assumed that there are no significant

non

- linear ities or cross

- pollutant interactions in the atmospheric chemistry whereby precursor emissions (consisting in this analysis of direct PM 2.5 of several sorts, SO 2 , and NOx) eventually become concentrations of PM 2.5 and ozone that may cause the alleged healt h damages. The
commenter s said that they suspect that the non

- linearities and cross

- pollutant interactions involving NOx in particular will result in lesser reductions in ozone and PM 2.5 concentrations in practice than those that EPA projected based on th e benefit

- per

- ton approach (source apportionment followed by something akin to assumed proportional rollback).

Commenter s also stated that for a regulation as costly and important as the ESPS, EPA should consider simulating the geographic distribution of e missions reductions, atmospheric processes and population exposures using policy

- specific, de novo atmospheric modeling, not the " short

cut " benefit

- per

- ton approach. The commenter s said EPA introduced needless inaccuracy and apparently some upward bias t o the Agency's benefits estimates by relying on the benefit

- per

- ton approach.

Commenter s stated EPA has failed to estimate the " benefit

- per

- ton " to the extent that precursor emissions from sources other than EGUs will increase as a result of the proposed r ule

Commenter s stated that in the proposed rule, EPA throws out a controlling premise of the 2013 PM 2.5 NAAQS and asserts that the agency is " unable to estimate the percentage of premature mortality associated with the emission reductions at each PM 2.5 con centration, as we have done for previous rules with air quality modeling. " The commenter s added that EPA offers no explanation for why it lacks the modeling data it used in the 2013 NAAQS rule, but this114 omission has an enormous benefit

- inflating effect. T he commenter s said that in a major understatement, the agency admits that it is " less confident in the risk we estimate from simulated PM 2.5 concentrations that fall below the bulk of the observed data in the relevant studies, " and acknowledges that " these results are not consistent with results from RIAs that had air quality modeling. " The commenter s said because the agency lacks " the necessary air quality modeling input and/or monitoring data to run the benefits model, " the proposed rule's RIA also lacks " the type of detailed uncertainty assessment found in the PM 2.5 and ozone NAAQS. "

Response 7: The EPA disagrees that the benefit

- per

- ton approach is inappropriate. The methodology used for the proposal analysis for estimating the health benefits associated with reducing PM 2.5 and ozone precursor emissions is based on peer

- reviewed publications (see Fann et al., 2012). For the final rule, EPA has provided a more representative benefits analysis that relies on air quality modeling of the proposed rule. EPA g enerated updated benefit

- per

- ton estimates based on modeling ozone and PM2.5 responses to reductions in NOx, SO2, and directly emitted fine particles estimated for the proposed Clean Power Plan (see Appendix 4A of the final RIA). These updated benefits

- pe r

- ton reflect the proposed rule, and are appropriate for modeling the benefits of the final rule. N ational average benefit

- per

- ton estimates are inherently more uncertain than benefits directly derived from air quality modeling . EPA has generated regional (east, west, California) benefit per ton estimates to reduce this uncertainty, and EPA has high confidence in the magnitude of total monetized benefits at the national and regional level

. EPA notes that the benefits for specific locations may vary , and t hus there would be substantially more uncertainty regarding state level benefits. EPA has not generated state

- level benefits estimates.

Comment 8: Enstrom

Commenters challenged the public health basis for the June 2, 2014 EPA Clean Power Plan, particular ly the validity of the EPA Fact Sheet claim that " Americans will see billions of dollars in public health and climate benefits, now and for future generations. The Clean Power Plan will lead to climate and health benefits worth an estimated $55 billion to $93 billion in 2030, including avoiding 2,700 to 6,600 premature deaths and 140,000 to 150,000 asthma attacks in children. " The commenters cited sections 4.3.1.1 (Mortality Concentration

- Response Function for PM2.5) and 4.3.2 (Economic Valuation for Health Co

- benefits) of the June 2, 2014 EPA

" Regulatory Impact Analysis for the Proposed Carbon Pollution Guidelines for Existing Power Plants and Emission Standards for Modified and Reconstructed Power Plants " and stated that they have assembled overwhelming ev idence that challenges the validity of the relationship between PM2.5 and total mortality ( " premature deaths " ) as described in publications based on the American Cancer Society (ACS) Cancer Prevention Study II (CPS II) cohort, such as, Krewski et al., 2009. The commenters also said that this evidence is detailed in their attached November 15, 2013 critique " Scie ntific Misconduct in Fine Particulate Matter Epidemiology by Dr. C. Arden Pope, III, in Collaboration with Drs. Daniel Krewski, Michael Jerrett, and Richard Burnett, with the Complete Cooperation of the American Cancer Society " , and that can be found
on t he following link ( http://www.scientificintegrityinstitute.org/Pope111513.pdf ).115 Commenters added this critique is supported by the attached November 7, 2013 email request to Dr. A lpa V. Patel of ACS Epidemiology describing their serious concerns about the use of CPS II data for examining PM2.5 and mortality ( http://www.scientificintegrityinstitute.org/Patel 110713.pdf ). The commenters said that the critique is further supported by the 50 attached pages of January 6, 2010 to May 17, 2011 correspondence between an Ad Hoc Group of California businessmen and the University of California President Mark G. Yudof re garding U.C. Berkeley Professor Michael Jerrett and his unethical use of ACS CPS II data in the analysis and characterization of the relationship between PM2.5 and mortality in California during 1982

- 2000 ( http://calcontrk.org/Jerrett051711.pdf ).

Response 8: The EPA strongly disagrees with the commenter s ' interpretation of evidence related to the impact of PM 2.5 on mortality. EPA completed a comprehensive, highly peer

- reviewed assessment of the scienti fic evidence on PM 2.5 and health in 2009, and an updated provisional review of new information published between 2009 and 2012, prior to issuing updated National Ambient Air Quality Standards in 2012. EPA concluded that the full body of evidence supports a determination that long

- term exposure to PM 2.5 causes mortality (U.S. EPA, 2009, 2012). Numerous scientific bodies, including the American Heart Association (Brook et al, 2010)

, and the World Health Organization (WHO/Europe, 2013)

, have affirmed this f inding of a causal relationship. Further, EPA's approach to estimating the mortality benefits of reducing PM 2.5 concentrations has been extensively reviewed by the National Research Council and EPA's independent Advisory Council on Clean Air Compliance An alysis , and the consensus conclusion of that panel was that the studies (those using the American Cancer Society and Harvard 6

- city cohorts) used by EPA to estimate mortality benefits are " good foundations for the health benefits estimates for PM and these studies are supported by other recent studies and expert evidence gathered by the EPA project team. " EPA provided information on studies published since 2009 in the 2012 PM NAAQS RIA

, including summarizing risk results presented in Enstrom 2005.

R eferences:

Enstrom JE 2005. " Fine particulate air pollution and total mortality among elderly Californians, 1973

- 2002. " Inhal Toxicol 17: 803

- 816.

U.S. Environmental Protection Agency (U.S. EPA). 2009. Integrated Science Assessment for Particulate Matter ( Final Report)

. EPA

- 600

- R

- 08

- 139F. National Center for Environmental Assessment

— RTP Division. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>.

U.S. Environmental Protection Agency (U.S. EPA). 2012. Provisional Assessment of Recent Studies on Health Effects of Particulate Matter Exposure. EPA/600/R

- 12/056A. National Center for Environmental Assessment

— RTP Division. December.

U.S. Environmental Protection Agency (U.S. EPA). 2012. Integrated Science Ass essment for Particulate Ozone and Related Photochemical Oxidants (Third External Review Draft). EPA/600/R

- 10/076C. National Center for Environmental Assessment

— RTP Division. June. Available on the Internet at <http://cfpub.epa.gov/ncea/isa/recordisplay.cfm ?deid=242490>.116 Comment 9 : BenMAP

Commenters in this summary expressed opposition to the rule with regard to public health and its purported benefits.

Commenter s discussion focused on two topics: (1) appropriateness of calculating benefits of pollutant reductions in populations already meeting the NAAQS for PM 2.5 and ozone and (2) limitations of BenMAP. The commenters stated that it is not appropriate for health b enefits to accrue at PM levels that are already deemed to be protective of human health, and that there are inconsistencies between how NAAQS standards have been set at a level below which uncertainty becomes too large and how the RIA has assumed a 100% ce rtainty for the elevated risk for all ambient pollutant exposure concentrations below the NAAQS. The commenter s referred EPA to the Smith 2014 research which discusses this type of inconsistency in greater detail, but summarized that " due to inclusion of r isks calculated in areas in attainment with the NAAQS, the benefits estimates in RIAs the expected value that can be inferred from the rationale for the NAAQS. This upward bias is even larger for PM 2.5 co

- benefits in RIAs for non

- PM 2.5 regulations "

.

Commen ter s discussed BenMAP and its " concentration

- response function " and stated that the limitations of BenMAP should be recognized. The commenters stated that some of the embedded options are limited and inconsistent with the literature

, such as the three PM

- m ortality concentration

- response functions which do not reflect the totality of the literature. The
commenter s cited a recent analysis by Smith and Gans that identified 22 studies containing valid concentration

- response functions and identified 59 appropria te risk estimates from these studies. The commenter s said that BenMAP includes only one risk coefficient (0.0058) whereas studies may include several coefficients, which gives the impression of much more precise conclusions from that study than is the case . The commenter s also said that if the range of risk coefficients identified by Smith and Gans is used, the same analysis produces risk estimates ranging from 0 to 516,000 deaths

, which is not only much wider but also reveals a chance there is no risk at a ll.

Commenter s also stated that BenMAP's benefit ranges only reflect the range of the two concentration

- response functions used and does not consider any other sources of uncertainty. The commenter s added that sensitivity analyses are limited because alter natives not embedded within BenMAP are not easily considered and there is no clear way to consider the impacts of simultaneously varying more than one input or assumption into BenMAP at a time. The
commenter s concluded that because of these issues, BenMAP can give a misleading impression about the uncertainty ranges that are biased toward suggesting less uncertainty than there probably is. The commenter s said that " EPRI is currently supporting research to develop an integrated uncertainty analysis that is e xpected to illustrate the greater policy insights that can be obtained using this approach rather than a set of deterministic calculations as currently exists within BenMAP "

.

Commenter s stated that BenMAP offers no provision for considering different speci es or components of PM 2.5 despite increasing evidence that some components of PM 2.5 may be more highly associated with adverse health effects. The commenter s cited a Rohr and Wyzga literature117 review that concluded that more scrutiny needs to be given to el emental and organic carbon components of PM.

Response 9: The environmental Benefits Mapping and Analysis Program

— Community Edition (BenMAP

- CE) is an open

- source PC

- based software program that estimates the incidence and economic value of air quality change s. Users can quantify impacts by applying the concentration

- response and economic valuation functions that U.S. EPA applies in its Regulatory Impact Analysis, or users can specify their own functions from the epidemiology and economics literature. When sel ecting among concentration

- response functions to use in BenMAP

- CE, the U.S. EPA selects among those health endpoints whose relationship with air pollution the Clean Air Scientific Advisory Committee (CASAC) has determined to be " causal " or " likely causal. " U.S. EPA quantifies long

- term PM 2.5 - related premature deaths using concentration

- response relationships recommended by CASAC. If users prefer instead to supply their own concentration

- response and economic value functions, they may use the built

- in health impact function or economic value function editor. Finally, the development team is exploring new features that will allow analysts to characterize the uncertainty associated with reducing two or more pollutants (e.g.

, PM 2.5 and ozone) or two or mor e pollutants and stressors (e.g.

, temperature and ozone).

In addition, EPA has include in the RIA a number of additional uncertainty and sensitivity analyses, including showing how mortality benefits are affected by the use of concentration

response funct ions based on the results of an expert elicitation which evaluated the scientific uncertainties in the relationship between PM2.5 and premature mortality. EPA provides estimates based on the responses of 12 different experts to demonstrate the range of un certainty. As discussed in the RIA for the proposed rule, b ecause the experts relied upon the A merican Cancer Society and Harvard Six Cities cohort studies to inform their concentration

- response functions, the benefits estimates derived from the expert re sponses generally fall between results derived from these studies , and thus the range of benefits provided by EPA in the RIA is largely representative of the broader range of uncertainty. BenMAP includes all of the concentration

response functions based o n the expert elicitation.

Comment 10: Differential Toxicity

Commenter s discussed EPA's assumptions regarding the composition and potency of each component of PM 2.5 . The commenter s cited Smith and Gans (2014) and Fraas and Lutter (2013) to state that the e qual potency assumption likely overstates risks from PM 2.5 changes, perhaps up to 100 % , especially because such a very large portion of the co

- benefits is derived from sulfate as a component of PM 2.5

.

Commenter s recommended EPA eliminate the fine particles of ammonium sulfate from the health benefit calculations as they have been shown to be non

- toxic. The commenter s said that three quarters of the health benefit calculation is based on ammonium sulfate reduction, which drops health benefits from $62 billio n to $15.5 billion. The commenter s added that most of the fine particulate matter from coal

- fired power plants comes indirectly from sulfur dioxide emissions forming particulate ammonium sulfate and that studies show no link between118 ammonium sulfate and he alth issues. The commenter s also said ammonium sulfate has been used as an inert control material in studies of health impacts of aerosols.

Response 10: While the EPA agrees that there is some uncertainty regarding the assumption of equal toxicity of PM s pecies, the EPA disagrees that there is no link between sulfate exposure and adverse health effects . The PM ISA concluded that " many constituents of PM 2.5 can be linked with multiple health effects, and the evidence is not yet sufficient to allow differentiation of those constituents or sources that are more closely related to specific outcomes " (U.S. EPA, 2009). While some particles may have higher or lower toxicity than the average for all fine particles, the body of scientific evidence supports the conclusion that reducing fine particles will result in substantial public health benefits.

We therefore follow the advice of the EPA’s Clean Air Scien tific Advisory Committee (Hammitt et al. 2010, available at: http://yosemite.epa.gov/sab/sabproduct.n sf/fedrgstr_activites/2nd%20Prospective%20812%20St udy!OpenDocument&TableRow=2.3#2), which concluded that " Although the possibility of differential toxicity among PM 2.5 components could be an important issue, the Council concludes that the state of the know ledge does not permit a useful sensitivity analysis at this time " (p. 6).

Comment 11: Valuation and VSL

Commenter s stated that 98% of EPA's estimated co

- benefits involve avoided premature mortality. The commenter s said that these mortality benefits woul d decline sharply, if the

a gency were to improve the analysis by estimating and valuing " statistical life

- years gained " rather than " statistical lives saved " . The commenters drew attention to the population assessed during the studies from which EPA drew t he estimated value of a statistical life (VSL). The
commenter s said the population assessed during those studies should have been older with many fewer average years of life expectancy remaining. The commenters stated that it is inappropriate for EPA to va lue the statistical lives at risk from PM 2.5 air pollution

- - for populations for whom the potential loss in life expectancy is usually small

- - by reference to studies on wholly different populations where deaths involve much greater loss in life expectan cy.

Commenter s stated that i n the benefit

- per

- ton calculations for estimating co

- benefits, EPA estimated the value of avoided mortality by multiplying the projected number of statistical deaths avoided due to the proposed rule by the wrongly chosen VSL. T he commenter s said a better approach for monetizing the benefits of avoiding premature mortality would be for EPA to estimate the number of life

- years gained as a result of the regulation and then multiply by the value of a statistical life

- year (VSLY). T he commenter s added that depending on the particular VSLY that is chosen, this different approach to valuation would reduce the monetized benefits that EPA estimates for the proposed ESPS regulation by between 47% and 95%.

Commenter s also stated that to estimate the total monetized benefits, EPA might alternatively have estima ted the monetized value of the a gency's projected reduction in risk of premature mortality by calculating the number of life

- years that would be saved or extended rather than the number of premature deaths avoided, and then m ultiplying by the value of a statistical life

- year119 (VSLY) rather than by the value of a statistical life (VSL). The commenter s said the VSLY approach would yield lower, and perhaps much lower, estimated benefits for the proposed rule than the VSL approach that EPA has applied. The commenter s provided comments with regard
to the use of VSL or VSLY as the preferred metric to valuate health benefits. The commenter s said that: 1) EPA did not follow the suggestion by OMB that agencies should present benefits estimates showing both statistical lives saved and statistical life

- years saved and 2) it is inappropriate for EPA to value the premature deaths avoided by this proposed regulation at the same VS L as has been derived from a set of studies where each avoided premature death involves many more years of life expectancy. The commenter s said that OMB suggests that

" when there are significant differences between the effect on life expectancy for the po pulation affected by a particular health risk and the populations studied in the labor market studies, it is prefer able to adopt a VSLY approach to reflect those differences. You should consider providing estimates of both VSL and VSLY... " The commenter s provided a list of several estimated VSLY, and stated that if EPA were to use them it would lead to lower estimates of PM 2.5 mortality benefits than those EPA calculated in the ESPS RIA.

Commenter s also recommended EPA use lost earnings potential instea d of willing

- to

- pay surveys to determine the value of one year of added life. The commenter s said the willingness

to

- pay survey is 100 times the rate of the lost earnings calculation; it drops health benefits from $62 billion to $0.6 billion. The commenter s said that the estimated number of expected premature deaths is multiplied by $10.1 million/premature death. The commenter s said that this is based on " Willingness

- to

- Pay " surveys and that this is an exaggerated measure. The
commenter s said that the Ameri can Lung Association estimates the total cost of all COPD premature deaths at $12.4 billion but the cost was spread over 134,000 deaths for an average cost of about $93,000/premature death. The commenter s compared this value to the $62 billion EPA estimate for 6

, 200 premature deaths. The commenter s said that the cost covers lost potential earnings with a 3% discount factor, and is reasonable as most of the premature COPD deaths (85%) occurred in people over 65 years old.

Commenters stated that EPA's estima tes of the health and economic benefits of reducing ambient PM2.5 and ozone appear similarly implausible when the reductions are carried forward to the year 2020, the first year for which the ESPS RIA estimates costs and benefits. The commenters said that a 50% reduction in ambient levels of PM2.5 cannot have as much public health impact as completely eliminating active smoking in the U.S. population. The commenters also argued the EPA's projected economic value of mortality reductions stating that: 1) EPA' s central estimate of the economic benefits of PM2.5 reductions would exceed the projected GDPs of all but 10 countries in the world, 2) EPA's high estimate of the economic benefits of PM2.5 reductions would exceed the total GDPs of all countries except th e U.S. and China; and 3) EPA's estimate of the economic benefits of PM2.5 reductions is equal to 10

- 28% of the total projected U.S. GDP in the year 2020.

Commenter s said that when measuring costs and benefits to children under this proposal, we must take i nto account that we are considering health effects to children that will occur over a number of years and across generations. The commenter s also said that traditional cost

- benefit analyses and discounting methods systemically reduce the value of long

- term benefits such as120 preventing a health effect in the future and that this is not correct or acceptable in measuring the true value of this pr oposal.

Response 11: The EPA’s approach for monetizing benefits from reductions in mortality risk (including sources of estimates and methods for adjustment over time) is based on standard welfare economics, is appropriate for use in these economic analyse s and has been peer reviewed by the Agency’s Science Advisory Board ( SAB )

. Specifically, the SAB noted that, in this context, " the value of a reduction in mortality risk (e.g., in the probability of dying over a stated period) is what a person is willing to pay for it " (U.S.EPA SAB 2000). The EPA uses estimates of the willingness to pay for smal l reductions in individual mortality risks drawn from the peer

reviewed literature and published in its peer

- reviewed Guidelines for Preparing Economic Analyses (U. S. EPA 2010). When applied to the population affected by a regulation, these risk reductions are reported as statistical lives and the associated value, the " value of a statistical life. "

Regarding the application of a Value of Statistical Life Year (VSL Y) approach, Circular A

- 4 (OMB, 2003) suggests that agencies consider providing the benefits of reduced mortality risk in these terms , but does not require an agency to do so. The EPA has since explored the issue of remaining life expectancy and its potent ial effect on WTP and has received guidance from the SAB on the matter (U.S. EPA

- SAB, 2007). To summarize, the SAB concluded that

, while age and health status would likely have an effect on willingness to pay for mortality risk reductions, economic theory is ambiguous on how people’s willingness to pay to reduce mortality risks should change over their lifetime leaving it, therefore, as an empirical matter (U.S. EPA

- SAB, 2007). The judgment of the SAB, however, is that the empirical literature is not advanc ed enough to provide clear guidance on how age and health status affect willingness to pay to reduce mortality risks and that " ...the use of a constant Value of a Statistical Life Year (VSLY), which assumes that the VSL is strictly proportional to remaining life expectancy, is unwarranted " (U.S. EPA, 2007, p. ii)

. Instead, the SAB recommended that EPA use an age

independent valuation of mortality risk reductions

. This position was upheld by the National Research Council of the National Academies in their 200 8 report on Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution

. In this report, the NRC stated the following:

" Unless future research produces empirical support for the assumptions that underlie a constant VSLY, EPA should not attempt to make valuation adjustments for changes in remaining life expectancy by estimating life years saved and applying a constant VSLY "

T h ese recommendations are reflected in EPA ’s Guidelines for Preparing Economic Analys es (USEPA 2010) and applied in this RIA.

Office of Management and Budget (OMB). 2003. Circular A

- 4: Regulatory Analysis. Washington, DC. Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a

4.html.

U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). 200 0. An SAB Report on EPA’s White Paper Valuing the Benefits of Fatal Cancer Risk Reduction. EPA

SAB

- EEAC

- 00

- 013. July. Available on the Internet at121 <http://yosemite.epa.gov/sab%5CSABPRODUCT.NSF/41334524148BCCD68525 71A70051649 8/$File/eeacf013.pdf>.

U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). 2007. SAB Advisory on EPA's Issues in Valuing Mortality Risk Reduction . EPA

- SAB

- 08

- 001. October. Available on the Internet at <http://yosemite.epa .gov/sab/sabproduct.nsf/02ad90b136fc21ef85256eba00436459/4128007E78 76B8F0852573760058A978/$File/sab

- 08

- 001.pdf>.

National Research Council of the National Academies. 2008. Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution. The National Academies Press: Washington, DC.

U.S EPA 2010. Guidelines for Preparing Economic Analyses. EPA 240

- R

- 10

- 001. December. Available at: http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html

Comment 12: Other Estimates of CPP Co

- Benefits

-- Harvard/Syracuse, Schwartz, NRDC

Commenters in this summary discussed the economic benefits that implementing the rule will provide to public health and to projected effects of climate change.

Commenter s cited the results from the Driscoll et al. 2014 and Schwartz et al. 2014 studies

, which indicated that the magnitude of these air quality and health co

- benefits can vary substantially and depend on the design of the final standards. The commenter s added that their results suggest th at carbon standards that have stringent CO 2 emissions reductions targets but have high compliance flexibility and promote substantial investments in demand

- side energy efficiency have the greatest estimated air quality and health co

- benefits in both absolu te terms and on unitized basis of per

- ton

- of

- CO 2 reduced. The commenter s also added the studies also showed that carbon standards focused strictly on power plant retrofits could increase emissions with little to no health co

- benefits nationwide. The commen ter s said the results underscore that the design of power plant carbon standards strongly influences the magnitude and distribution of air quality improvements and health co

- benefits that accrue to states and to local communities. The commenter s added that quantifying and valuing local benefits could be an important additional motivator for taking action on climate change. The commenter s said that given the vast difference in air quality and health results and the potential for increased emissions and adver se effects under some options, the final rule and subsequent state implementation plans should include an estimate of changes in emissions of co

- pollutants (e.g., SO 2 , NO x , PM, and Hg) and potential consequences for air quality, atmospheric deposition and health effects in the affected and downwind states.

C ommenter s cited a recent study by Driscoll et al. (2014) that modeled policy approaches, one of which was closely approximated to the proposed rule by considering state

- based CO 2 emission s targets, flexi ble compliance options, and significant program investments in new end

- user energy efficiency, and resulted in the greatest air pollution reductions out of all modeled scenarios. The
commenters stated that the results indicate that the CPP may affect a 35% decrease in carbon emissions, as well as decreases in NOx, SOx, SO 2 , ozone, and PM 2.5 . The commenter s said the122 study estimated that the scenario similar to the proposed rule would result in " 3,500 premature deaths avoided, 1,000 hospital admissions avoide d from heart and lung disease, [and] 220 heart attacks prevented each year, " with all states receiving benefits from the standards. No negative health endpoints were observed by the researchers for the scenario, while other scenarios less similar to the pr oposed rule indicated some negative health endpoints from different policy choices. The commenters stated that based on this, EPA and states must guard against negative health endpoints when developing plans.

Commenter s stated that strong limits on carbon pollution from existing power plants could improve air quality and prevent an estimated 3,500 (780 to 6,100, 95% CI) premature deaths in 2020 along with other significant benefits to human health, according to an analysis released in September by research ers from Harvard University, Syracuse University, and Boston University. The commenter s said that the report evaluated alternative approaches for reducing carbon pollution from power plants, and showed that a strong, enforceable and flexible approach to

re ducing carbon pollution would reduce emissions of sulfur dioxide and nitrogen oxides by about 775,000 tons each year. The commenter s said that the report stated that in addition to reducing premature deaths, the strongest options avoided 530 to 1

, 500 hospi tal admissions for cardiovascular and respiratory diseases in 2020; and that as a result of lower emissions, all of the lower 48 U.S. states would experience cleaner air.

Commenter s cited a study by scientists at Syracuse and Harvard, which showed that cle aning up carbon pollution will clean up other forms of pollution. The commenter s said that effective limits on carbon pollution are estimated to reduce about 775,000 tons annually of coal pollutants like sulfur dioxide, nitrogen oxide and mercury, and to decrease ozone and particulate matter, which are serious health hazards that increase the risk for asthma attacks, affect fetal development and contribute to premature death. The commenter s urged the EPA to move forward with strong limits on carbon polluti on to prevent diseases and premature deaths.

Commenter s cited the study by Harvard School for Public Health and indicated that the results of this study show that carbon standards for existing power plants that are aimed at addressing the long

- term issue of global climate change can bring substantial near

- term state and local health

co

- benefits. The commenter s also said that the study also demonstrated that the specific policy design choices for power plant carbon standards have a critical influence on the magnitude and distribution of the health co

- benefits that occur.

Commenters cited the Harvard School of Public Health, Syracuse University, and Boston University's research

, which found that significant investment in energy efficiency and giving states f lexibility for implementation similar to the Clean Power Plan yielded greater health benefits than other strategies for carbon pollution reductions. The commenters stated that like EPA's analysis, the research found reductions in premature deaths, heart a ttacks, and hospital admissions. The commenters said the study found that the health co

- benefits were achieved in states such as Pennsylvania, Ohio, and Texas that have historically borne the brunt of coal power plant pollution.

Commenter s argued the claim s that CPP will lead to increases in the price of energy a nd job loss es and stated that the electric bill is the least of our worries. The commenter s cited Harvard Medical School estimates that coal costs the U.S. economy $150 to $250 billion a year mostly in123 adverse health impacts. The commenters stated that even at the lower estimate it would double the cost of coal if these costs, which are disingenuously described as hidden, were taken into

a ccount. The commenter s added that American families are paying for these expenses and suffer the consequences. The commenter s also pointed out the costs of wildfires and the costs of fighting those fires. The commenter s cited the cost of Colorado's 2013 Se ptember flood

, which was estimated to top $2 billion and stated that that is the cost of climate change in only one state. The commenter s also addressed the ecosystem costs that could be potentially far more catastrophic but harder to define: " And here are just a few: The billion trees, what's the cost of that and who will pay? What is the cost of rapidly worsening ocean acidification which threatens the collapse of entire ocean ecosystems? What would be the cost of losing insects that pollinate our food cr ops or the cost of hand pollinating? And finally, to me one of the saddest statistics of all and the most frightening, many scientists have estimated we will lose between a quarter and a third of the earth's species by 2050 due to the combined impact of gl obal warming and habitat loss. This cost is incalculable. "

Commenter s stated that by 2030 under the CPP, not only do the climate benefits alone from CO 2 reductions amount to about $ 30 billion annually, but the corresponding health co

- benefits are valuated at up to twice as much as the climate benefit portion. The commenter s said that those annual total benefits accrue to a range between six and twelve times the accompanying

c ompliance costs. The commenter s cited the Syracuse and Harvard University's co

- bene fits report, which showed air quality improvements in western Pennsylvania projected to occur under this rule to be among the largest in the country.

Commenter s cited a study by Schwartz et al. 2014, which implemented three policy scenarios to determine th e effectiveness and efficiency of each scenario for establishing power plant carbon standards and their subsequent co

- benefits. The commenter s said, the scenario which resembled what EPA outlines in the CPP (Electricity Sector Improvements (incorporating m oderate stringency, high flexibility, and high user efficiency)), provided the most co

- benefits of the scenarios analyzed as it would result in larger CO 2 and co

- pollutant (NOx, SO 2 , and Hg) emission s reductions than the other two scenarios.

Commenter s ci ted the Clean Air Task Force report, which determined that presently coal

- fired emissions cause or contribute to premature deaths of over 13,000 people annually, and estimated that the U.S. societal cost annually in health care and lost work days due to si cknesses is over $100 million. The commenters stated that due to the Obamacare, it is the public's burden to carry the insurance for everybody, thus, pollution is an economic cost that should be placed on the generation of any power plant. The commenter s a rgued the investment to make coal power plants more efficient (e.g.

, scrubbers) may not achieve the goal; however, encouraged the use of wind power and stated that wind power had the same cost as mass coal power.

Commenter s stated that the NRDC's study (L ashof et el., 2014) was designed prior to and strongly resembles the CPP. The commenter s said that the study proposed six policy cases to mitigate carbon pollution, each with varying degrees of regulation (i.e.

, Moderate, Full Efficiency case; Moderate Con strained Efficiency; Ambitious, Full Efficiency; Ambitious, Constrained Efficiency; and Ambitious, Constrained Efficiency, Product Tax Credit (for wind power)). The commenter s said these cases were compared to a reference case, and that each case was analy zed using ICF's Integrated Planning Model (IPM) and NRDC's assumptions, which124 were based on fuel prices, expected policies, and energy demand, to determine CO 2 reductions by 2020. The commenter s said the IPM model showed substantial reductions in each case , with a 21% drop from 2012 levels (using the Moderate, Constrained Efficiency case) to 31% (using the Ambitious, Constrained Efficiency, Product Tax Credit case). The commenter s said that IPM also showed the economic impetus for pursuing NRDC's suggestion s as the benefits outweighed costs by at least $21 billion in each case. The commenter s also said the scale of environmental and health benefits these cases could bring as CO 2 reductions would mitigate climate change and cuts in co

- pollutants would " preven t more than 17,000 asthma attacks annually, avoid more than 1,000 emergency room visits and hospital admissions per year, and prevent thousands of premature deaths, among other benefits. "

Response 12: The EPA agrees that it is important to estimate all of the benefits associated with implementation of the alternative options for the Clean Power Plan, including benefits from reductions in CO 2 emissions and co

- benefits from reductions in emissions of NOx, SO 2 , and directly emitted PM 2.5 . As we did in the RIA for the proposed rule, we estimate the health benefits from improvements in air quality resulting from the Clean Power Plan, which includes reductions in mortality and morbidity associated with ambient concentrations of ozone and PM 2.5 . We agree that the se benefits are substantial and are an important component of the overall monetized benefits of the proposed rule.

Comment 13: Ecosystem Effects and Non

- criteria Pollutants

Commenters in this summary disc ussed the benefits of the rule o n environmental quality and how this will help the health of the public and the environment.

Commenter s stated that the reduction of coal ash waste disposal is a major side benefit of the proposed rule and that this action will reduce the toxicity of citiz ens' land, air, and water over and above smokestack emission s reductions.

Commenter s also stated that coal burning power plants are the major source of atmospheric mercury pollution in the State of Montana and through the deposition of mercury to land and water surfaces this lead to contamination of local fish and aquatic ecosystems.

Commenters also stated " The rule would also provide several benefits that the researches did not quantify, such as reducing asthma symptoms, preventing unquantified damage to e cosystems and agriculture, and reducing the accumulation of toxic mercury in fish. The agency quantifies and monetizes only a portion of the CPP's non

- climate

- related health benefits, but they are still massive. " " For all these reasons, we strongly suppor t the CPP. "

Commenters also stated that acid rain is caused by burning of sulfur

- bearing coal.

Commenter s stated that they support wind energy as a practice to reduce emissions of nitrogen oxide, mercury, and sulfur oxide, and conserve water. The commente r s said that 11 states had already achieved a 10% reduction in carbon emission s using wind energy.125 Commenter s stated that f ederal and s tate governments make the assumption that most poisons, including those in ambient air, are harmless below a certain threshold concentration, and the public policy task is to find that threshold and keep the poisonous substance below it. The
commenter s said that this precept has been shown to be false by a wealth of more recent studies that show that the principal fossil fuel pollutants (lead, mercury, fine particulates, and ozone) harm human health at every level of concentration. The commenter s cited a survey of recent research by the WHO which concluded that " new epidemiological studies, conducted over the last decade, using sensitive designs and methods of analysis, have identified adverse health effects caused by combustion

- derived air pollution even at the low ambient concentrations that now generally prevail in cities in North America and western Europe " (Health Eff ects Institute 2001). The commenter s added that many studies show that these pollutants not only cause significant damage at very low concentrations, but that the damage is proportionally the greatest (on a parts per billion basis) at the lowest concentrat ions. The commenter s described in detail the effects of lead and mercury, sourced by coal

- fired power plants, o n public health.

Commenter s stated that curtailing burning of coal as rapidly as possible is the best for humankind. The commenter s said that c oal mining results in miner's death and illnesses, and air pollutants from burning coal cause or contribute to asthma and other respiratory illnesses. The
commenter s said that mercury from burning coal ha s resulted in almost all areas in the U.S. hav ing f ish with mercury levels that make it unsafe for at

- risk populations to consume more than a limited amount of many fish species. The commenter s also said that coal ash ponds create a tremendous risk to people and their rivers

, as already demonstrated more t han once in the Southeast, and added that coal ash contains a witch’s brew of toxic heavy metals and arsenic which appears to be responsible for cancer around coal facilities.

C ommenter s stated that CDC conceded in 2012 that there is no blood lead level t hat is small enough to be considered " safe " , and that as a result CDC cut its tolerance level for blood

- level lead from 10.0 ug/dL to 5.0 ug/dL. The commenter s said that even a level of 5.0 ug/dL is 25 times too high, according to the most recent research. The commenter s cited a study that found that the I.Q. of Italian teenagers is reduced in proportion to their lead exposure, no matter how small their lead exposure is. The commenter s added the study demonstrated that every 0.19 micrograms per deciliter i n an adolescent's blood is accompanied by a one

- point reduction in his/her I.Q. The commenter s said the study results imply that the I.Q. of preschoolers in the United States has been reduced by 7 points, on average, due to their exposure to lead pollution (av erage in U.S. is 1.3ug/dL). The commenter s said that lead exposure has three main sources: lead paint, leaded gasoline, and coal

- fired power plants; and since exposure to paint and gasoline is mostly under control, coal

- burning power plants are the pri mary sources. The commenter s said that the harm to public health from lead pollution from coal

- fired power plants is modest compared to the harm caused by mercury pollution.

Commenter s stated that coal

- fired power plants are the largest environmental sour ce of mercury in the U.S. (65%). The commenter s said a typical coal

- fired power plant without modern pollution controls emits 170 pounds of mercury each year, and that in 2009, coal

- fired power plants in the U.S. injected 134,365 pounds (more than 67 tons) of mercury into the environment. The commenter s said that 90% of this mercury could have been removed by using activated carbon injection (ACI) technology combined with bag

- houses, but that as of 2011, only 8% of126 coal

- fired power plants were equipped with this technology. The commente rs said that according to WHO, exposure to methylmercury damages not just the nervous system, but the digestive, respiratory, and immune systems as well. The commenter s said that in 47 of the 50 states, wild fish cannot be eaten because their methyl mercury exceeds safe levels. The commenter s also said the estimated safe blood level of a mother bearing a child is 0.58ug/dL, and stated that the neurotoxicity of methylmerc ury is much higher than that of lead, therefore, the definition of a safe blood level of methylmercury (if there were one) should be well below that of lead (0.5ug/dL).

Commenter s stated that renewable resources and energy efficiency also protect water q uality and save water. The commenter s said that renewable resources like solar PV and wind turbines operate using no water, unlike steam cycle thermal power plants such as fossil and nuclear plants. The commenter s said that renewable resources and efficien cy also eliminate the many risks to public health and the environment posed by fossil and nuclear plants, including contamination of ground and surface water by coal ash pits, catastrophic failure of coal ash dams and nuclear plants, thermal discharges (i. e., heat pollution) by plants that lack closed

- loop cooling systems, discharges of pollutants to surface waters, and loss of fish and other aquatic life that are impinged and entrained in power plant cooling systems.

Commenters stated that fossil fuel powe r plants, particularly those fueled by coal, are one of the chief sources of toxic and other pollutants into our waters and air. The commenters said that these other pollutants have immense impacts on wildlife, killing and poisoning fish and other species, reducing the enjoyment of wildlife

- related outdoor activities, and making fish in many lakes, streams and rivers unsafe to eat. The commenters said that the CPP promises to make our air and waters cleaner, our wildlife healthier, and help allow us to enjo y wildlife

- based activities with less pollution and health risks. The commenters added that an even stronger final plan will have greater additional benefits for wildlife and human health by further reducing dangerous pollutants associated with fossil fuel

- derived electric generation.

Commenters stated that the proposed rule can reduce mercury and water pollution. The commenters said that pollutants such as mercury, arsenic, chromium and nickel, reach the environment as a result of coal

- fired power genera tion processes (atmospheric deposition and direct discharge). Commenter s said that cleaner power sources, especially renewables, do not pose waste disposal problems, in comparison to the fossil fuel power plants, which contribute 50

- 60% of all toxic pollu tants discharged in the nation's surface waters. Commenter s said EPA estimates that the CPP will remove 3,400 to 4,200 pounds of mercury from the environment, and stated that a quicker transition to clean energy would remove even more mercury and make fish safer to eat.

Commenters stated that the rule will be protecting wildlife from water intake systems used during fossil fuel power generation. The commenters said that process results in mortality of aquatic life, including threatened and endangered specie s. The commenters said that by spurring the transition to a clean energy economy, the CPP will help reduce the need for these cooling water intake systems and thus reduce wildlife casualties.

Commenters also stated that the rule will help reduce acid rain , mostly formed by sulfur dioxide and nitrogen oxides emissions from coal plants. The commenters said that EPA estimates that127 CPP will remove between 424,000 to 471,000 tons of sulfur dioxide and 407,000 to 428,000 ton of nitrogen oxides, which will mean l ess acid rain in the streams and lakes downwind of power plants. The commenters said that a strengthened rule will achieve even further reductions of these many harmful pollutants associated with fossil fuel power plant electricity generation.

Commenter s stated that different air pollutants (sulfur dioxide, nitrogen oxide, mercury, lead and particulate matter) as a result of burning coal have significant effects on human and environmental health. The commenter s said that toxic level of acid deposition are inflicting damage on trees and aquatic life, and stated that EPA need to fulfill its mission to protect our environment and significantly slow and reduce the amount of coal being burned, and restrict its
use as an energy source.

Commenter s stated that the CPP will result in reducing not only CO 2 but also other harmful pollutants, including sulfur dioxide, nitrogen oxides and particulate matter. The commenter s said that these " co

- benefits " are projected to include the reduction of hundreds of thousands of to ns of

non

- CO 2 pollutants, benefiting public health invaluably and improv ing the air quality in our national parks and wilderness areas . The commenter s said that there are extensive studies identifying specific national parks, species and ecosystems impacte d by pollutants released by coal burning power plants. The commenter s added that as EPA moves to finalize the CPP we strongly support the agency taking into account the co

- benefits that CO 2 reductions will have on our national parks and the Appalachian Mou ntains.

Commenter s stated that EPA is not protecting the health of the Deni people, the Hopi people and the ecosystems that they depend on. Commenters stated that, when you're looking at climate change the impact is going to be on the frontline communitie s, and those are the people that live right there. Commenters stated that a lot of studies coming out look at the cost benefits, but are not looking at the health of the communities and the ecosystems.

Response 13: The EPA agrees that there are environment al effects from various aspects of electricity generation, including fossil fuel extraction, transportation, combustion, and waste management. These effects reach different mediums, including air, water, and land and impact human health and ecosystem heal th. The EPA agrees that reducing CO 2 emissions from the power sector under the Clean Power Plan proposal would provide both human health and ecosystem health co

- benefits by reducing non

- CO 2 environmental risks, including risks associated with mercury and acid rain. Consistent with OMB (OMB, 2003) and EPA guidance (U.S. EPA, 2010) the EPA estimates all of the anticipated costs and benefits associated with a regulatory action, to the extent feasible, for the purpose of determining the likely impacts . We also include a list of unquantified benefit categories in the RIA of Clean Power Plan proposal which identifies reductions in exposure to methyl mercury and related health and environmental effects, reductions in other air toxics exposures, improved visibility in parks and urban areas, reductions in acid and toxics deposition and associated environmental damages, and reduction in nutrient enrichment as important unquantified benefits of the Clean Power Plan proposal.

U.S. Office of Management and Bu dget. Circular A

- 4. September 17, 2003.

U.S EPA 2010. Guidelines for Preparing Economic Analyses. EPA 240

- R

- 10

- 001. December. Available at: http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html128 Comment 14: Other

Commenters in this summary di scussed the role of power plants on impacts to public health.

Commenter s stated that we are treating the electricity industry very different to the way we treat other industries in America. The commenter s said that for some reason it seems to be a hurdle i n the public's mind that we could force a public health and safety upgrade during the life of a plant, when the usual practice is take action not only to protect health and safety of the public, but also to mitigate the costs associated with that issue.

Co mmenter s stated that we cannot simply replace coal with natural gas, or replace coal burned in dirtier plants with that same coal burned in slightly cleaner plants, without considering the climate change and public health costs of the full production cycle of these fuels, not simply the cost of their combustion.

Commenters stated that EPA needs to make sure these carbon rules are as stringent as possible to offer much needed relief to people living within the dirty coal cycle like my community. Commenters cited in southwestern Pennsylvania many coal field areas are exploding with shale gas extraction, so without a plan that focuses on renewables, these same communities will see shale gas drilling increase even more as power plants convert to gas. Commenter s stated this will not alleviate the negative health impacts already seen from the coal cycle, because the gas extraction has serious health impacts as well in massive methane emissions that would increase climate change damages. Commenters closed, statin g that these new regulations will create significant changes to front line communities, and the EPA is responsible for making sure the regulations are just and equitable.

Commenter s cited a study called ARIES, conducted by EPRI, that showed a direct correl ation between high pollutant concentrations and emergency health department visits and mortality. The commenters stated that even though there is evidence, the power companies are not required to pay the hospital, the insurance companies, or the patients f or the billions of dollars of costs caused by their emissions.

Commenter s stated that although carbon doesn't directly cause health effects, its potency as a greenhouse gas traps other pollutants (e.g., mercury, arsenic, lead, dioxins) that come from power plants.

Response 14 : The EPA agrees that there are additional impacts fr om various aspects of electricity generation, including fossil fuel extraction, transportation, combustion, and waste management. These effects reach different mediums, including air, water, and land and impact human health and ecosystem health. The EPA has quantified the co

- benefits from reductions in other non

- CO2 air pollution emissions, but agrees that there are other important beneficial impacts of the proposed rule which we were not able to quantify. The proposed Clean Power Plan uses the EPA’s Cle an Air Act authority to address power sector CO 2 emissions. While EPA did not directly address these other unquantified effects in the proposal, there may be also other laws, regulations, and voluntary programs at the federal, state, and local level that address129 these additional effects. EPA’s analysis of the emissions impacts and benefits of the proposed Clean Power Plan evaluated the full power sector impacts of the rule, which includes changes in fuels, changes in levels of power generation, and use of renewable and traditional fossil fuels, not just the impacts of emissions control devices.

Comment 15: Concerns about EPA air quality co

- benefit estimates

Commenter s stated that EPA is trying to conflate addressing CO 2 emissions with addressing air pollution in its proposed rule. The commenter s said that messages such as the President's statements that by addressing " dangerous carbon pollution, " this rule will also " cut down on...smog, and soot that threaten the health of the most vulnerable Americans " and " In just the first year that these standards go into effect, up to 100,000 asthma attacks and 2,100 heart attacks will be avoided " are causing public confusion, and making the public believe that CO 2 emissions

are some how linked with asthma and heart disease when they are not.

Commenters stated that EPA should carefully consider whether the benefits are worth the costs of the proposed rule. The commenters added that the current course of CO2 emission reductions will l ikely produce similar positive results as would the proposed regulations over the same time as technology improves and replacement capacity comes on line.

Commenters argued the opposition statements of the fossil fuel industry towards the rule (i.e.,
energ y cost increases and job losses), and questioned the costs of estimated effects of climate change, and health impacts, including job loss productivity and death as consequence of inaction.

Commenters stated that scenarios that assume lower discount rates f or costs and/or benefits, show costs for the proposed regulation exceed the climate benefits for the U.S., and climate benefits exceed the costs of the rule only if climate benefits are added for the non

- U.S. world population. (For a response to this comm ent, please see 8.7.2, comment 7 for information about the selection of discount rates applied to the SC

- CO2. The response to 8.7.2, comment 3, addresses why EPA uses a global rather than domestic SC

- CO2.

The commenters said that positive net benefits f or the rule depend on the large estimated criteria pollutant co

- benefits and that the proposed regulation would show negative net benefits if criteria pollutant co

- benefits were not included. The commenters also said that criteria pollutant co

benefits acc ount for more than 90% of U.S. benefits, with PM2.5 accounting for 95% of co

benefits and ozone 5%. The commenters said that avoided mortality accounts for 98% of co

benefits and morbidity 2%.

Commenters stated concerns with the EPA's statement " At this ti me, we don't have any estimates regarding the benefits and costs of this action, but we do expect it to be a significant regulatory action with annual effects on the economy exceeding $100 million. " The commenters noted that EPA projects that net climate a nd health benefits are $48 billion to $82 billion by 2030. The commenters said that in the overview, the benefits climb to $55 billion to $93 billion in 2030, including avoiding 2,700 to 6,600 deaths and 140,000 to 150,000 asthma attacks in children. The

c ommenters stated these numbers are important to consider because the nation deserves a130 credible approach that yields tangible results, and as taxpayers, people deserve justification of the financial costs and claimed benefits of the rule. The commenters no ted that EPA has highlighted the dramatic improvements in air quality over the past 30 years to support using this action to reduce climate attacks and fatalities despite the increase in population, the state of the economy, and vehicle miles traveled.

Re sponse 15: The actions taken by states and emissions sources to meet the Clean Power Plan requirements will have broad impacts on both CO2 and co

- emissions of many other pollutants, including SO2, NOx, fine particles, and mercury. Following best economic practices and consistent with many previous rulemakings, EPA has appropriately included both the direct benefits of CO2 reductions through reductions in climate impacts, and the co

- benefits of reductions in ambient concentrations of PM2.5 and ozone. Consistent with OMB (OMB, 2003) and EPA guidance (U.S. EPA, 2010a) the EPA estimates all of the anticipated costs and benefits associated with a regulatory action, to the extent feasible, for the purpose of determining the likely impacts . Further, the EPA ’s methods for quantifying the human health benefits of emissions reductions are based on the best available peer

- reviewed science and methods that have withstood scrutiny from the EPA’s independent Science A dvisory Board (SAB), the National Academy of Sci ences (NRC, 2002), and continuous interagency review.

Office of Management and Budget (OMB). 2003. Circular A

- 4: Regulatory Analysis. Washington, DC. Available on the Internet at http://www.whitehouse.gov/omb/circulars/a004/a

4.html.

U.S. Environmental P rotection Agency (U.S. EPA). 2010a. Guidelines for Preparing Economic Analyses. EPA 240

- R

- 10

- 001. National Center for Environmental Economics, Office of Policy Economics and Innovation. Washington, DC. December. Available on the Internet at <http://yosemit e.epa.gov/ee/epa/eerm.nsf/vwAN/EE

- 0568

- 50.pdf/$file/EE

- 0568

- 50.pdf>.

National Research Council (NRC). 2002. Estimating the Public Health Benefits of Proposed Air Pollution Regulations

. Washington, DC: The National Academies Press. Washington, DC.

8.9 REL IABLE AFFORDABLE ELE CTRICI TY

Comment 1: Commenters discuss FERC response to CPP.

C ommenter s cited FERC's criticism of the rule with regard to reliability. The commenter s said FERC can and should help the EPA understand the implications that such regulations may have on electric reliability and support utility compliance with those regulations where necessary and to the extent possible. The commenter s said i t speaks volume s about EPA's proposal when the leadership of the executive agency currently charged with developing and implementing national energy policy expresses such grave concerns about the Proposed Rule.

Response 1: FERC staff and Commissioners have been very help ful to EPA as EPA has developed the final rule. EPA staff and managers have met with FERC staff and all of the131 Commissioners to get advice regarding the CPP. In addition FERC held several Technical Conferences about reliability and the CPP and EPA manage ment participated in all of them. EPA is very grateful to FERC for their engagement in developing the final rule.

Comment 2: Commenters stated that coal use has benefits for reliability.

Commenter s stated that coal has been the anchor for generation w hen drought reduced hydropower output, fuel oil prices became subject to extreme volatility, natural gas was feared to be in short supply, and more recently, when Mother Nature does not cooperate with intermittent renewable sources. The commenters stated t hat as coal

- fired generation has increased 158 percent since 1970, there has been a 91 percent reduction in sulfur dioxide emission, 84 percent reduction in nitrogen oxide, and 89 percent reduction in particulate matter. The commenters stated that the EPA' s proposed regulations will drastically limit the options utilities have to provide low

- cost and reliable power, with dire consequences for our nation's electric grid, consumers, and the U.S. economy.

Commenter s stated that the interpretation of BSER is p roblematic because it is sufficiently broad to include actions and restrictions that go beyond the fence line of existing power plants and may vary widely from state to state. The commenters stated that the proposed rule for existing power plants will forc e coal

- fired units to retire because the installation of controls such as carbon

capture systems to reduce emissions is not viable, and the incentives in these proposed rules to eliminate coal

- fired units will disrupt current energy grid reliability and wi ll significantly increase energy costs for U.S. manufacturing operations.

Commenter s stated that residential rates are projected to increase by 20 percent to 36 percent as a result of the Clean Power Plan and industrial rates are expected to increase 22 p ercent. The
commenters stated that preliminary modeling demonstrates that the rule would leave Utah's electric reliability jurisdiction only 0.53 percent above the region's 15 percent target for reserve margin, which means that adequate supply would tighte n dramatically.

Commenter s operate d 4,890 miles of distribution line in three retail transmission organizations ( " RTOs " ). The commenter s operate d on the seam across ERCOT, MISO and SPP. The commenters stated that many companies operate and coordinate with multiple RTOs. However, the commenter s note d that most companies serve more than 4 meters per mile. The commenters stated that due to the low density of consumers and the geographic location relative to mult iple RTO's, there has been minimal transmission investment in the commenter s ' service area. The
commenter s further state d that the proposed dispatch of combine cycle gas units and running gas units at a higher capacity factor only works if the transmission infrastructure supports the delivery of electricity from the units, and the commenter s note d that the transmission infrastructure supplying power to their area cannot support the aggressive targets outlined in the Clean Power Plan. Commenters added o ur re liability will suffer.

Commenter s indicated that the Clean Power Plan can potentially raise our electrical rates by as much as 30%. Commenters stated a 30% increase in electrical power cost would have a significant impact on the rates we charge our custom ers, both residential and industrial.132 Commenter s stated that according to the Energy Information Administration, in 2010, nearly 48 percent of Illinois' electricity came from nuclear power while 47% of the state's electric power was generated by coal. The commenter s noted that the second targeted block of the Clean Power Plan relies on moving to increased use of existing natural gas fired power plants. The
commenters stated that since Illinois' energy portfolio includes a limited amount of natural gas fired generation, this requirement would jeopardize o ur state's ability to meet the requirement, and compliance would be extremely expensive leading to significant increases in cost and decreases in reliability for energy customers.

Commenter s first cite d the following (three) estimates of the Clean Power P lan 's impact on the cost of energy supplies in the United States: (1) The US Department of Energy estimates that the EPA 's Clean Power Plan could close several hundred coal

- based electricity plants across the country leading to electricity price spike esti mated to reach up to $2,000/Mwh in some parts of the country ( Electricity Grid Reliability: Close to the Edge. National Mining Association, 2014 ); (2) Reduction in generation capacity due to closure of coal fueled EGU 's could lead to natural gas prices to increase from $5 per million Btu to $123 per million Btu ( NMA 2014 ); (3) Wholesale electricity prices will increase 27%

- 55% across the nation with the closure of power plants over the next two years ( NMA 2014 ). The commenters stated that the combination of significantly increased energy costs, increasing energy demand from an expanding population and lack of transmission capacity would place a sustainable strain on our nation 's power grid in the years to come, likely leading to prolonged brown

- outs across t he country. The commenter s also stated that the consequences of these " blank spots " in our electricity supply would not only create immediate problems such as loss of power to our homes, businesses, hospitals etc., but also cause great uncertainty for busi ness looking to invest in expansion and improvements of their operation.

Commenters stated that compliance with the proposed emissions guidelines would likely raise serious concerns with the electric system reliability due to the shutdown of coal

- fired ge nerating units in the state. Commenters stated that replacement of coal generation with another type of generation (such as natural gas combined cycle), possibly at a different location, could result in potential outages or voltage collapse since Florida's transmission system was not designed and built to accommodate these types of drastic changes. Commenters stated that if, for example, many coal units are forced to retire and the replacement power has to come through Central Florida, this could create ser ious issues and hardship for us as our transmission system is very sensitive to generation dispatch pattern outside of our territory.

Commenters stated that rapid early retirement of coal units in the region could lead to thermal overloads, low voltage and collapsed voltage on the transmission system. Commenters stated that for potential impacts of the Proposal on reliability, please see the comments of the North American Electric Reliability Corporation (NERC) and MISO. Commenters stated that the EPA's rel iability assessment fails to adequately address regional concerns and the need to keep units operational until suitable base load capable replacements can be brought on line or transmission mitigation projects can be implemented.

Commenters stated that EP A fails to consider the competitive impacts of its Proposed Rule. Commenters stated that many utilities have a far greater dependence on coal

- fired plants than natural gas plants. Commenters stated that utilities that would be required to prematurely close133 viable coal plants with years of remaining operating life, and given the limited time period for re

dispatch, would be forced to purchase energy from other utilities. Commenters stated that ratepayers of such utilities would lose the use and benefit of in vestments made in capital intensive coal plants and, be forced to pay for new transmission lines and pipelines to other utilities to buy electricity from gas generation plants they do not own while paying down the debt on their own stranded investments as they sit idle.

Commenters stated that recent extreme weather resulted in a loss of 22% of generation capacity (including 13,700 MW of coal generation) and severely stressed PJM reserve capability. Commenters stated that it is noteworthy that coal generation has the ability to store backup supply on site whereas gas

- fired generation does not have onsite storage capability which led to at least some of the reliability issues.

Commenters stated that they have concerns over the impacts of BB1 on the re maining PJM coal generation and the threats it poses to future reliability. Commenters stated that the import of the EPA BB1 proposal will be the inevitable premature retirement of coal generation facilities, including facilities wherein significant enviro nmental compliance investment has already occurred with the simultaneous reduction in both generation portfolio diversity and system reliability.

C ommenters stated that in the face of the complexity of addressing nationwide reliability, the Proposal wrongl y presumes that an air regulator in any given state can impose controls on its state's piece of the BES that will dramatically reduce its emission levels in 2020, without impairing or damaging the system's ability to remain within all these other critical constraints.

Commenters stated that ignoring or inadequately evaluating these system constraints can cause significant long

- run problems. Commenters stated that this is because a big enough short

- run impact, e.g., re

- dispatch or displacement of sufficient energy production from existing coal plants, will render them uneconomic to keep operating. Commenters stated that IPM modeling demonstrates that a price on carbon or administrative control that is stringent enough to achieve the emission reductions requi red by the Proposal's interim goals and ten

- year

- averaging constraint would also render a significant number of coal plants uneconomic to operate at the very start of the 2020 compliance period

- practically overnight, especially in light of the uncertain legal challenges the Proposal faces. Commenters stated that substantially more plants than these modeling exercises indicate may retire due to the rule. Commenters stated that while both regulated and merchant plants are at risk, rapid retirement is partic ularly likely for the 42% of the country's generation fleet comprised of merchant generating units that depend on market revenues for covering operating costs.

Response 2: EPA disagrees with these comments. While EPA recognizes that there will be impacts from this rule, EPA believes these comments to be seriously overstated. EPA has conducted a thorough analysis to the impact of the rule and has concluded that the impact on generation changes and costs will be modest. For details of this analysis, see C hapter 3 of the Regulatory Impact Analysis. EPA also believes that concerns about reliability are misplaced, because reliability has been carefully considered in the development of the rule, through flexible provisions and through being built into the sta te planning process; in the unlikely event that the134 rules will lead to further impacts under well

- designed state plans, EPA has provided a Reliability Safety Valve mechanism that ensures reliability can be maintained.

Comment 3: Commenters discussed the f unction of Intercompany Interchange Contract.

Commenters discussed the function of the Intercompany Interchange Contract in allowing member companies to provide reliable affordable electricity and stated that if member companies must alter their operations to meet the proposed rule, they will not be able to achieve expectations of member companies under the IIC. The commenter s posited that if IIC expectations are not met, each member company will have to take independent actions that they deem necessary in order to protect themselves accordingly and the IIC membership would be diminished, if not eliminated altogether.

Response 3: EPA does not believe that the Intercompany Interchange Contract, or any similar provisions for coordination of operations among ut ility operating companies, will be diminished by this rule. The rule provides for flexible state implementation, and does not prescribe the methods that states must use to ensure compliance, not does it limit that ability of states to work with neighborin g states to ensure efficient implementation. The rule permits continued operations through current approaches, such as security constrained economic dispatch and reserve sharing agreements, and there is no reason to believe these will not continue. Multi

- state companies have a long history of working successfully to continue to coordinate the load and generation functions of their operating companies, while continuing to comply with both environmental and state PUC regulation. Nothing in this rule will impede continued success.

Comment 4: EPA should work with DOE to ensure grid reliability.

Commenter s stated that EPA and the United States must ensure that DOE uses its statutory authority to make sure that EPA rules don't endanger grid reliability. The commenter s also supported tax incentives for efficiency upgrades at existing plants. The commenters st ated that the current rules prohibiting advanced fossil fuel programs from receiving federal grants and loan guarantees need to be removed along with the regulatory impediments that delay or discourage efficiency projects.

Response 4 : T he EPA will be worki ng closely with DOE to monitor implementation of the final Clean Power Plan, as we have in th e past. In addition DOE has agreed to provide technical assistance to states and tribes t o help them develop state and regional plans. DOE’s expertise will be a v aluable asset in this process. EPA recommends that the commenter s pose d additional comments to the agencies that can address them.

Comment 5: Commenters stated that the CPP does not provide enough time to implement cost effectively and described conseq uences of tight deadlines for interim and final compliance.135 Commenters stated that the proposed rule does not provide enough time to implement the most cost effective solutions.

Commenter s noted " concerns regarding the need for additional time to mitigat e the impacts of the carbon regulation. The proposed timeline does not provide enough time to develop sufficient resources to ensure continued reliable operation of the electric grid by 2020. To attempt to do so would increase the use of controlled load sh edding and potential for wide

- scale, uncontrolled outages. "

Commenter s stated that the investments required to transform its fleet to meet the proposed standard may cost $7 billion in capital investments, which it will seek to recover through electric rate increases. The commenter s recommended that EPA consider comments rela ted to the aggressive timeframe and its potential impacts on electricity prices and develop a more workable timeline that minimizes unreasonable impacts on electricity prices.

Commenter s stated that increasing utility rates to pay for the CSAPR regulatio n alone will have a devastating effect on OUC customers and the Central Florida economy, and that the impacts of the Clean Power Plan and UMACT exacerbate these impacts. The commenters stated that its position is not to challenge the Rule, but to demonstra te the need for more time to reach the emission requirements identified.

Commenter s stated that the EPA completely fails to analyze the regulatory, time, and cost impacts triggered by Building Blocks Two and Three, which would require major changes to the regional energy market, involving more infrastructure, including pipelines and transmission lines. The commenters stated that transmission line construction involves negotiations with landowners for easements and possible eminent domain proceedings, in ad dition to permitting and engineering, which would add significant time and costs to the timeline and implementation of the Proposed Rule.

Commenter s stated that any compliance costs borne by ratepayers through higher rates will be magnified if utilities d o not have sufficient lead time for the development of new or increased demand side programs, construction of new generation, and/or extensive upgrades to existing coal

- fired generation. The commenters stated that compliance timelines must not prevent stat e regulators from having an adequate opportunity to review utility compliance plans to assure that ratepayers are being provided reliable service at the lowest reasonable cost. The commenters stated that compliance timelines must take into account the impa ct of rate increases that can result as utilities seek recovery from customers.

Commenter s stated that electric utilities need more time to build replacement generation and make significant investments in transmission and other mitigation to maintain reliability. The commenters recall ed when our overall environment was nowhere near the quality we have now, and the soot in the air represented progress. The commenters also recall ed that back then, thoughts of the long term ramifications were not paramount, that we are now much smarter, and we have made great strides in cleaning up our emissions. H owever, the commenters note d that now is not the time to make these draconian demands on our country's energy infrastructure. The
commenters state d that the loss of jobs, coupled with the drastic increases in electricity rates, will create a huge burden on our citizens. Both commenters felt that we should strive to continue the136 technological advances that have already provided us with a much cleaner environment; however, arbitrary deadlines and unproven benefits will only harm our still fragile economy.

Co mmenter s stated that EPA assumed that all emission rate reductions from Building Blocks 1 and 2 could be achieved at the start of the ten

- year interim compliance period, thus for many states, almost all of the emission rate reductions that the Proposed Rul e ultimately requires must be achieved in the first year of the ten

- year interim compliance period. The commenters stated that Pennsylvania is left with little or no flexibility to determine a different compliance path to avoid the 2020 compliance cliff. T he commenters stated that EPA intends to finalize the Proposed Rule in mid

- 2015, which means that the earliest state implementation plans would be approved by EPA is mid

- 2017. The commenters stated that this schedule leaves 2

- and

- a

- half years for electric generating companies to achieve aggressive emission reductions and states to make sweeping changes to their existing regulations and electric generation, transmission, and distribution systems. The commenters stated that the proposed implementation schedul e will force states to rely on coal unit closures to achieve compliance and the constricted timeline will prevent states from cushioning economic impacts from retirements.

Commenter s expressed the belief that the proposals in the Clean Power Plan would ta ke more time to be implemented by Arkansas than allotted under the proposed rule. The commenters stated that we must be smart about how we make changes to our electricity sector, and rushing to meet arbitrary, self

- imposed deadlines does not give states li ke Arkansas sufficient time to explore innovative ways to reduce its GHG emissions without requiring the closure of useful baseload power plants and the associated increase in electricity rates.

Commenters stated that in proposing the state emission rate goals and compliance periods, EPA did not assess the interconnected power system's reliability requirements, nor what effect the Building Blocks had on each other or on the bulk power system when simultaneously undertaken at the levels EPA proposed are ach ievable. Commenters stated that because the goals and compliance periods proposed do not reflect the reliability implications of the changes to the interconnected power system that will be required to implement the BSER Building Blocks, they do not fully d epict the changes the system may have to implement (or the time that will take).

Commenters stated that States need glide path flexibility to address concerns about price volatility, they also need flexibility to ensure on

- going system reliability. Comment ers stated that time will be needed to upgrade the electric transmission grid and natural gas distribution systems to accommodate a resource mix that meets Clean Power Plan targets. Commenters stated that these upgrades will require regional coordination a nd compliance with other federal laws designed to ensure reliability.

Commenters stated that, according to the EPA's Regulatory Impact Assessment, generation capacity would be reduced by between 108 and 134 GW by 2020. Commenters stated that constructing suitable replacement generation resources to maintain adequate planning reserve margins would be a challenge given the constrained time frame that the states were given. Commenters stated that in addition, in order to accommodate the greater use of natural

- gas fired generation, gas pipeline expansion would be necessary to maintain a reliable source of fuel, particularly during the peak winter heating season. Commenters stated that anticipated changes in resource mix and new dispatching protocols will necess itate comprehensive reliability137 assessments to identify changes in power flow and develop new operating procedures to maintain reliability. Commenters stated system operators and ISO/RTOs need to develop appropriate processes, tools, and operating practice s to adequately address operational changes on the system. Commenters stated that more time must be given to understand the implications of the CPP and to accommodate reliability enhancements.

Commenters stated that he proposed rule states that " the U.S. e conomy depends on this sector [electric energy] for a reliable supply of power at a reasonable cost. " 79 Fed. Reg. at 34,844. Commenters stated that the quick shift to natural gas, coupled with intermittent resources, puts that reliability at risk by fai ling to have sufficient time frames for transmission, generation, and gas infrastructure build

- out. Commenters stated that it also threatens reliability by shifting away from coal to heavy reliance on gas without significant modeling and infrastructure bu ild

- out or planning which puts the grid at risk. Commenters stated that in order to maintain even minimal reliability, the rule pushes utilities and states to look beyond what may constitute " reasonable cost, " to invest quickly in expensive transmission a nd natural gas infrastructure and the quick build

- up on additional NGCC to meet peak, base load, voltage support, renewable support and dispatchable reserve resource demands.

Commenters stated that the quick shift to natural gas, coupled with intermitten t resources, puts that reliability at risk by failing to have sufficient time frames for transmission, generation, and gas infrastructure build

- out. Commenters stated that it also threatens reliability by shifting away from coal to heavy reliance on gas w ithout significant modeling and infrastructure build

- out or planning which puts the grid at risk. Commenters stated that in order to maintain even minimal reliability, the rule pushes utilities and states to look beyond what may constitute " reasonable

cos t, " to invest quickly in expensive transmission and natural gas infrastructure and the quick build

- up on additional NGCC to meet peak, base load, voltage support, renewable support and dispatchable reserve resource demands.

Commenters stated that there is a profound disconnect between the early emission reductions that would be required under the Proposal and emission reduction trajectories that could be realistically achieved by states, without stranding assets needed for re liability. Commenters stated that these immediate results would destabilize and distort markets by driving the supply of power well below the levels needed by the BES to meet demand and ensure grid reliability.

Commenters stated that the implementation of the proposed Clean Power Plan will have a significant impact on the planning and operation of the ERCOT grid. Commenters stated the proposed CO2 emissions limitations will result in significant retirement of coal generation capacity, could result in trans mission reliability issues due to the loss of fossil fuel

- fired generation resources in and around major urban centers, and will strain ERCOT's ability to integrate new intermittent renewable generation resources.

Commenters stated that SPP's Assessment ma kes it very clear that new generation and transmission expansion will be necessary to maintain reliability during summer peak conditions if EPA's projected generator retirements occur. Commenters stated that even the scenario that assumes optimal resource expansion using new natural gas fired resources could be problematic during extreme winter load conditions with gas supply and delivery challenges " Unprecedented coordination and cooperation beyond regional planning efforts will be necessary. "138 Commenters stated that compliance with the interim performance requirements will force actions to be taken by 2020. Commenters stated that MISO's initial analysis indicates that up to 25 percent of the remaining coal capacity in MISO

- which equates to 14 gigawatts

- could potentially retire in order to comply with the proposed rule. Commenters stated that this impact is in addition to the 10 to 12 gigawatts of retirements expected due to MATS. Commenters stated that to avoid reliability and resource adequacy issues, retiring capacity will need to be replaced at the time it comes offline. Commenters stated that to comply with the interim performance requirements, a significant amount of retirements

- approximately 11 gigawatts

- would need to occur in the 2020 timefram e. Commenters stated that this is well before sufficient replacement capacity can be placed into service; new combined

- cycle natural gas generation is the most probable option to replace retiring coal

- fired plants and comply with the proposed rule.

Comment ers stated that the potential reliability impacts associated with the transition from the these traditional high

- inertia resources (and related loss of essential reliability services such as frequency and voltage support) to other forms of generation need to be studied to ensure that proposed state compliance plans do not reduce the reliability of the BES.

Commenters stated that this proposal raises reliability concerns. Commenters stated that the amount of down time that will be necessitated in order to m ake HRI upgrades in such a short amount of time is unknown due to this national averaging approach in lieu of unit

- by

- unit capabilities analysis. Commenters stated that obtaining NSR permits in some cases will take additional time, and there is just not en ough time under this proposal, especially considering HRI improvements is the very building block U.S. EPA assumes can be achieved the quickest.

Commenters stated that based upon study results, retired generation identified due to the proposed EPA Plan wi ll require system modifications. Commenters stated that additional requests for commenters to secure firm ATC may be required. Commenters stated that significant BPS modifications will likely result in system upgrades that potentially cannot be achieved ba sed upon the time requirements proposed in the EPA's plan. Commenters stated that reliability assurance mechanisms should be in place to allow for sufficient planning and construction of projects for the most feasible options with compliance dates dependen t upon system study results and requirements with projected in service dates and lead times. Commenters stated that each facility change should be evaluated on specific system identifications as listed in the NERC Report Potential Reliability Impacts of EP A's Proposed Clean Power Plan as guidance.

Response 5: Numerous commenters have suggested that the time allowed states to develop state plans and to come into compliance with the interim deadline of 2020 was inadequate. Although the proposal provided fle xibility in the timing with which emission reductions could be made over the course of the 2020

- 2029 period in order to achieve compliance with the emission limitations applicable to that interim period, many commenters perceived the start of the period

as too soon and stated that it provided insufficient time for planning and investments necessary for sources to begin complying while maintaining reliable electricity supplies. The EPA has considered these comments and in the final rule has established an i nterim compliance period of 2022

- 2029, providing two final rule’s requirements in an orderly manner while maintaining reliability of electricity supplies. See s ection VII.G.2 of the final preamble to the CPP for discussion of reliability issues.139 The final rule provides sufficient time to ensure system reliability and a phase

- in that allows for additional time to complete potential infrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) that might be needed to support more use of existing natural gas

- fired generation, and provides states with increased ability coordinate actions taken under building block additional years for planning and investment before the start of compliance. We are persuaded by comments and by ou r own further analysis that this timeframe is appropriate given the nature and magnitude of planning and investment activities that will be necessary to begin compliance with the actions taken under building block 3 (operation of new renewable capacity). A dditionally, this phase

- in increases the flexibility provided to states to address capital investment concerns regarding individual sources when scheduling compliance actions over the course of the interim and final periods.

Comment 6: Commenters request ed adjustable timing including safety valve.

Commenter s requested that EPA include a safety valve provision in the final rule that would include mechanisms to adjust timing and possibly state goals given extraordinary conditions that would affect the econ omy, public safety or reliability.

Commenter s stated that without certainty of the compliance timeline under the proposed rule, OMU must wait until the SIP is approved by EPA before finalizing compliance plans, but OMU must make definitive decisions regar ding participation in the RPM market each May for a three

year forward obligation. The commenters stated that the loss of RPM revenues would require OMU to raise rates to its customers. The commenters stated that based upon the most recent clearing price of the RPM, where OMU to not participate, electric rates would have to rise by 7% to make up for the lost capacity revenues. The commenters stated that these adverse impacts could be significantly redu ced were the final rule to eliminate the interim compliance date and allow OMU to work with the Division of Air Quality to implement compliance measures by 2030.

Commenter s stated that if the flexibility measures in EPA's proposed rule prove unworkable, o r are limited by judicial decisions, higher rate impacts could result.

Commenter s stated that the EPA should create an affordability safety valve mechanism within the final rule if cumulative rate increases exceed a certain threshold established in the ru le.

Multiple c ommenters discussed the time and effort needed to implement the proposed rule and meet reliability needs.

Commenters stated that it is necessary that enough time, flexibility and support to invest, plan, permit, design and build what will be almost an entirely new infrastructure of power generation, transmission systems and CCS. The commenters also stated that it is absolutely vital that the emissions reduction be implemented in a manner that is balanced with the equally compelling needs for a reliable power supply, reasonable cost controls to protect consumers, development of an adequate generation capacity using zero

- and low

- emitting sources.140 Commenters remarked that that the grid is ill equipped to meet the expansion and connection needs as a result of the new renewable generation capacities needed to fulfill CPP obligations. The commenters stated that this infrastructure will require significant time to plan, permit, site, and construct. The commenters cited a recent renewable integration s tudy that indicated the need for " at least $3.7 billion in transmission upgrades to support a 14% regional RPS, and this figure could reach $13.7 billion under higher penetration scenarios " , in addition to the costs of implementing the CPP upgrades require d to mitigate reliability impacts of coal unit retirements.

Commenters cited NERC conclusions that " the proposed timeline does not provide enough time to develop sufficient resources to ensure continued reliable operation of the electric grid by 2020. To a ttempt to do so would increase the use of controlled load shedding and potential for wide

scale, uncontrolled outages. " The commenters stated that EPA must consider reliability constraints in determining emission reductions achievable through the four buil ding blocks to ensure that reliability concerns not addressed by ex post analysis employed for the CPP are truly addressed.

Commenters stated that the proposed state goals and compliance period do not adequately account for the complexity of power grid operations or how the need to maintain reliability affects the pace and timing of implementing such changes. The commenters also stated t hat EPA's limited analysis focused primarily upon resource adequacy as measured by generation reserve margins and assumed that the state plan development process provides adequate opportunity to address other reliability issues. The commenters further stat ed that " while EPA does not have the expertise to assess fully the implications of the proposed guidelines on the interconnected power system that does not mean that the Agency can ignore the complexity of the electric system when developing state

- specific emission rate goals and compliance timelines. " The commenters added that the reliability studies and information that EPA should use to assess the significant changes that will be required to achieve the interim and 2030 goals will not be available before EPA finalizes the proposed guidelines or even before states are required to submit compliance plans for EPA approval. The commenters stated that states, electric utilities, system operators and other regulators will need sufficient time to assess the chan ges that will be required to implement the state plans and will need the time required to make the system changes and develop the infrastructure needed to implement the state plans and maintain reliability and meet the 2030 goals.

Commenters stated that s tate and regional plans must be approved by the EPA, which is anticipated to require up to one year, leaving as little as six months to two years to implement the approved plan. The commenters stated that areas that experience a large shift in their resour ce mix are expected to require transmission enhancements to maintain reliability, and that constructing the resource additions, as well as the expected transmission enhancements, may represent a significant reliability challenge given the constrained time period for implementation.

Commenters stated that because of the long compliance period (12 years or more under the CPP to achieve the final 2030 compliance deadline) and range of resources available to achieve compliance, states and grid operators will have sufficient time to identify and avoid reliability issues associated with the CPP. The commenters stated that States can scale up energy efficiency, coal

- to

- gas conversions and re

- dispatch, and other actions achievable in the next five141 years, and that states and grid operators can begin the process of identifying longer lead

- time resources such as new transmission needed for expansion of wind and solar power.

Commenters stated concerns with the time constraints associated with proposed rule given the ti me needed to make complicated bulk power system decisions, complete research needed to clarify the regional and national impacts the CPP may have on the generation mix, infrastructure needs, and electric reliability, and complete the proposal, acceptance, planning, investment and implementation process for SIPs. The commenters stated that although it is possible to achieve environmental goals and keep our power supply diverse, reliable, and inexpensive, the current EPA proposal will not achieve these goals.

Commenters stated that EPA has not taken into account the time needed to construct renewable energy, transmission infrastructure and reliability enhancements needed. Commenters added that high voltage lines can take five to 15 years depending on the volta ge class to construct and stated that EPA must consider reliability concerns and the timeline associated with ensuring reliability. Commenters added that the siting process can include real estate negotiations, environmental permitting, public opposition, and regulatory approval from various entities that can be costly and take up to three years for simple projects or up to ten years for complicated projects where large energy projects can affect federal, state, tribal, and private lands simultaneously.

Co mmenters stated that integration of large amounts of renewables must be done over a reasonable time period to preserve grid reliability. The commenters added that EPA proposal gives no consideration to the price and price policy implications which arise fr om the adoption of renewable energy goals, such as the fate of price containment policies in which states pay new renewable generation at lower rates when certain goals are achieved.

Commenters stated the Proposed Rule does not provide companies sufficien t time to evaluate potential compliance options and, if necessary, construct new generating resources and transmission facilities. The commenters further stated to ensure grid stability and reliability, EPA must provide electric generation companies with s ufficient time to evaluate and implement potential compliance options

.

Commenters stated timelines must provide sufficient time and flexibility to maintain the integrity and reliability of the existing electrical system given the following:

• it is anticipat ed that the nation's utilities will have to retrofit existing generation plants, close older coal

- fired electric generation plants and develop new supply and/or demand

- side resources over the next three to five years;

• the goal of state ratemaking, integrat ed resource planning and other regulatory proceedings will be to determine the most cost

- effective means to comply with the EPA regulations and to determine the just and reasonable costs of any supply side and demand side resources to replace the capacity and energy currently supplied by older coal

- fired generation plants;142 • the development of demand

- side resources, building new generation and/or making extensive upgrades to existing coal plants requires adequate lead time for engineering, procurement, constr uction and regulatory review;

• utility ratepayers in many states are already facing substantial rate increases due to a variety of factors, in addition to any costs related to complying with the EPA regulations;

• any compliance costs borne by ratepayers thro ugh higher rates will be magnified if utilities do not have sufficient lead time for the development of new or increased demand side programs, construction of new generation, and/or extensive upgrades to existing coal

- fired generation;

• compliance timelines that do not account for supply chain constraints could unnecessarily raise prices; and

• compliance timelines must not prevent state regulators from having an adequate opportunity to review utility compliance plans to assure that ratepayers are being provid ed reliable service at the lowest reasonable cost.

Commenters stated while natural gas, nuclear alternative, and renewable electricity generation have become a much more important part of the fuel mix over the last several decades, and are certainly capabl e of increasing their contributions to the grid, developing additional capacity from these sources and the necessary infrastructure to realize these expansions will take time and likely come with significant costs to consumers.

Commenters stated that studi es of their actual regional grid have found that combinations of solar, wind and electro chemical storage can power the grid with up to 99.9 percent reliability. The commenters further stated that this measure alone won't reverse global warming, but it is a good step in the right direction, and by pushing the required renewable technologies now, the Unites States can gain a competitive advantage, true energy independence and substantially enhance national security.

Commenters stated that the plan is about making the power supply as reliable and efficient as possible. The commenters stated further the Clean Power Plan will promote innovative ways to upgrade and invest in our electric grid and overall infrastructure. Commenters added that i t's imperative that we make these investments to prevent infrastructure failures like the 2003 blackout.

Commenters stated the rule prolongs this addiction to coal at a time when alternatives are more reliable and affordable than ever. The commenters ur ged the EPA not to tie the future of our economy to a dirty and unreliable fuel, and instead keep the path clear for renewable energy and energy efficiency.

Commenters stated that a key building block, reduce generation at coal

- fired power plants and

re

- d ispatch natural gas fired plants at a 70 percent capacity factor, makes assumptions regarding the availability and cost of natural gas fired generation to replace coal

- fired generation. The143 commenters also questioned EPA's assumption regarding the availabi lity of natural gas infrastructure in sufficient time to meet demand due to the proposed rule and EPA does not consider whether new pipelines or generating facilities can be operational by 2020.

Commenter s referenced NERC's reliability concerns raised in t he November 2014 assessment of the proposed rule and that they support NERC's recommendation that a reliability back

- stop or safety valve be implemented for reliability assurance. The commenters urged EPA to reconsider the targeted timeline of the proposed rule, consider the need for new natural gas infrastructure, and include flexibility for reliable operation of the electric syste m.
Response 6: The final rule features overall flexibility, a long planning and implementation horizon, and the widest possible range of options for states and affected EGUs to achieve the CO 2 emissions goal, and an opportunity to trade credits or allowances. This design reflects, among other things, the EPA’s commitment to ensuring that the final rule does not interfere with the industry’s ability to maintain the reliability of the nation’s electricity supply. Given this, it is highly unlikely that there will be a situation where an effected EGU cannot meet its requirements under a state plan.

While some have pointed out severe w eather or other short

- term events as potentially conflicting with state plans, we note that most of those events are of short duration and would not require major adjustments to emission standards on affected EGUs or state plans. However, should such a sit uation develop the ability to use ERCs and allowances in effect provides a safety valve.

EPA recognizes however that some states may choose to place inflexible requirements on individual plants as part of their state plans and not authorize the use of cred its and allowances. Those states will be more vulnerable to an unanticipated catastrophic event that could create a conflict that would inte r fere with reliability . To addres s this possibility, EPA is providing a safety valve in the nature of a short ter m modification to the state plan

. See section VIII. G.2.e. of the final preamble to the CPP for more information.

Comment 7: Commenters expressed reliability concerns relating to CPP. Multiple commenters noted that reliability is threatened by the rule.

Commenter s listed the following reliability concerns: " 1) the loss of production from member company facilities due to supply shortages or transmission outages 2) the potential damage t o equipment caused by unplanned outages, and 3) environmental releases caused from unplanned outages. "

Commenter s stated, " The effects of EPA's policies will vary dramatically and hinge on a wide variety of issues including everything from existing power resources and access to low cost alternatives to infrastructure constraints and energy demands. " Commenter s stated, " Americans deserve the bottom line: what does it cost and what will we get for the money? "

Commenter s noted that another reliability issue is " the impacts of the distribution of generating resources that support regional operations. "144 C ommenters cited the Polar Vortex of late 2013 and early 2014 as a demonstration of reliability

concerns. C ommenters noted that the unusually cold weather caused much of the United States to be at risk of blackouts and further retirements of coal

- fired units could make blackouts a recurring danger.

Commenter s stated, " On January 7, 2014, available power totaled slightly more than 142 GW " and " Demand peaked that day at 141 GW, meaning the grid was very close to failure. " Commenter s questioned whether " the grid will be in a position to deal with the scenario we faced this past January. "

Commenter s stated, " the lights almost wen t out during the Polar Vortex, but that was with many tens of thousands of MWs of coal

- fired capacity that will not be there in the future if this rule is finalized in its present form. " Commenter s stated that " the implementation of EPA's proposed environm ental dispatch scheme appears to be premised on assumptions about the existence of infrastructure, market forces, and market incentives that either are not correct or cannot be effectively implemented to accommodate mandatory environmental dispatch without compromising electric reliability. "

Commenter s stated that " almost every coal

- fired electric generation unit slated for closure in the next few years due to EPA regulations was required to operate this past winter 'simply to keep the electric grid functio ning.' "

Many commenters cited the NERC study as supporting evidence for reliability concerns.

Commenters stated " The Proposed Regulation, if not amended, could subject customers to the very outages that Congress sought to avoid when it directed, less than 10 years ago, the establishment of mandatory reliability standards by NERC. " According to commenters, " NERC's concerns cannot be taken lightly as NERC is certified under federal law as the organization with the reliability expertise to establish mandatory electric reliability standards for the bulk power system in Virginia and throughout the United States. "

Commenters noted a study conducted by NERA Economic Consulting [NERA Economic Consulting, Potential Energy Impacts of the EPA Proposed Clean Power Plan , October 2014, http://americaspower.org/sites/default/files/NERA_CPP%20Report_Final_Oct%202014.pdf

Commenters stated, " NERA's analysis tested two separate scenarios for compliance

- one 'unconstrained' scenario in which states had all four building b locks as viable options and one 'constrained' scenario in which states were limited by available resources to only two building blocks. " According to commenters, " In the constrained scenario, over 200 GW of coal

- fired power would be set to retire by 2029, while in the unconstrained scenario, almost 100 GW would retire. According to commenters, " NERA's report also estimates that between 18 and 68 percent of coal capacity could by retired across the U.S. by 2031. " According to commenters, " the Southeast, the South Central, and the Northeast regions stand to lose the greatest percentage of coal

- fired capacity by 2031. "145 Commenters cited a reliability analysis conducted by Southwest Power Pool (SPP) [ SPP Reliability Assessment of EPA 111(d) Clean Power Plan Rule

, SPP (Aug. 19, 2014), http://www.spp.org/publications/SPC%20Materials%20081914.pdf.]

Commenters noted " The SPP warns that the proposal will result in cascading outages and voltage collapse in six of the eight states where it operates the electric grid. "

Co mmenters cited a reliability analysis conducted by the Electric Reliability Council of Texas (ERCOT)

Commenters stated they are very concerned about the impact of the Clean Power Plan on their ability to adequately meet their customers' power supply needs , especially in the short timeframe proposed. The commenters further stated that the reduction in fossil

- fueled generation as well as the manner in which the remaining generating units are dispatched will impose significant adverse consequences on the ele ctric industry generally and the ETCs specifically , t he
commenters noted that NERC has stated more power plants will likely retire than EPA estimates, leaving many regions of the country without adequate resources to meet their power supply requirements an d that the compliance timelines proposed by EPA, especially the proposed interim deadline of 2020, do not provide sufficient time for utilities to either develop new, cleaner power resources or construct transmission to access alternative supplies.

Comment ers noted reliability concerns of several RTOs, including SPP, MISO, and SWEPCO:

• SPP found that " the generating

- unit retirements expected as a result of the [Clean Power Plan] will cause significant reactive power deficiencies and numerous overloaded facil ities. "

• MISO concluded that the Clean Power Plan, as currently proposed, would place approximately 14,000 MW of coal

- fueled generating capacity at risk of retirement, exacerbating existing resource adequacy concerns unless new generation is constructed

• SWE PCO stated the proposal makes no accommodation for the strength

-- or lack of strength

-- of Southwest Power Pool's current transmission system, nor does it recognize the conflict between state implementation plans and multiple RTOs within a state and that the CPP, provides no recognition that loss of local, base load generation requires significant investments in both new capacity and new transmission, and the proposed timeline gives no recognition to the planning, approval, permitting and siting time need ed to approve and install new generation and transmission.

Commenters noted that they will experience many of the resource adequacy concerns identified by NERC, SPP, MISO, and SWEPCO, threatening their ability to provide reliable service to their
customers

.

Commenters stated that by EPA's own estimate, four of the eleven power plants in which they hold ownership interests will be forced to retire as a result of the CPP and that they will lose 294146 MWs of capacity, or 22.5% of the total generation capacity t hey own seriously hindering their flexibility to adjust their generation portfolio to respond to system emergencies, plant outages and peak loads. The commenters further noted that the harm may be even worse if the majority owner of another power plant dec ides the final requirements of the Clean Power Plan are unachievable.

Commenters stated that The Proposed Rule will negatively impact the reliability of the supply of electricity, particularly in the ERCOT region and that an analysis by ERCOT estimated tha t between 3,300 and 5,700 MW of coal

- fired generation could be retired as a result of just this rule. The commenters stated that EPA's IPM results projected that almost 6,500 MW of coal

fired generation must be retired in Texas and such large potential ret irements of coal

- fired generation pose reliability risks, with one concern being the potential for system inertial support to be degraded.

Commenters stated that proposed changes could impact reliability of electric sources.

Commenters stated that the eco nomic vitality of industrial operations depends on reliable as well as reasonably priced energy supplies. Commenters stated that many manufacturers operate around the clock, with consistent energy needs at all times. Commenters stated that in the event of supply constraints or system emergencies, industrial consumers are subject to service curtailment in advance of residential and human needs customers. Commenters stated that the risk of any impairment to reliability, consequently, falls earlier and harder on industrials. Commenters stated that at the same time, service interruptions impose serious hardship on such operations, halting production, idling workers, disrupting downstream processes and potentially damaging product and equipment.

Commenters continued with: regulations that significantly alter the generation and supply of essential energy resources, accordingly, should be implemented with due care to mitigate the potential disruption and economic impact of any degradation in reliabi lity. Commenters stated that as indicated by a recent report by the North American Electric Reliability Corporation (NERC), there is substantial reason for concern that the proposed regulations may impair the reliability of electricity service in the Unite d States.

Commenters stated that reducing electric and gas reliability could result in the temporary or permanent shutdown of manufacturing facilities which could result in costs starting from tens of millions of dollars to $100 million per day.

Commenter s stated that nationwide, 132 gigawatts of generating capacity is projected to retire between 2016 and 2020, of which 68 GW is directly attributable to the Clean Power Plan, according to EPA modeling. Reliability watchdog North American Reliability Corpora tion has warned that " essential reliability services may be strained by the proposed Clean Power Plan. "

Commenters stated that the Edison Electric Institute cautioned that, " The dynamics of compliance, under circumstances of any unexpected shortfall in t he non

- emitting resources required for compliance, creates the risk of multi

- state compliance failures that would disrupt interstate power flows. "147 Commenters stated that in their state, EPA modeling predicts that 3,425 megawatts of fossil fuel electric ge nerating capacity would retire as a result of the rule. It is unclear if their state, and neighboring states similarly impacted, can afford to lose this much capacity. The resulting threat of rolling blackouts is very real.

Commenters stated that the West ern Electricity Coordinating Council, a non

- profit corporation that exists to assure a reliable bulk electric system in a 10

- State region in the west, shows that the loss of generating capacity leaves the Northwest WECC region only 0.53 percent above the

r egion's 15 percent target for reserve margin.

Commenters stated that FERC Commissioner Philip Moeller told Congress that the rule threatened the 15

- State Midcontinent Independent Service Operator footprint with " widespread rotating blackouts. " Commenters stated that in a November interview with Bloomberg, Thomas Fanning, the CEO of Southern Company, which services a four state region in the southeast, said that " I don't think we have the ability to maintain a reliable system " and also comply w ith EPA' s Section 111(d) rule. Commenters stated that a reliability analysis performed by ERCOT, the independent service operator that maintains Texas's grid, warned the rule " could result in transmission reliability issues due to the loss of generation r esources in and around major urban
centers. "

Commenters stated that the impact of the CPP on the existing electric generation fleet raises significant reliability concerns. Commenters stated that p rior to the release of the CPP, the DOE had modeled 60GW of coal plant closures by 2020. Commenters stated that EPA anticipates an additional retirement of close to 50GW of coal based generation as a result of the CPP. Private parties have suggested even more closures. Commenters stated that the loss of at least 110GW of capacity from the electric sector raises red flags for the industry and additional assessment of the reliability of the grid under the CPP is warranted. Commenters stated that s uch additional assessments are called for by numerous electric reliab ility organizations including the NERC.

Commenters stated that FERC Commissioner Moeller stated " [t]here are profound reliability implications of the Clean Power Plan that need to be thoroughly discussed and studied to assure the continued reliability of t he nation's bulk power system. "

Commenters stated that climate impacts will be minimal but adverse reliability impacts will be significant.

Response 7: EPA does not agree that the Clean Power Plan will cause unplanned outages, or voltage collapse. It also does not mandate or even contemplate environmental dispatch. Very much to the contrary, the CPP features overall flexibility, a long planning and implementation horizon, and the widest possible range of options for states and affected EGUs to achieve the CO 2 emissions goal. This design reflects, among other things, the EPA’s commitment to ensuring that the final rule does not interfere with the industry’s ability to maintain the reliability of the nation’s electricity supply. As further described in t he preamble to the final rule, states can develop plans to meet the CO 2 emission performance rates or state CO 2 emission goals by choosing from a variety of state plan types and approaches that afford states and affected EGUs appropriate flexibility. EE an d other non

- BSER approaches can strengthen a state’s ability to establish a plan to meet the CO 2 emission performance rates or state CO 2 emission goals by148 providing a considerable amount of headroom above the levels of the rates and goals. EE especially, b ecause it reduces load, can provide assurance that reliability can and will be maintained. Additionally, the final rule offers opportunities for trading among affected EGUs within and between states, and other multi

- state compliance approaches that will fu rther support electric system reliability.

In addition states can, if problems arise revise their state plans and in the unlikely event that a
very rigidly designed state plan conflicts with what must be done to respond to an emergency, the state can use a short term " reliability safety valve "

. EPA is aware that some parties have published studies that predict that the CPP will result in resource adequacy and other problems. EPA’s own analysis does not confirm this finding. Many of these studies assume t hat states, rather than developing state plans that make use of the wide latitude in the final rule to develop plans that are consistent with that state’s energy sector and policies, that every state simply implement the building blocks in cookie cutter fa shion t he building blocks are how the level of the standard is set. It isn’t how the states are to develop their plans. There are several other common mistakes made in these studies. Please see section VIII.G of the final preamble to the CPP for a discus sion of reliability studies.

Comment 8: Commenters supplied reliability

- related reasons that climate change should be addressed in the near future.

Commenter s noted the following reasons why " Addressing climate change is an essential part of maintaining r eliable and affordable power: "

• impact of unmitigated climate change in the Southwest will be a hotter and drier climate with more frequent and severe droughts

• Current water shortages have already decreased hydroelectric generation in the southwest

• future unmitigated climate change will warm rivers and lakes, reducing the capacity of thermal power plants, especially so in the summer when demand peaks

• projected increase in electric cooling demand, primarily driven by increased use of air conditioning

Commenters stated that an important aspect of the impacts this rule could have on reliability of the electric energy supply system not considered by EPA is the vulnerabilities and challenges the system is facing from climate change and extreme weather even ts. The commenters cited DOE's July 2013 report on vulnerability of the energy sector to climate chan ge:

" Increasing temperatures, decreasing water availability, more intense storm events, and sea level rise will each independently, and in some cases in combination, affect the ability of the United149 States to produce and transmit electricity from fossil, nuclear, and existing and emerging renewable energy sources. These changes are also projected to affect the nation's demand for energy. An assessment of i mpacts

- both positive and negative

- is necessary to inform forward

looking efforts to enhance energy security. "

Commenters summarized several findings from the DOE report on electric power generation facilities, energy infrastructure, renewable energy re sources, electric transmission and distribution, fuel transport, and increased electricity demand resulting from climate change.

Commenters stated that while EPA made a high level assessment of impacts to the electric supply system from power plant retirem ents and the shift to different electric supply sources using EPA's IPM Modeling, it did not take into consideration scenarios incorporating the risks the electric system is facing from ever increasing risks from climate change and extreme weather
events. The commenters concluded that reliability of the electric system to yesterday's system demands is not adequate for determining reliability of an energy system that also needs to operate effectively to a changing climate.

Commenters reviewed the effort of the National Climate Assessment Development Committee to create a set of physical, ecological, and societal indicators that would inform decision

- makers and the public about our nation's changing climate. The commenters urged EPA to identify appropriate c limate change and extreme weather event frequency scenarios and to consider the potential impacts of these scenarios on electric system reliability in concert with expected unit retirements, load pockets, and greater reliance on interruptible sources of en ergy. The
commenters stated that these considerations exacerbate the difficulties caused by the interim, and even the final, state emission rate standards.

Commenters identified and presented three comparative load forecasts.

Commenters noted that they an alyzed the feasibility of complying with the 2020 interim standards in a different way, without regard to EPA's IPM results, using its own transmission constrained dispatch models to estimate how much coal

- to

- gas redispatch it could achieve while maintaini ng reliable service. The commenters then noted that they then calculated the gap between the emissions rate reduction achieved through maximum redispatch and EPA's assumed improvement in coal heat rates (which is not a realistic assumption) and the 2020 s tandards (using a range of assumptions about how the state standards would be " allocated " ). The gap, which presumably would have to be achieved through additional use of renewables and through energy efficiency, was larger than the total potential assumed by EPA for those Building Blocks in several of the states served.

Commenters stated that renewable energy projects must balance all environmental impacts including state and local community considerations and believe the CPP can play a significant role in advancing the amount of energy that renewables can contribute to our overall energy needs. The commenters stated that at the same time the CPP should not advance policies that disproportionately contribute to other environmental impacts from energy projec ts beyond climate change.150 Response 8: EPA agrees with commenters that the impacts of climate change are a threat to electricity reliability. Storms create threats to the distribution system that many Americans are familiar with. Trees and tree limbs fall on wires and cause losses of power. Water shortages are reducing the capacity of hydroelectric plants in the southwest 31 . Warming of rivers, lakes and coastal waters are limiting their ability to coal thermal power plants. 32

Comment 9: Commenters expre ssed the importance of including reliability experts.

Multiple commenters made statements concerning the importance of including reliability experts in this rulema king. These include F ERC, NERC, ISOs, RTOs, industry stakeholders, states, DOE, WECC, electric industry, gas industry, etc. Commenters offered specific guidance on ways to include the reliability experts in this rulemaking.

Commenter s asked that EPA use a " series of technical conferences jointly sponsored by FERC and the EPA " to discuss the " impacts of the proposed CPP on power system reliability, impacts on regional markets, and how to move forward in a coordinated fashion that best facilitates accomplishment of both EPA and FERC objectives. "

Commenter s stated the following solution to improving regional energy planning by developing

" a memorandum of understanding (MOU) between EPA and FERC that cross references the EPA rule with the FERC 1000 rule. " Commenter s asked that the agencies " collaborate with

s tates and regional transmission authorities to make sure both greenhouse gas reduction and energy reliability needs are addressed nationally and locally. "

Commenter s asked that EPA " sink up its rules with requirements for state energy plans and improved r egional coordination with FERC. " Commenter s noted that " A strong tie to long

- term energy planning is necessary for the EPA Clean Power Plan to be successful. " To make environmental and energy policy more consistent, commenter s recommended that EPA develop

a " memorandum of understanding (MOU) with the Department of Energy and the Federal Regulatory Energy Commission " and " work closely with state Public Utility Commissions and regional entities such as the Regional Transmission Organizations (RTO) and Indepen dent System Operator (ISO). " According to commenter s , " The RTO and ISO are similar in that both are responsible for coordination of regional transmission systems and reliability of the electric system.

Commenter s offered the following example of the need for interagency coordination. According
to commenter s , " managing the necessary infrastructure build out for an aging electric energy grid and gas pipeline system across the U.S. " is a key area for coordination because " containing utilities desire to over b uild infrastructure to support their legacy electrical system " must be

31 h ttp://www.eia.gov/todayinenergy/detail.cfm?id=14911

32 http://green.blogs.nytimes.com/2012/08/13 /heat

- shuts

- down

- a

- coastal

- reactor/151 tempered with knowledge of " the growth of distributed energy resources (DERs) in a changing system. " According to commenter s , FERC landmark Order 1000 rule requires the " utilities and others responsible for our high voltage transmission grid to participate in a regional planning process, eliminate certain provisions that give incumbent utilities a competitive edge in transmission planning, establish methods to clarify who will pay for t he costs of transmission projects, and include procedures to consider how public policies like federal carbon pollution standards and state clean energy policies impact the grid. " The FERC authority was upheld in the D.C. Circuit Court of Appeals in August 2014, with the order forcing utilities to consider renewable energy in their transmission planning. According to commenter s , the following trends in the U.S. energy market could cause regulatory conflict and require coordination between FERC and EPA:

• the current low natural gas prices causing existing aging coal plant closures,

• some nuclear plant closures such as Wisconsin's Kewaunee plant, and

• the ability to replace this generation capacity.

• " whose regulating authority [FERC or EPA] trumps the other ov er the issue of reliability or carbon reduction? "

• " There could be problems with the state

- by

- state nature of EPA carbon emission regulations and the regional energy planning. "

Commenter s suggested a requirement that DOE work with FERC and EPA to develop a new national energy plan for the transition from the legacy carbon economy to the new clean energy economy. According to commenter s , " The DOE invests in energy research, programs like APRA

- E, and could shape the necessary energy technology innovation syste m advances to continue providing critical GHG reduction. " Therefore, commenter s suggested that one dimension of the plan include an energy technology roadmap. Commenter s continued that " input is needed from DOE and FERC on critical infrastructure investmen ts such as the electric expansion or natural gas pipeline upgrade and expansion " because the increased integration of renewable energy will dramatically re

- shape energy infrastructure needs as well as require changes in the electric energy utility business model. According to commenter s , " Planning documents can help make this a smooth transition versus disruptive change. " Commenter s suggested that " the energy vision, goals and metrics document should be produced by January of 2016 " and states using integrat ed resource planning and regional transmission plans through FERC 1000 could be used to continually feed into and update the federal plan document.

Commenter s noted that there may be an opportunity for EPA and FERC to coordinate with the states through the requirements for regional transmission planning under the FERC 1000 rule. According to commenter s , the FERC rule require d consideration of non

- transmission alternatives (NTAs) during regional transmission planning and NTAs can replace the need for additio nal transmission through energy efficiency, demand response, distributed generation, or centralized generation sited near load.

Commenter s noted that NTAs have the following additional benefits:152 • avoided energy costs,

• reduced wholesale electricity costs,

• reduced air pollution

• reduced water usage, and

• avoided land use and siting costs.

Commenter s suggested a " memorandum of understanding between EPA and FERC with a linkage to language in the final rules for the Clean Power Plan " to " simultaneously addres s gaps in grid reliability issues, regional energy planning (specifically transmission planning under FERC 1000) " and " add a requirement to develop a calculation of costs and environmental benefits of reduced air pollution (including greenhouse gas reducti ons) and reduced water usage from the greater use of NTAs, and some requirement for participation of public utility commissions and state air and water quality regulators to participate in mutual planning
processes. "

Commenter s noted that NTAs and the prop osed rule complement each other in the following
ways:

• energy efficiency,

• demand response, and

• increasing distributed generation

• advancing microgrids and energy storage

Commenter s suggested that EPA " strongly consider additional coordination with states , NERC, the Federal Energy Regulatory Commission ( " FERC " ), and Independent System Operators to develop mechanisms that allow for greater flexibility to maintain compliance and ensure reliability. "

Commenter s also stated that " the need for coordination betw een U.S. EPA and FERC regarding the feasibility of compliance with the proposed rule cannot be understated. "

Commenter s noted that the " Colstrip Plant in Montana is in 5 separate BAs [balancing areas] because the generation from Colstrip is used for servi ng load centers in several states. " According to commenter s , " As this example illustrates the Clean Power Plan compliance plans in one state can and will impact several states, highlighting the need for the EPA to work with WECC and all stakeholders to analyze and model the complex interaction of proposed state compliance plans. "

Commenter s stated that " The electric and gas industry should be invited to provide electric and gas system modeling and expertise regarding the impact to reliability of propos ed153 implementation. Without such modeling, stakeholders cannot appropriately evaluate the proposal and the complex interactions between states and regions. "

Commenters stated that recent grid operator comments mistakenly suggest that the CPP's deadlines ar e too onerous and risk triggering reliability issues underscore that reliability cannot be viewed in a vacuum; instead, grid operators are obligated and empowered under Order 1000 to use their planning tools to support state implementation of the CPP. Comm enters stated that FERC

- jurisdictional grid operators should provide whatever technical and analytical support the states require to help develop their plans and that acting under Orders 890, 1000, and other FERC authorities, they regularly assess how stat e public policy requirements (e.g., state renewable energy and energy efficiency standards, the forthcoming CPP) will affect system needs. The commenters stated that grid operators will provide the necessary information and guidance to states to allow the m to determine how their state

- jurisdictional CPP compliance solutions could better meet grid reliability needs and avoid or minimize the need to continue to run plants otherwise slated for retirement.

Commenters stated that FERC orders require every gri d planner (including both individual public utility transmission providers and the regional grid planners) to participate in a regional system planning process, create processes and forums for all stakeholders, including states, to consider such public pol icies as the CPP, and evaluate both transmission and non

- wires solutions to meet system needs. The commenters stated that the planning process helps link the system's physical/electrical needs to both transmission and " non

- wires solutions "

- which include onsite generation, demand response, and energy efficiency

- that can identify and resolve reliability needs, and that from the states' perspective, the regional planning process can help states develop and implement a cost

- effective and on

- time state plan for the CPP.

Commenters stated that FERC's grid planning rules create a forum for states to craft and implement effective and reliable CPP state plans and that FERC orders have evolved to reflect changes in the generation and delivery over time. The commenters stated that the regional planning process required by FERC can help states develop and implement a cost

- effective and

on

- time state plan for the CPP.

Commenters stated that one of FERC's critical responsibilities is to review and approve grid pl anning and operating standards created by the NERC, none of which would change under the Clean Power Plan. The commenters stated that all regions plan to have capacity above expected demand to accommodate unplanned power plant outages, transmission failure s, unexpectedly high demand, or other contingencies and that most regions maintain minimum target reserve margins of about 15 percent above their forecast demand. The commenters stated that this would continue to be the case under the Clean Power Plan and that states that exercise traditional regulation over vertically integrated electric companies often use integrated resource planning processes to ensure that electric distribution companies have sufficient resources available to meet projected load and re serve requirements at least cost.

Commenters reiterated the request for a formal role for FERC with the EPA as it relates especially to the reliability implications of the proposal. The commenters recommended convening the appropriate reliability experts t o examine the reliability implications necessary to avoid additional unintended consequences. The commenters noted that it's the details of154 calculating proper reserve margins and specific load pockets that matter from a reliability perspective and that alt hough a specific generating plant may not contribute significant power to the grid, its other outputs such as voltage support or " inertia " qualities may contribute significantly to grid stability.

Commenters also stated that the details of how reserve marg ins are calculated can have a significant impact on the ability of excess capacity in one load pocket to transfer power to another load pocket that is short, but these challenges can be addressed. The commenters stated further that infrastructure improvem ent sometimes cannot be implemented within the deadlines of specific rules.

Commenters stated that getting the electricity reliability experts together in a public and transparent forum to address these questions and develop answers is the responsible appr oach to publicly discuss the extent of reliability challenges under the proposal and potential solutions to these challenges. The commenters continued that the responsibility to formally address the reliability implications should be promoted by the EPA w ith their involvement, must be open and transparent, and cannot be merely a private and paperless discussio n between government employees.

Response 9: The EPA agrees that consideration of reliability is an important part of developing a sound plan to reduc e CO2 emissions from power plants. EPA consulted often with DOE, FERC, the ISO/RTO Council , other planning authorities

, reliability organizations and other stakeholders in developing the CPP. T he EPA is requiring that each state demonstrate as part of it s state plan submission that it has considered reliability issues while developing its plan in order to ensure that standards of performance can be implemented and enforced.

A number of commenters, notably ISOs and RTOs, pointed out that planning and anti cipation of change are among the essential ingredients of ensuring the ongoing reliability of the electricity system. To that end, they recommended that as states are developing state plans, their activity include the consideration of the reliability needs of the region in which affected EGUs operate and of the potential impact of actions to be taken in compliance with state plans. Therefore, we are requiring that each state demonstrate in its final state plan submittal that it has considered reliability is sues in developing its plan. One particularly effective way in which a state can make this demonstration is by consulting with the relevant ISOs/RTOs or other planning authorities as they develop their plans and documenting this consultation process in the ir state plan submissions. If a state chooses to consider reliability through consultation with the ISO/RTO or other planning authority, the state should request that the planning authority review the state plan at least once during the plan development st age and provide its assessment of any reliability implications of the plan. While following the recommendations of the planning authority would not be mandatory, the state should document its consultation process, any response and recommendations from the planning authority, and the state’s response to those recommendations in its state plan submittal to the EPA. This consultation is designed to inform how the state might adjust its plan for meeting the CO 2 reduction goal required under this guideline; the consultation is not a basis for relaxing that goal. While we consider this process to be an effective way for a state to demonstrate that it considered reliability in developing its state plan, a state may provide other comparable support for a demonstrati on that it has considered reliability during the state plan development process. The EPA believes that this requirement to155 demonstrate consideration of reliability will provide an essential reliability evaluation in the state plan development process. It s hould further help states avoid any conflicts between state plans and the maintenance of reliability during implementation of the state plan and associated emission standards.

In addition, the EPA, DOE, and FERC have agreed to coordinate efforts to help ensure continued reliable electricity generation and transmission during the implementation of the final rule. The three agencies have set out a memorandum that reflects their joint understanding of how they will work together to monitor final rule impleme ntation, share information, and resolve any difficulties that may be encountered. This effort is based on the successful working relationship that the three agencies established in their joint effort to work together to monitor reliability during MATS impl ementation.

Comment 10: Multiple commenters stated that the rule does not threaten grid reliability.

Commenter s stated, " We believe strengthening and energetically pursuing this proposal will protect public health and address climate change while ensurin g reliable, clean power and that new clean energy technology will create a new generation of green jobs. "

Commenter s stated, " for anyone saying that this threatens grid reliability, that's a laughable
statement. " According to commenter s , " In the record he at in Texas in August 2011, multiple coal plants that needed maintenance ended up shutting down, but it was the onshore wind farms, along the Texas Gulf Coast, south of Corpus Christi, that kept the lights and the air conditioners running during those firs t three days of August 2011. "

Commenter s stated, " While the retirement of fossil generating units poses a hypothetical challenge to the reliability of the electric grid, the adoption of proper policies, technologies, and procedures will allow the grid to evolve and meet the challenge of a changing generation mix, ultimately ensuring that frequently

- voiced reliability concerns never materialize. "

Commenter s noted the following:

• " a well

- balanced mix of low

- carbon and renewable resources, including natural
ga s, biomass, solar, wind, geothermal, hydropower, and other distributed resources like fuel cells, can replace retired generating units with electricity that is both clean and reliable. "

• " advanced grid technologies can help integrate variable renewable gene ration, increasing the output from these non

- emitting sources and amplifying their contribution to resource adequacy. These technologies include energy storage, advanced metering infrastructure, demand response, distribution automation, microgrids, high vo ltage direct current transmission, and smart grid management technologies. "156 • " demand

- side management technologies such as energy efficiency and demand response reduce peak demand, thus lowering the necessary reserve capacity and improving resource adequacy, " adding that. " Lawrence Berkley National Laboratory (LBNL) cites load shifting, energy efficiency, and renewable energy as viable strategies to address resource adequacy and thereby improve overall grid reliability. "

Commenter s stated that the guidelines will improve the reliability of electricity in the United States by " diversifying the electric generation portfolio and by improving energy efficiency measures that reduce peak demand. "

Commenter s noted the following features of the proposed rule that wil l preserve reliability:

• allows states flexibility to meet their carbon pollution goals through a variety of low

- carbon resources.

• provides great flexibility as to how states may demonstrate compliance

- allowing states, among other things, to average the ir emissions over the period from 2020 to 2029; average the emissions of multiple EGUs when determining fleet

- wide emission rates; and utilize market

- based mechanisms, including credit trading systems that build on frameworks already in place in many state s, to show that carbon pollution goals are being met.

• provides a multi

- year period for developing state plans as well as for demonstrating compliance. The relatively extended period for implementing these guidelines allows sufficient time for stakeholder s to plan for future resource needs, and develop and deploy any infrastructure that may be needed to maintain reliability while reducing emissions from existing EGUs.

Commenter s noted that the analyses from SPP and ERCOT contained incorrect assumptions th at undermine the determinations that reliability is threatened by the proposed rule. Specific criticisms are mostly contained in the commenter s ' arguments against the inclusion of a safety or reliability valve.

Commenter s stated that there is no valid reas on to doubt that system operators will be able to maintain system reliability as the Clean Power Plan is implemented. The commenters stated that there is a strong federal and state structure in place to plan for and achieve adequate system reliability, an d maintaining reliability under the Clean Power Plan will be facilitated by the significant flexibility provided by the multi

- year compliance period and the system

- based compliance options.

Commenters provided the following examples: " plants needed for reliability may continue to operate as long as needed under a credit

- based compliance program simply by obtaining a sufficient supply of low

- emission credits from renewable energy, energy

- efficiency or other lower emitting generation. Similarly, multi

- year averaging compliance will allow a plant essential for maintenance of reliability to continue to operate even if there are not adequate157 credits available in a particular year so long as the average emission rate is met over the multi

year period. "

Comment ers refuted commenters that stated that increasing the share of overall generation served by natural gas will reduce fuel diversity and threaten the reliability of the electric grid. The commenters stated that data shows that poor generator performance at the beginning of the Polar Vortex was more an issue of lack of preparedness and impaired generator availability than natural gas supply availability. For example, the commenters cited data that indicated that during the Polar Vortex' peak demand hour, 22% of PJM's generation capacity was reportedly out of service, not due to lack of gas availability, but due to weather

- related forced outages, a rate that is two to three times higher than the normal peak winter outage rate of around 7

- 10%. The
commenters add ed that issues will likely be alleviated by the continued build

- out of natural gas pipeline infrastructure, and that decreased reliance on existing coal

- fired power plants will increase fuel diversity in the electric generating fleet.

Commenters stated that a study was conducted by PJM, the regional grid operator, found that there would be no significant reliability issues from phasing in this level of renewable energy, even with current technology.

Commenters stated that we should strive to have more of all forms of energy and not simply pick one energy resource against another.

Commenters cited the E3 Study, NREL and NERC to note that reliability concerns can be addressed by CSP while satisfying emission reduction goals and the need for a cost

- effective, reliable energy supply. The commenters requested that EPA incorporate a requ irement within BSER to evaluate and address grid integration and reliability issues and help ensure that renewable energy assets will have a positive impact, decrease the risk that they will be curtailed, and increase their effectiveness and decrease their costs. Additionally, commenters supported the flexibility that the Proposed Rule would offer to the States in developing their State Plans but recommends that EPA require that grid integration and reliability issues be evaluated and addressed in addition to the cost of State Plans, economic benefits, jobs, and benefits of CSP+ TES and other technologies in designing State Plans.

Commenters queried how does the EPA proposes that we obtain our national energy supply if we cut carbon but do not move as quickl y as possible to sustainable, renewable replacement sources such as wind, solar, geothermal and efficiency.

Commenters stated that recent comments submitted by the Kentucky Energy and Environment Cabinet raise the issue, repeated by many, of " grid reliabil ity, " with many citing a recent report by the North American Electric Reliability Corp (NERC). Commenters stated that this report fails to consider several factors. The Union of Concerned Scientists challenge that the NERC report fails to include addition al renewable generation. Commenters stated that UCS particularly cites the MISO market, where renewables are increasing substantially. Commenters stated that parts of their state (Kentucky) fall within the MISO region.

Commenters stated that EPA should rec ognize Texas's role as a leader in maintaining system reliability. Commenters stated that concerns about reliability are largely overstated. Commenters158 stated that industry groups have often raised concerns about potential electric system reliability impac ts from major new EPA regulations affecting power plants, but the implementation of new environmental rules has never actually produced any reliability problems. Commenters stated that this is, in large part, due to the fact that the industry has proven it self capable of responding effectively to such regulations. Commenters stated that electric utilities, ERCOT, other grid operators, federal and state regulators, and others, have taken a wide variety of steps to ensure reliability in the face of previously promulgated environmental regulations.

Commenters stated that there have been recent developments in transmission line construction and best practices in renewable energy dispatch that are helping to address any reliability concerns with respect to wind e nergy.
Commenters stated that energy storage services can also provide additional reliability, and have a critical role to play in preserving the stability of the grid. Commenters stated the PUC has approved new rules and ERCOT has approved new protocols establishing some basic rules for energy storage facilities in Texas. Commenters added battery systems have been added by AEP near Presidio, Texas and at a wind farm in West Texas by Duke Energy.

Commenters stated that Oncor Electric Delivery, owner of t he largest power

- line network in Texas announced a proposed plan to spend more than $2 billion on up to 5000 MW of storage to address the problem of fluctuating wind and solar output, subject to needed rule changes at the PUC.

Commenters stated that they do not agree with ERCOT or NERC that distributed generation represents a serious reliability concern in the near

- term future, to give one example, the 9 to 13.5 GW of new solar capacity ERCOT's model anticipates over the next fifteen years is entirely util ity

- scale generation, but to the extent some market changes are needed, we note again that grid operators are already examining the various changes that may be required.

Response 10: The EPA generally agrees with the commenters that electricity system is well positioned to respond to the final rule while maintaining reliability. The changes made to the rule since proposal especially bolter the ability of the industry to maintain electric reliability. EPA agrees in large part with these commenters regardin g a reliability safety valve. While we have offered a reliability safety valve, it would only be of use in states that do not make use of the opportunity offered to develop a plan that avoids inflexible requirements on individual plants. Our own analysis d oes not point to any problems regarding resource adequacy throughout the compliance period. Please see section VII I of the final rule preamble and the Resource Adequacy Technical Support Document. For more information.

Comment 11: Commenters discussed the potential for including a safety value or reliability mechanism in the CPP. Commenters discussed the potential inclusion of a safety or reliability mechanism in the rule. According to the commenters, the provisions would allow units that are critical t o grid reliability to continue operation.159 Commenters referred to the " reliability safety valve " that was proposed by the ISO/RTO Council. Commenter s referenced the safety valve concept proposed by PJM. Commenters cited an idea set forth by the FERC Commiss ioner. Commenters referenced the one

- year compliance extension in the MATS Rule.

Commenter s stated " States should also be granted a structured exemption to allow emissions in excess of their target levels for a declared emergency period. "

Commenter s asked that FERC, NERC, or possibly state utility commissions " should be authorized to review the operation of the overall electric grid and identify any units that are 'necessary for grid stability and reliability' as exempt from redispatch requirements under B B2 as well as state goal

- setting. "

Commenters stated, " The final rule should include built

- in mechanisms for suspending or modifying plans to address unforeseen reliability emergencies. " For example, commenters stated,

" EPA provides flexibility in the oper ation of emergency generators at 40 CFR section 60.4211(f)(2)(ii) and (iii) and EPA provides a model rule for flexibility in the use of solid waste incinerators in emergencies at section 60.3061. "

Commenter s stated " Additional flexibility for states in imp lementing compliance plans is necessary. As plans are implemented, there will be unexpected and unintended consequences and EPA must allow states to address these by revising their compliance plans as necessary. States should not be locked in to a particul ar approach as there are simply too many variables associated with the interconnected power system and the proposed Clean Power Plan. "

Commenter s asked that EPA include a safety valve. Commenter s asked that it be triggered

" when the Plan is determined to be resulting in unit retirements that would harm reliability and/or have other unacceptable impacts that outweigh the benefit of further emission reductions " and " targeted to units that are needed for reliability and in the hours in which those units are

n eeded for reliability. " Commenter s asked that the safety valve not " interfere with the provision of an accurate market price signal for the value of CO2 emission reductions. "

Commenter s suggested that the provision would permit a state, " if it had concerns about the reliability implications of its or another state's plan, to cause the plan to be submitted to the

" local transmission operator or operators, or to the regional transmission planning body that is constituted under Orders 890 and 1000 of the Federal Energy Regulatory Commission, or to the local ERO or RTO. " According to commenter s " The selection of the appropriate body to submit the plan to would depend both on the geographic scope of the body and its willingness to undertake the analysis. " According to commenter s , " If the plan was found by the relevant body not to result in reliable operations of the grid, then the plan would be suspended and the state would be required to submit a revision to the plan to ensure reliability. "

Com menter s asked that EPA " allow [state] plans to be studied in tandem and for their effects on the reliability of the region. "

Commenter s noted that " Additionally, states should be authorized to provide reliability exemptions or minimum exempt run periods f or smaller units that are necessary for local voltage160 support or to provide the needed peak load support during high load months. " Commenter s noted that " This could be accomplished through a subcategory or through operational limitations that allow for exe mptions from the program. " commenter s cited as an example, the " EPA's RICE Rules which allow for a certain number of reliability run hours from uncontrolled diesel engines or even in the application of reformulated gasoline standards that allow for certain fuels to be sold during certain times of the y ear. "

Commenters stated that the proposed rule does not address how or even whether the proposed emissions standards could or should be relaxed or temporarily waived in the event of electric grid emergencies, including natural disasters, terrorist attacks, and forced outages, which would leave utilities potentially vulnerable to private citizen lawsuits for non

- compliance with a CAA requirement even if states exercise enforcement discretion. The commenters stat ed that it has presented a reliability safety valve proposal to EPA and urges EPA to adopt the proposal in order to ensure that rules and SIPs assess and mitigate reliability impacts and stated that NERC also supports a reliability backstop.

Commenters qu oted NERC's Reliability Impact Review which states that strict compliance with the proposed timelines will impact reliability. The commenters recommended that EPA work with NERC and the industry to develop and adopt a reliability assurance mechanism in the final rule. The commenters further suggested that transmission planners and planning coordinators be used to analyze the impact of resource changes due to implementation of the proposed rule, and that annual evaluations by the planners will anticipate neg ative reliability effects due to changes in generation resources. The commenters stated that if a reliability issue is identified that cannot be mitigated over the planning horizon, then a reliability back

- stop mechanism will be needed to preserve BPS reli ability and allow operators to comply within NERC limits. The commenters quoted the NERC reliability standard and discussed the effects of changes in load, such as possible sharp declines in generation which may lead to operating conditions close to NERC

r eliability limits and give operators few options during emergencies. The commenters stated that the backstop must incorporate grid modeling conducted by qualified personnel who understand BPS operations and also allow adequate time for BPS modifications ba sed on the modeling conclusions.

Commenters support ed the inclusion of a reliability safety valve (RSV) in the EPA's proposed rule to provide flexibility in the event that reliability is adversely impacted by meeting state goals within the required time f rame. The commenters quoted the ISO/RTO Council's proposed review process, plan and benefits regarding the reliability safety valve. However, the commenters stated that they do not necessarily endorse the specific RSV plan, rather that an RSV plan is essen tial to provide flexibility to address any unforeseen reliability impacts in various state or regional planning strategies and to address the associated market risks and uncertainty. The commenters provided an example of a situation where an RSV may be nee ded, such as if compliance plans entail a significant increase in variable renewable resources without sufficient flexible ramping capability in conjunction with the retirement of baseload resources in order to meet compliance goals. The commenters also no ted that RTO regions with mandatory capacity markets present significant impediments to the construction of new resources, adding risk and uncertainty. The
commenters stated that reliability safeguards and flexibility measures that allow for interim soluti ons are necessary to guard against adverse impacts to reliability, such as if planned161 resources are not built or cannot obtain affordable financing because of market risk. The
commenters concluded that incorporating flexibility measure such as an RSV into the Proposal will allow for more sustainable implementation strategies and is superior to an immediate approach that restricts the states to shorter

- term options that sacrifice reliability in exchange for full compliance.

Commenters recommended adopting an RSV process applicable during State Plan implementation to address unanticipated grid reliability impacts resulting from the administration of the State Plan. The commenters also stated that the RSV process and relief should be separate from the enforcem ent function.

Similarly, commenters stated that EPA's final guidelines should not exclude states from providing compliance exemptions during reliability

- critical situations

.

Commenters also stated that relatively long implementation periods could create disconnects between actual system conditions during those periods and system topology assumptions utilized during the Final Rule and State Plan development stages, and that these disconn ects could create reliability issues. The commenters recommended, to mitigate potential grid reliability impacts that arise over time due to changing grid conditions and/or other unforeseen circumstances that the Final Rule include a procedural mechanism ( like the RSV) to identify and respond to reliability challenges. The commenters stated that consideration of grid reliability should be incorporated in the Final Rule to: (1) formalize the requirement to consider grid reliability; (2) minimize administrati ve burdens and/or difficulties for both States and EPA, (3) ensure their effectiveness in mitigating impacts to grid reliability; and (4) minimize impacts to the achievement of the objectives of the Final Rule.

Commenters stated that the Final Rule should provide for adequate mitigation of unforeseen grid reliability impacts that may arise during the implementation of State Plans and which cannot be addressed within the extended compliance time frames. The commenters recommended an RSV process that provide s relief from compliance schedules, proposed State Plan activities, or performance expectations should be employed, where necessary, to preserve grid reliability. The
commenters stated that to address state, multi

- state, and/or regional grid reliability is sues arising at that time, the Final Rule should include a mechanism that: (1) is available without initiation of enforcement processes and (2) allows for course corrections when State Plan implementation strategies cause negative impacts to state, multi

- s tate, and/or regional grid reliability and the identified mitigation strategies would not allow the state to return to compliance with the existing compliance schedule and/or State Plan goals or performance expectations.

Commenters recommended that EPA include in its Clean Power Plan a " safety

- valve " in the event that natural gas prices rise rapidly due to some type of market disruption (for example, a large natural disaster or a significant national security issue may cause a tempo rary price spike in natural gas prices, or a sharp curtailment in the availability of natural gas at any price). The
commenters noted inaccuracies in predictions of future gas prices.

Commenters stated that EPA must consider a reliability safety valve. T he commenters appended a document outlining reliability concerns as a result of unforeseen events, such as a turbine loss at a nuclear plant that could last up to a year, and possible solutions to accommodating reliability162 issues, including adjusting the s ingle year CO2 rate or the normal averaging time. The
commenters added that if the averaging time were lengthened, it would be necessary to adjust over a period of five or more years to accommodate reaching the normalized state goal to keep generation reso urces critical to maintain reliability on the system until transmission solutions can be implemented to ensure retirements or curtailments do not create reliability constraints. The
commenters stated that periodic state reporting could explain and verify t he event, correction, and demonstrate the achievement of the goal over the allowed period.

Commenters stated that based on the existing market

- based approach in Michigan, jurisdictional issues may arise between the state regulators overseeing implementati on of the proposed rule and the RTOs managing the economic

- based dispatch of all generation, including NGCC units. The
commenters noted that a fundamental change in this system would be necessary in order to account for re

- dispatch of NGCC units and sugges ted that EPA strongly consider a reliability safety valve for purposes of meeting electric demand in RTOs. The commenters stated that a safety valve will keep generation resources critical to maintain reliability on the system until transmission solutions can be implemented to ensure retirements or curtailments do not create reliability problems. The commenters added that EPA must consider that some of these units are on interruptible gas supplies and will not be able to operate if a shortage occurs.

Comme nters cited FERC, Western Electricity Coordinating Council, Southwest Power Pool, Mid Continent System Operator statements and explanations of reliability concerns, the need for additional reliability assessments, and the need for a reliability safety valv e that would allow for the suspension of the program should the electric grid be put at risk by implementation of the Rule. The commenters stated that in lieu of " a rational Rule that accounts for the myriad of risks imposed on the electric system, [the co mmenters ] strongly argue that this Rule must include some sort of failsafe to prevent the economic and physical harm that will accrue to US citizens should it be implemented as proposed. "

Commenters also stated that a safety valve is needed which aligns w ith MISO procedures and defines levels of progressive action necessary to ensure reliability, safety and security during abnormal operating conditions or emergency situations. The commenters further stated that the inclusion of a safety valve during the tr ansition period as the system adapts to changing generation and transmission infrastructure will provide a critical buffer enabling the resolution of reliability issues with minimal power disruption or unnecessary costs. The commenters noted the importance of understanding and recognizing local reliability events and stated that the ability for electric utilities to support and restore power during emergency situations should also be recognized by EPA due to the unpredictable nature and timing of these even ts.

Commenters stated that EPA fails to consider the location of existing units necessary for grid stability in the proposed rule and requested EPA account for the generation of the volt

- ampere reactive power when determining the state

- specific goals by s ubtracting this generation from the goal computation. The commenters explained that as units are retired, the operation of the remaining existing units will be necessary to provide voltage support and will emit without actually generating megawatts for sal e while serving as voltage regulators. Commenters also recommended that EPA implement a safety valve mechanism that deducts emissions associated with energy generation required in must

- run conditions due to transmission constraints. The
commenters stated c oncerns that the proposed rule will affect the ability to transmit electricity1 63 from the generating units to the load areas, especially during the timeframe between when the proposed rule is final and when the transmission system can be updated to comply wi th the final rule.

Commenters recommended that an RSV that provides a process for undertaking timely reliability assessments at various stages in the process as well as the requisite compliance and/or enforcement flexibility to implement any identified re liability solutions. The commenters stated that an RSV can help to ensure outcomes that address reliability issues without affecting the core policies underlying the 111(d) rule compliance design.

Commenters also recommended that the proposed rule inclu de an RSV that provides alternative compliance options, including deferred timelines for both EGUs and states in circumstances where grid reliability is threatened. The commenters added that the safety valve should protect states and utilities from penalti es/fines and civil lawsuits in the event that the emission targets cannot be met due to the need to maintain reliable operations. The commenters suggested that one way to effectuate a safety valve would be to ensure that no state, federal, or regional impl ementation plan shall take effect until such time as FERC certifies that the implementation plan will not have a detrimental effect on bulk electric system reliability.

Commenters strongly encouraged EPA to heed warnings in NERC's November 2014 Initial Rel iability Review and incorporate a " safety valve " or reliability assurance mechanism to keep strategically important units online to maintain adequate power supplies to support vulnerable sections of the grid. The commenters also recommended that EPA adopt some type of grid reliability consultation and protection mechanism that will take into account the incredibly challenging prospect of merging individual state implementation plans and regional approaches into competitive markets for dispatching power gen eration.

Commenters stated that EPA should incorporate a safety valve in the final rule to mitigate reliability impacts.

Commenters stated that the ISO/RTO Council has offered to work with EPA to develop a

" Reliability Safety Valve " in establishing " processes to assess and, as relevant, to mitigate electric system reliability impacts " from the proposed rule as well as other EPA rules. The commenters stated that NERC reliability review concludes that " essential reliability services may be strained by t he and " more time for implementation may be needed to accommodate reliability enhancements. " The commenters encouraged EPA to work with these organizations to ensure that the electric system continues to be able to reliably supply homes, businesses and in dustry with the essential energy they need.

Commenters stated that it is imperative that EPA incorporate a safety valve in the final rule and that the safety valve should mitigate significant reliability impacts due to transmission line and natural gas pip eline limitations, recognizing that lengthy permitting, design and construction will be necessary. The commenters stated further that not only must EPA provide a mechanism for keeping some baseload coal plants online for reliability purposes, EPA must allo w utilities to use those plants without risk of punitive measures when they are running to fill key capacity during times such as cold weather.164 Commenters requested EPA consider allowing states to adopt an emergency provision or " safety valve " that would a llow carbon

- intensive sources to operate beyond permitted emission limits in the event that grid reliability is compromised within a region. The commenters stated that without natural gas units to provide reliable, base

- load, lower

- emitting CO2 generation, electricity providers will have to rely on higher

- emitting coal

- fired units in extreme cold weather events in the future but doing so could subject the company to prosecution under the CAA.

Commenters stated that the assumption that coal generation can be one

- for

- one diverted to existing NGCC units is inaccurate, and the magnitude and timing would make the Arizona's electric supply unreliable. The commenters stated the NERC report on the CPP cites the need for a 10 to 15 year outlook for planning transmis sion development due to the time required for engineering, contracting, siting and permitting, as well as the various federal, state, provincial, and municipal approvals required. The commenters stated the CPP interim goals would allow for less than a 5 y ear outlook. The commenters stated that the timing of the final state plan approval and the typical five

- year timeframe to site and construct new power plants would result in real reserve margin declines. The commenters stated that Arizona will need to s eek relief from the CPP's interim goals in order to maintain grid reliability and security and that EPA should include a reliability safety valve mechanism in the final rule.

Commenters submitted, as an attachment to their comment, an RSV administrative pr ocess recommended for incorporation into the Final Rule. The commenters ’ recommendation would limit the scope of entities that are eligible to submit RSV petitions to EPA to those entities that have responsibility for grid reliability. In addition, the c ommenters recommended establishing rules related to the reliability assessment to be performed in support of the petition, the entities qualified to perform that assessment, the process for submission of such petitions to EPA, and the role of relevant regu latory authorities, including the FERC. The commenters recommended that the petition be required to identify the reliability issue, provide verification of the reliability issue, provide an explanation regarding why the grid reliability issue (state, multi

state, and/or regional) cannot be addressed through a State Plan modification, include grid reliability assessment, a mitigation strategy, and supporting material.

Commenters stated that a " reliability safety valve " should allow the extension of time to a ddress the reliability issue. Commenters stated the " reliability safety valve " would also allow generating units to be excluded from the rule if it can be demonstrated that there is not a cost

- effective alternative to retiring the unit, and that the genera tor is needed for reliability. The commenters stated further, because FERC and NERC have authority and responsibility to assure reliability, they should be allowed to grant the time extension or exception, and EPA should defer to their bulk

- power system r egulatory and reliability expertise in making its decision.

Commenters stated that Brownouts or blackouts are not acceptable to the public. Commenters stated that for this reason, the EPA should include a process to support effective management of electric system reliability issues that may arise due to the implementation of the CPP. Commenters stated that states should have the flexibility to request a compliance extension deadline if they can make the case that reliability is threatened.

Commenters stated that dangers could be avoided by including a safety valve in its plan, a point echoed by officials at the PJM Interconnection regional transmission organization and the North165 American Electric Reliability Corporation. The commenters stated dangers could a lso be avoided if EPA did not require states to make dramatic cuts in GHG emissions by 2020, which is less than six years away, front

- loading compliance burdens through a rapidly approaching date that does not provide adequate time for states to make the m ajor planning decisions necessary to comply.

Commenters stated that it is of crucial importance that EPA study and take into account the potential effect of the proposed rule on the reliability of the electric system and the overall impact on residential, commercial and industrial customers. Commenters stated that a Reliability Safety Valve (RSV) is an appropriate measure that should be included in the rule as a means of avoiding potential reliability events in Kansas and the Midwest.

Commenters stated that Kansas is heavily reliant upon coal

- fired generation to provide the baseload power and ancillary services, such as reactive power, voltage control, and ramping capability are necessary to reliably and economically provide electricity. Commenters stated th at should the owner/operator of a coal

- fired power plant choose to comply with the proposed rule by simply retiring a unit or units, system reliability issues could be triggered in certain areas.

Commenters stated that they support adding a provision that will eliminate compliance penalties and allow for revisions to implementation plans in circumstances where reliability needs require continued operation of fossil units otherwise scheduled for retirement or reduced operation.

Commenters stated that there should be an exemption in the rule to use carbon generating sources if RE or nuclear sources go off line. Commenters stated that EPA's schedule is unrealistic and as a result creates serious risks to the reliability of the electrical system.

Commenters st ated that NERC supports policies that include a reliability assurance mechanism to manage emerging and impending risks to the BPS, and urges policy makers and the EPA to ensure that a flexible and effective reliability assurance mechanism is included in th e rule's implementation.

Response 11: EPA understands the concerns of these commenters but we feel that we have addressed them in ways that do not undermine achievement of the goals of the CPP. There are numerous features of the final rule, some of which were added to address concerns like th ese. But first we note that there are multiple features in the electricity system that ensure that electric system reliability will be maintained. Electric system reliability is continually being considered and planned for. There are also numerous remedi es that are routinely employed when there is a specific local or regional reliability issue. These include transmission system upgrades, installation of new generating capacity, calling on demand response, and other demand

- side actions.

Many aspects of th e final rule’s design are intended to support system reliability, especially the long compliance period and the basic design that allows states flexibility to include a large variety of approaches and measures to achieve the environmental goals in a way th at is tailored to each state’s energy resources and policies. Indeed, as with numerous prior CAA regulations affecting the electric power sector, environmental requirements for this industry are accommodated within the existing extensive framework establis hed by federal and state law to166 ensure that electricity production and delivery are balanced on an ongoing basis and planned sufficiently to ensure reliability and affordability into the future. Changes that the EPA is making in this final rule respond dir ectly to the comments and the suggestions that we received on these issues and provide further assurance that implementation of the final rule will not create reliability concerns.

First, the final rule allows significant flexibility in how the applica ble CO 2 emission performance rates or the statewide CO 2 goals are met. Given the differing characteristics of the electric grid within each state and region, there are many paths to meeting the final rule’s requirements that can be taken while continuing t o maintain a reliable electricity supply. States can develop plans to meet the CO 2 emission performance rates or state CO 2 emission goals by choosing from a variety of state plan types and approaches that afford states and affected EGUs appropriate flexibi lity. EE and other non

- BSER approaches can strengthen a state’s ability to establish a plan to meet the CO 2 emission performance rates or state CO 2 emission goals by providing a considerable amount of headroom above the levels of the rates and goals. EE es pecially, because it reduces load, can provide assurance that reliability can and will be maintained. Additionally, the final rule offers opportunities for trading among affected EGUs within and between states, and other multi

- state compliance approaches t hat will further support electric system reliability.

Second, the final rule provides sufficient time to ensure system reliability. The final rule retains the 2030 date for the final period, which commenters largely supported as reasonable and not a

conc ern for reliability, and addresses one of the key issues that commenters pointed to as a reliability

- related concern by both moving the start of the interim period from 2020 to 2022 and adjusting the interim goals to provide a less dramatic initial reducti on requirement and a more gradual glide path to the final 2030 goals. Both FERC’s May 15, 2015 letter and the comment record made it clear that providing sufficient time for planning and implementation was essential to ensuring electric system reliability. The EPA has responded by provided additional time to allow for planning and implementation of the final rule requirements.

As a result of these changes, the states themselves will have a meaningful opportunity to determine the timing, cadence and sequenc e of actions needed for states and sources to meet final rule requirements while accommodating the ongoing activity needed to ensure system reliability. The final rule provides more than six years before reductions are required and an eight

- year period fro m 2022 to 2029 to meet interim goals. Moreover, while the final rule requires each state to submit a plan by August 31, 2016, we recognize that some states may need more than one year to complete all of the actions needed for their final state plans, inclu ding consultation with reliability entities. Therefore, the EPA is allowing an optional two

- phased submittal process for state plans. If the state needs additional time to submit a final plan, then the state may submit an initial plan by August 31, 2016, t hat documents the reasons that the state needs more time and includes commitments to concrete steps that will ensure that the state will submit a final plan by August 31, 2018.

Third, we are including in the final rule a requirement that each state demons trate in its state plan submittal that it has considered reliability issues in developing its plan. This was suggested by a number of commenters, and we agree that it is a useful element to state plan development.167 Fourth, the final rule provides a mechanism for a state to seek a revision to its plan in order to address changes in circumstances that could have reliability impacts if not accommodated in the plan. The long compliance timeframe, with several interim steps, naturally provides opportuniti es for states, working with their utilities and reliability entities, to assess how implementation is proceeding, identify unforeseen changes that may warrant plan revisions, and work with the EPA to make necessary revisions.

Finally, in response to a vari ety of comments, we are providing a reliability safety mechanism that provides a path for a state to come to the EPA during an immediate unforeseen, emergency situation that threatens reliability to inform the EPA that an affected EGU or EGUs may need to
t emporarily comply with modified emission standards to respond to this kind of reliability

concern. See section VIII of the preamble for a discussion of the safety valve.

Commenters stated that NERC supports policies that include a reliability assurance mec hanism to manage emerging and impending risks to the BPS, and urges policy makers and the EPA to ensure that a flexible and effective reliability assurance mechanism is included in the rule's implementation. Commenters stated that plan should have reliabil ity assurances built into it similar to MATS. Commenters stated that EPA recognized that overly aggressive schedules for implementation could undermine the reliability of the electric utility sector, and wisely provided for a reliability safety valve. Com menters stated that EPA should recognize that this rule also poses significant risks to reliability.

Comment 12: Commenters stated that a reliability safety valve is not needed for the CPP.

Commenter s specifically referenced an analysis from Southwest Po wer Pool (SPP) [SPP Reliability Assessment of EPA 111(d) Clean Power Plan Rule, SPP (Aug. 19, 2014), http://www.spp.org/publications/SPC%20Materials%20081914.pdf.] wherein SPP stated that the rule " would shrink the region's 'reserve margin' (the percent by which generating capacity exceeds expected demand) from 13.6 to 4.7 percent by 2020, and to

- 4.0 percent in 2024. " Commenter s noted one issue with the analysis in that " it assumed that almost 15 percent of the region's power supply would retire without re placing it with any new power sources or demand

side management. " Commenter s stated that " Those conclusions are not, however, based in the reality of what CPP is expected to accomplish or how resource planning unfolds: the CPP objectives will be reached on ly if states invest in renewable resources, demand

- side management strategies, and other new, low

- carbon emitting generation. " According to commenter s , " Nothing in the rule requires that any of the coal

- burning capacity in SPP retire, much less prior to ot her generation coming online. "

Commenter s further stated that " SPP is well

- positioned to transition under the Clean Power Plan, given that it achieved a reserve margin of 47 percent in 2013 and has not had a margin below 32 percent in the last six years a t least (both numbers are far above its 13.6 percent requirement), and that it is located in the heart of our nation's strongest potential regions for wind power production. " Assuming the SPP and its member states plan for the transition, commenter s noted that " it should have no difficulties ensuring resource adequacy. "168 Commenter s also referenced an analysis from Electric Reliability Council of Texas (ERCOT) [ERCOT Analysis of the Impacts of the Clean Power Plan, ERCOT (Nov. 17, 2014), http://www.ercot.com/ content/news/presentations/2014/ERCOTAnalysis

ImpactsCleanPowerPlan.pdf] wherein ERCOT " predicts retirement of between 5.7 and 7.8 GW of electricity generation capacity between now and 2029 under the CPP (compared to a baseline of 2.8 GW of retirements), a nd addition of 16.9 to 19.3 GW of new generation, about 90 percent from wind and solar alone (compared to baseline of 14.5 GW of new generation, about two

thirds from wind and solar). " Commenter s noted that " ERCOT's model does predict a capacity constraint sometime between 2018 and 2022, when coal plants are trying to retire and renewables have not yet been fully built out " but " ERCOT's concerns are unfounded because the CPP provides enough flexibility that, if necessary, coal plants can continue operating early in the compliance period. " Commenter s also noted that ERCOT " can and should supplement already

planned major transmission line improvements with additional projects serving load centers in the state, and as a last

- resort (as ERCOT acknowledges), it c an keep coal plants operating using reliability

- must

- run contracts to cover identified shortfalls, or shift generation from existing coal to gas units. "

Commenter s also noted the following flaws in the ERCOT modeling assumptions:

• " ERCOT assumed, without an y apparent basis for this assumption, that Texas would enact a flat price on greenhouse gas emissions to meet its obligations under the CPP. "

• " the third scenario applied CPP limits in the most cost

- effective way possible, supposedly to determine the ideal compliance option, but that study requires ERCOT to meet the applicable emission rate goal every year, thereby failing to take advantage of the 2020

- 2029 compliance averaging, which is one of the CPP's key flexibility mechanisms. "

• " ERCOT also dismisses tha t scenario as unrealistic because it may not be achievable 'within the current electricity market design in ERCOT' " but " there is no requirement that the current market design remain in place: ERCOT can clearly redesign its market to accommodate faster mar ket changes, and in fact already is looking into redesigning its ancillary services market to accommodate distributed generation (and demand response resources). "

• " ERCOT also assumes efficiency gains of just over half EPA's projections by relying on histor ical trends instead of considering future potential; and it assumes the current Production Tax Credit (which has incentivized huge wind build

- out in the state) will expire with no replacement, even though that would be an easy way to continue the current r ate of wind generation construction. "

• " And finally, ERCOT's model does not include any " negawatts " for demand response services, which could be a huge contributor to the reliability of Texas's power grid. "169 Commenter s referenced the PJM reliability analysis [PJM Reliability Review] and noted that

" PJM apparently believes that six states (Ohio, Pennsylvania, New Jersey, Kentucky, Virginia, and Maryland) will meet their 2020 interim targets simply by following through on planned coal retirements in their state s. " Although commenter s disagreed with this analysis because " we believe PJM used a higher mass cap on emissions than will be allowed under the CPP, "
commenter s stated that the " analysis nonetheless demonstrates, at least in the PJM region, that the CPP wi ll not impose any insurmountable burden on those states' power grids, and belies PJM's contention in public forums that policy protections are needed to ensure grid reliability. "

Commenter s stated that a safety valve is not necessary in this rule and noted the following:

• it would seriously impact greenhouse gas emissions by allowing old, dirty plants to continue operating well past when they would otherwise retire.

• it would reduce motivation for regional and state grid operators to actively prepare for chan ges in customer demand, and related power needs and supplies of the future "

• significant advanced planning, and coordination with states in designing their plans, will be required to ensure power grids are equipped to manage our changing resource structure s. " A safety valve provision would undermine those conversations by removing a base level of accountability, and would therefore leave us less prepared in the long term. "

• " the provision proposed by IRC would impose a huge administrative cost on EPA,
state s, and grid operators, all of which would be required to go through a reliability determination and approval process at several stages throughout the plan approval process. "

• Each additional administrative decision could be subject to challenge by industry or environmental groups, which could make the CPP implementation process even more difficult than the plan approval process already can be.

• While supportive of state coordination with the ISO/RTO and neighboring states,
commenter s did not believe that th e " formalized veto process proposed by the IRC will be constructive. "

• " The ISO/RTOs already have mechanisms such as reliability

- must

- run requirements as a final measure to ensure system reliability. "

• " none of the justifications leading EPA to limit its enforcement of MATS obligations come into play h ere

Commenters stated that State plans should require that emissions from plants needed for grid reliability purposes are offset with emissions credits elsewhere. The commenters support ed RTO and other planni ng regions' overriding interest and mandate to preserve and enhance grid reliability; however, commenters stated that the reliability safety valve as proposed by the170 ISO/RTO council is unnecessary. The commenters stated that the CPP essentially has three

" reliability safety valves " already embedded in the structure of the rule: i) flexibility to take advantage of a broad array of system resources, including both supply

- side and demand

- side resources; ii) an extended compliance period spanning at least 10 ye ars and multi

- year averaging; and iii) compliance flexibility, including emissions trading and averaging to avoid mandating reductions at any individual plant, or at any specific period of time.

Response 12: EPA agrees that it is highly unlikely, given the many features of the electricity industry that safeguard reliability and the many flexible options in the final rule

, that there could be a conflict between maintaining reliability and operations under the requirements of a state plan. But among the flex ibilit ies given the states is the option to design a plan that places very rigid and inflexible requirements on specific affected EGUs. If a plan has such requirements it is possible that a severe, unanticipated event could put such a requirement on a spe cific affected EGU in conflict with what needs to be done to maintain reliability. In that case, if certain conditions are met, the affected EGU can operate for 90 days only , above the level called for in the state plan

. The state however must meet its go al. I f the problem reoccurs the state must revise its plan to avoid such conflicts.

Comment 13: Multiple commenters stated that a complete and proper grid reliability analysis was not conducted.

Commenter s noted " The current electric power grid has evolved incrementally over the last 40

- plus years to provide a reliable supply of power in support of the current mix of generation
assets. " Commenter s stated, " The changes being proposed by the EPA in the proposed timeframe will dramatically change use of the current system and will need to be thoroughly evaluated, modified as necessary, and implemented in a timely and responsible manner to avoid imposition of unnecessarily high costs and reliability risks to customers. "

Commenter s stated, " The extensive w ork by states to implement the carbon rule requires that each generator and the entire system be evaluated " making this " an ideal opportunity to assess potential climate vulnerabilities and needed resilience measures to protect the electric system. "

Commenter s stated that " EPA has not demonstrated that reliability constraints permit redispatch. Commenter s asked that EPA consider " whether state's NGCC fleets can reliably operate at a 70% capacity factor. Commenter s noted that " A 70% capacity factor wou ld change the purpose and design of the nation's NGCC fleet at large, and EPA must consider whether fleets by state or NERC reliability zones can operate reliably at such a capacity factor. "

Commenter s asked that " a detailed unit commitment dispatch analys is should be conducted to ensure reliable operation of the system with increased renewable generation. "

Commenter s stated that " EPA's purported grid reliability analysis is made obsolete by the D.C. Circuit's decision in Electric Power Supply Ass'n v. FERC , 753 F. 3d 216 (D.C. Cir. 2014), in which the Court struck down FERC's authority to implement mandatory demand

- response

measures " which have become a " major part of the way grid operators ensure that reserve171 margins are met. " Commenter s further noted that " the court's decision will have a very significant effect on the ability of grid regulators to maintain adequate reserves. "

Commenter s stated " the EPA has not given sufficient consideration to the impacts its proposal will have on organized electricity m arkets and the challenges that the proposal presents to syste m reliability and the economy. "

Response 13: The final rule requires that every state consider reliability as a part of its development of a state plan. We have suggested that a very good way of doing that is to consult with the grid operator. In addition please see the Technical Support Document on resource adequacy in the docket for this rulemaking. Regarding concerns about whether the NGCC fleets can reliably operate at a 70% capacity factor the preamble to the final rule has a full description of the basis for Building Block 2 which is a gradual shifting of generation from existing fossil steam to existing NGCC within each region up to a maximum NGCC utilization of 75% on a net summer basis. In that section EPA discusses the technical basis for using this as a part of BSER, taking into account important factors such as reliability of the electric system, natural gas infrastructure, natural gas production potential, transmission planning and cost considerations. Please see Chapter V.D. of the preamble. In addition there is a Technical Support Document, entitled GHG Mitigation Measures Technical Support. This Technical Support Document also discusses renewable energy feasibility. The Preamble to the rule addresses considerations for feasibility of the 2030 level of RE deployment, and the rate of progress during the interim period in getting to that level, in section V.E on building block three of the preamble to the final rule. RE feasibility is addressed in more detail in the GHG Abatement Measures technical support document. EPA found that these levels were supported by comments received, DOE analysis, and external studies evaluating the costs of and potential for higher levels of RE penetrat ion. Finally, commenters are most likely aware that the US Supreme Court has agreed to review the D.C. Circuit's decision in Electric Power Supply Ass'n v. FERC, 753 F. 3d 216 (D.C. Cir. 2014),

Comment 14: Multiple commenters stated that the reliability analysis conducted by EPA and the use of the Integrated Planning Model (IPM) to determine reliability is not appropriate and the analysis is flawed.

Commenter s stated that the analysis is flawed " because it does not consider potential sub

regional supply deficits below the 64

- subregion level provided by the IPM model, and assumes large

- scale reductions in electric demand resulting from the rule's energy efficiency building block. These reductions may not occu r either because states do not pursue them, or efficiency goals are not met due to economic growth or other factors. "

Commenter s noted that the NERC study stated that " EPA's modeling of its proposed rule assumptions is not a detailed system evaluation. Ac cording to c ommenter s , t he IPM " lacks the granularity and realism capable of identifying the real risk of the proposed ESPS at the operational level. " Commenter s stated, " The necessary details to assess reliability are simply172 missing from EPA's model. " C ommenter s noted the following areas where the IPM analysis was insufficient:

• IPM dispatches on a seasonal basis using load duration curves and regional load shapes, which is a " gross generalization of actual real

- time dispatch practices. "

• IPM does not effe ctively model individual power plants,

• does not model the random intermittency of wind and solar,

• relies on an " unrealistic, simplified industry structure (i.e., 64 model regions in lower 48 States as proxies for the actual utilities and transmission opera tors), "

• relies on an even more " simplified 'model " of natural gas supply and demand. "

Commenter s noted that " The EPA's parsed IPM results for 2025 indicate that many NGCC units do not retire, but are projected to have zero generation. " Commenter s asked ho w zero generation is " different from retirement? " and why are these units are " not modeled as retiring? "

Commenter s stated that " The models used by the RTOs, ISOs, and NERC are more appropriate for assessing electric system reliability than is the EPA's I ntegrated Planning Model (IPM), and these organizations also have planning expertise that could promote a more robust analysis. "

Commenter s stated that the Resource Adequacy and Reliability Analysis TSD contains " broad, unsubstantiated generalizations abo ut the existing transmission system to imply that the proposal will have little impact on system reliability. " According to c ommenter s , " Experts and key stakeholders disagree with this approach, its conclusion, and with statements from EPA Administrator Gi na McCarthy such as 'nothing we do can threaten reliability.' "

Commenter s stated, " EPA's use of the Integrated Planning Model does not assess the impact of the proposed rule on system reliability because the model is not capable of incorporating operatin g reserve requirements, actual transmission system constraints, or variable resources with sufficient granularity. "

Commenter s also noted that the IPM does not " adequately model transmission constraints or system reliability that may be associated with retiring and adding generation resources. " According to commenter s , IPM recognizes known transmission capacity constraints by

" limit[ing] the ability to transfer power between regions to certain values for each transfer path " but " because the actual transm ission system is not modeled, simulation results from the IPM cannot predict the performance of the transmission system itself. "

Commenter s also noted that the IPM is " insufficient to address reliability issues associated with increased wind and other var iable resources. " According to commenter s , " Generation may only be added if it does not compromise the stability or reliability of the transmission system " which requires " detailed system impact and facilities studies. " Commenter s noted that " the hourly

ou tputs of variable resources are typically modeled in production cost programs using a variety of simulation methods " and " the outcomes of these simulations are used to assess the range and173 probabilities of possible impacts. " According to commenter s , " varia ble resources are represented in IPM in one or more simulations where their output is modeled as an average expected value " and " does not accurately simulate transfers across constrained paths because constraints are expected to occur at the resources' res pective maximum outputs. "

Commenter s noted that EPA's IPM analysis results in the Birchwood plant shutting down or idling for multiple years under three of the four scenarios. Commenter s stated that two of the options have the Birchwood plant idling for m ultiple years and then being reactivated for multiple years. Commenter s noted the following concerns with this result:

• " Birchwood would continue to have substantial fixed and variable costs, including its loan payments, ongoing maintenance, and its staffin g needs. It is quite unlikely that the Birchwood plant could remain viable for long if it is not earning revenues sufficient to meet its fixed and variable O&M costs. "

• " Moreover, idling a facility, even temporarily, opens up a host of issues regarding the plant's permitting status, including whether the air permit remains in full force and effect. "

• " Finally, PJM rules require a plant that has been mothballed for three years to surrender its interconnection rights. To re

- connect, the plant is considered as n ew generation and would likely incur significant costs to upgrade the PJM grid if it wanted to begin generating power after that time. "

• " It is quite likely that if the Birchwood plant is idled for the periods indicated in the IPM modeling, it will not retu rn to service. "

Commenter s stated that there were " flawed assumptions used by the EPA when it evaluated the

re

- dispatch of coal

- fired generation to NGCC. " According to commenter s , " The most likely outcome of the proposed policy is that the state's utilities will be left with the difficult decision of whether to jeopardize electric reliability in Arizona, risk noncompliance with the proposed carbon reduction goals, or spend exorbitant amounts of money to offset flawed assumptions. "

Commenter s state d, " EPA's assumptions about reduced coal usage in Montana are infeasible because 'the reduction that EPA assumes relative to Big Stone[, for example,] would result in the plant operating at 23 percent of its capacity " while " its minimum run level is 40 per cent.' "

Commenter s stated that the IPM analysis consists of " inconsistent assumptions concerning the loss of investments, the number and timing of unit retirements, and the number and timing of new construction. "

Commenter s noted that several studies on the impact of renewables on power system operating requirements have been conducted during the past decade. According to commenter s , " These studies show that requiring an increased operating reserve is one of the major operating impacts due to higher

- level penetration of wind generation. " Commenter s stated that EPA has not

" analyzed these studies or conducted any additional study to support the feasibility of the substantial increase of wind generation. " Commenter s asked that a " detailed model mimicking a174 s ystem's actual scheduling, dispatch, and regulation processes and timelines is needed to study the impact of renewables on operating reserve requirements. " Commenter s noted that " Minute

to

- minute variations and statistical interactions of the system parame ters involved in these processes need to be depicted with sufficient details to provide a robust and accurate assessment of the additional operating reserve requirements caused by higher penetration of renewable

resources. " Commenter s stated, " In addition, a detailed model that more accurately represents the time lags in the dispatch system and in generator response to dispatch commands is needed to capture the variation of increased operating reserve requirements with the season, month, and hour. "

Comment er s noted " To avoid system overloads and violations of mandatory reliability standards required and approved under federal law, system operators must continually monitor thermal, reactive, and stability limits on the transmission system. " Commenter s added that " System planners must also consider such limits when evaluating, through the use of power flow models, where and when new transmission facilities are needed. " Commenter s noted that the IPM analysis ignores such constraints.

Commenter s stated that the IPM analysis " ignores real

- world barriers to resource development " and that " system dispatch is subject to localized constraints that impede the flow of electricity across broad regions, including intra

- regional transmission constraints, particularly arou nd metropolitan areas. " According to commenter s , " These constraints create transmission

- congested 'load pockets' with limited access to remote resources " meaning that " certain local, primarily coal, units cannot be retired because they are needed to mainta in voltage levels and to assure 'black start' capability (to bring generation on line quickly in the event of a system emergency). "

Commenter s stated that " EPA's modeling replaces the 2,851 MW of fossil

- fuel generation it projects will retire in the Domi nion transmission zone by 2020 with only 351 MW of intermittent onshore wind. " Commenter s stated " It is not clear how EPA concludes (if indeed it has) that reliability could be maintained in the Dominion transmission zone. "

Commenter s stated, " IPM fails because the model builds as many new natural gas units as are necessary to meet reserve requirements " but " the construction of new natural gas units may be constrained by numerous factors, including the need to obtain sites and regulatory approvals and
to bid into capacity markets where applicable. "

Commenter s noted, " EPA's use of a generation resource adequacy model to determine whether the transmission grid will operate reliably is arbitrary and capricious. Sierra Club v. Costle , 657 F.2d 298, 333 (D.C. Cir. 1981), rev 'd on other grounds , 463 U.S. 680 (1983) (A model may not be used for purposes that 'exceed the bounds of its usefulness.'). " According to commenter s , this is no small matter because 'local' grid reliability impacts can have cascading effec ts over a broad region. "

Commenter s noted modeling shows that there are several units operating at low revenues and/or low capacity factors that would likely be retired, especially when other non

- modeled factors are taken into account.175 According to comme nter s , " Based on a review of capacity factors and operating revenues for the remaining coal units, ERCOT anticipates the retirement of an additional 2,000 MW of coal capacity and the seasonal mothball of 1,000 MW of coal capacity beyond what is specified i n the model output. "

Commenter s noted " The EPA's assumptions regarding costs and resource adequacy are deeply flawed, and the Proposed Rule generally ignores the extreme reliability challenges created by the rapid, unrealistic transition envisioned by the Proposed

Commenters stated that EPA's reliability analyses were inadequate because they did not consider potential electricity supply deficits below the 64

- subregion level of the IPM model, and erroneously assume large

- scale reductions in electric d emand resulting from the rule's energy efficiency building block. The commenters also stated that EPA's assumption that, within each model region, adequate transmission capacity exists in in contrast to the latest NERC Long Term Reliability Assessment whic h projects that many electric supply regions will fail to meet reference reserve margin levels in 2023.

Commenters stated that the CPP is not based on any detailed reliability analysis and would force the electric system to evolve without considering acti vities such as planning and analysis that must precede such changes. The commenters stated that the transmission grid is not prepared to accommodate the sweeping changes in the generation portfolio that would result from the coal retirements and addition o f substantial new renewable generation associated with the CPP.

Commenters stated that EPA has provided no analysis to validate the claim that local grid reliability issues can be managed using the flexible resource option and timeframes in the rule, and that developing the transmission necessary to address reliability in time to achieve building blocks 1 and 2 reductions by 2020 is not achievable.

Commenters stated that EPA's goals do not consider reliability issues of the interconnected power system or the interaction between building blocks, and thus the costs and time required to meet the goals have not been accurately estimated.

Commenters stated that EPA failed to conduct an adequate reliability analysis to determine the extent of potential improvem ents needed in order to maintain reliability with the implementation of the proposed rule. The commenters cited EPA

- HQ

- OAR

- 2013

- 0602

- 24030 A3; Attachment ID 2501, pg 76

- 98, which " indicates up to $2 billion in potential improvements may be necessary on the AEP transmission system alone as a result of the proposed rule " . The commenters stated that EPA must thoroughly evaluate and weigh costs associated with transmission upgrades in the RIA for the proposed rule.

Commenters stated that EPA has failed to evalu ate the impact that Building Block 2 will have on grid reliability.

Similarly, commenters stated that a more robust analysis of the impacts the CPP will have on energy consumption and infrastructure must occur before this rule is adopted due to reliability and electricity price concerns.176 Commenters stated that EPA has proposed this rule without due regard to its effect on reliable operation of the electric grid and EPA's reliability analysis is wholly inadequate. The
commenters further stated that EPA has failed to substantively engage FERC and NERC, which was not engaged to study, model and simulate the effects of the proposal. The commenters also noted that RTOs have raised questions and that until such time as NERC has validated the reliability of the p roposed rule, it must be delayed pending such validation by NERC.

Commenters stated that EPA needs to balance concern for the environment with reliability and cost. The proposed rule contains virtually no discussion of its impact on electric system reliabi lity and cost to consumers. The commenters added that the proposed rule does not take into account increased costs to consumers, as utilities pass on potential higher operating costs due to increased reliance on natural gas and the need to invest in new, potentially higher cost technology to comply with the rule, nor does it take into account the potential cost to society that may result from reduced reliability. The commenters further noted that the environmental benefits of the rule could well be counte rbalanced by reduced reliability and substantial cost increases to residential consumers and businesses.

Commenters stated that concerns about grid reliability are incomplete, stating the NERC report fails to consider several factors such including additio nal renewable generation.

Commenters stated reliability and cost modeling analysis does not adequately address the reliability implications of the proposed rule which predicts that Arizona would take a significantly different approach to meet the CO2 goals than EPA assumed in setting those goals. The commenters said both approaches are unrealistic and do not accurately reflect the path that Arizona would likely follow to meet EPA's stringent CO2 goals. The commenters said EPA's Reliability and Cost Modeling Analysis is premised on an inappropriate reliance on out

- of

- state imports, erroneous assumptions about power plant ownership, and overly aggressive energy efficiency assumptions, and both the target setting and com pliance analyses are flawed and fail to properly reflect how the rule will affect reliability of energy availability in Arizona.

Commenters stated an assessment performed by PACE Global concluded EPA's interim goals would generate the following reliability concerns in Arizona:

• All non

- tribal coal in Arizona would need to be retired by 2020, implying a stranded investment of more than $3 billion.

• Coal retirements would result in the need for at least 2.4 GW of incremental natural gas capacity within a 3

- year period at a cost of around $2 billion to maintain reserve margins.

• Additional electric transmission infrastructure would be required to ensure electric reliability and deliverability since most coal generation is in the eastern part of Arizona and most of the existing natural gas generation is in western Arizona.177 • Additional natural gas pipeline infrastructure would be required to support the two existing main natural gas pipelines serving Arizona since one is already near capacity throughout the year and b oth are near capacity during peak periods.

Commenters stated that changes to the mix of generation resources require a full assessment of the capabilities of the transmission grid from utilities, cooperatives, balancing authorities, and many others, and that EPA has failed to complete an adequate reliability analysis. The
commenters noted that during implementation of the MATS rule, regional transmission authorities played a critical role in protecting the grid from the unintended consequences of generator retirements by working with state authorities and gen erators review compliance plans and identify the activities and construction projects necessary to maintain reliability in those new configurations. The commenters stated that the MATS assessments indicated the need for additional time, and states worked w ith generators to provide the needed flexibility in scheduling.

Commenters stated that assessments by individual RTOs, the NERC, and others indicate that new generation and transmission expansion will be necessary to maintain regional reliability standard s and avoid widespread reliability concerns as an estimated 46 and 49 GW of baseload generation is retired. The commenters remarked that EPA has failed to meet their obligation to adequately evaluate reliability impacts that may have significant impacts on public health and welfare, rendering the proposal arbitrary and capricious.

Commenters added that a reliability analysis studies to evaluate the impacts of both retiring generation and integration of new generation resources must be performed by RTOs and other regional entities because any modifications to electric generation or transmission in one state will inevitably impact surrounding states due to the interconnectedness of the electric power system. The commenters requested that, under the guidance o f NERC, regional and interregional comprehensive assessments of reliability be mandated because it will be impossible for states that have facilities in multiple RTOs to develop a compliance plan without interregional coordination.

Commenters discussed th e proposed rule's impacts on generation resources and stated that if implemented as proposed, the propose rule will cause a realignment of the BPS transmission system to new gas fired generation and/or non

- emitting energy resources. The commenters stated
t hat the realignment must be studied for the reliability impact to the whole system. The
commenters provided the loss of inertial mass on the BPS system as one example impact, which provides stability during a fault or loss of a major generating unit. The c ommenters stated that the loss of inertial mass may cause a cascade in faults and blackouts.

Commenters stated concern that proposed rule will not preserve the reliability of the bulk power system unless significantly modified. The commenters discussed th e history and intent of the NERC reliability standards and supports NERC's statement that " industry stakeholders and regulators will need to develop an approach that accommodates the time required for infrastructure deployments, market enhancements, and re liability needs if the environmental objectives of the proposed rule are to be achieved " . The commenters encouraged EPA to incorporate a detailed and thorough BPS reliability analysis into the final rule to inform the reliable integration of new resources and decommissioning of old resources, assure that all flows178 of electricity are balanced and help system operators respond to unexpected loss of equipment to prevent a blackout, cascade or uncontrolled separation of equipment.

Commenters listed the many typ es of local and regional reliability assessments required to demonstrate reliability. Commenters provided recommendations to: NERC in order to continue to assess the reliability implications of the proposed CPP and provide independent evaluations to stakeh olders and policy makers; to regional and multi

- regional industry planning and analysis groups to perform reliability assessments and coordinate with states to ensure SIPs are aligned with what is technically achievable within the known time constraints, a nd to policy makers and EPA to make timing adjustments and to grant extensions in order to address reliability concerns and infrastructure deployments. Commenters stated that the final rule must take into account the complexity of reliable BPS operation an d that further study to plan for changing loads, to operate within system performance standards.

Commenters quoted the following four primary impact recommendations identified by NERC:

• " Fossil

- Fired Retirements and Accelerated Declines in Reserve Margins " The Regions, ISO/RTOs, and states should perform further analyses to examine potential resource adequacy concerns.

• Transmission Planning and Timing Constraints. EPA and states, along with industry, should consider the time required to integrate potential transmission enhancements and additions necessary to address impacts to reliability from the Proposed Rule. EPA and policy makers should recognize the complexity of the reliability challenges posed by the rule and ensure it provides sufficient time for th e industry to take the steps needed to significantly change the country's resource mix and operations without negatively affecting BPS reliability.

• Regional Reliability Assessment of the Proposed CPP. Other ISO/RTOs, states, and Regions should prepare for the potential impacts to grid reliability, taking into consideration the time required to plan and build transmission infrastructure.

• Reliability Assurance. EPA, FERC, DOE, and state utility regulators should employ the array of tools and their regulator y authority to develop a reliability assurance mechanism, such as a " reliability back

- stop. " These mechanisms include timing adjustments and granting extensions where there is a demonstrated reliability need.

The commenters stated that they support NERC's initial reliability review and recommended that EPA take into account the issues identified as well as NERC's anticipated 2015 Special Reliability Assessment prior to developing the final rule and implementation timelines.

Commenters discussed the import ance of ancillary services and stated that " even the seemingly simple decision to close a single fossil base load unit and replace it with a renewable generator requires consideration of, at least, the availability of sufficient generation to meet demand, the need for ramping and back

- up power, the availability of natural gas supplies and the infrastructure to deliver it, the impact on the transmission system and the need to maintain179 inertia, frequency and voltage control. " The commenters stated that a simu ltaneous feasibility study, which is both time and resource intensive, must be done to determine whether the electricity actually can be moved from the point of production to other points on the transmission system. Commenters stated that the results of th e study determine whether transmission upgrades or expansions are needed to accommodate the increased generation. Commenters stated

m anaging these considerations requires a significant amount of rigorous and time

- intensive study and coordination.

Commente rs stated that that the proposed guidelines will require major changes to the way the interconnected power system is planned and operated in order to ensure reliability while achieving emission reductions, and that given the interconnected nature of the sy stem, specific reliability impacts and necessary system changes cannot be assessed and coordinated until after all state compliance plans are finalized and approved, which will not be until 2017 at the earliest. The commenters stated that as a practical ma tter, this schedule does not allow adequate time for the needed reliability assessments and system changes to be accomplished before 2020. The
commenters stated that changes to the interconnected power system require close management to ensure continued re liability. The commenters stated that retiring a coal based EGU reduces the ability to arrest and stabilize system frequency following a grid disturbance or the loss of a large generator, even if the capacity is replaced with renewables. The commenters s tated that replacing the coal

- based units with increased generation from an existing NGCC unit may be feasible, but this requires other assessments to determine if the transmission system can accept this increased generation or if transmission or interconn ection modifications first will need to be made. The commenters further noted the importance of ensuring that increased amounts of solar photovoltaic generation do not lead to decreased system inertia and frequency response capabilities that are critical f or maintaining reliability, and that voltage support concerns also must be addressed. The commenters also stated that in order for electric utilities, states and other regulators to fully realize the potential benefits of increased DSM and EE measures, th ere must be close coordination between entities responsible for DSM and EE to ensure appropriate capacity values are estimated and that assuring adequate measurement and verification of the load response, will require advanced metering, load curtailment te chnologies and two

- way customer communications.

Commenters stated that the anticipated changes in the resource mix and new dispatching protocols will require comprehensive reliability assessments to identify changes in power flows and Essential Reliabili ty Services including (1) load and resource balance; (2) voltage support; and (3) frequency support. The commenters stated that more transmission and new operating procedures may be needed to maintain reliability.

Commenters stated that as the EPA is scheduled to finalize its rule by June 2015, NERC will develop a specific reliability assessment in early 2015 that will focus on evaluating generation and transmission adequacy and reliability impacts. The commenters stated that after the EPA rule is finalized, the states, either individually or in multi

- state groups, are required to develop their SIPs by 2016 and 2018, respectively and NERC plans to provide a more specific and comprehensive reliability assessment before SIPs are submitted to the EPA. The commenters further state d that a Phase III approach is tentatively planned for December 2016, which will examine (generation and transmission adequacy and reliability in light of) finalized SIPs.180 Commenters stated that NERC has issued an initial reliability review of EPA's Proposed Guidelines that has identified numerous serious concerns. The commenters stated that NERC is planning to conduct three more special assessments between now and December 2016 to evaluate more comprehen sively the impact of EPA's Proposed Guidelines and of the state plans that will be submitted if the Proposed Guidelines are not withdrawn. The commenter s recommend ed that EPA pause and reconsider the feasibility of the Proposed Guidelines.

Commenters cit ed concerns of NERC and RTOs that if possible, the guidelines would take longer to implement than EPA envisions due to required approval time, and time for construction of generation and transmission capacity. The commenters cited RTO concerns that the pr oposed schedule would result in decreased reliability and increased costs.

Commenters stated that curtailment of coal plants will result in localized voltage sag and other operational issues and will require reliability studies to assess voltage/reactive p ower control issues; how to replace frequency response, inertial support, and ramping capability provided by retiring units; and the necessity of potential transmission upgrades.

Commenters stated EPA should perform state

- specific analysis of transmission and grid capability to ensure that renewable goals set for states are not established at levels that pose threats to transmission capacity and grid reliability. The commenters stated the ability to construct new wind energy facilities in Montana and neighb oring Western states is limited by transmission system constraints and grid reliability referencing studies performed by the WECC in which the path constraints of the transmission lines from Montana to the Northwest were pushed to the limit, resulting in e nergy generated but not transmitted nearly half of the time. The
commenters stated EPA's proposed regulation has failed to identify the monetary costs and timeline delays associated with constructing or upgrading transmission lines and building sufficient generators to ensure the provision of ancillary services to renewable generators.

Commenters stated that the changes being proposed by the EPA in the proposed timeframe will dramatically change use of the current system and will need to be thoroughly eval uated, modified as necessary, and implemented in a timely and responsible manner to avoid imposition of unnecessarily high costs and reliability risks to customers. The commenters noted that other parties have documented that the costs to consumers due to the Clean Power Plan proposal will increase significantly. The commenters stated that they continue to advocate that the EPA work closely with the regions, the states and all interested parties to ensure that any final CO2 rule maintains bulk electric sys tem reliability compatible with a reliable, efficient market dispatch of available generation.

Similarly, commenters noted that the installation of new capacity is likely to approach and potentially exceed 20% of the total installed base, which could jeopa rdize the ability of the changing resource mix to adequately fulfill peak demands over the course of a year. The
commenters stated that improved modeling will be required to determine the capability of the changed resource mix to reliably serve load. The c ommenters supported the " development of probabilistic planning tools to assist in scenario

- based studies that determine likely on

- peak availability of the variable energy resources as well as hydro generation, and natural gas deliverability. "181 Commenters st ated that models such as IPM are inadequate for identifying future reliability issues, and do not address critical issues such as balancing supply with demand while maintaining voltage, frequency, and other criteria. The commenters stated that detailed
tra nsmission reliability studies are required to identify these issues and determine the supply and transmission changes required to meet FERC requirements to maintain Bulk Electric System (BES) reliability, and until such studies are completed, the costs and schedules for measures required to maintain BES reliability cannot be accurately determined.

Commenters stated that preliminary evaluations of the CPP's proposed standards have limited value and do not realistically model contributions from energy efficie ncy, demand response, and renewable energy in achieving compliance and maintaining grid reliability. The commenters stated that in some cases they force implementation of the EPA BSER building blocks rather than achieving the state goal at least cost. Th e commenter s cite d the Southwest Power Pool's reliability

- only assessment which unrealistically assumed the closure of thousands of megawatts of coal plants by 2020 but considered none of the replacement power resources which would occur during CPP impleme ntation. The commenter s quote d the report, " due to time constraints [SPP] did not evaluate the viability or reliability impacts of any of the building blocks used to establish [the CPP's] proposed goals. " The commenter s cite d errors (ignoring averaging fl exibility, ignoring new generation and ignoring efficiency improvements).

Commenters stated that IPM is not suited to analyzing reliability and is not a substitute for load power flow or stability studies because IPM assumes that there will be no impact to the transmission grid inside the regions, despite dramatically altering the generation resources within them, and does not consider NERC standards. The commenters discussed how IPM is structured and added that it does not take into consideration the volta ge/reactive power requirements of the transmission grid or the full range of possible contingency events and only considers a small number of outage events. Commenters further stated that the changes contemplated as part of the proposed presents a multitud e of uncertainties and complications that increase the risk of extensive disruptions to the grid and stated that this is supported by NERC's preliminary review of the proposed rule. The commenters discussed models maintained by RTOs and ISOs to assess reli ability and factors such as load forecasts, expected service dates of new transmission facilities, reactive resource capabilities, and generation additions, retirements, or other dispatch scenarios. The commenters stated that the proposed rule will require NERC, transmission planners, and planning coordinators to perform short

- term and long

- term analyses to determine the reliability impact of the proposal because the proposed rule will have a tremendous effect on one or more of these factors.

Commenters st ated the application of the four building blocks contained within the proposed Best System of Emissions Reductions (BSER) has not been subjected to modeling that meaningfully studies its impact on system reliability for which the changes pose a significant threat to grid reliability in the West. The commenters stated that no reliability analysis of EPA's proposed BSER has been conducted for the Western Interconnection, which spans 14 states, two Canadian provinces, and Mexico's Baja California, and it is in accurate for EPA to assert that its BSER is adequately demonstrated absent a transmission modeling study that concludes that EPA's building block approach would result in a system as reliable as the one we have today. The commenters stated the IPM model do es not model the operations of the transmission grid182 and whether resources that exist in a particular region can be delivered to the consumer location of demand; rather, the model focuses on whether, in a particular region, there are an adequate amount of electric supply resources to meet consumer demand. The commenters reference d the Western Electricity Coordinating Council (WECC), the Electric Reliability Organization (ERO) empowered by Section 215 of the Federal Power Act for establishing reliability sta ndards in the Western Interconnection, and a preliminary technical analysis of the BSER's application to the interconnection. The commenters also discusse d Deer Creek and Big Stone, South Dakota as an example of how the proposed EPA rule does not comport with transmission realities.

Commenters stated EPA has not conducted an adequate analysis of the impact its proposal will have on grid reliability. The com menters said EPA conducted what it inaccurately called a grid reliability analysis by running the Integrated Planning Model (IPM), but IPM grid simulations are not true reliability analyses because they provide a much simpler " resource adequacy " analysis, examining only whether the total amount of electric capacity that will be forced to retire within broad regions will cause capacity levels to fall below regional reserve requirements. The
commenters said IPM " assumes that adequate transmission capacity exi sts to deliver any resources located in, or transferred to, the region. " The commenters also referenced the WECC's Phase I Technical Summary Report that focused on frequency response in the grid from increased renewable generation which concluded needs fur ther monitoring and review.

Commenters also stated they are particularly concerned about grid stability across northern Nevada which is a rural area with numerous mining operations and high industrial load demands. The commenters said power generation in t he area consisted of three coal

- fired EGUs which would all be closed by 2020 under the proposed rule.

Commenters stated that a modeling assessment showed Arizona complying with EPA's interim and final goals but the results shown in this analysis are not achievable given the real world timeframes needed to construct new generation, transmission and gas pipeline infra structure.

Commenters stated the proposal, and the modeling used to support it, misrepresents the

" interconnected " grid as a single open market; that its implementation would jeopardize the utility's ability to continue to meet state regulatory expectation s. The commenters stated that the proposal would effectively reduce the utility's direct control over its generation and transmission assets, in favor of shifting Arizona's generation resource reliance to merchant

- based resources.

Commenters stated EPA's i nsistence that the rule is achievable appears to be based on modeling that it conducted using the IPM, however, IPM is not equipped to perform detailed technical studies that include stability analysis. The commenters stated that they believe the model is being misapplied, and should at the very least be accompanied by comprehensive production cost and detailed power flow/stability analyses. The commenters stated that as a result of the proposed rule, WECC has performed preliminary analyses in order to prov ide a starting point for additional discussions and more detailed assessments. The commenters stated they agree with WECC's two key recommendations: 1) allow additional time following the filing of state compliance plans for the NERC, WECC, and other relia bility entities to concurrently evaluate the potential reliability impacts of those plans; and 2) creating a process within the proposed Clean Power Plan that considers timing adjustments or the granting of extensions if there is a demonstrable reliability need identified.183 Commenters stated both parts of the TSIA (Transmission System Impact Analysis) identified significant reliability issues.

Commenters stated the power flow analysis performed in Part 1 of the TSIA showed SPP network was so severely stresse d by large reactive deficiencies that the software used in the analysis was unable to produce meaningful results, which is generally indicative of voltage collapse and blackout conditions. The commenters stated further that the analysis indicates approxima tely 5,200 MVAR of reactive deficiencies in the SPP footprint during system intact conditions resulted from modeled EPA generator retirements.

Commenters stated Part 2 of the TSIA utilized the latest optimal generation resource plans available to SPP as we ll as existing wind resources to mitigate generation shortfalls within SPP. The commenters stated that an N

- 1 assessment revealed 38 overloaded elements in portions of six states and that cascading outages and voltage collapse would occur.

Commenters state d that EPA concludes that, based on the results of the IPM model, implementation of the proposed rule can be achieved without undermining resource adequacy or reliability. The commenters stated that the model effectively assumes that states will implement programs in response to this rule that do not impair resource adequacy and reliability.

Commenters stated that because of the flexibility provided to states under the proposed regulation, there is no way to predict how individual or groups of states will choose to comply with GHG targets. The commenters stated that interaction of multiple different state implementation plans within the same interconnection could exacerbate any impacts on system reliability or resource availability and is highlighted by t he Western Electricity Coordinating Council in a preliminary technical report evaluating the potential reliability impacts on the western electrical grid.

Commenters stated that a thorough assessment of the potential reliability risks of the CPP would help ensure its successful implementation by enabling EPA and the states to avoid reliability impacts and make better choices in the design of implementation plans.

Commenters stated that the modeling analysis indicates that significantly more analysis by the EPA must be done to assess the impacts on electric reliability and costs for upgraded electric and gas infrastructure. The commenters stated that the modeling does not assess feasible schedules for installing this capacity or necessary work to the natural gas infrastructure nor does the modeling assess the electric reliability implications of retiring coal capacity. The commenters also stated that the cost of additional infrastructure installation costs is excluded.

Commenters stated that EPA's assessment of impacts on reliability is flawed. Commenters stated that the loss of 30 GW capacity, as called for by the rule, is not fully or accurately defined. Commenters stated that the impacts from the retirements on the reliability of the grid must be studied by transmission operators and reliability organizations to determine what specific impacts will be created by these changes in supply. Commenters stated that planning, permitting and construction of bulk electric system transmission lines can take 8 to 10 years. Commenters stated that with State plan approvals by the EPA (either individual or regional) not completed until as late as 2018 or 2019 with extensions, is will not be possible to place such facilities in184 service before later in the next decade. Com menters stated that it is also not clear how or if IPM (EPA's predictive model) addresses RTO/ISO seams issues, which affect the deliverability of power even when there is a surplus of generation. Commenters stated that further, IPM's regions do not align with the planning regions used by the RTOs/ISOs. As EPA notes, IPM also does not address intra

- regional transmissions constraints. Commenters stated that these limits impact EPA's ability to address local reliability concerns.

Commenters stated that EPA's use of a generation resource adequacy model to determine whether the transmission grid will operate reliably is not rationally based. Sierra Club v. Costle

, 657 F.2d 298, 333 (D.C. Cir. 1981), rev'd on other grounds, 463 U.S. 680 (1983) (A model may not be used for purposes that " exceed the bounds of its usefulness. " ). Commenters stated that this is no small matter because " local " grid reliability impacts can have cascading effects over a broad region. Commenters stat ed that in the absence of any reasoned explanation to justify EPA's confidence that the real

- world grid can accommodate the near

- term impacts of its Proposed Rule, the proposal lacks a rational justification.

Response 14: EPA disagrees with these comments . IPM is the best available modeling tool for assessing power sector/environmental impacts of policy initiatives. IPM is a multi

- regional, dynamic, deterministic linear programming model of the U.S. electric power sector. It provides forecasts of least c ost capacity expansion, electricity dispatch, and emission control strategies while meeting energy demand and environmental, transmission, dispatch, and reliability constraints. The model is designed to reflect electricity markets as accurately as possible . The EPA uses the best available information from utilities, industry experts, gas and coal market experts, financial institutions, and government statistics as the basis for the detailed power sector modeling in IPM. The model documentation provides add itional information on the assumptions discussed here as well as all other model assumptions and inputs

. Detailed information and documentation of EPA’s Base Case using IPM (v5.1 5 ), including all the underlying assumptions, data sources, and architecture parameters can be found on EPA’s website at: http://www.epa.gov/airmarkets/powersectormodeling.html http://www.epa.gov/powersectormode ling/BaseCasev513.html

Regarding the commenter s ’ view that the use of a generation resource adequacy model to determine whe ther the grid will operate reliably is arbitrary and capricious, EPA recognizes that local reliability conditions can be critical. EPA addresses resource adequacy and reliability considerations only insofar as these concerns can be assessed at a general l evel at this time. The modeling examines those potential implications that can be studied at the stage of the rulemaking process, that is, the broad changes in transmission generation patterns and transmission flows that are projected in modeling the impac ts of the rule. Any realistic appraisal of reliability cannot be conducted until the CPP planning and implementation process provides the necessary information for reliability authorities to conduct the necessary analysis. EPA fully addresses this
proces s in the rule, first by providing the flexibility to states to develop plans that will not raise reliability concerns, and also by ensuring the reliability is addressed in state plans and by including a reliability safety valve mechanism in the rule.185 Com ment 15: Commenters noted that relying on natural gas as a replacement for coal

- fired generation has negative consequences.

Commenters noted the following issues:

• natural gas is a price

- volatile fuel and low prices are unlikely to continue

• natural gas can not be stored on site as easily as coal

• natural gas is more difficult to transport than coal

• natural gas availability is limited by natural gas transmission pipelines, which are near capacity

• competition for natural gas supplies due to increased demand

• cos ts to increase natural gas transmission infrastructure and storage capacity will result in higher costs for natural gas

Commenter s stated that " maximum annual NGCC capacity can be limited by natural gas curtailments, transmission constraints, and/or air permit requirements. "

Commenter s noted that switching from coal to NGCC is only a short

- term solution. According to
commenter s , " In order to achieve an 80 percent reduction by 2050 compared to 2012 emission levels, even though NGCC technology is required i n the near

- term to meet the year 2030 targets, such technology cannot meet the 2050 GHG target, making NGCC investments obsolete long

term. " Commenter s also noted that utilities will be " forced to make costly long

- term decisions that will produce only shor t

- or medium term results " which will result in " accelerated depreciation and other stranded costs that result from retiring generation resources well ahead of their economic or useful lives. "

Commenter s noted that " It will take dramatic increases in energ y technology innovation to meet long

- term greenhouse gas reduction goals and the EPA rule as written does not adequately take into account how the rule drives private market investment. " Commenter s asked, " What are some complementary steps the EPA, DOE and FERC might take in a coordinated fashion to advance the Energy Technology Innovation System in the U.S.? "

Commenter s noted the following concerns:

• " The desirability of and need for firm natural gas supply and pipeline capacity contracts by generators "

• " The interruption protocols for natural gas delivery during cold weather events and the ability of pipelines to provide very short

- term

- supply flexibility (pack and draft) "186 • " The ability of the gas transmission industry to make timely infrastructure investme nts. "

According to commenter s , " Coal fired plants have on average a thirty

- day supply of energy on

site, whereas natural gas fired plants typically have no fuel storage capability. " Citing the Polar Vortex of 2014, commenter s noted that " There was simply not enough natural gas transportation capacity available to satisfy the home heating and power generation needs. "

Commenter s cited a NERC study that found that during the 2013

- 2014 Polar Vortex, " natural gas units represented over 55 percent of the total outages during the Polar Vortex, twice the rate of coal units "

.

Commenter s stated " Natural gas supplies can be temporarily strained, particularly in regions where there is insufficient pipeline capacity to meet the spike in demand. " Commenter s also

comm ented on increasing demand for natural gas: " During the 2014 polar vortex, some regions of the country experienced demand for natural gas in excess of supply, which would have led to interruptions of electricity service if other generating resources

- part icular those powered by coal

- were not there. "

Commenter s noted that " increased reliance on NGCCs for electric generation also renders the electric system and its customers more vulnerable to natural gas shortages and delivery congestion. "

Commenter s noted that siting new NGCC generation at all existing coal generation locations could be difficult " because of the altitude impact on NGCC output and because gas transmission pipelines do not run near these locations. "

Commenter s stated " Re

- dispatching co al generation to NGCCs may increase operation of Combustion Turbines (CT) during peak loads " and " Additional renewable energy, such as wind or solar generation, will require greater variability in the amount of fossil generation and potentially increase pe aking CT generation. "

Commenter s noted the following potential issues of converting to NGCC units:

• permit limits,

• electric transmission constraints, and

• natural gas delivery constraints

Commenter s stated that " an important distinction between the use of coal and natural gas is the ability of coal to be stored in inventory at power plants, which allows for quick response to changes in generation demand. " According to commenter s , " there is no such buffer for natural gas plants so the effects of a supply di sruption to plant operations, and thus dispatch availability, are immediate. "187 Commenters stated that as reliance increases more on natural gas for both baseload and on

- peak capacity, it is important to examine potential risks associated with reduced diver sity and increased dependence on a single fuel type. The commenters stated that currently, natural

- gas

fired resources account for large portions of both the total and on

- peak resource mix in several assessment areas when considering both existing capacity and planned additions. The
commenters stated that with this shift toward more natural gas consumption in the power sector, the power industry will become increasingly vulnerable to natural gas supply and transportation risks, and that extreme conditions, although rare, must be studied and integrated in planning. The
commenters stated that overdependence on a single fuel type increases the risk of common

- mode

or area

- wide conditions and disruptions, especially during extreme weather events. The
commenters s tated that the CPP proposal accelerates the shift toward more natural gas generation and could create additional pipeline needs. The commenters concluded that the increased demand can be addressed with sufficient lead time (i.e., more than three years), wh ich is needed to plan, collect contracts, permit, procure, and build new pipelines.

Commenters added that the proposed guidelines actually could prohibit the building of new natural gas

- based units because, in some states, the emission rate goals are less than the emission rate allowed these units under CAA section 111(b).

Commenters stated that IPM does not consider that in many cases, coal units that are retired will be replaced with additional generation added at another location, or with new onsite NGCC generation. The commenters stated that where a multi

- unit coal plant is replaced by a NGCC plant, both the reliability of the onsite generation and the operational flexibility of the transmission system will be decreased, especially during transmission ou tage season. The commenters stated that remotely located generation cannot provide the necessary dynamic reactive power, resulting in the need for a transmission solution. The commenters stated that there are areas that will require transmission upgrades t hat are not addressed by EPA's resource adequacy and reliability assessment. The commenters recommend ed that EPA revise its analysis to appropriately consider these potential impacts and outcomes.

Commenters also stated that EPA fails to consider reliabili ty concerns associated with increased reliance on natural gas. Commenters noted special concern during unforeseen events that disrupt natural gas supply and delivery for the power sector in high

- congestion regions, increasing the risk for potential blackou ts. The commenters stated that NERC has also expressed concern regarding reliability issues and constrained natural gas delivery and storage during peak usages. The commenters added that due the IPM's overestimation of potential gains in energy output thro ugh increased utilization of NGCC units and underestimation of the number of NGCC units that will be needed to provide reactive support and load

- following for variable energy resources, the commenter s oppose d proposals that displace coal, either by NGCC ge neration under Building Block 2 or by RE and EE generation under Blocks 3 and 4. Commenters added that EPA's reference to flexibility is misleading due to threats to fuel diversity and the hard limits and compliance deadlines.

Commenters stated that EPA's assumption that natural gas plants can increase annual utilization to 70% across the entire fleet presents huge technological challenges both at the plants and within the supply chain and has not been fully considered in EPA's analyses. The commenters188 note d that 70% utilization rates have been exceptionally rare and therefore technical feasibility requires detailed modeling, contingency planning, and real

- word testing.

Commenters stated concern that the CPP could adversely impact the reliability of the ele ctric power grid as early as 2017. The commenters stated the CPP promotes future increases in natural gas and renewable electric generation at the expense of coal fired generation, which places additional financial pressure on coal fired generation units that will most likely lead to an additional wave of coal generation unit retirements beginning as early as 2020. The commenters noted that this wave of retirements is in addition to the approximate 60 GW of coal fired generation that has already retired o r is anticipated to retire within the next five years due to previously enacted environmental rules coupled with low natural gas prices and stated that EPA's own modeling of the impacts of the CPP predicts an additional 40 to 48 GW of fossil unit retiremen ts by 2020. The commenters indicated it is unlikely that, given long lead times for permitting and construction of replacement generation and transmission, the industry will be prepared for such a dramatic change in the time period required by the CPP. T he commenters provided an example that would drop reserve margins to below 5% and place customers in the perilous position of being dependent on other regions to meet their electric power needs.

Commenters expressed concern that the CCP may shrink capacity margins, damage power quality, and leave the grid unprepared for extreme weather conditions. The commenters cited NERC's worry that the CPP is moving too far too fast and is not paying sufficient attention to the question of electric reliability, costs an d the risk of power failures.

Commenters stated that the industry will primarily increase its dependence on natural gas fired generation and given the " just

- in

- time " nature of natural gas fueling, the industry will become more vulnerable to natural gas supply and transportation disruptions which add to the reliability risk especially during extreme weather events. The commenters further stated that unlike coal units, combustion turbine EGUs do not have onsite storage of fuel. The commenters indicated that the time necessary to develop the required natural gas infrastructure (e.g. pipelines and storage facilities), is not offered in the 2020 start date of the CPP thus creating even more risk to electric service reliability.

Commenters noted that the CPP is designed to promote power generation from a subset of renewable resources. The commenters stated that current wind and solar PV technology provides intermittent gener ation that is non

- dispatchable and is subject to large variations in output, requiring increased generation ramping flexibility by conventional units. The
commenters cited there are reliability issues with large onsets of non

- dispatchable resources having already created operational challenges in California, Hawaii, and Germany.

Commenters also noted that generation variation challenges can be accommodated, but the changes to the grid require further study and planning, the time for which is not offered in the CPP.

Commenters also requested a safety valve or " off

- ramp " to address unexpected scenarios and to address electric system reliability and the CPP should include a predetermined procedure that would allow the provision of the program to be adjusted or suspended to address adverse impacts of the program on electric system reliability. The commenters further recommended that safety189 valve or " off

- ramp " provision could also offer states and/or affected entities protection in terms of not being penalized f or fewer emission reductions resulting from the unpredictable performance of renewable generation units.

Commenters stated that the EPA proposes that almost a third of the existing coal

- fired generation will be retired between 2020 and 2022 a third of exis ting coal

- fired generation will be gone. The
commenters further stated that these plants currently provide electricity that sustains our economy and the health and well

- being of our citizens and when these plants are shuttered, our electricity supply will be entirely dependent upon EPA's predictions about energy efficiency and the growth of costly and currently underdeveloped alternative energies. The commenters stated that their fear is that without current generating facilities, all it will take is anothe r polar vortex or heat wave to expose vulnerabilities and subject businesses and citizens to energy shortages and price shocks.

Commenters stated that EPA projects that this rule will cause the loss of 41 to 49 gigawatts of coal

- generating capacity by the year 2020. Commenters stated EPA's estimates are far too low. These retirements are in addition to the 92 gigawatts of coal capacity that the EPA has already projected will shut down between 2012 and 2020, due in large part to the compliance with the 2012 mercury and air toxic rule. The commenters stated that losing around 130 gigawatts of base

- load coal capacity, nearly 40 percent of the nation's coal generation fleet in 2012 raises serious concerns about the future reliability of our electrical power sup plies.

Commenters stated that in its reliability study, NERC also identified reliability concerns with increased reliance on natural

- gas

- fired generation. The commenters stated further that historically, NGCC units have been used for load following and ar e better suited for this purpose. The commenters noted that extreme weather (as experienced in last winter's polar vortex) impacts fuel availability for NGCC units, and can result in forced outages. The commenters stated that overreliance on NGCC sources w ill undermine the resiliency and fuel diversification built into the existing system and increased reliance on NGCC units will naturally increase demand for natural gas. The commenters stated that additional infrastructure will have to be constructed to su pply natural gas to new generation and the implementation timeline presented in the CPP does not adequately account for the time necessary to create required infrastructure.

Commenters stated the following concerns regarding reliability:

• The carbon emission rate that EPA proposes for Virginia will require the retirement of a significant amount of fossil

- fuel generation in a timeframe that compromises reliability.

• EPA's modeling shows 2,851 megawatts of dispatchable fossil

- fuel generation in Virginia being retired and replaced, before 2020, with 351 megawatts of non

dispatchable onshore wind.

• Additional near

- term generator retirements caused by the Proposed Regulation will compound existing, unresolved reliability concerns in the Commonwealth.190 Comment ers stated EPA's proposed rule would prevent replacement of coal

- fired base load, creating a gap that natural gas cannot completely fill, thereby leading to decreased reliability and security of the power grid. The commenters stated that the reliability co ncerns stem from the fact that natural gas, unlike coal, cannot reliably be stored for immediate availability at EGUs during demand spikes. The commenters stated that decreased reliance on coal due to the retirement of coal

- fired EGUs has led many to becom e concerned over grid reliability issues, such as FERC officials, AEP, SPP, and ERCOT.

Commenters stated disruptive changes such as retirements, retrofits and/or changes in the operating characteristics of base load resources, must be considered carefully and communicated clearly in a transparent and open process. The commenters stated that findings in their assessment make it clear that new generation and transmission expansion will be necessary to maintain reliability during summer peak conditions if EPA 's projected generator retirements occur. The commenters stated more comprehensive planning efforts with stakeholders and new tools/metrics will be required and coordination and cooperation beyond regional planning efforts will be necessary, but may not be timely given significant challenges with interregional planning and necessary system expansion. The commenters stated broader system assessments of the bulk power system, and natural gas pipeline and storage systems based on environmental constraints will be required. The commenters stated that implementation of approved state plans will take time, as will potential mitigation measures to address unacceptable system conditions to accommodate retirements, and/or retrofits to existing plants.

Commenters stat ed that in some instances, the most cost

- effective means of complying with the EPA's rule may be to retire more coal

- based generation than is already projected to retire due to the EPA's MATS regulation. The commenters stated that CO2 regulation could inc rease coal plant retirements and thereby place substantial new pressure on the grid to ensure reliability. The
commenters stated that EPA is under an obligation to ensure that the shift in the industry's generation mix as a result of the CPP does not under mine the reliability of the North American electric system.

Commenters stated that if the CPP is adopted and implemented, the proposed requirements will necessitate a monumental shift in how our country generates electricity, including premature retirement of coal

- based power plants along with an unprecedented expansion of natural gas

based and renewable electricity. The commenters stated that the rule could have significant negative impacts on the reliability and affordability of electricity because of th e scope of the changes necessary to achieve the emission requirements set forth in the Proposed Rule, and the short time frame to achieve the majority of these changes.

Commenters stated that it is unclear whether the proposed rule has taken into account f uture potential load growth from population shifts or increases in the electrification of states' transportation sectors and could leave states unable to comply with their performance standards. The commenters stated that electrification of the transportat ion sector is widely viewed as an important means of reducing GHG emissions from mobile sources, and EPA should not create a disincentive for states to pursue these policies. The commenters remarked that load growth and peak energy demand increases from fu ture population shifts and increases in electrification of the transportation sector mean that zero

- and low

- emitting sources will likely be operating at191 capacity and states will be forced to rely on higher

- emitting sources to meet their increased generati on needs.

Commenters stated very concerned about the reliability of the service we provide to their customers. The commenters noted that proposal is silent on providing for an increase in demand from an expanding population or the addition of an energy int ensive industry or customer and that energy efficiency and renewable energy will not be sufficient to attract any business to compete in these markets. The commenters stated that they are very concerned about the reliance on natural gas by substantially i ncreasing the operating capacity of the natural gas combined cycle plans. The commenters noted that there is a lack of understanding in the proposal about how natural gas electric generating units are used to ensure the reliability of renewable energy, pow er quality and intermittent operation which will exclude many units from being available for base load generation, and reliance on more natural gas generation will only exacerbate the problem.

Commenters stated that they question implementation of Building Block 2 and limiting use of coal burning plants could result in not meeting needs in times of high demand.

Commenters stated that Building Block 2 of EPA's " Best System of Emissions Reduction " assumes transmission operators increase the dispatch of NGCC plants to 70 percent of capacity. Commenters stated that the proposed rule applies to NGCC plants that " were in operation or had commenced construction as of January 8, 2014. Commenters stated t hat " uncertainties exist regarding what, if any, regulatory agency would have the authority to enforce a minimum utilization limit, or to design a permitting condition for specific sources. Commenters stated that because transmission operators employ " secu rity

- constrained economic dispatch, " environmental considerations do not directly factor into dispatch decisions. Commenters stated that instead, existing environmental regulations have had an indirect impact on dispatch decisions by altering the variable cost of electricity produced at EGUs. Commenters stated that in this regulatory and policy context, EPA proposes two ways for states to implement Building Block 2. Commenters stated that states can superimpose a de

- facto price on carbon through a variety o f market

- based mechanisms, which would increase the variable cost of dispatching higher

- emitting EGUs. Commenters stated that states can " impose limits on utilization or CO2 emissions at higher

emitting EGUs. " Commenters stated that they believe placing di rect limits on plants' operating conditions entails significant legal and practical difficulties for Indiana. Commenters stated further that directly limiting the number of hours a coal

- fired plant can operate puts a hard ceiling on the amount of electrici ty the plant can provide to the grid. Commenters stated that in periods of unusually high demand, Indiana's coal

- fired plants may be necessary to preserve the state's bulk power reliability. Commenters stated that during the early 2014 cold spell the vast majority of coal

- fired units that were slated for retirement because of EPA's MATS were running at full capacity to meet demand. Commenters stated that to the extent that displacing coal

- fired units with NGCC units causes the former to adopt a reduced oper ating profile, Building Block 2 could leave utilities without the tools needed to respond to extreme conditions.

Commenters stated an assessment of pipeline expansion was needed to meet the expected reliance on natural gas for electric generation. The comm enters stated that though the EPA concluded, in its assessment of Building Block 2, that major gas infrastructure investment is not needed to support the increased gas consumption by the power sector, there are some very192 obvious and critical regions of the country that will need major capital investments. The commenters gave the example the current pipeline capacity in the North East that is constrained as evidenced during the 2014 polar vortex where power prices skyrocketed, the region is in need of additi onal pipeline capacity.

Commenters said the current constraint in the North East does not address the scheduled, or anticipated, increase in gas demand from EGUs replacing baseload coal unit retirements, and that this gas generation requires dedicated pipe line capacity that lessens interdependency issues and decreases potential blackouts. The commenters said to get to a point where gas transmission capacity meets gas generation demand, there must be a thorough consideration of the time required for such pro jects to be constructed, and that an industry planning and analysis group will be able to look at the multitude of variables incorporated into critical infrastructure construction, which often include: Planning, Permitting, Financing, Purchase agreements, Construction, and Timetables.

Commenters stated that the over

- reliance on natural gas also creates a less

- diverse generation portfolio. Commenters stated that they believe that its portfolio should be diverse both in terms of geography and fuel (to the e xtent possible given its limited size). Commenters stated that the proposed rules rely heavily on natural gas for base load, reactive power, voltage support, inertia, and grid reliability. Commenters stated that this heavy reliance on one fuel for grid s tability leaves the grid and customers vulnerable to potential disasters like the gas explosions mentioned here, or the extreme cold of 2014 which caused a lack of natural gas supply for some generators as heating demands reached record levels, causing eme rgency conditions in PJM and ISO

- NE.

Commenters stated that there are concern related to reliability due to concentration on a single fuel and the time schedule to adjust infrastructure.

Commenters stated that they disagree with U.S. EPA's contention that the re

- dispatch to natural gas is a " routine and well

- established operating practice, " especially when the proposed rule is predicated on offsetting generation from coal sources to natural gas on a one

- to

- one basis. Commenters stated that examination of U .S. EPA's IPM results demonstrates this result (one

- to

one generation offset) is predicted only when significant amounts of coal retirements occur (46

- 49 GW) by 2020 nationwide. Commenters stated that they have strong concerns that shutdowns of this magnit ude on a short time

- table will have negative impacts on grid reliability and energy costs even though U.S. EPA emphatically states it " will not jeopardize system reliability. " Commenters stated that U.S. EPA is over

- estimating the ability to convert withou t any technical basis and knowledge of individual state capabilities.

Response 15 : The preamble to the final rule has a full description of the basis for Building Block 2 which is a gradual shifting of generation from existing fossil steam to existing NGC C within each region up to a maximum NGCC utilization of 75% on a net summer basis. In that section EPA discusses the technical basis for using this as a part of BSER, taking into account important factors such as reliability of the electric system, natural gas infrastructure, natural gas production potential, transmission planning and cost considerations. Please see Chapter V.D. of the preamble. In addition there is a Technical Support Document, entitled GHG Mitigation Measures Technical Support Document discusses technical and cost issues including a discussion of natural gas prices.193 Regarding the extreme cold or " polar vortex " experienced in early 2014, we note that all kinds of generation, not only gas

- fueled units, experienced difficulty.(See

: https://www.pjm.com/~/media/documents/reports/20140509

- analysis

- of

- operational

- events

and

- market

- impacts

- during

- the

- jan

- 2014

- cold

- weather

- events.ashx ) We also note that in a similar extreme cold weather event the following year, most operators had managed to overcome the problems that had been experienced only a year earlier. We further note that permit limits and electric transmission constraints are not unique to NGCC units.

With regards to the comment that it is unclear as to whether future population growth and industry demand growth are considered in the development of the CPP, the EPA does consider future electricity demand in the IPM modeling conducted. EIA forecasts are incorporated into IPM. See Chapter 3 of the RIA and documentation for the IPM model available at: http://www.epa.gov/airmarkets/powersectormodeling.html http://www.epa .gov/powersectormode ling

Comment 16: Commenters noted that the economics of the natural gas market are more volatile than the coal market, causing negative consequences on reliability and electricity costs.

Commenter s offered the following comments on t he economics of natural gas and the underpinnings of the market. According to commenter s , " Because natural gas prices were at or near historical lows when the proposed rules were drafted, any supply or demand issues will drive prices further upward. A mult itude of factors can drive significant gas price increases in the future:

• " Gas prices were recently low because of perceived supply [or oversupply] for the long term. If any event occurs to change the perception of plentiful supply or the actual level of supply, gas prices will rise. "

• " Gas supplies may tighten because at current price levels many gas producers are losing money or showing small profits. As a result they may cut back on production (or go bankrupt) to stop losing money and to reduce supply

- w hich will increase prices. Some experts believe that sustainable profits cannot be made on natural gas development until prices rise to more than $7.00 per MMBtu. "

• " Gas supplies may tighten because productivity decreases due to greater difficulty in extracting natural gas easily from wells that are drying up and new wells are simply less productive. "

• " New, more stringent environmental regulations and in some cases outright bans on fracking, the most common technique for extracting natural gas from sh ale, will increase gas production costs and potentially reduce productivity

- both of which will cause natural gas price increases. "

• " Demand for natural gas will increase as the economy continues to rise out of the Great Recession because natural gas is a feedstock for many products and is used194 by industrial facilities for heat and steam. Experts predict as much as 2.6 trillion cubic feet per year additional demand for usage in industrial steam and industrial combined heat/power applications. "

According to commenter s , " It is dangerous public policy for EPA to base regulatory decisions on the highly volatile economics of natural gas prices, particularly when the current prices are on the low side of the volatility curve. " Commenter s noted that if the rule " d rives more electricity producers to natural gas and away from the more stable and plentiful coal, the cost of electricity will rise. " Furthermore, commenter s noted that " it will be more difficult for utilities to switch back to coal because of the uncertai n regulatory environment for coal

- fired power plants and new coal

- fired power plants cannot be built if the proposed New Source Performance Standards for coal

- fired plants is ever finalized. "

Furthermore, commenter s stated, " EPA's directive to push greater investment in natural gas generation also ignores the high degree of sensitivity investment in natural gas based generation has to the cost of gas. " Commenter s agreed with EPA that " the vast majority of the overall cost of building and operating an NGCC facility is the cost of the natural gas " and " when natural gas costs are low, the economic driver for building NGCC facilities is very strong. " On the other hand, commenter s noted that " as gas prices increase, the drive to shift to cheaper baseload
g eneration facilities is equally strong " and " the economics are exacerbated by the fact that the stranded capital costs in an NGCC facility are so low which in turn provides an incentive to switch away from those facilities. " According to commenter s , " When gas prices increase, power producers will have strong impetus to turn to older, less energy efficient coal facilities for lower cost baseload generation " and " there will be fewer new NGCC facilities built, which then creates a supply risk, particularly if too many existing coal facilities have been shuttered. "

Commenter s noted that " there is great risk that new natural gas units cannot replace existing coal

- fired units that will be shut down as a result of this rule. " Commenter s noted that " Investors won't invest in new pipeline capacity unless gas suppliers will make long term commitments regarding gas shipments " and " suppliers are currently reluctant to make commitments under current market scenarios because prices are low (in many cases below production costs) and there is a fear of significant natural gas price increases created by increased demand and potentially tighter supply caused by power generators needing more natural gas. "

Commenter s stated, " Natural gas prices also tend to be more volatile than coal prices, putting remaining baseload electricity at risk once coal plants have closed. Although new supplies and infrastructure will help, price volatility will remain a challenge because of how many sectors of the economy use natural gas for various p urposes. Government policies that create more demand for natural gas will likely only worsen the problem. "

Commenters stated that in addition to the potential impact on electric reliability, the proposed regulations will also have potential impact on the r eliability of natural gas service. Commenters stated that the NPRM recognizes that a mandatory increase in utilization of gas

- fired generation will necessitate construction and investment in production and transportation capabilities. Commenters stated th at if those changes cannot be implemented as quickly and efficiently as assumed, the reliability of natural gas service could be compromised by the required shift to gas

- fired generation.195 Response 16: The preamble to the final rule has a full description of the basis for Building Block 2 which is a gradual shifting of generation from existing fossil steam to existing NGCC within each region up to a maximum NGCC utilization of 75% on a net summer basis. In that section EPA discusses the technical basis for using this as a part of BSER, taking into account important factors such as reliability of the electric system, natural gas infrastructure, natural gas production potential, transmission planning and cost considerations. Please see Chapter V.D. of the
pr eamble. In addition there is a Technical Support Document, entitled GHG Mitigation Measures Technical Support Document discusses technical and cost issues including a discussion of natural gas prices.

Comment 17: Commenters noted that the rule is lacking in fuel diversity, which will negatively impact reliability of the electric system. On the other hand, commenters noted that the proposed rule itself will contribute to the increase of fuel diversity.

Commenters noted " Diversity of energy supply is not on ly critical in keeping energy costs reasonable, it is essential in ensuring steady and reliable streams of energy to power our factories and heat our homes "

Commenters stated, " The proposed rule does not adequately consider fuel diversity and the long
term impacts of relying too heavily on predominant fuels such as natural gas and intermittent generation from renewables. "

Commenters stated, " A diverse energy supply is not only critical in keeping energy costs reasonable, but it is essential in ensuring st eady and reliable streams of energy to power farms and heat our member's homes. " According to commenters " For many farmers, energy represents a major input cost that can ultimately determine viability and prosperity. "

Commenters noted, " A prominent energy research group, IHS Energy, recently found that the current diversified portfolio of U.S. power supply lowers the cost of generating electricity by more than $93 billion per year versus a less diversified supply with no meaningful amount of coal or nuclea r generation. " [IHS Energy, The Value of U.S. Power Supply Diversity 34 (July 2014), available at http://www.energyxxi.org/sites/default/files/USPowerSupplyDiversityStudy.pdf .]

Commenters noted that " a reliable and economic power system should be composed of all categories of power generation

- fossil fired steam, natural gas simple cycle, natural gas combined cycle, nuclear, hydro, solar, and wind. "

Commenters noted, " We believe the U.S. needs an energy policy that emphasizes expanded production of all fo rms of energy and the development of new forms of energy. "

Commenters noted that " Adoption and implementation of the EPA's current plan introduces similar risks and consequences " as the Fuel Use Act from the late 1970s that " restricted construction of powe r plants using oil or natural gas and encouraged the use of coal, nuclear energy and other alternative fuels. "196 Commenters stated " Because Florida imports most of its fuel and is a peninsula, which limits opportunities to import power, fuel diversity is cr itical for electricity reliability in Florida. " Commenters noted the importance of fuel diversity during cold weather and hurricanes when natural gas supply may not be available. "

Commenters stated " Reliability requires a diversified portfolio of resources , so that when one generation technology is temporarily unavailable, others can fill in. " Commenters noted that " A diverse portfolio of generation technologies that includes fossil fuel sources and renewables can complement one another to create a reliable supply of electricity for customers. " Commenters concluded with " No single source of electricity generation is the answer. "

Conversely, commenter s noted that the rule can " spur further investment in clean energy technologies [and] increase energy supply diversity. " Commenter s also stated that " By employing increasingly competitive renewable technologies, along with energy efficiency and other low

- carbon energy technologies, states will be able to cost

- effectively meet the emission reduction targets of the Clean Power Plan, while diversifying their energy mix. "

Commenters stated that possibly the most troubling finding by the NERC that the rule may
create an over

- reliance on gas, narrowing the diverse fuel mix required to minimize the risk from unforeseen events and pointed out that NERC notes that fuel diversification is an important component of an " all hazards " approach to system planning, and the dangers of placing too much reliance on natural gas were evident when the polar vortex weather system swept down across the United States in January 2014. The commenters added that an alarming number of power plants were unable to operate at peak levels because they could not secure enough gas, straining reliability to the limit and forcing operators to take eme rgency measures. The commenters stated that many manufacturers were asked to curtail production or shut down altogether during that period. The commenters concluded as power generation shifts more towards more natural gas consumption, the NERC warns that t he industry will become increasingly vulnerable to natural gas supply and transportation risks.

Commenters said EPA's attempt to cut carbon emissions through re

- dispatch to lower or zero emitting EGUs could come at the cost of reliability which depends on maintaining a portfolio of various resources across the region. The commenters stated EPA's goal

- setting formula proposes to diminish fuel diversity by creating an energy portfolio consisting almost entirely of natural gas and renewable resources, which ca n be unpredictable and unreliable unless paired with other fossil fuel generation resources. The commenters referenced the System Operator for New England (ISO

- NE) who identified the three biggest factors that create risk to the reliable supply of power to New England as: natural gas dependency, power plant retirements, and renewable resource integration.

Commenters also referenced the success of the ISO

- NE's 2013/2014 Winter Reliability Program which provided compensation for EGU's to maintain oil invento ry throughout the winter months and FERC's approval of the program for the 2014/2015 winter. The commenters said the planned retirements of coal and nuclear plants in New England compound the region's reliability issues and increase the importance of fuel diversity.197 Commenters also referenced the ISO

- NE's finding that the factors contributing to natural gas fuel availability issues include inadequate infrastructure, unreliable fuel arrangements, limited storage, and out of sync markets, and these factors h ave a substantial effect on power grid reliability and wholesale prices. The commenters stated that under the EPA's model, New England as a whole is projected to have no remaining oil or coal resources, which would be highly detrimental to the region's rel iability as well as customer rates. The commenters stated many renewable sources are intermittent, cannot be dispatched on

- demand, and require reliable back

- up generation sources. With regard to resource inadequacies, the commenters gave the example of wh en ISO

- NE called on wind farms to reduce output during the heat wave of the 2013 summer due to insufficient transmission systems even though demand required additional resources to be dispatched. The commenters said the reduction was required due to insuff icient transmission systems.

Commenters also recommended EPA consider the effects of renewable resource goals on the reliability of the electric grid as many are intermittent, cannot be dispatched on

- demand, and require reliable back

- up generation sources.

Commenters stated that if implemented in the current form, the CPP will impact the reliability and diversity of the nation's electricity supply, which could dramatically destabilize electricity prices and energy security.

Commenters stated that NERC exp ressed concern about the CPP

- induced shift from coal to natural gas and renewables for power generation. Commenters stated that, as NERC explained, greater reliance on natural gas requires significant construction of new natural gas pipelines, while more t ransmission capacity is needed to deliver renewable generation to demand centers.

Commenters stated that the CPP will accelerate the ongoing shift toward greater use of natural

gas

- fired generation and variable energy resources (VERs) (renewable generatio n). Commenters stated increased dependence on renewable energy generation will require additional transmission to access areas that have higher

- grade wind and solar resources (generally located in remote areas). Commenters stated that increased natural gas use will require pipeline expansion to maintain a reliable source of fuel, particularly during the peak winter heating season. Commenters stated that pipeline constraints and growing gas and electric interdependency challenges impede the electric industry 's ability to obtain needed natural gas services, especially during high

- use horizons.

Response 17: With changes in relative costs of generation by fuel type the electricity sector is becoming more diverse, rather than less and the final rule will encourag e that movement toward a more diverse electricity sector. With lower natural gas prices, natural gas fueled generation has grown but as the cost of renewable electricity is falling as well renewable are becoming a larger share of the generation mix. We r efer the commenters to Chapter 3 of the Regulatory Impact Analysis for a discussion of EPA’s projections regarding fuel mix with an illustrative scenario under the final rule compared to the fuel mix in the base case. Regarding the intermittent nature of renewable energy, this was considered by EPA in quantification of building block 3 potential. See preamble section V.E.198 Comment 18: Multiple commenters noted that additional transmission infrastructure will be needed to accommodate new capacity and maint ain reliability. Multiple commenters noted that relying on the existing infrastructure implies that replacement generation will be built in the same place as the retiring units, which is not realistic.

Commenter s stated that " additional transmission infrastructure will be needed to maintain reliable operation of the grid. " Commenter s’ assessment " revealed 38 overloaded elements that
commenter s would be required to mitigate with transmission planning solutions. " Commenter s further noted that " portions of the system in the Texas panhandle, western Kansas, and northern Arkansas were so severely overloaded that cascading outages and voltage collapse would occur and would result in violations of NERC reliability standards. "

Commenter s stated that unless th e proposed rule is modified significantly, the commenter's transmission system impact evaluation indicates " serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP region, introducing the very real possibility of rolli ng blackouts or cascading outages that will have significant impacts on human health, public safety and economic activity within the region. "

Commenter s stated that " The remaining useful life of expensive infrastructure modifications undertaken to comply with other requirements imposed by EPA can and should be recognized in this rulemaking " and " utility and customer investments required by the government to effect these environmental remediations should not be confiscated by operation of a subsequent requi rement. "

Commenter s stated " The second issue is the ability of the transmission system to reliably transmit power to load. " Commenter s use d a " well

- established path

- rating process for the BES. " According to commenter s , " Those ratings may be affected due t o the changing resource mix, resulting in a need for path re

- rating and transmission utilization analysis to ensure available generation can actually be delivered to load centers. "

Commenter s noted the following concerns:

• " EPA inadequately considers electric transmission facilities in establishing the timeline for the interim goals in the draft CCP "

• " the energy efficiency assumptions relied upon in the CPP are unrealistic and not sustainable "

• " utilization of a 70% capacity factor for combined cycle units is unsound "

• " failure to consider the availability of the materials and labor for constructing the electric transmission and generation infrastructure required to comply with the CPP proposed rule "

• " the short time frame to meet interim goals by 2020 risks the reliability of the bulk electric system "199 Commenter s noted that " Existing natural gas pipelines are operating at near capacity today, and some regions have inadequate capacity. "

Commenter s explained that the BPS is a network of transmission lin es that allow electricity to flow from generating sources to customer loads even if certain sections of the transmission network are out of service. According to commenter s , the realignment of generation resources contemplated in the Proposed Rule may reve rse the flow of electricity on a transmission network. Commenter s asked that these flows be studied so they can be anticipated and managed. Commenter s specified a study conducted by the Brattle Group for SRP that evaluates the challenges of new flows on th e Western Interconnect with the loss of fossil

- fired generation in Arizona.

Commenters noted that increased dependence on renewable energy generation will require

" additional transmission to access areas that have higher

- grade wind and solar resources (gen erally located in remote areas). " Commenters also noted that " increased natural gas use will require pipeline expansion to maintain a reliable source of fuel, particularly during the peak winter heating season. "

Commenter s raised reliability concerns for s ix states, including parts of Texas. According to an evaluation by commenter s , additional transmission infrastructure will be needed to maintain grid reliability. The commenters stated that the proposed rule " will impede reliable operation of the electric transmission grid in the SPP region, resulting in violations of NERC's mandatory reliability standards and exposing the power grid to significant interruption or loss of load. "

Commenters noted that " the total re

- dispatch of all coal

- fired generation to NG CC will create an imbalance in the state's electrical transmission system " which can cause overloading of transmission lines, overheating of the lines, and failure of the transmission system. Commenters noted that the loss of coal generation will lead to " reliance on congested transmission " lines.

Commenters stated, " A robust electric transmission grid is an essential component of a CO2 emissions reductions strategy. " Commenters added that " renewable resources are often located in remote areas, some distan ce from load centers " and " if sufficient levels of transmission capacity are not built, utilities will not be able to fully access this country's substantial renewable electricity potential. "

Commenters added that the rule should " recognize that a robust transmission grid is critical for reducing emissions and ensure that transmission investments are appropriately monetized by permitting states to receive credit for consuming renewable electricity generated in another
state. "

Commenters noted that electri c transmission provides the following benefits:

• " available transmission capacity can reduce electric rates by adding new generation supply options and also can enhance grid reliability "

• " Investments in grid modernization are likewise essential for improvi ng operational and system efficiency. A modernized transmission system will enable200 new products and services that reduce emissions both by more effectively using electricity and enhancing grid resiliency. "

• " It will also serve as a platform to enable customers and markets to reduce CO2 emissions. "

Commenter s stated, " EPA fails to recognize the length of time necessary to incrementally identify and construct transmission, generation, and natural gas infrastructure adequate for the transformation of the currently adequate and existing energy supply infrastructure into that required by this proposal. "

Commenter s stated " Recent estimates of the cost of expanding grid lines are in the range of $1,000,000 per mile, and such projects could take several years to complete. "

Commenter s stated " Without upgrades to the Alaska Intertie, which is currently operating at or near capacity, the only generation resources that could replace the Healy coal generation are old, oil

- fueled generation resources in North Pole and Fairbanks. " Commenter s continued that " By contrast, Healy is co

- located with its fuel source, Usibelli Coal Mine. "

Commenter s noted that it takes more than a decision to build more pipeline capacity because the pipeline must be certificated, and rou ted, which could raise eminent domain issues.

Commenter s stated that " the increased development and utilization of renewable energy resources introduces a number of concerns regarding the need to upgrade and/or expand the existing grid. " Commenter s noted that the concerns become more significant when " coupled with the impact of all the building blocks on the grid in terms of changes to the location and capabilities of generation versus load centers. " According to commenter s , " NERC has identified a number o f issues that must be addressed in order to accommodate the increased development of renewable resources. "

Commenter s stated " replacing a significant amount of base load capacity and production without compromising reliability will require the rapid deve lopment of significant new infrastructure. "

Commenters noted " The Electric Reliability Council of Texas has noted that the proposed rule would result in an increase in energy costs of up to 20% by 2020. " However, according to commenters, that estimate doe s not account for " costs associated with transmission upgrades, natural gas supply infrastructure upgrades, procurement of additional ancillary services, energy efficiency investments, capital costs of new capacity, and other costs associated with the reti rement or decreased operation of coal

- fired capacity. "

Commenters stated that " renewable energy requires expansion of the transmission grid. "

Commenters noted that " The change in generation will almost certainly require development of new transmission to ensure operational reliability, but scheduling outages of existing facilities will be difficult if simultaneous upgrades across many systems are needed such that the time lines for commissioning of new transmission facilities may be delayed. "201 Commenters stated the proposed CPP does not adequately provide for planned integration of generation and transmission resources to meet the substantial CO2 reductions targets suggested by the EPA. The commenters stated that the retirement of base

- load resources and the prospect of their replacement by the re

- dispatch of intermediate

- duty generating facilities will require substantial natural gas pipeline and electric transmission infrastructure additions and improvements crossing the entire country and that the CPP p roposes to undertake this reinvention on an unprecedented timeline.

Commenters stated that Building block 1 will require existing coal generation sources ( " Coal Generation " ) to be modified and refurbished to achieve the required heat rate improvements. Com menters stated that to meet these requirements, existing Coal Generation will need to be taken out of service and then brought back on line after the modifications are complete. Commenters stated that transmission capacity will be critical to ensure contin ued grid reliability as the Coal Generation is taken out of service.

Commenters stated that Transmission investment will likely be necessary to ensure the availability of the Replacement Generation as it may not be possible to locate Replacement Generatio n at the sites where the Coal Generation will be retired. Commenters stated that natural gas generation may be sited near existing pipelines to avoid additional costs of gas transportation, and certain renewable generation sources like wind and solar will necessarily be sited where the renewable resources are abundant, even though those locations may be distant from load, because those types of fuel sources are not transportable. Commenters stated that as generation resources change, the existing transmissi on infrastructure may be insufficient to deliver the replacement generation reliably to consumers.

Commenters stated that with its diverse portfolio of energy assets they have maintained electric reliability in the area with minimal transmission support. S ince the transmission system in this part of the state was not built to support the community, service from their plants is necessary to preserve that electric reliability. Commenters stated that the closure of generation would make it very difficult to me et peak loads, and the Proposed Rule would compound the dilemma of inadequate power supply by indirectly restricting new generation from natural gas, and significant emphasis on greater wind and solar power, or some combination thereof. Commenters stated that regulations such as the Clean Power Plan must be crafted so as to preserve, not undermine, their continued vitality of Municipal Power Providers.

Commenters stated that RTOs are mandated by the Federal Energy Regulatory Commission (FERC) to ensure re liable supplies of power, adequate transmission infrastructure, and a competitive wholesale electricity marketplace. Commenters stated that commenters ’ area s are serviced by the Southwest Power Pool (SPP) and Midcontinent Independent System Operator (MISO)

. Commenters stated that SPP relayed the results of its assessment of the impacts that the Clean Power Plan (CPP) will have on reliability in the SPP region. Commenters stated that SPP concluded that " unless the proposed [CPP] is modified significantly, S PP's transmission system impact evaluation indicates serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have signif icant impacts on human health, public safety and economic activity within the region. "202 Commenters stated that SPP concluded: " if the assumed EGU retirements were to occur absent requisite transmission and generation infrastructure improvements, the power grid would suffer extreme reactive deficiencies ... that would expose it to widespread reliability risks resulting in significant loss of load and violations of [North American Electric Reliability Corporation (NERC)] reliability standards...even with gener ation capacity added to replace the assumed EGU retirements, additional transmission infrastructure will be needed to maintain reliable operation of the grid. This assessment revealed overloaded elements that SPP would be required to mitigate with transmis sion planning solutions. "

Commenters stated that the IPM model that EPA relies upon assumes the availability of transmission adequate to meet the changing pattern of electric supply and demand that the proposed rule would induce. Commenters stated that tra nsmission lines can take 10 years or more to site and construct. Commenters stated that there is simply insufficient time to ensure that electric transmission upgrades and new line construction, with their attendant permitting and regulatory approvals, can occur to meet an initial 2020 compliance schedule.

Commenters stated that the potential risks to reliability posed by the Clean Power Plan are illustrated by the latest Long

- Term Reliability Assessment by the National Electric Reliability Corporation (NE RC). NERC's December 2013 analysis, prepared prior to the development of this rule, cites concerns about increased reliance on natural gas, difficulties in integrating planned intermittent renewable energy sources within the existing bulk power system, and uncertainties associated with current and anticipated levels of energy efficiency and demand

response resources. Commenters stated that NERC's overall assessment identifies substantial portions of the eastern and western United States that are projected n ot to meet planning reserve margin requirements in 2023.

Commenters stated that as a vertically integrated municipal utility, providing not only generation, but also transmission and distribution to their customers, they own and operate 64 miles of 138kV and 66 miles of 69 kV transmission lines for the 80 square miles of their service territory. Commenters stated that their original system and substations were all built on the 69kV transmission line, from which the majority of their load is served. Comment ers stated that as part of the engineering and economic assessment of options to make APC and EE upgrades, they concluded the cost to retire these units was disproportionate to any gain. Commenters stated that one notable concern is the impact early retire ment will have on their transmission system. Commenters stated that analysis of removal of 31 and 32 generation concludes reliability consequences of sufficient magnitude to require significant transmission upgrades and to mitigate these reliability issues , they would be required to install multiple new connections between the 69 kV to 138 kV system. Commenters stated that two engineering alternatives are available but costly. Commenters stated that the least expensive option that is deemed necessary but ad equate is estimated to cost approximately $8,900,000 for upgrades that include new transformers and a new 138 kV line. Commenters stated that the other option, which provides greater benefits, is estimated to cost more ($12,216,800 in 2012 dollars). Commen ters stated that additional facility study would be necessary to determine a more accurate cost estimate, which would include a short

- circuit analysis and stability analysis, and would also require a very coordinated outage schedule to complete any upgrade s and additionally, these investments would203 have to be proposed analyzed and approved by the MISO, a time consuming and expensive
process.
Commenters stated that other logistical and financial issues arise with the concept of closing units 31 and 32. Comm enters stated that in addition to the transmission voltage step down costs, the building that serves units 31 and 32 also houses unit 33. Commenters stated that during a unit 33 outage, heat that is currently provided by units 31 and 32 boilers to the buil ding and would no longer be available. Commenters stated that while this may seem inconsequential, the estimate to install building heat is $1.5 million. Commenters stated that closing the plant is estimated to cost an additional $1M, to address closure is sues such as hydrogen and oil removal and other closure expenses. Commenters stated that sales associated with units 31 and 32 provide significant income to the City's general fund by contributing 30% of revenue of sales from these units. Commenters stated that revenue from sales associated with units 31 and 32 are also directed to fund their energy efficiency programs and therefore, early retirement of units 31 and 32 would require the City to determine not only how to pay for the transmission voltage step down, heating and closure costs, but also how to raise funds for the City services and their energy efficiency
programs.
Response 18: EPA believes the comments are primarily answered by the overall provisions of a long compliance period and flexible implementation in the rule. However, EPA is also sensitive to the need to maintain adequate infrastructure and to the time required to do so. EPA has

c onsidered these comments, along with others, and has modified the compliance period to provide for a later start year

– 2022 rather than 2020

– and modified compliance requirements so provide a smoother path during the interim period from 2022 to 2029. EP A believes these modifications will provide sufficient time and flexibility to build transmission and related infrastructure to meet the requirements of the rule.

Contrary to this comment, EPA does not rely solely on exist ing infrastructure or assume no ad ditional transmission will be built. Planning for new infrastructure is a regular part of electric power industry operations and EPA believes that infrastructure required for this rule is within the normal planning parameters and can be achieved at modest additional cost. With respect to Building Block 2 and natural gas, the rule is expected to lead to increases at existing facilities, which can lead to less need for new transmission than new facilities. In the case of Building Block 3, new transmission infrastructure is already being developed to meet current increases in wind and solar power; increases that occur under the rule can be efficiently incorporated into these existing planning processes. For further information on natural can and renewables infrastructure, see the GHG Mitigation Measures TSD. See also the State Goal Computation section of this RTC in Chapter 4 for more information.

Comment 19: Multiple commenters noted that the intermittent operating nature of renewables could negatively inf luence reliability. Commenters also asked for funding related to variable generation resources and reliability issues.

Commenter s stated, " Replacing coal with alternative energy sources like wind turbines endangers electric grid reliability because the win ds do not always blow. "204 Commenter s stated " The proposed Clean Power Plan will likely result in increased penetration of variable energy resources that will impact the operating characteristics and practices of the power system " leading to the need for " ad equate flexibility to integrate intermittency and to provide regulation and other system reserve services. "

According to commenters, " increased operation and storage ability are key drivers " to " increase the reliability of variable generation resources. " Commenters asked that " funding be available for research and development into the light

- weighting of wind blades and turbines and development of new battery technologies. "

Commenters expected that " renewable generation [will] be constructed in states with higher wind and solar capacity and therefore not in the end use states. " Commenters stated that " the transferring of renewable generation from one state to another to meet the CPP [will] result in additional system transfers which will increase the possib ility of system frequency variations, congestion and reliability concerns. "

Commenters also noted that " line loss will increase during the system transfer of renewables. " Commenters asked that EPA " incentivize states with low capacity factors for renewable energy by allowing for a multiplier for energy produced in the state. " As an example, commenters stated, " some states in their renewable portfolio standard allow for a 1.25 to 1.5 multiplier for MWh produced in the state " bringing " projects, employment and economic develop[ment] to rural areas in a state and provides for a more efficient electric system paid for by members/customers who actually utilize the energy. "

Commenters stated that " prematurely retiring large quantities of reliable coal

- based pow er while pushing intermittent renewable sources higher in the 'merit order of dispatch' could complicate the task of balancing loads and ensuring grid reliability. "

Commenters stated " Until there are massive breakthroughs in storage technologies, these in termittent sources have little hope of supplying base load energy. "

Commenters stated, " Renewables, at least at this point, are insufficient by themselves to ensure a reliable energy supply, so coal

- fired plants must remain open to fill the demand gap and to provide back

- up capacity in times of greater demand. "

Commenters stated, " One of the major issues with renewables is their impact on the electric grid's reliability due to the intermittent nature of their operation. " Commenters added, " Another is the i nability to match the times of peak electric demand with renewable energy availability (e.g., sun, wind, etc.). " According to commenter s , " As a result, the grid requires fossil units to be used as backups resulting in their operation at low loads and hence increased heat rate operating regime (i.e., low efficiency). "

Commenters noted " As resource mix changes, the reliability characteristics associated with different generation types must be considered " due to " the challenge of steep daily ramps associated w ith intermittent resources such as wind and solar generators all coming online or going offline at the same time. " Commenters also noted that " Some renewable resources205 generally operate at full production, rather than below maximum related output, which pr ovides less flexibility. "

Commenters cited NERC studies that show " as variable sources of energy generation increase, maintaining voltage stability becomes challenging " and that " voltage stability is essential to a reliable electricity grid. "

Commenters noted " The rapid, unrealistic growth in variable renewable resources assumed under the Proposed Rule will pose acute challenges for maintaining grid reliability. For instance, commenters noted that " dispatchable resources like coal and natural g as provide a number of essential reliability services, including reactive power support, voltage support, frequency and ramping responses, and inertial support. " According to commenters, " These are essential reliability services that variable renewable res ources cannot presently provide in a reliable and economical manner. "

Commenters noted that " Renewable sources, such as wind and solar, are variable in nature and, as a result, are less reliable in providing energy and grid reliability services such as voltage support, frequency response, and contingency support. "

Commenters stated, " EPA's assumption that renewable energy can be increased to offset coal plants like Big Stone probably raises issues with respect to physical inertia necessary for long dis tance transmission. "

Commenters noted that " Integrating large amounts of renewable resources into the bulk power system requires significant changes to power system planning and operations to maintain the adequate level of system reliability. " Commenters s tated that " The major attributes of wind and solar photovoltaic ( " PV " ) generation that are different from conventional forms of generation are variability and uncertainty of the available power output. " Commenters added that " It is vital to understand the specific attributes of wind and solar PV generation and resulting impacts on power system performance. " Commenters also added that " Large

- scale penetration of renewable generation will displace the self

- regulating characteristics of conventional synchronous generators and affect system stability. "

According to commenter s , some of the attributes of renewable energy that affect system stability include inertia, frequency response, regulation, voltage stability, and low and high voltage ride

through :

• Related to inertia, commenters stated, " The energy rotating machines such as synchronous and induction generators can store and release, helping system transient stability. According to commenters, the " latest converter control technologies in wind turb ine generators and PV inverters can emulate inertial behavior similar, but are limited in magnitude, when compared to that of synchronous machines. "

• Related to frequency response, commenters stated that " Synchronous generators are equipped with a turbine

- g overnor that provides corrective adjustment of power output in response to frequency excursion. " According to commenters,206 " Conventional generators designated as Automatic Generation Control units control the power output to increase when the system frequen cy falls below or rises above the target (60 Hz) frequency. " Commenters noted that without modifications that would reduce the amount of delivered power, " PV generation offers little to no frequency response, and wind generation offers virtually none unles s specifically designed to do so. " Commenters noted that recent studies suggested a need of over

- frequency drop response capabilities on renewable

resources. "

• Related to regulation, commenters noted that " Reliable operation of the power system requires con tinuous balancing of power supply and demand as demand for electricity ramps up and down. " According to commenters, " conventional generation provide[s] controlled output following the fluctuating demand " but

" wind and solar PV generation output is subject to instant available power from wind or solar irradiation. " According to commenters, " the output of wind and solar PV generation is seen by the operator as negative demand, and the effective net demand (actual demand minus output from renewable resources) is controlled by traditional generation. " According to commenters, " Managing the supply and demand balance can be challenging for system operators if the wind and solar PV output decreases as demand increases and vice versa. "

• Related to voltage stability, commenters stated, " Dependence on increasingly remote resources (such as those located in wind

- rich rural regions of Texas) creates the need for increasingly expensive transmission equipment to ensure stable and reliable delivery because of the long distan ce and weak grid conditions. " According to commenters, " The lightly loaded transmission infrastructure connecting concentrated wind resources in the Texas Panhandle is a prime example. " Referencing ERCOT's recent study, commenters noted, " 'The ERCOT panhan dle grid is remote from synchronous generators and requires long distance power transfer to the load centers in ERCOT's Stability challenges and weak system strength are expected to be significant constraints for the Panhandle Export. "

• Related to low and high voltage ride

- through, commenters stated " Renewable resources are required to stay connected after a certain disturbance period as specified in FERC Order No. 661

- A. " According to commenters, " Modern wind turbine generators and solar PV inverters are d esigned to have the low/high voltage ride

- through capability through the converter controls. "

Commenters stated that the notion that fossil fuel

- fired baseload units can be replaced with intermittent RE generation and EE measures is not appropriate, as RE and EE are not dispatchable, intermittent and cannot be used for reliability. The commenters stated that the backup generation needed would likely be natural gas, which would diminish CO2 reductions and lead to more investment for natural gas capacity and therefore higher electricity prices.

Commenters stated that electricity is fungible and that there is no way to distinguish between resources on the basis of environmental attributes. The commenters also stated that in many207 cases renewable or otherwise env ironmentally preferred resources are more expensive and that wind and solar at present cannot be dispatched at times of peak demand. The commenters further stated that the Clean Power Plan is likely to increase electricity costs and destabilize grid securi ty and power reliability due to overreliance on certain fuel sources and is likely to increase electricity costs and destabilize grid security and power reliability.

Commenters stated that renewable energy resources require significant amount of reactive

s upport and ramping capability and that EPA failed to consider the impact that increased reliance on renewable energy could have on increased reserve requirements, reliability of operations and the need for additional transmission infrastructure. Commenters stated that renewables require additional dispatchable generation (typically gas

- fired combustion turbines) as backup for reliability purposes and the combination will be significantly more expensive than the existing coal plants. The commenters stated that it is unclear if EPA considered the additional transmission requirements that would be required to serve the projected levels of renewable generation in Building Block 3, particularly if they are in remote areas.

Commenters stated that the pro posed guidelines seek to more than double the energy capacity that currently is provided by variable energy resources, like wind and solar which will significantly increase the demand for reactive power and ramping flexibility and make maintaining voltage stability more challenging.

Commenters stated that grid reliability issues associated with increased variable resources are not directly addressed in the EPA's proposed Building Blocks. The commenters stated that while conventional generators are able to respond automatically to frequency changes and historically have provided most of the power system's essential support services, a large penetration of variable energy resources will require maintaining a sufficient amount of reactive support and ramping capability. The commenters stated that more frequent ramping needed to provide this capability could increase cycling on conventional generation. The commenters stated t his could contribute to increased maintenance hours or higher forced outage rates, pote ntially increasing operating reserve requirements.

Commenters stated that renewables are an important source of electricity but large penetration of intermittent renewables will have a significant implication on many aspects of power system planning, opera tion and control. The commenters further stated that the proposed regulation will strand assets, raise the cost of operating due to load cycling, possibly raise the costs of meeting long term service agreements put in place before the onset of rapid and fr equent cycling and diminish future investments in clean air technology. The commenters recommended that systems be put in place to ensure that artificial market mechanisms or regulations are not established that encourages the deployment of assets favoring of a single technology that could aggravate the intention of ensuring a reliability electrical system.

Commenters noted that in Europe, only 4% of the wind installed capacity has a probability of being available 95% of the time, solar power is characteri zed is well correlated with hours of high demand however large fluctuations in output are observed, and wind may result in such a low value of net demand that forces a large number of thermal units to shut down only to have to start up a few hours later. T he commenters stated that by putting environmental dispatch as the first priority, Europe created an artificial market that encouraged the significant over

- investment208 in renewables and exaggerated the impact of renewables on grid integrity, so that product ion from renewables can only be limited by security reasons. The commenters stated that in other words, whenever the market price equals zero or a negative value, even if the optimal solution is to curtail wind rather than stop a conventional thermal plant for a short period of time, renewable production will be scheduled to receive the feed

- in tariff or premium. The commenters stated that this should not be considered acceptable and that conventional power plants should not be penalized for the inability o f non

- dispatchable power to meet peak demand. The commenters recommended that a different approach is needed to consider the cost of achieving environmental benefits, including subsidies that are not being considered.

Commenters discussed the challenges a ssociated with integrating new wind and solar resources, including the need for improved forecasting capabilities and the need to avoid curtailment to maintain operational reliability if sufficient ramping capability and operational reserves are not availa ble during periods of high renewable penetration. The commenters detailed and discussed the modeling scenarios assessed by ERCOT which found that if a $25/ton CO2 scenario is employed, intermittent renewable generation sources will contribute 22% of energy on an annual basis in 2029 and meet interim and final goals through the installation of a higher proportion of solar and lower proportion of wind resources. The commenters noted limitations to the model, including difficulties modeling the real world chal lenges of accommodating maximum ramps from solar and wind generation decline and accurately forecasting the proportion, size and location of resources. The commenters stated that if wind resources are the majority of new renewable resources, the reliabilit y impacts may be more severe because it results in lower net loads. The commenters also stated that regulation and non

- spinning reserves will need to be increased to address increased intra

- hour variability and uncertainty of power production from wind and solar, forecasting systems for wind and solar will become increasingly important, and market mechanisms for flexible generation to be reflected in real time energy prices will be needed.

Commenters stated that EPA's analysis does not take into account ope rational or reliability impacts, and the impacts of the required transmission infrastructure, associated with the change in renewable energy generation that would be required to meet the goal. Commenters stated that increased use of wind power will signifi cantly increase the demand for reactive power and ramping flexibility, which will increase cycling on conventional generation and often results in either increased maintenance hours or higher forced outage rates. The commenters stated that increased variab le energy resource may also result in the need for increased reserve margins, which is problematic because the proposed rule will leave several regions with significant deficiencies in their reserve margin. The commenters also stated that new transmission will be required to integrate new resources, which generally require a large amount of space and are often built in rural areas that are distant from the point of interconnection, with the existing electrical grid. The commenters added that in many cases v ariable energy resources will only be able to produce enough power to meet minimum voltage requirements.

Commenters discussed the potential impacts if solar is expanded to meet the CO2 target goals amount, and stated that it would result in insufficient f ossil generation on line to deal with system regulation and the loss of solar generation due to its variability.209 Commenters stated that impacts to the system from increased reliance on renewables must be included in the analysis of benefits included in th e Clean Power Plan. The commenters provided a detailed explanation of the impacts of renewables and how they can negate the intended benefits of changing fuel source, including results of a net load projection developed by California ISO. The commenters re commended that: (1) a penalty be assigned to intermittent energy sources that result in negative impacts on other power sources relied upon to meet net load demands, impacts on energy losses in the electric grid resulting from increased use of intermittent sources, and impacts on downstream equipment that decrease overall system efficiency and equipment life; and (2) benefits be included for facility owners that invest in improving the reliability and efficiency of the entire system that will result in a ne t decrease in CO2, such as upgrading transmission and distribution systems though the inclusion of power factor upgrading devices or incorporating grid

- scale energy storage, especially when it can be integrated into an existing generation facility.

Commen ters stated that DOE, EPRI, and several utilities acknowledge that high amounts of variable renewable generation (specifically solar, but also wind) present significant operational challenges to maintaining a secure and reliable electric grid, including th e possibility of bottom

out conditions in low load periods and ramping challenges, and that it is difficult to forecast long term capacities and impacts. The commenters remarked that the knowledge gained from the Sunrise project and other efforts is requir ed before the impacts of large amounts of solar generation to distribution, transmission, and generation systems can be fully understood and quantified. The commenters also noted that renewables can create the need for additional regulating reserves in the short term which could impose additional regulating reserve costs and increase consumer costs.

Commenters also noted that forecasting non

- dispatchable renewables can be far more uncertain than forecasting temperature or load. Commenters cited an October 2011 study by EPRI indicating that day ahead wind production forecast errors could vary from 10 percent to 25 percent or more. The commenters stated that forecast errors can only be overcome by having and using resources that are flexible enough to respond in the 30 to 60 minute timeframe which creates the need for " flexible " reserves in addition to the regulating and spinning reserves currently required by NERC standards.

Commenters stated additional reliable backup generation will be required to ensure g rid reliability and proper balancing since a significant portion of the additional renewable generation needed to attain Building Block 3 goals is wind. The commenters added that system frequency and voltages must be maintained within defined, extremely ti ght tolerances and wind and solar PV technologies present challenges to power system operators, owing to variability and uncertainty of their generation output on the timescales relevant to the task of maintaining system reliability. The commenters indicat ed that the proposal failed to consider these needed generation resources and how they would be acquired and financed.

Commenters cited, as an example, the California ISO, with its RPS of 33 percent of retail electricity from renewables by 2020, who indic ate its grid's flexible generator capacity is nowhere near what it needs to be to accommodate increasing wind and solar energy on the grid. The commenters stated that any capital investment costs for increased flexible generator210 capacity, transmission syst em build

- outs, and associated O&M cost increases, will be charged to rate payers via rate schedules and fees on electric bills, not to wind turbine owners.

Commenters stated that NERC concluded that Building Block 3 would pose several reliability challenge s:

• EPA's analysis relies on resource projections that may overestimate reasonably achievable expansion levels and do not fully reflect the reliability consequences of renewable resources;

• Increased reliance on of Variable Energy Resources (VERs) (e.g., wi nd and solar) can significantly impact reliability operations and requires more transmission and adequate ERSs to maintain reliability; and

• With a greater reliance on VERs, transmission and related infrastructure expansion lead times may not align with the NOPR's implementation timeline.

Commenters stated the EVA's analysis concluded that the flaws in EPA's assumptions suggest that as a technical and practical matter, the proposed rule is likely to be unachievable, and that the total costs will far exceed E PA's ten

- year projections (2020

- 2030): EVA found that the proposed rule would increase wholesale electricity costs by $274 Billion, non

- power natural gas costs by $80 Billion, and require additional capital costs for replacement power of $53 Billion.

Comm enters stated that they are concerned that the increased use of renewable power and NGCC units anticipated by the Proposed Rule will result in greater cycling of existing baseload units which were not designed to run at variable generating rates. The comme nters stated that operating at variable rates will increase the wear on plant equipment, in part due to metal expansion and contraction, which in turn will increase the occurrence of unscheduled outages and detrimentally impact reliability of the total electric system and that this unintended cycling will also lead to potential heat rate increases in coal units, contrary to the purpose of the Proposed Rule.

Commenters stated that grid reliability issues associated with increased renewable resources are not direc tly addressed as part of the EPA's proposed building block approach and as the penetration of variable generation resources increases, maintaining system reliability will become more challenging. The commenters stated that given that Arizona would be requi red to retire all of its existing coal

- fired generation in 2020 to comply with EPA's goals, additional assessments will be needed.

Commenters stated grid reliability issues associated with increased renewable resources are not directly addressed as part of the EPA's proposed building block approach, and based on recent industry studies and prior NERC reliability assessments, as the penetration of variable generation resources increases, maintaining system reliability will become more challenging.

Commenters stated ERCOT's analysis indicates that the impacts of proposed and recently finalized environmental regulations will result in retirement of legacy base

- load generation and development of new renewable generation resources will have a significant impact o n the211 reliability of the transmission system and will likely require significant upgrades to the transmission infrastructure of the ERCOT system. The commenters said retirement of resources would result in a loss of real and reactive power, potentially exc eeding thermal transmission limitations and the ability to maintain stable transmission voltages while reliably moving power from distant resources to major load centers. The commenters also said in the ERCOT region, it takes at least five years for a new major transmission project to be planned, routed, approved and constructed, and as such, the need must be seen at least five years in advance, though unit retirement decisions will likely be made with only the minimum required notification (currently 90 da ys).

Commenters stated units that are at risk of retirement from the proposed rule are located near load centers, and future transmission needs would be increased or accelerated by the likely retirements. The commenters gave examples in the Houston, San An tonio, and Dallas

- Fort Worth regions. The commenters also stated growth in renewable generation would also likely have a significant impact on transmission requirements and provided examples to illustrate costs on recent upgrades. The commenters concluded that wile recent upgrades provide transmission capacity beyond current generation development, the new circuits will not provide sufficient capacity to reliably integrate the amount of renewables necessary to achieve the requirements of the proposed rule.

Commenters concluded the retirement of existing capacity in ERCOT could result in localized transmission reliability issues due to the loss or fossil fuel

- fired generation resources in and around major urban centers, and will strain ERCOT's ability to inte grate new intermittent renewable generation resources. The commenters stated the CPP will also result in increased energy costs for consumers in the ERCOT region by up 20%. The commenters stated there is uncertainty regarding the implementation of environm ental regulations.

Commenters stated the CPP is likely to negatively and significantly impact the reliability of the electrical service they receive.

Commenters stated the RIA understates the cost of intermittent sources of power, such as wind and solar a s it is necessary to have available other power sources readily available and capable of supplying and balancing the total peak load of electricity to avoid disruption in supply. The
commenters said, these " intermediate sources " are effectively constantly spinning and consuming fuel. The commenters gave the example of the variable nature of wind power. The commenters referenced the Idaho Public Utility Commission who placed a cost on the integration of variable sources of about $21/MWh. The commenters stat ed improved energy efficiency at power plants (CPP Building Block 1) would likely be at least partially offset by efficiency degradation wrought by reliance on intermittent renewable energy technologies as a result of imposed efficiency degradation at powe r plants forced into grid balancing operation.

Commenters stated modeling of blackouts and brownouts indicates that the higher the percentage of wind power on the grid, the greater the unreliability of the grid and the greater the likelihood of blackouts a nd brownouts, and the risk increases exponentially, not linearly, with increasing levels of wind generation. The commenters referenced NERC as having recognized the operational impact of variable energy resources such as wind and solar, which are the bulk of CPP building block 3. The commenters stated that operationally, an increase in wind and solar212 resources continues to challenge operators with the inherent swings, or ramps, in power output, and system planners accommodate added variability by increasing the amount of available regulating reserves and potentially carrying additional operating reserves.

Commenters stated that Building Block 3 assumes state

- level increases in renewable energy generation based on regional renewable energy targets and the pre servation of " at risk " nuclear and under construction nuclear. The commenters stated that any significant changes involving new generation, retiring generation, and/or changes in the dispatch or operating parameters of existing generation can have signifi cant power system (grid) reliability impacts and that compliance with this proposal as currently drafted could significantly alter the generation mix. The commenters stated that assessments to determine which specific units may be retired and specific unit s will replace them cannot readily be performed and could vary depending upon the actual provisions in the final state plan. The commenters stated that transmission facilities will be required to reliably integrate new facilities into the system.

Commenter s stated they worked with members of the AUG to develop proposed improvements to goal calculations for Arizona. The commenters stated if EPA would implement these improvements, the impact to customers would be $2.4 billion less than if the commenters were forced the implement the rule as proposed by EPA. The commenters also stated it is important for EPA to support a rational path for carbon reductions that fully accounts for the complex structure of the country's current electric generation and transmissio n grid, natural gas supply network, and the recent infrastructure investments mandated by EPA.

Commenters stated concerns about renewables, nuclear, and infrastructure.

Commenters stated that that the proposal makes broad assumptions about access to renewa bles and fails to consider how increased renewable penetration will impact grid reliability and existing base

- load capacity. The commenters asked the following questions:

• Has the federal government conducted an analysis to determine the environmental imp act of building renewable energy systems at the scale envisioned in the proposal?

• Given the amount of land required by renewable energy systems, has the Administration considered that federal land permitting requirements may preclude or stall the developme nt of renewable projects?

• Has the Administration mapped out a transition pathway for renewables from an artificial to a competitive market?

Commenters stated that the proposal supports nuclear power as a key part of carbon dioxide emissions reduction strat egy and maintaining existing reactors and building new units is essential for many states to reach their assigned reduction targets; however, at least nine states have bans on new nuclear builds. The commenters asked the following questions:

• Will a viable , long

- term solution for disposal that would win public support and the necessary votes in Congress be brought forward, and if so, when?213 • If not, are the states with bans on new nuclear facilities expected to revise their laws?

Commenters stated that the pr oposal entails significant fuel switching from coal to natural gas, but most retiring coal plants cannot simply be replaced by natural gas plants. The commenters asked the following questions:

• What steps will be taken to ensure the necessary construction o f interstate natural gas infrastructure, including pipelines? Will you consider expediting the environmental impact study (EIS) process so that gas transmission can be built to serve constrained regions?

• What is the estimated cost of the gas infrastructure required to meet compliance targets under the proposal, and who does the federal government foresee paying for it?

Commenters stated that adding significant renewable resources to the grid could create additional interconnection, congestion and dispatch problems, threatening the reliability of the electrical supply. Commenters stated that congestion is currently a prob lem for the 800+ wind turbines located in and around White County, Indiana. Commenters stated that this problem has been acknowledged by other U.S. federal agencies. Commenters stated that a 2014 draft study on congestion by the U.S. Department of Energy f ound that in the Midwest " congestion results from high and growing levels of wind generation that cannot be delivered from western sources to more distant loads, and the lack of additional transmission to enable further development in renewable

- rich areas. " Commenters stated that they have no reason to believe EPA took these unique circumstances into consideration when drafting the proposed rule, which calls into question the appropriateness of the agency's expectations for Indiana.

The commenters stated th at the TSD states that, where needed for reserve margin, retiring capacity is replaced by new generation sources, including 10 GWs of wind. Commenters stated that the TSD incorrectly discusses wind generation as if it can provide the same capacity as basel oad resources. Commenters stated that it is inappropriate to assume that wind can provide capacity to ensure reliability. Commenters stated that periods of peak demand often occur when wind is minimal (i.e., hot summer days/nights with stagnant air conditi ons). Commenters stated that during the coldest winter days/nights, wind conditions do not consistently support generation. Commenters stated that during these periods, it is a high risk to assume that 10 GWs of wind will be available.

Commenters stated t hat wind and solar power generation naturally fluctuate depending on weather conditions and therefore require a solid alternative backstop to ensure that provision of electricity remains constant. Commenters stated that Building Block 3, as amended by the NODA, undermines this security by forcing the reduction of coal

- fired EGUs as RE utilization climbs. Commenters stated that the significant re

- dispatch of NGCCs also takes away some of the margin currently available to firm renewables.

Commenters stated t hat EPA's proposal to nearly double the state's RE sources in Building Block 3 poses additional problems for rules put in place by the SPP to ensure reliable operation of the214 regional grid. Commenters stated that based on criteria, they can only consider a pproximately 5 percent of its wind generation toward its planning capacity margin requirements. So, in order to replace a 500 MW coal plant with enough wind to meet the capacity requirements of the SPP, commenters stated that they would need to install 10, 000 MW of wind generation (which, again, under the Proposed Rule and NODA would mandate the reduction of coal

- fired generation, resulting in a vicious cycle.

Commenters stated that they do not believe that it has been adequately demonstrated that non

combustion renewable sources can serve as providers of base load power. Commenters stated that they do not believe that the differences in generation dispatched to serve various demand levels were considered fully in either the RE goal setting calculations or the IPM model. Commenters stated that there are significant grid reliability concerns that have not been adequately addressed. Commenters stated that a clear d istinction between base load and non

- base load capable renewable sources must be made in both the goal setting and IPM projections.

Commenters stated that EPA acknowledges some renewable resources provide intermittent availability. Commenters stated that EPA indicates that storage can serve to bridge the intermittent availability of those resources. Commenters stated that they believe EPA is overestimating the ability of electricity storage technologies and that it cannot be counted on to address reliab ility issues with RE sources. Commenters stated that electricity storage technology has not advanced to a degree that it can be reliably considered. Commenters stated that DOE
states: " Industrial standards for grid storage are in their infancy. Industry ac ceptance could also gain ground when we reduce the uncertainty surrounding how storage technology is used, and monetized, at scale. Ultimately, it will be the experience and real

- world use of storage that will provide the confidence and desire to expand in stalled storage. "

Response 19: The EPA addresses considerations for feasibility of the 2030 level of RE deployment, and the rate of progress during the interim period in getting to that level, in section V.E on building block three of the preamble to the final rule. RE feasibility is addressed in more detail in the GHG Abatement Measures technical support document. EPA found that these levels were supported by comments received, DOE analysis, and external studies evaluating the costs of and potential for h igher levels of RE penetration.

Comment 20: C ommenters stated that renewable generation sources do not interfere with the reliability of the electricity system.

Commenters stated, " despite being an intermittent resource, wind energy has proven to be a reliable source of energy " and has provided " more than 10 percent of the energy mix in multiple states across the country, and it has not led to any reliability concerns throughout those states. "

Commenters offered counterpoints to common arguments about voltage support and frequency stability services, two " Essential Reliability Services " (ERSs) that could be negatively affected by renewable generation sources:215 • V oltage support. According to commen ters, voltage support " mostly comes down to the grid's ability to balance 'real' power (the usable power on the grid) with 'reactive' power (the unusable power on the grid, also called phantom power). " Commenters cited NERC's ERS Task Force in stating that " generators attached to wind or solar plants also can provide both real and reactive power, and inverters attached to those generators can do so even when the plants are not producing any electricity. "

• Frequency stability . According to commenters frequen cy services " are primarily focused on maintaining the system at the standard frequency (in the United States, this is 60 Hertz, or power cycles/second). " Commenters noted that " Perhaps the most pervasive critique of renewable energy resources from a reliab ility perspective is that they are unsuited for providing ramping services because their output is constrained by meteorology. " According to commenters noted that

" Wind power plants in particular, but also large

- scale solar installations, are already requi red to have the capability to provide ramping services as required. " Commenters ended their argument with " This is not to say, of course, that it will necessarily be good policy to ask too much ramping from utility

- scale renewable generators, because doing so normally requires curtailing their power output (which reduces their overall capacity factors); but finding the right balance is part of the challenge to which EPA rightly expects states and grid operators can and will respond. "

Commenter s noted that " technical experts have concluded that variable renewable energy resources can represent as much as 50 percent of electric systems, provided that utilities make 'investment in additional distribution and transmission system infrastructure as well as change s in electric system operations, markets, and planning to achieve reliability.' "

Commenter s supplied detailed information related to the inherent reliability of renewable generati on sources in the next comment.

Commenters stated that to absorb more solar e nergy into the electric grid, there are ways that the electric grid can be adapted and as part of a balanced energy portfolio, solar can improve grid reliability and provide benefits to the existing energy infrastructure, including reducing transmission lo sses and relieving congestion on the grid. The commenters stated that advanced features enable solar PV to provide a state or region with additional system flexibility by responding to utility and independent system operator instructions. The commenters went on to describe operations by a solar provider.

Commenters stated that on an aggregated basis, utility scale and distributed solar resources provide significant reliability and transmission benefits to a state or regional grid. Commenters stated e ven i f solar output varies at a few individual locations due to localized cloud coverage, when the sum of the solar installations in a geographic area is assessed, the variability is reduced and can be managed by the grid operator. The commenters stated further that targeted deployment of solar generation in congested areas can provide relief to transmission and distribution systems, defer costly transmission upgrades, and help maintain grid reliability. The
commenters stated that solar technologies that requir e transmission investment often do not216 require pipelines, coal transport or the associated production and processing infrastructure needed by coal and gas industries, thus having the potential to save immense costs as the energy infrastructure in the U.S. ages and requires repairs.

Commenters stated that the CPP encourages the use of modern electricity resources, such as solar power and energy efficiency, which have many additional co

- benefits. The commenters noted that solar is a zero

- fuel resource, so sol ar energy protects customers from the risks of price volatility from fossil fuel generation and as a result, can provide important hedge value to customers, insulating them from potential future increases in fuel prices from natural gas and coal. The comme nters stated further that distributed solar power and energy efficiency benefit our transmission system and because they allow us to generate electricity right where we need it, these resources can lessen the strain on our aging grid and reduce the need fo r expensive new transmission and distribution infrastructure.

Commenters stated solar can improve grid reliability and provide benefits to the existing energy infrastructure, including reducing transmission losses and relieving congestion on the grid. Comm enters stated that there are several resources the EPA can look to for understanding how solar fits into the grid in terms of reliability and higher penetrations of renewable energy.

Reliability and Transmission Benefits of Solar: Commenters stated solar e nergy can be configured and operated to provide various reliability services and transmission benefits that will be essential to electric power system operations in conjunction with the state implementation of 111(d) regulations.

Commenters stated that on an aggregated basis and utility

- scale, distributed solar resources provide significant reliability and transmission benefits to a state or regional grid. Commenters stated that even if solar output varies at a few individual locations due to localized clou d coverage, when the sum of the solar installations in a geographic area is assessed, the variability is reduced and can be managed by the grid operator. Commenters stated that solar technologies that require transmission investment often do not require pi pelines, coal transport or the associated production and processing infrastructure needed by coal and gas industries. Commenters stated that this has the potential to save immense costs as the energy infrastructure in the U.S. ages and requires repairs.

Commenters stated that they do not agree with ERCOT or NERC that distributed generation represents a serious reliability concern in the near

- term future, to give one example, the 9 to 13.5 GW of new solar capacity ERCOT's model anticipates over the next fi fteen years is entirely utility

- scale generation, but to the extent some market changes are needed, we note again that grid operators are already examining the various changes that may be required.

Response 20: The EPA appreciates this comment and agrees that RE can be an important part of the mix of generation types in a system. Please see the GHG Abatement Measures technical support document for more information.217 Comment 21: Commenters noted the following details on the reliability of renewable generat ion

sources:

" With the potential for utilities in the Southeast to deploy renewable energy resources on their systems at a scale of 15% or more over the next decade, some may raise concerns about reliability risks or other operational considerations. Elsew here in the country, technical experts have concluded that variable renewable energy resources can represent as much as 50 percent of electric systems, provided that utilities make 'investment in additional distribution and transmission system infrastructu re as well as changes in electric system operations, markets, and planning to achieve reliability.'

Across much of the United States, these questions are systematically addressed through the planning processes of regional transmission operators (RTOs), in dependent system operators (ISOs) and super

- regional planning councils. For example, the US DOE SunShot analysis included GridView simulations to verify the basic hourly operational feasibility of high solar scenarios, confirming that electricity demand an d operating reserves are completely served in all areas during every hour of the year.

However, in the Southeast, several large vertically

- integrated utilities conduct their own resource adequacy, reliability and operational planning with minimal market ex posure. Due to historically limited solar and wind development, vertically

- integrated utilities in the Southeast have not provided analyses of renewable energy that are as comprehensive or similarly robust as those in RTO or ISO regions. While few of their planning studies have thoroughly examined renewable energy resources, these studies do often raise questions regarding renewable resource adequacy, reliability and flexibility.

A new study by SACE, provided as Attachment A, summarizes the information ava ilable from these utilities, and answers several key questions (laid out below) with analysis that could be used in a variety of energy planning activities.

• Renewable energy offers dependable on

- peak capacity that is effective at replacing conventional pow er resources. While the specific values vary by technology, a blended portfolio of wind and solar resources is likely to provide dependable capacity of approximately 50 MW per 100 MW of nameplate capacity.

• While the dependable capacity ratings of renewabl e energy would decline with large scale deployment, that decline will be gradual and predictable, and will remain substantial at generation levels of 10

- 20% of annual energy demand.

• While renewable energy resources are variable, they perform very well during high demand periods when utility systems need to use most of their generation resources. On average, regional solar and imported wind resources should generate at 50

- 60% capacity factors during these hours. At current and near

- term levels of renewable energy use, long

- term modeling analysis indicates no increased reliability risks at the system level

-- even during hours in which renewable energy production might be low. Even if rene wable energy is increased218 to meet 10

- 20% of annual energy demand, reliability should be relatively unaffected on balance. At these higher levels of renewable energy use, there would be a balance of increased and decreased risks that utilities would need to study and monitor. Hours with increased reliability risks would occur very infrequently, roughly one hour per year on average. That same level of renewable energy generation would also increase the number of hours in which reliability is ensured by about 80 hours per year.

1. Solar power is unlikely to cause some utility systems to effectively shift from a summer to winter peak. With responsible planning and management, renewable energy will not be a problem during a " polar vortex " type event.

2. Utility opera tors will not need to increase the ramping of convention generation in the near future. Up to around 10% of energy supply, utility systems may actually be easier to operate, since solar energy in the Southeast is closely aligned with system peaks. While th e transition point depends on the utility system and the resources applied, even at 10

- 20% of annual energy demand, the California " duck curve " problem of high ramp rates for conventional generation is unlikely to appear in the Southeast.

These questions have been answered by matching industry

- standard data about potential wind and solar generation to the historical generation data supplied by Duke Energy (in the Carolinas), Southern Company (including Alabama, Florida, Georgia and Mississippi subsidiaries ), and the Tennessee Valley Authority (serving portions of seven Southeastern states). The methods applied in these analyses apply industry

- standard techniques, enhanced to more carefully examine concerns about renewable energy development in the Southeast

. "

Response 21: The EPA addresses considerations for feasibility of the 2030 level of RE deployment, and the rate of progress during the interim period in getting to that level, in of the preamble to the final rule in section V.E which discusses building b lock three. It is further addressed in more detail in the GHG Abatement Measures technical support document. EPA found that these levels were supported by comments received, DOE analysis, and external studies evaluating the costs of and potential for highe r levels of RE penetration.

Comment 22: Commenters commented on the national security and cybersecurity risks that will be increased by the proposed rule.

Commenter s noted that " the U.S. power sector already faces serious cyber security threats. " For

e xample, commenter s noted, " Recently, Admiral Michael Rogers, director of the National Security Agency and head of U.S. Cyber Command, testified before a House Intelligence Committee hearing on cybersecurity threats that other countries are currently capabl e of launching cyber

- attacks that would shut down the electric grid. " Commenter s stated that " EPA must work with the NSA, Homeland Security and all stakeholders to ensure implementation of the Clean Power Plan, with its heavy reliance on natural gas, does not exacerbate this situation. "219 Commenter s stated that " Reliable and secure electric generation and transmission are essential to national security and the economy. " According to commenter s , " EPA is proposing sweeping unprecedented changes to the intercon nected power system, including the natural gas transmission system, yet has not conducted a baseline study of the cumulative interstate and intrastate effects of the proposed building blocks on stability, reliability and security. "

Commenter s also noted the national security aspects of the rule by stating, " the effect of applying the Proposed Carbon Rule also adversely affects national security with respect to critical energy infrastructure facilities by rendering that infrastructure less resi lient to natural or man

- made disasters. "

Commenters stated that as indicated above, the heavy reliance on intermittent resources and natural gas, raises serious reliability questions. Commenters stated that with reliability concerns come national security concerns. Commenters stated that if the grid becomes heavily reliant on natural gas, the natural gas supply as well as the pipelines themselves become targets for the disruption on our electric grid, whether by vandals or domestic or foreign terrorists. Commenters stated that in January, 2014, a TransCanada natural gas pipeline near Winnipeg ruptured and exploded. Commenters stated that the explosion not only affected TransCanada, but led to the precautionary closure of two nearby pipelines, resulting i n the loss or severe limitation of natural gas to more than 100,000 customers in the upper Midwest. Commenters stated that utilities responded by asking home

- heating and other customers to limit natural gas consumption. Commenters stated that markets res ponded with a dramatic jump in natural gas prices. Commenters stated that in May, 2014, a natural gas line belonging to Viking Gas Transmission Co. exploded, affecting customers again. Commenters stated that if those same customers were also reliant on t hat natural gas for electricity as well, the results would have been even worse.

Commenters stated that the proposed rule moves the nation away from centralized power to a more decentralized or distributed placement of generation. Commenters stated that with a centralized generation approach, security and reliability is protected by redundancy in the system, particularly with redundancy in transmission and distribution lines. Commenters stated that as the nation moves to a more decentralized approach, t here will need to be transmission and distribution upgrades not only to support the new generation being built, but also for reliability and redundancy. Commenters stated that if that redundancy in infrastructure is not met or delayed, it again opens the grid to a national security risk. Commenters stated that without sufficient redundancy, a portion of the grid may go down without the possibility of " re

- routing " the power around the disrupted portion of the grid to serve customers.

Commenters stated th at it would be highly irresponsible for EPA to adopt the Clean Power Plan in a vacuum, disregarding the fact that significant impacts on the electric industry pose a direct threat to the most critical missions of our national defense. Commenters stated th at the failure of EPA to evaluate grid vulnerabilities that can impact defense missions, and lead to major economic ramifications, demonstrates that EPA has not adequately evaluated the reliability issues created by its proposal. Commenters stated that un til it does so, in close collaboration with NERC and FERC, the proposal should be delayed indefinitely.220 Commenters stated that one of the biggest impacts of block 2 is that it means shutting down or reducing coal

- fired generation. Commenters stated that s hutting down coal

- fired plants, particularly in the short period of time allowed by the glide path and the interim goals, means that there is less base load on the grid to provide vital ancillary services. Commenters stated that it is assumed that given t he short time for compliance, it will force more reliance on and build

out of NGCC. Commenters stated that the decrease in diversity is also a decrease in reliability, as well as a possible national security issue. Commenters stated that the reliance on significant increases in intermittent renewables coupled with competing natural gas uses (peaking, base load, voltage support, harmonics, and dispatchable power, not to mention winter heating) puts the robustness and stability of the grid at risk.

Respon se 22: EPA is sensitive to potential implication of the rule for national security and cyber security risks, but does not agree that the rule increases these risks. The specific concerns expressed in this comment have been addressed in other responses in this section. For infrastructure concerns, see Response 18; for reliability concerns see Responses 7 and 9 in section 8.9 of this RTC

.

Comment 23: Commenters asked that skill certification standards be put in place to improve the reliability of the electr icity system.

Commenter s suggested that EPA consider requiring the industry to " adopt skill certification standards to ensure that all new and modified facilities we are going to rely on for our future energy systems " are " correctly designed, [and] prope rly constructed, which means the skills of the construction craft personnel should be specified, evaluated and verified or the end goal of reliability will again be put at risk. "

Response 23: The EPA agrees worker certification can help to ensure that that construction personnel are well qualified to perform high quality work which can benefit the program and achievement of state goals. EPA encourages states to ask for a demonstration that the work is performed by a proficient workforce. We further suggest that a good way of ensure such a workforce is to require that workers have been certified by: 1) an apprenticeship program that is registered with the U.S. DOL, Office of Apprenticeship or a state apprenticeship program approved by the DOL; 2) a skill cer tification aligned with the U.S. DOE Better Building Workforce Guidelines and validated by a third party accrediting body recognized by DOE; or 3) other skill certification validated by a third party accrediting body.

Comment 24: Commenters noted that th e proposed rule interferes with existing state authorities and mandates to provide reliable, affordable electricity.

Commenter s stated that " Implementation of the Clean Power Plan raises a host of complicated jurisdictional questions that promise to roil state oversight of the electricity sector in Montana. " Commenter s gave the following examples:221 • " EPA's proposal is silent as to which state body should implement the regulatory regime. " For commenters, federal environmental statutes have been administered i n Montana by the Board of Environmental Review and the Department of Environmental Quality while the Board of Environmental Review has rulemaking authority and the Department of Environmental Quality is delegated enforcement and administration of air quali ty laws. Commenters stated, " the proposed regulation lends no insight into which body should take the lead. " For example, commenters offered, " Were the Board of Environmental Review and the Department of Environmental Quality to adopt their traditional roles, and assume responsibility for the implementation of section 111(d), the two state bodies, in so doing, undoubtedly would override the Public Service Commission's legal authority to oversee the state's electricity market. " Commenters stated that " In all likelihood, the legislature would have to decide who leads by passing an enabling
statute. "

• " The Clean Power Plan also confuses Montana's participation in multistate power grids. " According to commenters, " the Clean Power Plan seems to require the Sta te to somehow deputize regional grid operators as part of its State Implementation Plan " and " it is unclear how this could be accomplished. "

• " EPA's Clean Power Plan would thrust into regulatory limbo the state's municipally

- owned utilities. " According to commenters, " these 'munis' would have to be part of any Montana strategy to achieve the Clean Power Plan, but they are exempt from rate regulation by the Public Service Commission. "

• " The proposed regulation is silent as to how Montana should incorporate its public power utilities into a compliance plan " and " any attempt to further regulate these entities no doubt would court a political battle. "

Commenter s noted " States have jurisdiction over retail markets, while FERC has jurisdiction over wholesale m arkets. "

Commenter s stated, " The Proposed Rule materially intrudes on Montana's authority to make determinations critical to the interests of Montana's retail and wholesale electric ratepayers, including LCG's members. "

According to commenter s , the rul e " violates both Missouri state law and federalism principles guaranteed to Missouri under the Constitution of the United States by Tying the Hands of Missouri's Public Service Commission from Managing the State's Electricity Grid "

. Commenter s added these specifics:

• " by setting emission rate limits that can be achieved only through aggressive outside

- the

- fence measures, EPA is attempting to substitute its judgment for that of our State's PSC, utilities, grid operators, and other Missouri decision

- makers wi th respect to allowable amounts of electricity from coal, natural gas, nuclear, and renewables. "222 • " EPA is presuming how much electricity Missourians should use. This is the job we have delegated to the PSC. If EPA requires transmission utilities to dispatch electricity to draw from 'greener' energy sources instead of the most cost

effective

-- for example, favoring drawing power from wind plants instead of coal plants

-- EPA would infringe on the authority of energy regulators at all levels. In this regard, the Proposed Rule would deprive the Missouri PSC of its ability to maintain constant and reliable electricity supply at the times it is most needed. "

Commenter s stated that the rule " threatens to disrupt long

- term, proactive planning of Georgia's
energy genera tion and distribution networks that will potentially lead to reduced reliability, supply disruptions, wasted resources and more expensive energy supplies. "

Commenter s noted that Missouri River Energy Services (MRES) is already " allowing municipal utilitie s to make their own resource decisions to meet state goals and mandates. " As a result,
commenter s added, they are " able to carefully study and select those resource projects that best fit the needs of its 61 member communities in four states, and do so without creating major rate shock. " According to commenter s , " The Clean Power Plan is the direct opposite of the thorough and deliberative process used by MRES and municipal utilities everywhere to provide reliable,
cost

- effective long term energy and ener gy services in a fiscally responsible and environmentally sensitive manner " and " gives no credence to reliability, planning horizons, and power quality. "

Commenters stated that wind and solar, the predominant renewables being deployed currently, are both intermittent resources which strain the system and require redundant resources to back up when they are not available. Commenters stated that the NERC report says that in 2008, Texas faced a near catastrophic event when it unexpectedly experienced a loss of all of its wind capacity at once when a major weather system moved through the state. Commenters stated that the NERC report says that dramatic events like that will only become more common with the massive deployment of renewables contemplated by the Clean Power Plan. Commenters stated that the NERC report says that in such a case, fossil resources will need to be called upon to try to pick up the load and avoid a voltage collapse, causing a widespread black out.

Commenters stated that Wyoming has v ast wind resources which it is eager to develop. Commenters stated that the NERC report says that since it has no significant load to utilize those resources, high voltage transmission must be built from Wyoming across multiple states to reach its intende d Nevada or California destination. Commenters stated that without that build

- out of transmission, the renewables demanded by the Clean Power Plan lack the critical infrastructure to move forward with a currently proposed 1,000 MW wind farm. Commenters st ated that it is irresponsible to take the approach that forces utilities and others to build renewables without first ensuring the reliability of the underlying infrastructure.

Commenters stated that one of the underlying assumptions of the proposed rule is that natural gas, renewables, and energy efficiency can each replace coal

- fired generation and that each are interchangeable with the other. Commenters stated that when it comes to reliability, the fact is that electric generation is not fungible as EP A states. Commenters stated that intermittent renewable energy cannot provide voltage control or dispatchable (reactive) power. Commenters stated that in 2008 when the ERCOT system came dangerously close to experiencing a black out, the grid frequency dr opped suddenly when wind production fell from more than 1,700223 megawatts to 300 MW and a system emergency was declared. Commenters stated that multiple power suppliers fell below the amount of power they were scheduled to produce. Commenters stated that this created problems moving power to the west from North Texas, leading to the
emergency.
Commenters stated that NERC explicitly points out that an increasing reliance on natural gas poses reliability concerns when, for example, extreme weather strains demand for electricity. Commenters stated that NERC reported that during Winter 2012

- 2014, there were over 35,000 MW of outages due to cold weather and fuel issues; 17,700 MW of those outages were caused by frozen equipment, controls, and frozen coal. C ommenters stated that a number of generators were exposed to extremely high fuel prices and interruptible gas transportation was often unavailable. Commenters stated that, as a result, uplift costs in organized electricity markets for the month of January 2014 rivaled the total uplift incurred by the RTOs for an entire year. (PJM reported energy uplift costs greater than $500 million for January 2014.) Commenters stated that in addition, record high natural gas price spikes drove up prices to electric end use customers, both in real

- time and over the past year, as higher wholesale electric prices were passed through in retail electric rates.

Commenters stated that the final rule should be modeled and studied by NERC, the RTOs, and by state utility boards t o simulate the impact on reliability. Commenters stated that the modeling should include recommendations and cost estimates for infrastructure and upgrades needed to maintain high reliability and power quality, including transmission and distribution equi pment upgrades and build

- out, plans to meet incremental and large load growth, and build

- out of transmission and natural gas infrastructure.

Commenters stated that in SPP's Reliability Impact Assessment of the EPA's Proposed Clean Power Plan dated Octobe r 8, 2014, the RTO reported on its analysis of the impact of the proposed rule. Commenters stated that its work indicates an expected increase in thermal overloads and low voltages due to EPA's assumed retirements, and that its summer peak modeling runs w ere not solving under a single contingency due to an extreme lack of reactive support. Commenters stated that under the Clean Power Plan, its minimum required reserve margin of 13.6% cannot be maintained and the reserve margin will fall to a

- 4.0% by 202 4, as it experiences a capacity deficit of approximately 10,100 MW. Commenters stated that SPP has emphasized in its Assessment that the Clean Power Plan will require an unprecedented level of coordination and study by local, regional and national exper ts before it can possibly be implemented.

Commenters stated that the NERC report emphasizes the need for a " Reliability Assurance Mechanism, " or a reliability " back

- stop " to preserve the reliability of the Bulk Power System (BPS) and manage impending ris ks to the BPS.
Response 24: The implementing regulations at 40 CFR part 60.26 require that each state plan show the State has legal authority to carry out the plan. The EPA notes that for state plans under CAA section 111d, usually it is the state enviro nmental agency that will be responsible for submitting and implementing a plan per the emission guidelines. However, under the implementing regulations, states may authorize a state governmental agency, or local agency,224 other than the air pollution control agency to carry out the plan if the plan demonstrates to the EPA’s satisfaction that such agency has the legal authority to implement the plan.

EPA encourages the State agency with appropriate legal authority to work closely with the other state agencies where a state plan affects those agencies area of jurisdiction. These other agencies are likely to include the state public utility commission and state energy offices and possibly others. Close coordination among these agencies will help to produce a hig h quality plan.

The ISOs/ and RTO’s are not under the jurisdiction of states. However the ISO/RTO Council has offered to assit the states as they develop and implement their plans. EPA encourages the states to discuss state plan design with these orga nizations and make use of their capabilities.

Comment 25: Multiple commenters made statements concerning FERC regulations and FERC jurisdiction under the FPA.

Commenter s asked that " EPA, in its dealings with FERC, seek ways to assess the effect of the proposed Rule on natural gas delivery systems and ensure natural gas deliverability, which is outside the control of electric utilities, is sufficiently reliable to permit compliance with the final rule. "

Commenter s stated that " FERC is legally

- designated with the authority and responsibility for grid reliability " and " The most efficient and productive manner of moving forward with the proposed Rule's implementation is for FERC and EPA to work closely and effectively together regarding the mandates imposed by the proposed Rule, mindful of reliability and other electric grid issues, for the benefit of the country, including the electric industry. " Commenter s noted that there are " aspects of the proposed Rule that have the potential to abridge or affect FERC's jurisdiction over grid reliability, specifically, and the utility industry, generally. "

Commenter s noted that FERC " has oversight over the re

- dispatch from coal

- fired EGUs to natural gas

- fired EGUs to the extent that it includes wholesale generation or interstate commerce transactions. " Commenter s noted that " to comply with the Clean Power Plan, states may have to submit plans that may contradict FERC requirements, which potentially sets states up for failure. " Commenter s asked for guidance to address th is potential conflict between the two agencies.

Commenter s stated that FERC and NERC " have the expertise on the reliability implications of altering the generation resource mix in the nation's energy markets. "

Commenter s asked that FERC be involved to ass ess " both the reliability implications of the Clean Power Plan as well as its implications for a host of issues that fall within FERC's jurisdiction. "

Commenters reminded EPA of the Energy Policy Act of 2005 where Congress recognized that

" the population d ensity of the New York City area, the percentage of the population that lives or works in very tall buildings and relies upon underground transportation, and the critical225 importance of institutions located there intensify the need to maintain the reliabili ty of New York's electric system. "

Commenters stated, " EPA's proposed CPP rule impinges on FERC's regulatory primacy over energy markets and ensuring the reliable operation of the bulk electric system " and " EPA should respect the equal and exclusive juris diction of FERC and not seek to dictate electricity policy that could have harmful impacts on grid reliability. "

Commenters noted, " Congress clearly intended FERC to have exclusive jurisdiction over wholesale, transmission and grid reliability because it granted the agency such jurisdiction in the FPA as modified by the Energy Policy Act of 2005. " Commenters noted that Congress " intended that the CAA be confined to the regulation of air pollution and not the energy sector writ large, which is under the sta tutory jurisdiction of FERC. " and " clearly intended that matters that can be left to the states must be left with the states. "

Commenters noted " States have jurisdiction over retail markets, while FERC has jurisdiction over wholesale markets. "

Commenters stated that " The Section 111(d) proposal presents significant jurisdictional challenges between the Federal Energy Regulatory Commission (FERC) and U.S. EPA, and in fact has been referred to as a 'jurisdictional train wreck. "

Commenters stated, " Under th e Federal Power Act, FERC has jurisdiction to promulgate and enforce mandatory reliability standards for the bulk

- power system, a power that FERC has delegated to the North American Reliability Council (NERC) " to " ensure reliable operation of the bulk

- powe r system. "

Commenter s noted that " States cannot force retirement of generation facilities if the facilities must run to ensure system reliability. " According to commenter s , " Even if states were to adopt laws completely prohibiting production by certain types of generation facilities, states could not guarantee that those facilities would retire or cease to dispatch " because Section 215 of the FPA grants FERC jurisdiction to " promulgate and enforce mandatory 'reliability standards' for the bulk

- power syst em, a power that FERC has delegated to the North American Electric Reliability Corporation (NERC). " According to commenter s , " If a generation facility proposes to retire, the relevant RTO must determine whether the retirement of that facility will result i n the violation of a NERC reliability standard or otherwise jeopardize the reliable operation of the bulk

- power system. " Commenter s continued by noted that " If the RTO determines that retirement of a facility will jeopardize the reliable operation of the b ulk

- power system, the RTO may require that the facility continue to operate. " Commenter s further noted that " an RTO may require a facility to continue running if it determines that the facility's retirement will result in the overload of transmission facil ities or unacceptable voltage levels. "

Commenters noted, " there is a direct conflict in the building block 4 energy efficiency measures and the objectives of FERC in Order 745 to encourage demand

- side participation in organized markets. " according to comm enters, " Allowing energy efficiency to participate in regional cap and trade markets could tie the concepts together, but as currently formulated the CPP does not allow a regional approach to energy efficiency. "226 On Order 1000, commenters stated that the ru le does not directly address transmission but will

" have other impacts on transmission planning and investment " including " changes in dispatch under building block 2 " that will " change flows on the transmission system, and could even overload certain lines

. " Commenters noted that " Utilities and RTOs with responsibilities for transmission planning and operations will have to take these changes into account, but without knowledge of what the final rules will look like or how plants will be dispatched, it is e xtremely difficult to do the kind of transmission planning envisioned and encouraged by FERC Order 1000. " Commenters noted that " It seems like the two agencies, EPA and FERC, have different visions of how the future electric industry should operate. "

Comme nters also commented on FERC's role in dispatch decisions: " FERC has regulatory authority over the rates, terms and conditions of wholesale power sales and interstate transmission " which includes " exclusive authority over RTOs (with the exception of the El ectric Reliability Council of Texas ISO which [is] exempt from FERC regulation under a provision of the Federal Power Act). " According to commenters, " Regulation of RTOs occurs primarily under sections 205 and 206 of the Federal Power Act, which require th at rates, terms and conditions of service be 'just and reasonable' and not unduly discriminatory " which traditionally has meant that

" rates be set at the lowest possible level consistent with adequate returns for investors. "

Commenters continued: " The just and reasonableness standard of the Federal Power Act is really an economic standard, but under the CPP, RTOs may be required to make planning and operational decisions based on environmental requirements. " According to commenters, " The changes in operatin g and other agreements that will be needed to allow the RTO to make these decisions will have to be approved by FERC under the just and reasonable standard. " According to commenters, " There is little precedent, and not much analysis to suggest how FERC can and will apply this economic standard to environmental decisions. "

Commenters commented on the Energy Policy Act of 2005, which gave the FERC authority to set reliability standards governing the nation's interconnected electric systems. Commenters noted t hat the rule " does not expect that reliability of electric systems will be harmed by requiring states to meet the proposed emission requirements " but " is silent about what happens if an operating RTO or utility is faced with violating emissions requirements or violating reliability standards or criteria. " According to commenters, " Operators are trained to ensure reliability first, but there may be situations where choices are necessary with economic consequences. " According to commenters, " FERC h as not yet said anything about its expectations for maintaining reliability under the CPP, nor has it initiated any studies. " Commenters asked that the two regulatory regimes be reconciled so that utility operators are not faced with the

" reliability versu s environmental penalty dilemma. "

Commenters stated, " EPA's proposed rule to regulate existing EGUs under Section 111(d) of the CAA impinges on the Federal Energy Regulatory Commission's ('FERC') regulatory primacy over wholesale energy markets and relia ble operation of the bulk electric system. " Commenters also noted, " EPA must respect the equal and exclusive jurisdiction of FERC and not seek to dictate electricity policy that could have harmful impacts on grid reliability. " Commenters noted

" Under secti on 215 of the FPA, FERC is the executive agency responsible for promoting the reliability of the nation's bulk power system. " Commenters continued, " To that end, FERC has certified the North American Electric Reliability Corporation ( " NERC " ) to develop man datory227 and enforceable reliability standards, subject to FERC's approval. " According to commenters, " It is thus FERC and NERC, rather than the EPA, which have the expertise on the reliability implications of altering the generation resource mix in the nati on's energy markets. "

Commenters noted " The Federal Energy Regulatory Commission (FERC) has over the past few years adopted policies to promote expansion of transmission lines " including " Order 1000 adopted on July 21, 2011. "

Commenters noted that " Secti on 215 of the Federal Power Act authorizes FERC to oversee the reliable operation of the Nation's interconnected electrical bulk power system " and stated that

" FERC's jurisdiction over the nationwide interconnected electrical bulk power system means that F ERC has a crucial role to play in ensuring that environmental regulation does not impair or impede grid reliability. " However, according to commenters, " there has been a troublesome lack of coordination between FERC and EPA regarding this proposal. " Commen ters shared the opinion of Southwest Power Pool (SPP) and North American Electric Reliability Corporation (NERC) that " significant concerns [with] the Proposed Rule as drafted could pose a threat to the reliability of the electric power grid. " Commenters n oted that FERC has exclusive jurisdiction to regulate wholesale sales of electricity and the transmission of electricity in interstate commerce. According to commenters, " The Proposed Rule contemplates that States will direct utilities to substitute the us e of higher emitting CO2 generators with lower

- or zero

- emitting generators, through some combination of shifting from coal

- fired units to increased dependence on gas generation, renewables and/or demand response. " Commenters noted that the rule " incorrect ly assumes that States can regulate activities that are subject to FERC's jurisdiction or are otherwise beyond their authority. "

Commenters noted that the proposed rule's environmental dispatch is " likely inconsistent with a long list of provisions in FERC 's Open Access Transmission Tariff (OATT) defining transmission customers' transmission rights, including the priorities different customers have for access to the transmission system. " As an example, commenters noted that " the OATT provides 'first

- in

- time ' priority to transmission capacity for generation resources that qualify as 'Designated Network Resources' under FERC's pro forma OATT. " According to commenters,

" priority to transmission capacity used for 'long

- term firm transmission service' over the bu lk transmission system is assigned transmission customers based on a standard that allocates transmission capacity to users (including utilities seeking to serve their own native load) based on a 'first

- in

- time principle' which applies " regardless of the fuel

- source of any generation that may be competing for access to the transmission system. " According to commenters, " a transmission customer using transmission capacity for purposes of delivering power from a coal

fired generation unit has priority access to transmission capacity over the incumbent utility that may want the same transmission capacity to serve native load with renewable generation as long as the transmission customer requested transmission service first. " According to commenters, " A utility cannot reserve transmission capacity for future but currently 'undesignated' network resources to the detriment to a transmission customers' prior

- queued request for transmission service. "

Commenters stated that " while FERC has made significant steps tow ards the integration of renewables, those efforts are in their preliminary stages, partially because of their potential to impact reliability. " Commenters also noted that " States cannot lawfully implement an228 environmental dispatch that conflicts with FERC tariffs, whether they relate to organized markets or any other FERC

- jurisdictional service. " According to commenters, " it is FERC, and not the States, that must control how renewable resources may be used to implement the environmental dispatch that the Pr oposed Rule contemplates. "

Commenters stated that it is vital to the security of America's electric power supply that EPA re

examine the grid reliability impacts of the proposed rule, particularly in conjunction with other EPA rules that are also closing our most dependable sources of electricity. Commenters stated that EPA has not done enough to ensure that the power grid remains reliable during the very aggressive implementation period it has proposed. Commenters stated that in the face of an unprecedent ed number of power plant closures, the EPA has consistently shrugged off potential reliability problems. In the rule, EPA sums up its position by simply stating, " the proposed rule will not raise significant concerns over regional resource adequacy or rais e the potential for interregional grid problems. "

Commenters stated that a number of stakeholders hold an opposite position. Commenters stated that the organizations, utilities, and regulatory bodies that have the most direct interest in grid reliability are warning EPA that the rule most certainly does raise significant concerns. Commenters stated that the Electric Reliability Council of Texas (ERCOT) issued a report criticizing the impacts of the proposed plan. Commenters stated that the Southwest Power Pool (SPP) similarly concluded in its own report on the rule that the impacts would be significant and problematic. Commenters stated that the North American Electric Reliability Corporation (NERC), the organization tasked with developing mandatory grid r eliability standards after the 2003 blackout, also issued a report in November that was very critical of the EPA rule and its effects on the grid.

Commenters stated that NERC concludes that coal retirement is problematic. Commenters stated that the report notes: The number of estimated retirements identified in the EPA's proposed rule may be conservative if the assumptions prove to be unachievable. Commenters stated that developing suitable replacement generation resources to maintain adequate reserve margi n levels may represent a significant reliability challenge, given the constrained time period for implementation. Commenters stated that new reliability challenges may arise with the integration of generation resources that have different ERS characteristi cs than the units that are projected to retire. Commenters stated that NERC is concerned that developing replacement generation sources during EPA's constrained implementation time period will be difficult, and it calls into the question EPA's assumptions. Given that, commenters stated, the agency should be prepared for a scenario in which more capacity is lost than it previously anticipated.

Commenters stated that FERC has issued warnings similar to those of IER's report. Commenters stated that the agency' s analysis is particularly important because FERC officials are the government's experts on grid reliability. Commenters stated that FERC Commissioner Philip Moeller, warned: Prices will definitely rise. Commenters stated he testified as well before the Se nate Committee on Energy and Natural Resources on April 10, 2014 and again affirmed the importance of grid reliability over anything else. Commenters stated that Moeller expressed skepticism about the proposed rule, saying that he feared that EPA had " grea tly underestimated the amount of power production that would be retired due to these rules. " EPA should thus seriously reconsider its estimates of how much power would go offline as a result of its rule.229 Commenters stated that regional grid operators acros s the country warn of the reliability risks associated with the sweeping retirements of coal

- fired generation that would result from the combination of EPA power plant rules, including the proposed rulemaking.

Commenters stated that the Midcontinent Indepe ndent System Operator (MISO) conducted an analysis which suggests that the proposal would put an additional 14,000 MW of coal

- fired power at risk of retirement, on top of the 12,600 MW already slated to retire by 2016 because of the MATS rule. Commenters s tated that the rule may increase the likelihood of a loss of load and an emergency situation. Commenters stated that EPA's analysis in the proposed rule is inadequate, and we urge the agency to seriously consider and address these issues.

Commenters stated that NERC claims that: compliance with the carbon regulations will not be possible without significant investment in new generation and associated major improvements to both the electric transmission and natural gas infrastructure to accommodate new gener ation. Commenters stated the results indicate that by 2020, SPP's anticipated reserve margin would be 5 percent, representing a capacity margin deficit of approximately 4,500 MW. By 2024, 10,000 MW beyond current plans would be needed to maintain their res erve margin. Commenters stated given the 8

- to 10

- year timeline needed to plan for and construct these additional resources, SPP has concluded that there is not sufficient time to achieve compliance with the EPA's interim goals, and that widespread reliabi lity impacts are likely.

Commenters stated SPP's conclusion that as a result of the assumed EPA retirements with no resource additions, the SPP network was so severely stressed by large reactive deficiencies that the software used in the analysis was unab le to produce meaningful results, which is generally indicative of voltage collapse and blackout conditions.

Commenters stated that ERCOT's primary concern with the Clean Power Plan is that the timing and scale of the expected changes needed to reach the C O2 emission goals could have a harmful impact on reliability. Commenters stated that specifically, implementation of the Clean Power Plan in the ERCOT region, particularly to meet the Plan's interim goal, is likely to lead to reduced grid reliability for c ertain periods and an increase in localized grid challenges

Commenters stated that EPA's Response to Grid Experts Does Not Address Their Concerns. Commenters stated that EPA has been summarily dismissive of concerns to grid reliability. Commenters stated t hat administrator Gina McCarthy gave a speech arguing that " for decades, power plants have met pollution limits without risking reliability. " Commenters added, McCarthy, however, ignores large differences between past regulations and the proposed rulemakin g. Commenters stated that the proposed rule will likely cause an unprecedented number of power plants to close without reliable sources of replacement generation. Commenters stated that McCarthy also fails to address the reliability effects of integrating renewables into the electric grid, arguing, " If anything, what threatens reliability and causes blackouts is devastating extreme weather fueled by climate change. " Commenters stated that her statement, however, stands in opposition to the Intergovernmental Panel on Climate Change (IPCC)'s latest report. Commenters stated that this Fifth Assessment Report notes that " there is limited evidence of changes in extremes associated with other climate variables since the mid

- 20th century. " Commenters stated that th e IPCC's opinion matters because it is frequently cited as the leading expert source on climate change assessments. Commenters stated that even if extreme weather230 events do occur, Americans will be unable to cope with them without reliable power to keep th eir homes and offices lit and warm. Commenters stated that EPA responded to NERC's concerns by arguing that " there have been no instances in which " the Clean Air Act standards have caused the lights to go out and the Clean Power Plan reflects the EPA's con tinued commitment to ensuring reliability as standards and programs move forward. " Commenters stated that a lthough EPA compares the proposed rulemaking to other rules promulgated under the Clean Air Act, it provides no basis for claiming that this rule wil l have the exact same effects as prior rules. Commenters stated that arguing that, because other rules did not cause blackouts or brownouts, the proposed rulemaking will also have no negative impacts on the grid, requires far more substantive evidence spec ific to the proposed rule.

Commenters stated that there appears to be a high likelihood that implementation of the proposed EPSP could threaten grid reliability and stability.

Commenters referenced NERC who has stated that the proposed rule could harm the reliability of the power grid, and who cautioned that the proposed rule contemplates a wholesale shift from coal combustion towards more efficient and cleaner

- burning combined cycle natural gas plants, an increase in renewables and big efficiency improveme nts to cut electricity demand through the 2020s. The commenters also stated the NERC has expressed concerns that such a rapid transition will damage capacity margins, make it harder to maintain aspects of power quality and leave the grid vulnerable to extr eme weather; and any one of these outcome would be detrimental to manufacturers.

Commenters stated that the Proposed Rule underestimates the critical importance of ensuring the reliability of the electric system. Commenters stated that building blocks 2 an d 3 involve the displacement of coal

- fired EGUs, which are the most reliable form of generation. Commenters stated that the risk associated with coal plant retirements was made evident during the severe cold weather events of the winter of 2013

- 2014. Comme nters stated that during this period of increased energy demand, wind produced only 4.7 percent of the nation's power while solar produced less than 0.2 percent Nuclear provided only 5 percent of incremental year

- over

- year generation, and hydroelectric out put declined 13 percent. Commenters stated that power generation from natural gas decreased when the resource was diverted for residential heating needs and gas prices soared to over three times that of coal (Btu basis). Commenters stated that only the ava ilability and operation of coal units scheduled for retirement over the next two years enabled the power sector to meet demand during periods of harsh weather events.

Commenters stated that before making any changes to the generation portfolio pursuant to building blocks 2 and 3, states, utilities, FERC, and reliability councils will need to assess resource adequacy, regional power flow, regional stability and voltage security, natural gas supply and pipeline constraints, operating reserves, system restora tion and blackstart protocols, and limited controllability of renewable generation. Increased reliance on natural gas over coal also will require expansion of natural gas pipeline transportation and storage capabilities. Commenters stated that potential re liability issues are most acute in areas where power generators rely on interruptible natural gas pipeline transportation.

Commenters stated that in November 2014, NERC published a white paper titled " Potential Reliability Impacts of EPA's Proposed Clean Power Plan, " in which NERC provided valuable231 insight into planned generation retirements, load growth, renewable resource development, and energy efficiency measures that impact CO2 emissions and the EPA's target

- driven assumptions. Commenters stated that they support NERC's conclusions and recommendations and reiterates herein that analysis must be performed to demonstrate electric system reliability before states commit to plans that include changes to their current generation portfolios.

Commenters wrote of concerns of accelerated retirement of units by resource owners in ERCOT within a short period of time rather retrofitting to comply with environmental regulations. The commenters stated if ERCOT did not receive early notification it could affect reliability of the ERCOT grid since coal resources provide essential reliability services, including reactive power and voltage support, inertial support, frequency response, and ramping capability.

Commenters stated that the Rule should require EPA to complete a reliabili ty study on a state by state basis to assess impact of rule requirements. Commenters stated that in so doing, EPA should invite and consider technical input from FERC, the North American Electric Reliability Corporation, RTOs and other balancing authoriti es, on potential electric reliability impacts of the section 111(d) program, as well as economic analyses from states on rate and other cost impacts of the program.

Commenters stated that as drafted, the proposal requires wholesale shifts in the way elect ricity is generated in this country and does so without regard to the need for expanded electric and natural gas transmission infrastructure. Commenters stated that the failure of EPA to conduct meaningful and substantive consultation with NERC and FERC t o ensure that the Clean Power Plan can be implemented without grave threats to reliability requires that the proposal be withdrawn until such time as those rigorous studies are completed and can fully inform the rulemaking process.

Commenters stated that as is demonstrated by the recent publication by NERC of its analysis of the Clean Power Plan, the proposal represents an unprecedented and unproven attempt to make wholesale changes to the operation of the electric infrastructure, which threatens the cont inued operation of the electric grid on a local, regional and national level. Commenters stated that in its report " Potential Reliability Impacts of EPA's Proposed Clean Power Plan: Initial Reliability Review, " November 2014 (hereafter " NERC Report " ), NER C provides a non

- partisan, objective evaluation of the potential implication of the proposed environmental regulations in an effort to

" inform regulators, state officials, public utility commissioners, utilities, and other impacted stakeholders. " Comment ers stated that this NERC Report establishes that the EPA proposal has not undergone a rigorous reliability evaluation, and that in initiating such an assessment, there are serious and complex reliability issues that have not been addressed in the Clean Po wer Plan, and that it should not go into effect until those concerns have been adequately addressed and resolved

Commenters stated that the NERC report says that the Clean Power Plan will force the premature closure of base load plants around the country t hat have not been included in existing NERC case study work to evaluate the impact of such closures, jeopardizing reliable power supply for millions of Americans. Commenters stated that even if we assume that energy efficiency will reduce demand by 1.5% n ationwide (an assumption with which commenters do not agree), that will be inadequate to fill the major void caused when hundreds of gigawatts of coal

- fired power232 plants close. Commenters stated that the NERC report says that " As reliance increases more o n natural gas for both baseload and on

- peak capacity, it is important to also examine potential risks associated with reduced diversity and increased dependence on a single fuel type. Commenters stated that the NERC report says that with this shift toward more natural gas consumption in the power sector, the power industry will become increasingly vulnerable to natural gas supply and transportation risks. "

Commenters stated that the NERC report says that the necessary transmission to support natural
gas cannot be permitted, sited and constructed in time to avoid a major shortfall in resources around the country, a concern that NERC details throughout its report. Commenters stated that the NERC report says that instead, the Clean Power Plan's " analysis " " assumes that adequate transmission capacity is available to deliver any resources located in, or transferred to, the region. "

Commenters stated that independent experts and key stakeholders are increasingly alarmed that the Proposed Rule will dramaticall y increase electrical grid stress and reliability challenges. Commenters stated that the North American Electricity Reliability Corporation ( " NERC " ) reviewed the Proposed Rule and concluded that the agency's proposed regulatory deadlines

" would increase th e use of controlled load shedding and potential for wide

- scale, uncontrolled outages. " Commenters stated that the Southwest Power Pool ( " SPP " ), which is the Federal Energy Regulatory Commission ( " FERC " ) approved Regional Transmission Organization ( " RTO " ) f or AECC (NSA and NYS's wholesale electricity provider), has determined through modeling that without significant changes, the Proposed Rule, will result in " numerous thermal overloads and low voltage occurrences " in the SPP Region, and that the Proposed Ru le will have

" serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have significant impacts on human health, public s afety and economic activity within the region. " Commenters stated that during winter 2013

- 1014, extreme cold temperatures put a tremendous strain on the electrical grid and resulted in a price spike on the electricity spot market covering the mid

- Atlantic and parts of the Midwest. Commenters stated that specifically, the cost of producing electricity in those areas climbed above $1,000 per Mwh for the first time as cold temperatures hit the East Coast. Commenters stated that according to the Energy Informat ion Administration, the average wholesale price in that region last year was $42/Mwh. Commenters stated that this price spike was due to strong demand for natural gas for heating and electricity production.

Commenters stated that they are amazed that U.S. EPA would not formally analyze information obtained during EPA, FERC, DOE meetings regarding reliability, as it appears U.S. EPA has also not done under this proposal. Commenters stated that FERC reported " c oncerns and uncertainty related to potential reliability and price impacts associated with environmental regulations. " Commenters stated that PJM coordinates the movement of electricity through all or parts of Delaware, Illinois, Indiana, Kentucky, Marylan d, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. Commenters stated that this geographically concentrated retirement is occurring all within the PJM region yet U.S. EPA made no att empt to specifically analyze reliability concerns within the specific regions under this proposal233 Commenters stated that IRC prepared a proposal that would provide a means to assess and mitigate reliability impacts resulting from compliance action. Comment ers cited the NERC report that assesses reliability in response to the rule.

Commenters stated that to promote open and competitive markets, FERC encouraged the formation of System Operators. Commenters said in areas of the country where the grid is
contr olled by a System Operator, the System Operator facilitates " the interstate sales of electricity products, including energy and capacity, by managing marketplaces where those products may be exchanged. " Commenters said the System Operator also " manages th e flow of electric energy through the regional power grid, 'dispatching' energy in real time to where it is needed. " Commenters said in regions controlled by System Operators, these energy and capacity auctions determine the rates for the transmission and sale of energy in interstate commerce. Commenters said accordingly, these wholesale electricity and capacity markets are subject to the exclusive oversight and regulation of FERC.

Commenters stated, EPA claims that the Proposed Guidelines were " substanti ally informed by the extensive input from states and a wide range of stakeholders . . . since the summer of 2013. " 79 Fed. Reg. at 34,835; see also I d. at 34,845

- 51. Commenters said, it is clear, however, from statements made by FERC commissioners, includi ng their sworn testimony before the House of Representatives' Committee on Energy and Commerce, Subcommittee on Energy and Power on July 29, 2014, that consultations with FERC have been extremely limited. Commenters said, it appears that only the office of FERC's Chairman had any contact with EPA and that those contacts were both limited and " private and paperless. " Moeller Testimony at 7. Commenters said, no other Commissioners appear to have been involved in, or made aware of the details of, the limited F ERC staff communications with EPA.

Commenters stated, the Commissioners' testimony and responses to written questions also make it clear that FERC: (i) was not involved in preparing the Technical Support Document ( " TSD " ) entitled " Resource Adequacy and Re liability Analysis, " EPA

- HQ

- OAR

- 2013

- 0602

- 0368, that accompanied the Proposed Guidelines; (ii) has not conducted an independent study of the Proposed Guidelines' reliability impacts; and (iii) did not verify the feasibility of EPA's optimistic assumptions concerning the major new electric transmission and gas pipeline infrastructure development that must take place for the emission reductions contemplated by the Proposed Guidelines to be achieved (which are discussed separately). Commenters said, to date, E PA has also not accepted requests that FERC be given a formal role, along with NERC and other entities with reliability expertise, in discussing the reliability implications of the Proposed Guidelines. Moeller Testimony at 6 ( " Going forward and at a minimu m, I will reiterate my request for a formal role for the Commission with the EPA as it relates especially to the reliability implications of the proposal. Convening the appropriate reliability experts (including the Commission, and possibly the North Ameri can Electric Reliability Corporation, electric wholesale market operators, power generators, electricity consumers, along with input from the states) to examine the reliability implications is necessary to avoid additional unintended
consequences. " ).

Com m enters stated, Commissioner Clark recently reiterated that EPA has not seriously engaged FERC on reliability issues. Commenters said, most recently, the Chairmen of the House Energy and Commerce Committee and the Subcommittee on Energy & Power and the Rank ing Member234 of the Senate Energy & Natural Resources Committee wrote a letter to FERC Chairman Cheryl A. LaFleur that noted the evident lack of substantive outreach by EPA. Commenters said, the letter asked FERC to take action to " begin to mitigate EPA's failure to engage FERC and other relevant agencies . . . . "

Commenters stated, EPA's refusal to consider FERC's expertise regarding wholesale power markets, transmission operations, the real world impact of transmission constraints, and the BPS is inexpli cable, arbitrary, and capricious. Commenters said, Article III courts frequently recognize and defer to FERC's expertise in these matters. Commenters said, EPA's failure to show similar deference has resulted in a proposed rule that fundamentally misunders tands the technical realities of the modern utility sector and is therefore not the product of reasoned decision

- making.

Response 25: EPA disagrees with these comments where they suggest a conflict between FERC and this final rule . The final rule will no t conflict with FERC jurisdiction or regulations. Commenters raise concerns about the final rule and FERC jurisdiction over grid reliability and wholesale market dispatch. There concerns are simply not valid; EPA regulations have successfully coexisted w ith FERC regulations to ensure that grid operations are both secure and environmentally sound, and will continue to do so under this rule. Contrary to these comments, the final rule is entirely consistent with continuing operation of security constrained economic dispatch in FERC jurisdictional markets, and does not prescribe anything resembling economic dispatch. On the contrary, the final rule assumes planning for transmission will occur along the lines of FERC transmission planning regulations, such as Order 1000, which provides planning mechanisms to incorporate public policy initiative like this final rule.

EPA also relies on FERC designated or regulated entities, such as NERC and the Reliability Authorities, to provide information and assistance in e nsuring that state planning considers reliability. EPA works closely with RTOs in implementing current EPA regulations such as MATS and expects to have a continuing coordination during the implementation of this rule. EPA has carefully considered reliabil ity in the development of this rule, and does not believe there are conflicts between the rule and reliability.

Comment 26: Multiple commenters noted the importance that reliability plays in rural America, especially with respect to farming, ranching, a nd agriculture. C ommenters noted that the rule will violate the Rural Electrification Act (REA) Mandate to Provide Affordable and Reliable Power to Rural America.

Commenter s noted, " Texans who live in the rural areas of my county can face greater electric

reliability challenges than some more urban areas of the state. " Commenter s noted that " Rural electric cooperatives in parts of Texas have often struggled over the years to have adequate and economical sources of generation and transmission to provide to their members. "

Commenter s further stated that the rule will " result in the significant reduction in either the operation of or retirement of nearly all coal

- fired EGUs, many of which are owned and operated by rural electric cooperatives. "235 Commenter s stat ed that the rule " violates the [Rural Electrification Act] and over sixteen additional statutes establishing the federal mandate that rural electric cooperatives reliably serve rural America. "

Commenter s noted, " Tennessee farmers need an efficient, reliabl e, and affordable energy supply. Energy is a major expense for producers of crops, livestock, poultry, and dairy commodities. " Commenter s noted that " Agricultural industries that supply, process, and produce agricultural products and input items also are m ajor users of energy " and this proposal " affect[s] the bottom line of farmers " and " places Tennessee farmers at a competitive disadvantage to producers in other nations. "

Commenter s stated, " Farmers and ranchers depend on reliable as well as affordable so urces of energy to operate their businesses and depend upon stable input costs to bring agricultural products to American and worldwide consumers. "

Response 26 : The EPA is well aware of the concerns about the CPP in rural America. Fortunately the rule is not expected to have a large impact on electricity prices. Further the USDA has programs that can help rural electric cooperatives and others in rural America invest in renewable generation and in energy efficiency which can both help states achieve th e goals of the CPP. We note that Texas, with its well

- developed energy efficiency program and substantial renewable generation is well situated to respond to the CPP.

Comment 27: Commenters noted that the role of regional transmission organizations (RTOs ) should not be given the authority to create new markets as compliance vehicles.

Commenters noted that " the creation of new, mandatory markets or trading platforms run by the RTOs will significantly complicate the already overly complex competitive energ y market and could very well add unnecessary costs. " Commenters voiced concerns with " the lack of consumer focus and transparency in the mandatory energy and capacity markets that some RTOs run today, as well as how the RTOs themselves are operated and gov erned " and asked that those approaches not be broadened. Commenters also noted that it is " important to balance the reliability and environmental compliance with the ultimate costs on load (consumers and wholesale customers). "

Response 27: The EPA recognizes that the RTOs and ISOs can play a valuable role in CPP compliance. The final rule suggests that the states consult with them as to the reliability impacts of state plans as they are developing those plans. States can chose to incorpora te a larger role for the RTO’s in their state plans if they see that as appropriate; however, regional transmission organizations in wholesale electricity markets are regulated by FERC, and any new markets run by RTOs cannot be created except through FERC orders under its rules for such orga nizations. The final rule, itself, does not give them authority to run trading platforms.

Comment 28: Commenters commented on the plan's reliance on nuclear power plants.236 Commenters stated that there were no issues " supplying places in the Northeast with nuclear
energy " during the Polar Vortex.

Commenters noted that " EPA's conception that nuclear power is reliable is not applicable in the real world, because it is a logical fallacy to assume that only 6% of a reactor 's capacity would be available. "

Commenters noted that nuclear plants are more expensive to operate than coal or renewable
energy resources.

Commenters noted that EPA is unlawfully encroaching upon the regulatory domain of the NRC and " EPA should avoid tre spassing on NRC's unique regulatory domain by presuming a positive outcome for NRC license renewal reviews. " According to commenters, " Even assuming for purposes of argument that such encroachment is lawful, it would be extremely poor public policy for the EPA to build extended operation of aging and increasingly dangerous reactors into its regulatory scheme as a fait accompli. "

Response 28: EPA acknowledges the comments and has determined that the BSER for the final rule will not include the proposed provisions for nuclear units in the setting of state goals. Please see VIII. G .2 of the preamble for further discussion of the flexibility states have in developing state plans appropriate to ensure compliance, the requirement that states consider system reliability in plan submittal, and a discussion of a Reliability Safety Valve.

Comment 29: Multiple commenters noted that the forced retirement of coal

- fired generation will have a negative impact on reliability in the energy sector and would result in a large amount of stranded costs.

Commenter s noted that the impact of unit retirements is high. The commenter s noted that the number of retirements could be underestimated by EPA because of other environmental regulations (e.g., 316(b) rule, CSAPR, MATS, FI P for Texas, the Regional Haze program, etc.).

Commenters stated that " Interior Alaska uses coal fired power plants because it is the only available energy source capable [of] generating cost effective, on

- demand power. " According to commenters, " Massive n atural gas reserves are available hundreds of miles north at Prudhoe Bay, but until a multibillion dollar gas pipeline is built that fuel is not an option. "

Commenters stated, " Fossil fuels, such as coal, and environmental protection are not mutually excl usive

-- Georgia's energy portfolio is evidence of this fact "

. According to commenters, coal

- fired generation is critical to the reliability of this nation's energy sector. According to the commenters, if a " significant portion of this nation's coal

- fired
g eneration is forced into retirement, which is a realistic consequence of the Existing Source Proposal, then there may be catastrophic failures of the grid in response to extreme weather events such as the polar vortex that occurred this past winter. " See N ERC, Potential Reliability Impacts of EPA's Proposed Clean Power Plan (Nov. 2014) at 10.237 Commenters noted that " Coal

- fired generation has proven for decades that it is a reliable, predictable source of energy " because " our nation has plentiful supplies of coal, which keeps costs low and predictable " and " because the fuel is solid and tangible, it is easily transported and stored. "

Commenter s noted that coal is crucial due to its:

• availability

• affordability

• reliability

• delivery advantages over other sources

Commenters noted that " Coal

- fired capacity provides reliable base power to help stabilize the electrical grid and a shift away from coal toward less predictable renewable energy sources as planned by this proposed rule will be problematic. "

Commenters note d that " dispatchable resources like coal and natural gas provide a number of essential reliability services, including reactive power support, voltage support, frequency and ramping responses, and inertial support " that " variable renewable resources cannot presently provide in a reliable and economical manner. "

Commenters listed multiple reasons that coal should not be eliminated from electricity generation:

• Clean . According to commenters, " Since 1970, coal generation in this country has tripled, but r egulated emissions have decreased more than 90 percent " and work continues on " creating more efficient, cleaner burning coal

- fired technology. "

• Reliable . According to commenters, " Coal has provided more than 75 percent of Missouri's electric power for decades because it is a highly stable, reliable base

load fuel. " Commenters noted that during the Polar Vortex, " coal fired

- plants were the only sources of energy with the capacity to meet the high demand. "

• Affordable . Commenters noted that " Since 2000, t he cost to produce electric power from coal has been one third of the cost to produce natural gas " showing that " the relative affordability of coal is the primary reason Missourians are accustomed to comparatively low energy rates. "

• Abundant . According to commenters, " The U.S. has 27 percent of the world's coal securely located within its borders " and it is an " abundant local source of energy for the vast majority of states in the middle of the country. "

• Predictable . According to commenters, " Coal has the most stable pricing and output of any fuel " while natural gas, " has had the greatest price volatility of any238 fuel " and renewable energy sources, " such as wind and solar, are not reliable enough to be base

- load fuels. "

• Sustainable. According to commenters, " Contemporaneous land restoration ensures that active areas for mining operations remain small and are left in conditions that benefit local mining communities. " Commenters also noted that

" carbon capture and other clean coal tech nologies continue to be developed and U.S. should lead the world in their continued development. "

• Long

- term resource. Commenters noted that " The U.S. has hundreds of years of coal in its mines and has the ability to advance clean coal technologies toward

near

- zero emissions. "

Commenter s stated that the rule will " limit stability and reliability by remov[ing] a viable fuel source from our nation's supply " and will " shut down virtually all existing coal fired fuel plants within 15 years. " Commenter s noted that " It is irresponsible for the federal government to impose unrealistic and unachievable goals on our state, and the pressure on supply will negative[ly] impact our consumers and our economy. "

Commenter s noted the importance of coal to the US and the w orld:

• " Coal is essential to the achievement of the United Nations' Millennium Development Goals, which range from halving extreme poverty rates to achieving universal primary education. "

• " strong relationship between coal and fossil fuel use and global prosperity "

• " coal is a plentiful, affordable resource and will therefore be essential to continued economic progress "

• " In the end, the World Bank and " its biggest shareholder, " the United States, recognized that raising the developing world out of poverty depends on intelligent development and utilization of coal. That is an important lesson for the United States domestically as well. "

Commenter s noted that " No fossil

- fueled generation facility in Virginia currently meets the carbon emission rate proposed for Virginia " because " that rate is lower than the emission rate of a new combined cycle natural gas facility. " According to commenter s , " a compliance strategy of replacing all coal

- fired generation facilities in Virginia with comparable amounts of state

- o f

- the

art natural gas combined cycle facilities would not satisfy the proposed rule.

Commenter s referenced an analysis from ERCOT that stated, " as electricity generation owners consider potential CPP compliance together with other pending environmental reg ulations such as MATS, regional haze, and the 316(b) Cooling Water Intake Structures rule, they may decide to retire units early rather than make investments to retrofit them to meet the requirements of these other rules. " According to commenter s , " ERCOT i ndicates that if such earlier coal retirements occur, grid reliability challenges could be experienced even sooner. "239 Commenter s also stated that " There is simply no economic, reliable, scalable, and timely way to replace the one

- third to three

- fourths of t he coal plant shutdowns anticipated due to this proposed rule and other previous EPA environmental regulations while also continuing to have electricity supplied at the flip

- of

- a

- switch. " Commenter s stated, " This is especially apparent and especially criti cal given EPA's timeline for the existing source rule as proposed, with interim goals from 2020

- 2029. " According to commenter s , " those interim goals would require carbon reductions before 2020. "

Commenters stated that shuttering coal facilities will resul t in stranded investments, which

" further undermines and erodes the State's economic health. "

Commenters stated that utilities would essentially be penalized for increasing electricity production from existing sources and forced to provide energy from lowe r emitting sources in order to comply with the proposed state based goals despite the fact the electrification programs would result in lower carbon emissions.

Commenters stated t hat the weather event in January and the reduction of generation capabilitie s within the PJM footprint demonstrated the vulnerability of the system and is a preview of the challenges the system faces if generation capacity is prematurely taken off

- line by these proposed rules. The commenters stated that the unreliability of the electricity supply is a disincentive for businesses and manufacturers to invest in Ohio and the Cleveland region and that additional burdensome regulation will accelerate this problem.

Response 29: EPA disagrees with t hese comments. The final rule does not force coal plants to close, and coal remains a major source of power throughout compliance with this rule, as documented in Chapter 3 of the RIA for this rule. Nor will the compliance lead to reliability issues. Se e previous responses in this section and Section VII I.G of the preamble for the treatment of reliability issues in the rule.

EPA also disagrees with comments that maintain the rule will result in stranded costs at coal plants. See Section 5.11 of this R TC for stranded costs issues.

Comment 30: Multiple commenters noted that there are differences between baseload generation and intermediate resources and replacing coal with NGCC as baseload generation will likely have negative impacts on grid reliability

. According to commenters, base

- load resources " are designed to run continuously, irrespective of the short

- term price signals " and " environmental re

- dispatch of these units (without regard to its questionable technically feasibility, since these units ha ve long startup and shutdown times) will further deteriorate the underlying economics of base

- load generation in the ISOs by limiting the output that is sold. "

Commenters also noted that coal units dispatched with minimum load will increase the emissions per MWh (of CO2 and criteria pollutant emissions) due to inefficient operations.240 Commenters stated that " Conventional power plants should not be penalized for the inability of

non

- dispatchable power to meet peak demand " and " a different approach is needed to consider the cost of achieving environmental benefits, including subsidies that are not being considered. "

Commenters stated " EPA has not performed a proper assessment of whether the proposed Clean Power Plan will result in an appropriate mix of baselo ad and intermediate resources needed to serve load reliably and cost

- effectively. "

Commenters noted that coal units " are generally run as base load units, operating at or near full output around the clock " and are " ill

- suited to following variations in lo ad over the course of the day " due to " long ramp times. " According to commenters, " NGCC units can also run as baseload [but] they are better suited to provide flexible service, including operation as intermediate resources, which can ramp up or down quickl y in response to changes in demand and changes in other resources, such as wind and solar generation. "

Commenters stated that " Baseload capacity is a key component of a reliable generating system and provides value particularly during the peak hours of a u tility's peak season " and " If Unit 3 is shut down, Tri

- State will not have sufficient capacity to serve firm load, and will be required to construct new generation to replace that capacity, further increasing costs to its member systems. "

According to comm enters, " Nuclear units, coal units and other forms of baseload capacity provide these necessary services that are crucial for grid reliability, without which any power system cannot operate safely and reliably. "

Response 30: Economic dispatch which helps to assure affordable electricity in the US and the economics of the power sector are dictating the types of generating capacity that is used in the electric power sector. The availability of abundant low cost natural gas is re placing coal for base load capacity even in the absence of the Clean Power Plan. In addition, the growth of renewable generation, itself dictated by falling prices, is also making natural gas an attractive source of power as it is flexible and can be used along with variable renewables in a way that neither coal, nor nuclear can. Nuclear energy with its very low fuel costs is in a different position than coal as it will run as long as it is available. However, even with the CPP fully implemented, coal doe s not go away. Even in 2030 and substantial part of the electricity generated in the US will come from coal.

Comment 31: Multiple commenters noted that unit retirements ahead of the unit's end of useful life is detrimental to reliability.

Commenters noted that " Another consequence of the forced closure of the existing fleet of generating units that cannot achieve the more stringent emissions targets will be accelerated depreciation and other stranded costs that result from retiring generati on resources well ahead of their economic or useful lives. "

Commenter s recommended " Retiring coal units as they reach their normal end

- of

- life " rather than according to the rule schedule.241 Commenter s stated that the guidelines should " Avoid premature retire ments and stranded

assets. "

Commenters asked that EPA consider the loss of useful life from coal

- fired units, such as those that have seen significant investment based on prior EPA rulemakings. Commenters stated that

" The utilities making these investments

- and the rate

- payers who are ultimately paying for them

- had a reasonable, investment

- backed expectation that these upgraded, coal

- fired units, would be able to operate through the end of their useful lives. "

Commenters noted that " EPA should allow the full value of existing coal plants to be realized before retirement. "

Response 31: EPA disagrees with these comments. See response to comment 29 in section 8.9 of this RTC

.

Comment 32: Multiple commenters noted that entities should receive full credit f or any retirement of existing fossil

- fueled units prior to the beginning of the interim period and regardless of the reasoning for the retirement.

Commenter s asked that EPA allow for the following

• " expressly allow states to rely on unit retirements occur ring after the baseline year(s) to meet Section 111(d) goals. "

• " retirements should be given equal credit under a rate

- based or a mass

- based program. As proposed, the rule would not allow states that have adopted a rate

based goal to fully benefit from uni t retirements if the replacement generation comes from out

- of

- state. This is because, in coal

- heavy states, the pre

- retirement and post

- retirement emission rate for the state will remain largely unchanged, even if the generation is not increased in

- state. "

• " In states that adopt a mass

- based standard, EPA should allow all EGUs that a company or state has agreed to retire to be included in the state's 'reference case.' The generation from the reference case would then be used to determine the mass

based goal. If generation from the retiring unit is not built into the reference case, then the lower generation and emission rate would result in a lower mass

- based target. "

• " The purpose of the retirement should be irrelevant, since all existing EGU retirements resu lt in substantial reductions in GHG emissions. Ensuring that states and companies receive credit for retirements will help ensure that utilities and states that are planning retirements of existing coal plants are not penalized by that action. It also will incentivize future retirements, resulting in additional GHG emission reductions. "242 Commenters stated " EPA should make clear that CO2 emission reductions due to unit retirements after the 2012 base year may be applied toward goal achievement after 2020, an d may be banked prior to 2020 beginning on the date of retirement, without requiring states or utilities to make any demonstration that the retirement would not have occurred in the absence of the CAA section 111(d) program. " According to commenters, " This should include retirements that, in addition to CO2 reduction, achieve compliance with MATS or other regulations, as well as retirements that are carried out in fulfillment of state legislative program such as the Clean Air Clean Jobs Act in Colorado. " Co mmenters continued, " EPA should specify in the final rule how such retirements will be credited, under both rate

- based plans and in the event that a state elects to convert its rate target to a mass budget. "

Commenters noted that changes to its energy ge neration mix has already happened: " In 2006, the majority of electricity in Georgia was produced by coal (63 percent) " and " In 2001, just 3 percent of Georgia's electricity was generated by natural gas, whereas in 2012, natural gas share of the generation capacity has risen markedly to 35.6 percent. " Commenters asked that they " gain full credit for these early and proactive investments. "

Commenters asked that EPA " recognize the quantifiable emission reductions achieved as a result of retirements that occur after the baseline period elected by the state and prior to the start of the interim compliance period " by converting them into bankable credits that are allowed to count in future compliance period(s) once the compliance program begins. Commenters offere d a potential way to incorporate this idea into the plan is to " assume the unit's generation was replaced by the existing natural gas combined cycle generation located within the state. " According to commenters, " the credit would be based on the reduction in emissions caused by the change in the generation source " and " calculated by subtracting the state's existing NGCC emission rate (lbs.CO2 /MWh) from the emission rate of the retired unit and then dividing that difference by the emission rate of the retir ed unit to obtain the percentage reduction in emissions resulting from the retirement. " According to commenters, " multiply the percentage reduction by the average annual MWh generated by the retired unit during its last three years of operation and by the number of years prior to the start of the section 111(d) interim compliance period the retirement occurred " and the " resulting number of MWh would be available to be added to the denominator in calculating a state's emission rate during one or more complia nce periods. " Commenters also stated, " EPA's emissions guidelines should make it clear that states may provide full compliance credit for the avoided CO2 emissions that result from the retirement of existing fossil

- fueled units prior to the beginning of th e interim compliance period, without regard to the reason for the shutdown. "

Response 32: EPA realizes that reductions will be occurring before the start of the interim period and first notes that these retirements will reduce emissions from the existing f ossil steam fleet. The purpose of these retirements does not matter for purposes of the rule, what matters is the reduction of emissions, and these reductions will facilitate compliance: in a mass

- based state, emission emissions levels will be lower; in a rate

- based state, retiring a high emitting unit will result in a lower emissions rate. The rule also provides for early credit where the generation from the retiring unit is replaced by renewable generation. See s ection V III

. B of the final preamble to the CPP

.243 Comment 33: Commenters commented on the loss of lignite

- fueled electricity generation.

Commenters asked that " New efficient lignite

- fueled baseload electric generation facilities should not be removed as an option avail able for meeting the substantial projected demand. " Commenters also asked that " existing lignite

- fueled facilities should not be curtailed or closed by any of EPA's GHG

- related rulemaking initiatives. "

Commenters noted that the rule " threatens North Dakota 's ability to continue to use lignite and other coals as a low cost electricity generation option and a means to enable responsible development of the Bakken oil reserves that are critical to North Dakota's continued economic development. "

Response 33: The final CPP does not require that any type of electricity generation be removed as an option for meeting demand, nor does it curtail or close specific facilities. Rather it sets goals for the states to meet by any of a wide range of policies and measure s that they choose. State should make those choices based on the situation in their states.

Comment 34: Commenters noted, " EPA has not sufficiently considered the effects that redispatch at the level Building Block 2 requires would likely have on the g rid " including reliability and the feasibility of implementing the required level of redispatch.

According to commenters, " Generation dispatch must account for the variety of factors that can affect available generation " including the following:

• higher

- or lower

- than

- expected demand,

• planned or unplanned generator outages,

• planned or unplanned transmission outages,

• weather,

• fuel availability, and

• events on a neighboring system.

Response 34: The final rule does not require any level of " redispatch " or shift in generation from one kind to source to another. States have wide latitude to choose the policies and measure that they will include in their state plans to achieve the reductions they need to achieve their state goals.

Comment 35: Commenters n oted that the rule requires the replacement of economic dispatch with environmental dispatch.244 Commenter s stated that the rule will " require RTOs to replace economic dispatch with environmental dispatch, while trying to maintain reliability for different states, all of which have different emissions reduction targets. " According to commenter s , " The underlying premise of an RTO is to help their members’ access the lowest cost generation on a continual basis, regardless of the location of the generation or t he location of the member, while maintaining grid reliability. " According to commenter s , " under the proposed Rule every state has a different CO2 emission reduction target, and presumably each state implementation plan will propose to achieve its respectiv e target differently " and " RTOs will be forced to implement environmental dispatch of generating units, i.e. RTOs will first consider environmental effects of operating generating units before the economic benefits of operating those same units. " Commenter s stated, " This is contrary to the purpose for which RTOs were formed and also violates those regional entities' obligations under the Federal Power Act to dispatch generation economically. "

Citing Europe's experience with increasing the use of renewables, commenters stated, " By putting environmental dispatch as the first priority, Europe created an artificial market that encouraged the significant over

- investment in renewables and exaggerated the impact of renewables on grid integrity. "

Commenters stated

, " The existing natural gas system infrastructure struggles at times to effectively handle current demand for natural gas during peak usage, let alone the increased pressures that would result from demands for increased natural gas dispatch as envisioned b y the proposal. " According to commenters, " the multiple factors currently at work in the energy market that drive the dispatch of the existing generation fleet can effectively be transitioned to prioritize environmental dispatch within the proposed timelin e. "

Commenter s stated " While there are several problems with the EPA's assumptions relating to environmental dispatch, the fundamental flaw lies in the assumption that states or utilities plan for anticipated loads and resources using data averaged over th e course of a year. " According to
commenter s , utilities " are required to provide firm resources to meet the peak hour anticipated load while maintaining adequate reserve margin. "

Commenters stated that the Proposed Rule marks a shift from economic to env ironmental dispatch and such a change in dispatch philosophy could potentially upset the significant gains in power market efficiencies. The commenters stated further that power markets have struggled with the balance of maintaining resource adequacy and e fficient dispatch and that adding another layer of complexity, through implementation of the Proposed Rule, would likely upset that balance.

Commenters stated that because MISO employs security constrained economic dispatch for electric generation, environ mental considerations do not factor directly into dispatch decisions. Instead, the commenters stated existing environmental regulations have an indirect impact on dispatch decisions by altering the variable cost of electricity produced at EGUs. The comment ers stated that EPA proposes two ways for states to implement Building Block 2: 1) states can superimpose a de

- facto price on carbon through a variety of market

- based mechanisms, which would increase the variable cost of dispatching higher emitting EGUs, a nd 2) states can " impose limits on utilization or CO2 emissions at higher emitting EGUs. " The commenters said neither245 recognizes that RTOs like MISO are designed to accommodate a security

- constrained economic dispatch, not an environmentally

- based dispatc h.

Response 35: These commenters mistakenly think that EPA in the CPP is requiring

env ironmental dispatch. In fact, n othing in the rule requires dispatch entities to depart from current economic dispatch principles. This final rules makes that point even clearer by emphasizing the role of market based approaches and the use of tradable emission rate credits and mass allowances that enable the incorporation of costs as part of the standard economic dispatch.

Comment 36: Commenters noted that distributed e nergy resources (DERs) are increasing and have negative impacts on reliability.

Commenter s , referring to NERC's reliability report (dated November 5, 2014), noted, " NERC warns that increases in distributed energy resources (DERs), such as rooftop photovol taic arrays, under the proposed rule will pose significant challenges to system operators. Id. at 25

- 26. This resource cannot be dispatched and is generally invisible to the operator, but will rely on the system for backup services, placing a greater and u npredictable demand for ERSs. "

Commenters noted that the increasing penetration of DERs impacts reliability due to the " limited visibility and controllability of these resources. "

Response 36: These comments are not directly relevant to the final rule, be cause DERs are not included as part of BSER, and not relied on in setting state goals. EPA also believes DERs can be reliably managed and contribute to energy efficiency and be effectively managed to contribute to reliability by reducing peak demand as w ell as overall load.

Comment 37: Commenters noted that there are other factors that influence reliability.

Commenters noted that " By capturing CO2 from existing coal or gas

- fired plants, [the commenter] will help maintain total system reliability, and our ability to pay for the CO2 will ensure that there is minimal impact on electricity prices. "

Commenters noted that " The unprecedented closure of coal base load capacity is not the only development affecting the future reliability and affordability of th e electric grid. " Commenters elaborated that " approximately 25 percent of the coal, natural gas and nuclear base load capacity is 40 years or older " and " within ten years, the 40

- plus years demographic will increase to about 50 percent of the entire base l oad fleet. "

Commenters noted that " much of Arizona's fleet of combined cycle natural gas plants is owned by merchant operators " which is currently committed to Arizona facilities but " there is no guarantee that these contracts will be extended into the future. " According to commenters " The capacity currently available to Arizona utilities could be sold to utilities in other states " and " may not be available to Arizona utilities in sufficient quantity to meet EPA's 2020 interim goal. "246 Commenters expressed concern that there is the potential for many irreconcilable differences in emission compliance plans between the 13 PJM states in RTOs due to the diverse characteristics of the states (economic makeup, generation rich vs. generation constrained, states wi th renewable portfolio standards vs. states without these standards, vertically integrated vs. deregulated state). The commenters stated there is the potential for many irreconcilable differences in emission compliance plans between the states; PJM will ul timately be required to manage the end result of these plans which could negatively impact reliability and affordability.

Commenters recommended that EPA amend Building Block 1 stipulating that no reductions associated with coal plant heat rate improvemen ts will be required for states t hat generated less than 10% of their total annual energy from coal. Commenters stated that there are many reasons EPA should exclude states with limited coal production from Building Block 1. Commenters stated that first and foremost those states with less than 10% of their total energy generated from coal have already undergone a significant change in the energy mix. Commenters stated that the coal currently operating in New York is performing a needed function as it helps t o address local reliability issues and in many instances is operating because those units must run for local reliability needs.

Commenters stated that EPA fails to account for additional capital expenditures needed to ensure system reliability concerns. T he commenters discussed factors, such as the highest cooling degree days in the continental U.S., that require Florida to rely heavily on a robust and dispatchable generating fleet contrary to many of the low carbon/zero carbon technologies the EPA uses to justify the 10 percent Block 3 calculation. The commenters added that the low capacity factors of many low carbon/zero carbon technologies (excepting nuclear) combined with Florida's need for dispatchable generation means Florida would need to build addit ional natural gas

- fired facilities and related infrastructure, which would again be fully paid for by Florida's citizens, for use as stand

- by units for reliability purposes.

Commenters stated that EPA's assumptions do not apply to Alaska where the majorit y of the EGUs are not interconnected via a grid, and none of the EGUs can engage in the type of economic dispatch practices assumed by EPA. The commenters w ere thus unable to fully evaluate and understand the proposed rule. The commenters further stated th at reliability is important in Alaska's extreme climate and that electric utilities most directly affected by this proposed rule are municipal or cooperative utilities not investor owned utilities. The commenters stated that as a result, the financial impa ct will be borne directly by consumers.

Commenters stated that EPA has failed to consider that Arizona has only two major natural gas pipeline systems serving the state and no in

- state natural gas storage. Commenters cited NERC findings that the addition o f CPP

- induced power generation demand in the Southwest could lead to a situation where the current pipeline system is inadequate to serve all demand during periods of peak usage.

Commenters also discussed disproportionate impacts to Arizona state

- wide as a result of the rule due to one of the most severe carbon emission reduction targets of all states with a reduction below its baseline of 52 percent. The commenters stated that Arizona stands out as the state most impacted by building block 2 due to its hi gh coal

- fired generation and significant existing NGCC capacity, which will result in significant cost impacts from new infrastructure investments and247 the recovery of stranded investments, and put the state at a significant competitive disadvantage
compare d to neighboring states resulting in job impacts.

Commenters stated that Building Block 2 will result in a major shift to natural gas in a short period of time, away from the current more optimal mix of generation sources. Commenters also discussed the In tegrated Resource Planning rule which requires utilities to demonstrate how it will meet its future energy requirements in an efficient, cost

- effective, and responsible manner. The commenters remarked that the proposed rule will result in significant risk from natural gas supply disruptions as well as price increases and security risks.

Commenters added that EPA's building blocks provides Arizona no flexibility, would require Arizona to shut down all coal plants by 2020 in order to comply, and would jeopar dize grid reliability and the reliability of electric service. The commenters further stated that the proposed rule will cause a health and safety problem during the load peaking summer months for the many elderly, fixed income citizens.

Commenters stated that EPA fails to ensure that utilities can meet peak demand and that implementation of BB2 will jeopardize the reliability of Arizona's electricity grid. Commenters added that it is not clear that Arizona utilities can purchase sufficient power to attemp t to make up for shortfalls through purchases on the short

- term market because other states in the region also experience peak demand during the summer. The commenters stated that an NGCC resource could easily run at a 90 percent capacity factor during the peak summer hours in Arizona leaving no existing NGCC generation to replace existing coal and OG steam generation during this period, despite an annual NGCC capacity factor around 30 percent. The commenters provided examples and illustrated the shortfalls that would occur without coal generation.

Commenters also stated that coal generation was not designed to cycle with intermittent resources, does not possess the ramping capabilities to do so, would place heavy wear

- and

- tear on these units, and result in escalating costs of operations. The commenters added that EPA insufficiently estimated the availability and cost of renewable resources, as well as the cost of fossil fuel source backup.

Commenters stated that the proposed rule is an overreach of federal administrative authority with the potential to increase uncertainty and impact the reliability and affordability of energy for residents and businesses of Arizona. The commenters discussed the disproportionate financial burden to citizens in rural areas du e to the areas' significant reliance on coal investments that are still being paid off. The commenters remarked that the issue of stranded assets must be addressed to provide relief for our most vulnerable citizens.

Commenters stated that EPA's assumption that coal

- fired generation cannot be re

- dispatched to NGCC units as envisioned by EPA, and incremental, lower

- emitting generation resources cannot be permitted and brought online in a two to three year period. The commenters further remarked that virtually a megawatt

- for

- megawatt replacement of this generation to maintain safe reserve margins.

Commenters discussed the proposed rule's impacts resulting from shifts in electricity generation from coal to natural gas, such as upward pressure on natural gas demand and price burdens. The248 commenters stated that North Carolina is served by only one major intersta te pipeline and significant natural gas transportation constraints and prices were realized during the polar vortex. The commenters also stated that supply constraints could force utilities to burn fuel oil or more polluting fuels which would be contrary t o the mission of EPA's Clean Power Plan.

Commenters stated concern about impacts to Montanans as a result of the decisions that may be made by other states as they implement the rule within their borders. The commenters stated Montana coal is a mainstay f or many power plants in the Midwest, where it has been projected that many plants may close, and the reshuffling of the industry could have significant impacts for Montana families such as electric rate increases in the future since the eastern part of the state draws much of their electricity from the Midwest. The commenters also stated that many of the ratepayers are customers of small rural electric cooperatives that may not have resources to further embrace renewables and energy efficiency.

Commenters also stated there may be ways to address these concerns, and still achieve the goal of reducing the nation's carbon emissions. The commenters stated regional planning must remain a key feature of the final rule and may allow for coordination, cost allocati on, and a least cost strategy. The commenters strongly encouraged EPA to tailor the rule and its goals more to the useful life of the nation's coal fleet, such that already planned and anticipated retirements can play a more central ro l e in complying with the final rule, capturing efficiencies and minimizing the negative economic impacts attributable to the rule itself.

Commenters stated residential rates in Montana are projected to increase by 16 percent to 19 percent as a result of the Clean Power Plan; Industrial rates are expected to increase 23 percent, and perhaps as much as 40 percent in the eastern part of the State. The commenters stated the rule also poses a threat to electric reliability and the preliminary modeling demonstrates the rule threaten s the State's reserve margin.

Commenters stated a minimum level of coal and oil

- fired generation must be preserved to avoid the potential for extreme economic consequences and hardship that could occur due to the loss of any one type of fuel supply. The co mmenters referenced the winter of 2013

- 2014 when the northeast was exposed to a period of extreme cold temperatures. The commenters stated NJ would likely have had brownouts and blackouts if not for the remaining coal and oil

- fired EGUs. The commenters sai d assumed emissions reductions from Building Block 2 would eliminate NJ's remaining coal and oil

- fired electric generation which are equipped with approximately $2 billion in air pollution controls. The commenters stated it would be unreasonable for EPA to impose requirements that could lead to calamitous results in New Jersey while allowing higher emitting coal units in many other states to continue operations.

Commenters stated that EPA's plan is a solution in search of a problem, and it's looking in the wrong place and that Colorado's clean low sulfur, low mercury, low ash coal is not a major contributor to pollution. The commenters noted that, according to the Energy Information Administration, carbon dioxide emissions from U.S. coal amount to only abou t 3 percent of the global total. The commenters suggested that a more prudent federal policy for pollution control would perhaps involve facilitating exports of Colorado's clean coal to nations to replace the dirtier forms that they are currently using.249 Co mmenters stated there are serious concerns regarding the proposal's impact on Florida's infrastructure. The commenters stated further that EPA has not studied the ability for Florida's limited natural gas pipeline infrastructure to deliver the needed natu ral gas, nor has EPA assessed the feasibility of adding new generation resources within required timeframes.

Commenters stated that they have serious concerns about the impact that EPA's Clean Power Plan would have on the reliability of Florida's electric grid, and on the electric utility ratepayers that would be forced to pay significantly higher electric bills. The commenters noted that their comments are based on the understanding that the CPP would require at least 90% of Florida's coal

- based electric generating capacity to be retired.

Commenters stated that they believe the CPP's timelines will create an unrealistic and unachievable mandate for Florida's utilities to replace their existing coal facilities in a relatively short time period while maintai ning grid reliability. The commenter s have requested that the EPA withdraw or significantly redraft the CPP in light of the consequences that almost surely will result from the CPP because the new proposed rule should not place utilities in the position

o f being forced to incur fines and potentially criminal penalties if they need to utilize a power plant that is required to run in order to keep the lights on, and should not unduly burden the ratepayers.

Commenters noted that : Reliability

- EPA's complianc e modeling results (Option 1

- State compliance scenario) depicts a significant amount of retirements by 2020. The commenters stated that this option depicts 12,222 megawatts of fossil fuel

- fired retirements for the state of Florida by 2020, and of that a mount, 9,995 megawatts are incremental retirements from EPA's base case scenario. The commenters state d that the retirement of this amount of baseload capacity raises reliability concerns and provided an example. The commenters stated that it is highly un likely there is sufficient time, materials or craft labor to construct this replacement generation in the state of Florida, much less so to have this replacement generation in place nationwide by 2020.

Commenters stated that the potential impact of the pro posed rule to disrupt power generation within Illinois and within the ISO footprints is great. The commenters stated further that resources in PJM are already strained with the so

- called " polar vortex " contributed to the inability of 22% of its installed capacity to operate within the RTO, and left PJM perilously close to instituting select outages to maintain system integrity. The commenters stated further that the situation is so serious that PJM has instituted a special procedure to alter the means it uses to compensate for capacity, to better insure resource adequacy in the event of such a situation. The
commenters also noted that MISO anticipates similar capacity shortfalls that, if unresolved, could see systemic reliability issues within its footpri nt, and MISO's reserve margin dropping below the generally accepted reserve requirement of 15% as early as 2015.

Commenters stated that complicating this issue is that Illinois, as a deregulated state, has no regulatory mechanism in place to ensure resourc e adequacy within its borders.

Commenters stated that given the tenuous nature of the current capacity resource situation in Illinois (based on past and pending capacity retirements) as well as the uncertain ability of RTO markets to provide for timely c apacity replacement within the RTOs, USEPA should adopt a250 safety valve or off

- ramp of some sort that acknowledges the vital importance of resource adequacy for the health and safety of Illinois' citizens and allows for delay or deferral of greenhouse gas r eduction requirements in the event that adequate resource thresholds cannot be met under the rule as adopted.

Commenters stated that in adopting policies that realign their State's energy generators, decision makers must take care not to strain our alread y overburdened energy infrastructure. The
commenters state d that MISO predicted that over the next ten years the North/Central Region will suffer an increasingly pronounced energy shortfall given current trends in energy generation. The commenters stated further that if policy changes force existing sources of energy to retire early, without sufficient time to find suitable replacement sources or develop efficiency increases to offset the loss in generation, residents and businesses throughout the region m ay find themselves without power when they need it.

Commenters stated concern about electric reliability and that EPA has not adequately examined the impact of the proposal on this issue. The commenter s state d that they are very concerned that a shift away from a coal

- fired fleet to natural gas plants, which are designed to supplement coal

generated power to meet peak demands, will jeopardize their ability to meet electricity needs.

Commenters stated EPA's prim ary renewable energy proposal fails to recognize real

- world constraints on the integration of new renewable energy capacity and generation, and it ignores other potential constraints on the growth of renewable energy resources that are likely to be
state

- s pecific. The commenters included the following examples: increasing renewable energy generation often requires increased transmission infrastructure to transmit long distances; and there must be sufficient back

- up fossil fuel

- fired resources to meet peak d emand in the event that a peak occurs at a time when renewable resources are unavailable, of particular importance to New Mexico, where winter peak demand is almost as high as summer peak demand, but during winter some renewable energy resources are typica lly far less productive.

Commenters stated EPA inappropriately assumes that all renewable generation will provide the same level of service: wind energy capacity can be expanded relatively rapidly but is least likely to be available when demand is at a pe ak while solar energy matches peaks in demand well but is more difficult to expand quickly. The commenters said this was first realized in New Mexico with the interconnection of PNM's first significant variable energy resource in 2003 during which came the awareness that the variable nature of wind energy can have a significant impact on system operations, particularly in regard to the regulation for moment

- to

- moment power fluctuations. The commenters said a study was commissioned that concluded that 700 MW of wind could not be accommodated given PNM's low peak load, current resource mix, and transmission constraints even though New Mexico has significant wind resources.

Commenters explained that during low peak demand levels, fluctuations in the variable
ge neration resources will have a more significant impact by affecting a larger percentage of the total on

- line capacity. The commenters also stated the existing dispatchable resource mix in New Mexico is dominated by large coal

- fired units and out

- of

- state n uclear capacity that cannot provide as rapid a response as may be needed to support rapid fluctuations in renewable energy generating levels. The commenters added, New Mexico has relatively limited interconnections to neighboring utilities, which makes it difficult for the State to purchase the additional251 dispatchable power needed to support the development of additional renewable generation

resources.

Commenters stated integrating new wind and solar resources will increase the challenges of reliably opera ting the ERCOT grid, and almost 10% of the ERCOT region's annual generation came from wind resources. The commenters stated the increased penetration of intermittent renewable generation, as projected by modeling results, will increase the challenges of re liably operating all generation resources, and if there is not sufficient ramping capability and operational reserves during periods of high renewable penetration, the need to maintain operational reliability could require the curtailment of renewable gene ration resources which would reduce production from renewable resources, leading to possible non

- compliance with the proposed rule deadlines.

Commenters stated intermittent renewable generation sources will contribute 22% of energy on an annual basis in 20 29; however, during 628 hours of the year intermittent generation will serve more than 40% of system load. The commenters continued, during 128 hours, instantaneous renewable penetration will be higher than 50%, and the peak instantaneous renewable penetra tion from the model results is 61%; the highest renewable penetration hours will be driven by maximum solar production during relatively high wind periods, occurring during the day (8 a.m. to 5 p.m.), as opposed to early morning hours (usually 2 to 4 AM], as currently experienced in the ERCOT region.

Commenters wrote in detail about the model results and the unrealistic assumptions made by the model and the challenges of real

- time operations. The commenters said to ensure grid reliability, there would need to be increased consideration of operational activities on the distribution and transmission systems. The commenters said based on ERCOT's modeling, the majority of new renewable generation resource additions are anticipated to be solar. However, if inste ad ERCOT sees a large amount of wind resource capacity additions, then the reliability impacts may be more severe. The commenters stated wind production in West Texas results in high renewable penetration during early morning hours, when load is lowest, an d a larger expansion in wind production relative to solar may result in lower net loads and significant reliability issues. The
commenters concluded if ERCOT cannot reliably operate the grid with these high renewable penetration levels, then production fro m these resources will be curtailed to maintain operational reliability which would reduce production from renewable resources, leading to possible non

compliance with the proposed rule deadlines.

Commenters stated that the concerns about legal challenges

- about the uncertainty of litigation involving aspects of the plan

- are irrelevant to the core issues the plan is attempting to address. The commenters stated that lack of significant innovation and diversification in our state that has now resulted in the costly, aging and polluting infrastructure we now have, creating a highly uncertain future for coal

- generated power.

Commenters stated that, with Louisiana as part of SPP and MISO, uncertainty increases with the potential for carbon emission limitation s. While the specifics of any carbon proposal are unclear, any carbon emission limitations will negatively impact MISO's coal generation fleet and further increase the resource deficiency.252 Commenters stated that Arizona needs to protect the reliability of its energy grid because it is unclear if Arizona could survive the loss of a natural gas pipeline and still support the grid demand without retaining backup coal

- fired options. The commenters stated that the assumption that coal generation can be one

- for

- o ne diverted to existing NGCC units is inaccurate. The
commenters also stated that the Proposed Rule will eliminate energy reserves and has timing issues that will significantly risk the reliability of the Arizona electric transmission network. The
comment ers stated that in order to maintain grid reliability and security, EPA should include a reliability safety valve mechanism in the final rule, as well as including circumstances under which compliance can be delayed to manage real time issues that will com promise electric reliability. The commenters stated further that the modeling does not take into account region

specific technical issues.

Commenters stated that EGU owners and operators, as well as FERC and NERC are concerned with impacts to reliability. Commenters stated that many of the concerns stem from its impossibly short timelines, as previously discussed. Commenters stated that it is not clear how customers would be able to invest in its units in various states to meet the compliance of the units' local state and how that would interplay with Indiana's compliance. Commenters stated that the proposed rule would require generating units to comply in the individual state of its location or suggests that states may cooperate with one another. Commenter s stated MISO and PJM in combination control a substantial amount of the whole U.S. power grid and also part of Canada's. Commenters stated that the EPA calls the proposed rule flexible but does nothing to solve the problem of the interconnectedness of the whole power system.

Commenters stated that the dispatch of generating units is currently handled on an economic basis by the MISO and PJM RTOs. Commenters stated that the proposed rule assumes that NGCC units will all operate at 70 percent capacity factor . Commenters stated that this upends running the most economical unit first in the RTO's dispatch order. Commenters stated that spinning reserve will also have to be maintained which effectively are units running at reduced output at the ready if another u nit that is online needs to come offline due to a problem. Commenters stated that if the coal units are backed off to meet the 70 percent NGCC capacity factor level or the state's emission rate target, those units are running at a lower efficiency level

an d at a higher CO2 emission rate. Commenters stated that environmental dispatch in place of economic dispatch of generating units as is now done by the RTOs will increase cost to customers by disturbing the economic order of dispatch keeping lower marginal cost units on the sidelines.

Response 37: These comments show the many factors that influence reliable operation of the electricity system, and EPA generally that these multiple factors are important. As many of these commenters noted the electric power s ector is complex with differing market structures, ownership structures, fuel mixes, and state requirements across the country. But, as we pointed out in Chapter VIII of the preamble , there are multiple features well embedded in the electricity system that ensure that electric system reliability will be maintained. The CPP is designed to assure that it does not interfere with the industry’s ability to maintain electric reliability. Please see Chapter VIII.G.2 for a dis cussion of this. The final rule has b een modified from the proposal to address comments that express concern over the 2020 start of the compliance period, and253 issues raised in comments that address the use of natural gas and renewables are discussed in The GHG Mitigation Measures TSD.

Commen t 38: As an example of maintaining reliability during coal phase

- out, commenters offered " the province of Ontario's experience in phasing

- out coal from its supply mix. "

Commenters stated " Whereas 7,500 MW of coal represented approximately 25% of provincial capacity in 2003, Ontario shut down its last coal

- fired generating station in April 2014 and passed legislation to prevent restarting. " Commenters stated " This generation has been replaced by a mix of non

- and low

- emitting resources such as natural gas, h ydropower, nuclear, wind and solar. "

Commenters noted, " In order to protect reliability, though, Ontario was compelled to adjust its coal phase

- out schedule on several occasions. " Commenters stated " A shutdown originally scheduled to occur in four years u ltimately took more than 10 years. " Commenters noted that

" The province achieved a significant accomplishment in becoming the first jurisdiction in North America to eliminate coal as a power generation source " but noted that " preserving electric reliabilit y was a paramount imperative and extended timelines became necessary as a result. "

Response 38: EPA appreciates this comment. EPA has considered these types of issues in developing the final rule. The final rule does not attempt to shut down coal generat ion prematurely, provides flexibility to states in designing plans for compliance, and provides a long period to ensure reliable transition to a changing generation mix.

Comment 39: Multiple commenters cited analyses by NERC and other organizations rega rding reliability concerns.

Commenters referenced NERC's concerns about potential reliability risks.

Commenters cited NERC, MISO, and PJM concerns regarding reliability. Similarly, Commenters cited NERC, SPP, MISO, ERCOT and AEP assessments indicating the CPP will result in reliability threats due to coal retirements, shifts to natural gas, and increased RE that may result in issues with reserve margins, vulnerability to natural gas supply constraints, the need for increased essential reliability services, thermal overloads, voltage collapse, and increased time and costs related to additional transmission infrastructure.

Commenters provided a lengthy description of resource adequacy and the importance of providing reliable power, citing the FERC primer, a NERC ERS report and several FERC regulations. The commenters also explained that there are many entities involved in maintaining reliability, described the interconnections of the U.S. electric grid, listed key functions of system operators, and summarized energy markets. The commenters stated that " significant market changes impact price signals which could have reliability and resource adequacy implications if the price signals do not incent construction of needed new generation and infrastructure. "254 Comm enters also referenced the November 2014 NERC Reliability Study which highlights the reliability impacts of coal

- fired generation units that may be forced into retirement as a result of building block 2 and the importance of diversification of fuel sources to offset unforeseen events such as abnormal weather, regional transfers and unplanned outages. The commenters also referenced the September 2014 NERC study reviewing the events of the polar vortex. The stated the CPP lacks meaningful discussion on how t o mitigate any detrimental impacts that may arise as a result of an increased reliance on VERs.

Commenters stated the NERC Reliability Study sets forth the following concerns with building block 4, all of which could impact reliability of the electric grid :

• US EPA appears to overestimate the amount of energy efficiency expected to reduce electricity demand over the compliance time frame;

• Substantial increases in energy efficiency programs exceed recent trends and projections;

• The CPP assumption appears to underestimate costs and may underestimate the capital investments that would be required by utilities to sustain energy efficiency performance through 2030; and

• The offsetting requirements in more coal retirements, along with expansions in natural gas and VERs, in a constrained time period could potentially result in reliability or ERS constraints.

Commenters listed the following issues in the proposed rule as identified by the Initial NERC report: (1) EPA assumed " rapid grow th in non

- hydro renewable generation exceeds its own forecast " in the RIA of 356 TWh/year by 2030; (2) EPA overlooked real world differences among state renewable portfolio standards that are contrary to EPA's assumptions; and (3) EPA failed to address the well

- known grid reliability challenges associated with increa sed dependence

on " variable " resources, which have also been noted by FERC Commissioners. The commenters quoted NERCs initial reliability report which stated that as variable resources increase, a sufficient amount of reactive support and ramping capabilit y is needed that could increase cycling on conventional generation and contribute to increased maintenance hours or higher forced outage rates, potentially increasing operating reserve requirements. The commenters stated t he report further stated that succ essful large

- scale storage solutions have not yet been commercialized. The commenters stated that the report makes it clear that increased dependence may seriously impact reliability.

Commenters cited NERC's November 2014 report in discussing the potentia l for resiliency and fuel diversification to be degraded as a result of the proposed rule, which is crucial to keeping energy prices affordable, supporting grid reliability, and mitigating unanticipated events such as weather, strikes, and outages. The com menters also noted that the U.S. has an unparalleled opportunity for energy independence and security as a result of housing 28% of coal reserves and increasingly available oil and gas reserves, and cited Tom Donilon's statements on the relationship betwee n energy, foreign policy, economic strength and world leadership. The
commenters concluded that " purposefully moving away from energy diversity in the United255 States is a short

- sighted, irresponsible policy choice that benefits neither our nation nor the re st of the world. "

Commenters cited NERC as having grave reliability concerns with the proposal, which NERC believes would result in between 108 and 134 GW of generation retirements by 2020, most of which will disproportionately impact base

- load coal genera tion in the U.S. The commenters cite d NERC's concern over pipeline constraints, growing gas and electric interdependency, increased transmission projects, policy and operations and regional and multi

- regional coordination for electric utility planning. The commenter s cite d NERC's conclusion that the EPA's " proposed timeline does not provide enough time to develop sufficient resources to ensure continued reliable operation of the electric grid by 2020 " . The commenter s warn ed of a high probability of blackout s occurring around the country as a result of the proposed rule.

Commenters cited Southwest Power Pool comments, NERC's reliability impact analysis, and DOE's 2012 study on large power transformers and the electric grid, to highlight their concern

surroun ding reliability issues and the proposed rule timeframe. The commenters discussed planning, materials procurement, and construction timelines, and stated that manufacturing of transmission systems may take one to five years if procurement of raw materials and equipment from foreign countries do not slow the process. The commenters also cited DOE's discussion of lead times which may extend from five months to five years depending on the manufacturer and location of the materials. The commenters stated that n ew extra

- high voltage transmission systems will need to be studied and built to maintain reliability and that if the timeline in the Propose Rule is not adjusted, certain regions may see significant impact on reliable operations.

Commenters stated that th e CPP puts the reliability of the U.S. electricity supply at risk and cited statements by NERC, MISO, PJM, SPP and ERCOT for support. The commenters attached analyses by MISO, ERCC and PJM that indicate uncertainty and reliability concerns. The
commenters suggested that because every independent non

- partisan analysis by system operators agrees that the CPP may threaten electric reliability, EPA should reconsider the proposed rule, because reliability risks entail serious legal and public policy consequences . The commenters provided several attachments discussing reliability concerns, such as one from U.S. Government Accountability Office, as well as several FERC Commissioners. The commenters also stated that electrical outages endanger economic growth and ha ve a demonstrable negative effect on public health, as noted by health care professionals who also serve as Members of Congress, such as unemployment, disease, extreme weather, and food safety, among other benefits. The
commenters stated putting these publ ic benefits at risk is undesirable and wrong, especially when the alleged benefits associated with the CPP are tenuous and unverifiable. The commenters cited ISO New England's statements on the importance of reliable electricity, the Institute of Electrica l and Electronics Engineers of the U.S. observations that " even minor disruptions in the electric power grid can sometimes lead to catastrophic 'cascading' blackouts, and that the loss of a single generator can result in an imbalance between load and gener ation. The commenters stated t he resulting blackouts cause incalculable economic damage. The commenters added that f or example, the direct costs to high technology manufacturing in the San Francisco Bay Area alone during the California blackouts alone ran as high as one million dollars a minute due to lost production, and the relatively brief Northeast blackout of 2003 cost business about $13 billion in lost productivity. " The commenters noted that the " polar vortex made it clear that coal

- fired256 generation, much of which is currently scheduled to be retired as a result of EPA rules, is vital to the reliability of our electricity supply. In some areas, coal

- fired plants thought to be obsolete were discovered to be essential to reliability, and one of the nati on's largest electricity generators reported that 89 percent of the coal

- fired generation slated for retirement by 2015 as a result of EPA rules was needed to supply electricity during the cold weather. "

Commenters also referenced the polar vortex as evid ence of potential reliability concerns and cited NERC's statements regarding potential reliability concerns. The commenters urged EPA to address these concerns regarding the aggressive timetable of emission reductions required under the Proposed Rule.

Comm enters cited an October 2014 NERA study of the CPP stating that the Proposal will result in from 46 to 169 additional gigawatts retired unless EPA makes significant corrections to the rule, which is likely to seriously threaten the nation's electric reliab ility The commenters stated that state regulators and industry stakeholders have warned that the proposal will force them to choose between meeting its requirements at the risk of potentially violating FERC reliability mandates, or complying with those man dates at the risk of failure to comply with the proposal. The commenters further cited:

• Southwest Power Pool predictions that the proposal will increase retirements in its area by 200%, with significant economic, health, and safety impacts resulting from " rolling blackouts or cascading outages " ;

• Electric Reliability Council of Texas warnings that the proposal will have " a harmful impact on reliability " and " will have a significant impact on the planning and operation of" its grid, forcing the retirement of between 3.3 and 8.7 gigawatts in its region alone;

• North Dakota officials' concern that FERC may reject state 111(d) plans on reliability grounds and may even impose significant penalties for any blackouts and similar failures that might result from states efforts to meet EPA's requirements;

• FERC Commissioner Moeller's warnings that the proposed shift from least

- cost to least

- emission dispatch priorities " has the potential to completely undermine the market principles that underpin dispatch of the system " ;

• NERC's determinations that " Essential Reliability Services may be strained by the proposed " rule, and that the rule requirements " represent a significant reliability challenge. "

• The commenters also paraphrased NERC in the following statements: " [p]ipeline constraints and growing gas and electric interdependency challenges " and the need for " more transmission and new operating procedures " will limit state and utility ability to comply with the proposal while preservin g reliability. And the retirements of coal

- fired units due to the proposal will " lessen industry diversification of fuel sources. " Cumulatively, these issues mean the proposal will257 impair the reliability of the grid, especially under extreme weather condit ions such as last winter's " polar vortex. "

Commenters cited SPP comments on reliability impacts as a result of compliance with the proposed rule, such the lack of time available to upgrade transmission and the challenges associated with increased regional and interregional planning efforts needed to handle the necessary system expansions.

Commenters stated their concern for reliability under the proposed rule and cited several system operators, reliability councils, and public service commissions including APPA, NERC, TVA, SPP, National Rural Electric Cooperative Association, ERCOT, ISO/RTO Council regarding the CPP's effect on bulk electric system reliability. The commenters specifically cited: NERC's initial reliability review discussions of adequate rese rve margin levels, constrained time periods, and resource mix shifting: SPP's comments regarding NERC violations, transmission expansion time and cost restraints, and reliability during extreme events as a result of the proposed rule; ERCOT's analysis indi cating reliability and management challenges associated with market design, increased renewables, coal plant closures, transmission system upgrades and dispatchable generation capacity issues; and TVA's comments stating that there is insufficient implement ation time for implementing the glide path, that IPM is inadequate, and that detailed transmission reliability studies are required to determine the supply and transmission changes required to meet FERC requirements to maintain Bulk Electric System reliabi lity.

Commenters cited statements from FERC Commissioner Moeller and Chair LaFleur as well as representatives from Alliance for Cooperative Energy Services and American Electric Power discussing recent winter grid reliability issues and the potential relia bility impacts of EPA's recent and proposed rules, such as those resulting from coal fleet closures. The commenters discussed the instability of natural gas prices when compare to coal during the winter, included a figure illustrating the point, and stated that electricity price spiked followed the natural gas price increases

- primarily as a result of a less diverse electricity grid driven by policy

- induced closures of coal power plants. The commenters cited Southern Company reports to indicate the importan ce of fuel diversity and coal power for electricity prices. The commenters then summarized findings of Energy Ventures Analysis' (EVA) study for the NMA and cited statements from PJM, MISO, JP Morgan as well as EIA statistics to illustrate the importance o f the existing coal fleet to reliability, reserve margins and electric prices and provide projections increases in costs and prices in various seasons and scenarios. The commenters further cited ConocoPhillips who projects domestic natural gas demand will exceed DOE/EIA's projection by 30 percent in 2017. Commenters provided further citations from SPP regarding the impact of the proposed rule's timeline on reliability due to new transmission needs, and from NERC, MISO and ERCOT regarding the negative reliab ility and reserve margin impacts of the interim performance requirements on reliability. The commenters also discussed NERC's concerns of overdependence on a single fuel type and the effect of increased reliance on wind and solar on the reliability of the grid due to storage, ramping flexibility, reactive power, and voltage stability issues. The commenters added statements from First Energy and Virginia State Corporation Commission that stated that EPA rules will lead to less reliable service over time and that the EPA Section 111(d) proposal could have an impact similar to the MATS rule that has brought the electric grid to the edge. The commenters summarized that the proposed rule creates an258 unacceptable risk to our nation's electricity generation, transmi ssion and delivery system that may result in widespread voltage degradation, collapse and cascading outages in its system.

Similarly, commenters cited NERC, MISO, SPP, NERA, ERCOT to indicate that the CPP, especially its interim targets, will create signi ficant reliability risks by forcing early retirement of fossil units that cannot be timely replaced with any form of generation, let alone generation with similar reliability attributes. The commenters also stated that the proposed rule will also create di fficulties with respect to state efforts to develop an effective portfolio of generation resources and discussed NERC's concerns of overdependence on a single fuel type and the effect of increased reliance on wind and solar on the reliability of the grid.

Commenters summarized and cited PJM and ISO New England's proposals as well as MISO statements to illustrate that every market has its own unique resource performance issues and EPA's capacity mandates in the BSER could exacerbate such issues by restricti ng the ability of these markets to utilize all types of generation to ensure reliability.

Commenters stated the CPP was developed without thorough consultation with the Federal Energy Regulatory Commission (FERC), the North American Electric Reliability Corporation (NERC), or any of the regional transmission organizations that regulate and control grid

r eliability. The commenters stated the FERC has approved mandatory, enforceable reliability standards with which electric utilities must comply or face civil monetary penalties. The
commenters agreed with the Southwest Power Pool (SPP) who stated the bulk e lectric system will be at serious risk of violating limits if the CPP remains as

- is and the likelihood would increase if not given enough time to construct the infrastructure necessary to facilitate compliance with the state goals being contemplated under the proposed CPP. The commenters stated that planning, design, siting, permitting, and construction can easily take as long as a decade. The commenters also stated the CPP clearly advocates a greater transition from coal

power generation to natural gas

- fir ed generation, but there has been no assessment as to whether there will be adequate natural gas supplies or infrastructure to meet the increased demands created by the CPP.

Commenters also stated the need for EPA to consult with FERC, NERC, and RTOs to de termine impacts to reliability, cost stabilization and national security issues. The commenters referenced concerns raised by NERC, MISO, and SPP. The commenters stated a lack of sufficient pipeline infrastructure to increase supply of natural gas and the impossibility to modify existing plants and build new plants to meet EPA deadlines.

Commenters listed the following negative reliability impacts that will result from the proposed rule:

• overall reliability of service impacts to New Mexico's electric grid a nd the utilities' electric grid if plants are shuttered or if plant output is reduced;

• reliability of service impacts to utility customers, industries and the State's economy if plants are shuttered or if plant output is reduced;259 • utility's ability to int egrate existing and prospective New Mexico located renewable energy projects if plants are shuttered or if plant output is reduced;

• promotion of New Mexico's renewable energy industry and the State's economy if plants are shuttered or if plant output is re duced; and

• State's ability to attract economic development.

Commenters stated that EPA's power plan will not work and poses an unacceptable risk to our nation's electricity generation, transmission and delivery system. The commenters stated that a growing number of experts are warning that the agency's proposal will degrade grid reliability and produce substantially higher utility and energy costs for all Americans. The commenters noted NERC's conclusion that implementation of the pr oposal will prove impossible while damaging the reliability of the nation's electricity supply and the proposal " would increase the use of controlled load shedding and potential for wide

- scale, uncontrolled outages. " The
commenters further noted NERC's fi ndings that these results are inevitable because EPA's plan underestimates the number of power plants that will be closed and overestimates the amount of new power sources and increased energy efficiency expected to offset the power generation lost. The c ommenters stated concerns of several power organizations: Southwest Power Pool's warning that the proposal will result in cascading outages and voltage collapse; MISO's forecasts that the power reserves needed in the fifteen

- state region will fall below sa fe margins and only get worse; and American Electric Power studies that indicated the plan would result in widespread voltage degradation, collapse and cascading outages in its system.

Commenters stated concern about how the implementation of the Plan will impact grid reliability in coming years. The commenters further cited concerns by NERC, MISO, and SPP about how the retirement of significant coal

- fired capacity will impact the reliability of the nation's electric grid. The commenters noted an observat ion by NERC that while NGCC units are capable of running at a high capacity factor, those units are generally not designed to be utilized as baseload resources. The commenters also noted that NERC pointed out that overreliance on one fuel source threatens the fuel diversification that utilities rely on to help maintain reliability. The
commenters also noted that EPA's finding that 10% of the 464 NGCC units in service in 2012 had a capacity factor of 70% or greater does not support a conclusion that all of these generating units can be used at the same rate.

Commenters reiterated concerns raised by SPP, noting that SPP performed an evaluation of the impacts of the projected EGU retirements on SPP's reserve margin and concluded that by 2020, SPP's reserve mar gin would fall to 4.7%, which is 8.9% below SPP's minimum reserve margin requirement and would result in a violation of SPP's reliability criteria and NERC reliability standards. The commenters further noted that out of the fourteen load

- serving members i mpacted by the EPA's projected EGU retirements, nine would be deficient in 2020. Furthermore, SPP found that its anticipated reserve margin would fall to

- 4.0% by 2024, causing ten of SPP's load

- serving members to be deficient.

Commenters also presented i nformation by other reliability experts:260 • In a letter to EPA, 18 current and former State PUC Commissioners asserted that

" [p]oor forecasting by EPA [in the proposed rule] also means the reliability of the electric grid will be threatened due to coal shutdo wns .... "

• Several sources have concluded that, if the NOPR were implemented, the Midcontinent Independent System Operator ( " MISO " ) and SPP would be forced to operate well below FERC's required 14.5% reserve capacity.

• A joint study by NERC and the Californi a ISO concluded that the reliability of bulk power supply can be diminished when renewable resources reach 20% or more of total supply (19)

- a number that EPA projects can be achieved or exceeded by 24 States to achieve the NOPR's emissions reduction mand ates.

Commenters stated that the concerns being raised by the organizations that focus on electricity grid reliability issues highlight not only the unprecedented scope of the NOPR, but also the risks it would create in an area where it has less expertise than other federal agencies such as FERC or industry bodies such as NERC and SPP. The commenters further stated that reliability impacts have not been adequately addressed in the NOPR or related technical support documents and that the impacts are so subst antial that the NOPR should be withdrawn to enable them to be more adequately assessed on a nationwide basis.

Commenters summarized some of the concerns by SPP that the NOPR would pose a " serious risk " to reliability and the bulk electric system will be at serious risk of violating limits [to ensure that transmission lines are not overloaded and voltage is maintained]. The commenters presented SPP's conclusions from the assessments:

• If the assumed EGU retirements were to occur absent requisite transmissio n and generation infrastructure improvements, the power grid would suffer extreme reactive deficiencies that would expose it to widespread reliability risks resulting in significant loss of load and violations of NERC reliability standards.

• Even with gener ation capacity added to replace the assumed EGU retirements, additional transmission infrastructure will be needed to maintain reliable operation of the grid. The assessment revealed 38 overloaded elements in portions of six states that SPP would be requir ed to mitigate with transmission planning solutions.

Commenters noted that the transmission expansion currently planned in SPP does not consider EGU retirements expected as a result of the CPP and that EPA's projected EGU retirements represent approximatel y 6,000 MW of additional capacity being retired in the SPP region beyond that currently expected by 2020, or approximately a 200% increase in retired generating capacity compared to SPP's current expectations. The commenters noted that SPP's transmission system impact evaluation indicates serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have significant impacts on h uman health, public safety and economic activity within the region.261 Commenters said EPA's analysis does not appropriately consider all of the potential impacts on the safe and reliable provision of electricity, nor the potential adverse impacts on the cost of electricity that can result from implementation of the Proposed Rule as drafted. The commenters said increased renewable generation resulting from building block 2 will likely result in the need for additional electric transmission facilities or constr ain existing facilities; likewise, greater reliance on cleaner

- burning natural gas will create a greater demand on natural gas infrastructure. The commenters said the interrelated nature of the natural gas and electricity markets, combined with varying com pliance costs and mandates between neighboring states, will complicate the ability to permit and develop the needed infrastructure, resulting in a direct impact on electric system reliability. The commenters stated, furthermore, EPA's analysis does not app ear to review how the proposed requirements would influence the dispatch of electric generation resources, potentially shifting the market away from an efficient economic dispatch structure, to one that is driven by environmental mandates, and this could s ignificantly increase the cost of electricity to consumers and adversely impact the economies of the states involved, as well as negatively affect grid reliability.

Commenters stated EPA's assessment must include an evaluation of how the proposed reduction targets would impact individual states within an interconnected electrical planning region where the interconnected states have widely varying reduction mandates. The commenters said that impacts could adversely affect the cost and reliability of electric ity throughout a region, and based on comments already received from stakeholders, EPA has recognized the interrelated nature of the building blocks and the need to develop necessary infrastructure. The commenters said there is insufficient data in the rec ord to conclude that the Proposed Rule will not adversely impact the availability or reliability of electricity. The commenters said while EPA indicated that it had consulted with ISO and RTOs, other agencies that would be most optimally positioned to

asse ss the impacts of the Proposed Rule on electricity reliability and costs

- the Federal Energy Regulatory Commission (FERC), the North American Electric Reliability Corporation (NERC), the Western Electric Coordinating Council (WECC), and other local and re gional balancing authorities

- do not appear to have been engaged in EPA's initial assessment. The commenters stated that emphasizing the importance of ensuring that the Proposed Rule does not jeopardize the electricity bulk system, on November 7, 2014, FE RC Chairman Cheryl LaFleur called for a reliability mechanism to be incorporated into the Clean Power Plan, noting that " protecting reliability isn't optional " . The commenters said the EPA should utilize the expertise and regional insights of these various agencies to further refine the Proposed Rule in a manner that addresses the concerns that have been raised. The commenters stated that at the national level, NERC has underta ken reliability assessments to examine the Clean Power Plan and identify the reliability implications and potential consequences from the implementation of the Proposed Rule and the EPA's underlying assumptions. The commenters added that the NERC Initial R eliability Review notes that there are several assumptions embedded in EPA's building blocks that are likely to impact the reliability of the bulk power system, and which should be further considered prior to finalizing the Clean Power Plan. The commenters said NERC identified several assumptions that warrant further consideration, including the following:

• Development of replacement generation for facilities that will be retired may be too conservative, and developing replacement generation in the constrain ed time262 period allowed for implementation under the Proposed Rule could present significant reliability challenges;

• Constraints on electric transmission and gas pipelines due to greater reliance on variable resources and natural gas are not properly accoun ted for;

• Proposed energy efficiency expansions are not supported by peer data;

• Changes to the resource mix resulting from implementation of the Proposed Rule will result in changes to the operations and expected behaviors on the bulk power system that are not addressed in the Clean Power Plan;

• Necessary reliability enhancements are not likely to be implemented within the timeframe contemplated under the Proposed Rule.

Commenters stated NERC also recommends that the Proposed Rule include a form of reliabilit y assurance, which should be developed on a multi

- agency and state level, and " EPA, FERC, the DOE, and state utility regulators should employ the array of tools and their regulatory authority to develop a reliability assurance mechanism, such as a 'reliabi lity back

- stop' " (NERC Initial Reliability Review, p. 3). The commenters stated the EPA should continue its outreach to stakeholder groups and work with NERC and other agencies that will be conducting reliability assessments to ensure that the development

- and implementation

- of the final rule does not have the unintended result of disrupting the reliability of the nation's bulk power system.

Commenters stated, in addition to the nationwide review conducted by NERC, in the west, WECC has undertaken a phas ed

- study process that is intended to provide the industry with unbiased and independent analysis of the potential reliability impacts of the Proposed Rule. The
commenters said that in WECC's preliminary report

, one result of exploratory sensitivities
regar ding carbon price " highlighted the interconnected nature of the Western Grid " (WECC Preliminary Technical Report at p. 30). The commenters said this emphasis on the interconnected nature of the regions relevant to the provision of electricity cannot be und erstated, and must be recognized by EPA in the final rule that is promulgated.

Commenters said coordination with FERC, NERC, and WECC to determine the real impact of the Clean Power Plan on regional and national operations and markets is essential, and mus t be done prior to making any final determinations regarding the Proposed Rule's impact on the electricity markets. The commenters urged EPA to review the studies being done by NERC, WECC, and other regional entities, and to address national and regional r amifications of the EPA's proposal in the final rule. The commenters said EPA simply cannot promulgate massive, national emission reduction strategies like those proposed in the Clean Power Plan without fully analyzing the impacts on the provision of elect ricity and the cost of the electricity.

Commenters said concerns regarding impacts to reliability have been raised at the national, regional, and state

- wide level. The commenters said that in a prepared testimony, FERC Commissioner Moeller raised concerns regarding the impacts of the Clean Power Plan on the integrated electricity grid, including concerns regarding infrastructure constraints and integration issues. The commenters said the integrated nature of the electric grid and the need for multi

- state263 co ordination are not adequately address in the Proposed Rule, and as more fully addressed below, there would likely be significant benefits to having a regional plan in the west, given the interconnected nature of the electric grid. The commenters stated tha t while multi

- state and regional plans and agreements would address many of the " seams " issues associated with the interconnected nature of the electricity grid, there are a number of impediments that are likely to thwart the timely development of such reg ional plans, including the level of reductions required of neighboring states, the interaction between potential rate

- and mass

- based approaches utilized by neighboring states, and the amount of time that will be required to coordinate such a plan between multiple governmental agencies. The commenters said it is these very concerns that have prompted FERC Chair LaFleur to note that FERC will need to be involved in implementation and enforcement of the Proposed Rule to ensure that reliability is protected, a nd LaFleur has also noted the complexities associated with regional implications, which would require a lot of " work to help regional transmission organizations patch together state plans to ensure that states can comply with the rule while power generatio n is dispatched regionally "

.

Commenters stated that SPP's comments filed on October 9, 2014 in response to the proposed rule and based on SPP's own evaluation are centered around a reliability impact assessment based on the EPA's plan. The commenters ide ntified several of SPP's concerns including the SPP region will experience numerous thermal overloads and low voltage occurrences. The
commenters also stated that based on the SPP's analysis, it is clear EPA has not adequately demonstrated the reliability of its Clean Power Plan and due to the shortcomings of the EPA's IPM modeling, EPA cannot demonstrate whether its Clean Power Plan is reliable. The
commenters stated that EPA must rely on Regional Transmission Organizations and utilities to determine what changes to generation mix are feasible while still ensuring reliability of the electric grid.

Commenters stated that the organization supports NERC's conclusions and recommendations in the November 2014 report and reiterates that analysis must be performed to demonstrate electric system reliability before states commit to plans that include changes to their current generation portfolios.

Commenters cited concerns from NERC, Edison Electric Institute, MISO, and SPP regarding retirements and shrinking reserve margins of coal

- generated power and its impacts on reliability for various regions of the country. The commenters stated that electric grid operators in their region will be placed into a situation where an increasing amount of backup and emergency proced ures are necessary to ensure the adequate supply of electricity.

Commenters stated that several entities such as NERC, FERC, SPP, MISO and SO/RTO Council have examined the reliability impacts of the Proposal, and have found that it would exacerbate the rel iability concerns that already exist due to the nation's transition from coal

- fired generation to natural gas and renewables. The commenters stated some of the reliability concerns raised by NERC with regard to the four building blocks. The commenters sta ted challenges to reliability that would occur from the change in resource mix contemplated by the Proposal and that with greater reliance on natural gas, there are risks from the reduced diversity and increased reliance on a single fuel source. The comme nters cited NERC's recommendations to ensure reliability including a Reliability Safety Valve, immediate coordination and meetings among EPA and state and industry planning and analysis groups, more time for implementation of the Proposal, and a264 " reliabili ty back

- stop " that would allow for greater timing readjustments and granting extensions, when needed.

Commenters stated MISO performed an initial analysis of the Proposal and concluded that up to 14 gigawatts (GW) of coal capacity could be at

- risk for reti rement in addition to the 10 to 12 GW expected to retire to comply with the MATS. The commenters stated that MISO already faces extremely tight reserve margins, increased probability of reliance on emergency operating procedures, and loss of load. The com menters noted that MISO called for removal of the interim compliance requirements and greater flexibility in any final rule to reduce reliability risks.

Commenters stated that a FERC commissioner raised reliability concerns and indicated support for a RSV that also included cost as part of the reliability assessment. The commenters also stated that SPP recommended EPA provide more time for compliance with any final rule and include a RSV. The commenters also stated that AF&PA and AWC support adoption of an RSV, and the other mechanisms to reduce reliability risks discussed in this c omment.

Commenters referenced NERC's reliability impact study their concerns related to the CPP that are more impactful than prior environmental compliance programs due to the extensive impact to fossil

- fired generation NERC's questioning many of the assum ptions EPA used to support its economic impact analysis of the CPP. The commenters cited NERC who stated EPA's assessment of the potential coal plant retirements could be conservative, and that, if EPA's assumptions prove wrong, " developing suitable replac ement generation resources to maintain adequate reserve margin levels may represent a significant reliability challenge, given the constrained time period for implementation " . The commenters also wrote about NERC's concern about the CPP

- induced shift from coal to natural gas and renewables for power generation.

Commenters stated that with respect to Building Block 1, the Initial NERC Report acknowledges that improving the existing coal generation fleet's efficiency by six percent " may be difficult to achie ve. " Commenters stated that it explains that EPA calculated unit

- specific heat rates using gross generation data from the CEMS, thereby ignoring " generation

- reducing effects from post

combustion environmental controls . . . . " , and that EPA also used net

- g eneration data, without considering the fact that these retrofits would reduce the net output and net heat rate efficiency of affected units. " Not considering these reductions creates an inconsistent approach, especially considering that most coal

- fired EG Us will require control retrofits to comply with environmental regulations, such as [MATS] and Section 316(b) of the Clean Water Act. " Commenters further stated that EPA also assumed that turbine overhauls would result in major heat rate improvements but " [r]egular turbine overhauls are generally not practical or economical " because they require units to be out of service for protracted periods, and that the notion that there are significant efficiencies to be obtained through overhauls also ignores the

rea lity that generation owners have strong incentives to operate at peak efficiency, including profit incentives in FERC

- regulated wholesale power markets. Commenters stated that, moreover, the Initial NERC Report notes that EPA fails to account for factors t hat have

" profound effects on the process efficiency of a coal

- fired EGU, " including " (1) subcritical versus supercritical boiler designs; (2) fluidized bed combustion, integrated gasification combined

- cycle (IGCC), and pulverized coal; (3) unit size and a ge; and (4) coal quality variations in moisture and ash (i.e., every 5 percent change in coal moisture results in a 1 percent change in boiler heat rate efficiency). "265 Commenters stated that in the November 2014 " Potential Reliability Impacts of EPA's Clea n Power Plan " report, NERC stated: " NERC is concerned that the assumed improvements may not be realized across the entire generation fleet since many plant efficiencies have already been realized and economic heat rates have been achieved. Commenters state d that multiple incentives are in place to operate units at peak efficiency, and periodic turbine overhauls are already a best practice "

.

Commenters stated that NERC pointed out a number of areas which EPA's analysis fails to account for that impact coal unit efficiency and ultimately have reliability implications: 1) factors including subcritical versus supercritical boiler designs, 2) fluidized bed combustion, integrated gasification combined cycle (IGCC), and pulverized coal, 3) unit size and age, and 4 ) coal quality variations in moisture and ash.

Commenters stated that the NERC reliability study highlights faults with US EPA's regression analysis. Commenters stated that NERC also cites numerous problems with US EPA's regression analysis in building bl ock 1. Commenters stated that the NERC Reliability Study states that US EPA fails to account for (1) coal

- fired plant retrofits; (2) subcritical vs. supercritical boiler designs; (3) fluidized bed combustion, integrated gasification combined

- cycle (IGCC), and pulverized coal; (4) unit size and age; and (5) coal quality variations in moisture and ash.

Commenters stated that over time, the utilities will want to retire the coal plants that operate at low capacity factors, but that can be delayed until they ca n be made redundant by efficiency, renewables, new gas plants, CCS coal, nuclear, transmission, or other solutions. Commenters stated that some observers assume that the Plan would require shutdown of power plants required for reliability. Commenters stat ed that AEP CEO Akins said:

" I instructed my team here at AEP to run system planning and performance studies, typically known as load

- flow studies that engineers use to plan and confirm the reliable operation of the grid. And I asked them to assume the EP A 2020 cornerstone assumptions and add generation that's included in the PJM queue. The results of those studies found widespread occurrences of voltage degradation, collapse, and in fact, cascading outages of the electric grid. These results are even befo re any contingency outages, such as loss of generation or transmission facilities. The Southwest Power Pool ran their own studies and confirmed the same results for their region of the country, which we also serve. "

Commenters stated that indeed SPP's pres entation in Arkansas (October Presentation 4) claims as follows: “ If CPP compliance begins before generation and transmission infrastructure is added [the region will experience] extreme reactive deficiencies of approximately 5,200 MVAR across SPP system, [which] will result in significant loss of load and violations of NERC reliability standards. During CPP compliance without additional transmission infrastructure, loading on 38 facilities in SPP [would] exceed equipment ratings, some overloads would be so severe that cascading outages would occur, [resulting] in violations of NERC reliability standards. (Slide 11) By 2020, SPP's anticipated reserve margin would be 4.7%, representing a capacity margin deficiency of approximately 4,600 MW. By 2024, SPP's an ticipated reserve margin would be

- 4.0%, representing a capacity margin deficiency of approximately 10,100 MW ”

.

Commenter s stated that our nation's electrical power grid is interconnected and dependent upon a stable and constant flow of energy. Commenter s said that regional power organizations such as266 the Southwest Power Pool (SPP) and the North American Electricity Reliability Corporation (NERC) are mandated by the Federal Energy Regulatory Commission to ensure reliable supplies of power, adequate transmi ssion infrastructure, and competitive wholesale prices of electricity. Commenter s said that several of these organizations have expressed serious concern with the impact of the rule.

Commenters stated that they concur with NERC conclusions. Commenters sta ted that the interim goals provide a constrained time period for implementation to the point of being unrealistic and efforts to meet the interim goal will raise reliability concerns. Commenters stated that the heat rate improvements contained in Block 1 a re unrealistic because heat rate improvements that are technically available already have been implemented.

Commenters stated that the EPA should schedule technical conferences with FERC, NERC and the regional transmission organizations to fully evaluate p otential impacts of the CPP on power grid reliability.

Commenters stated that Section 215 of the FPA authorizes FERC to certify an electric reliability organization to develop and enforce mandatory reliability standards for the nation's bulk

- power system, and further authorizes FERC to approve and enforce those reliability standards. Commenters stated that pursuant to this authority, FERC has certified the NERC as the electric reliability organization. Commenters stated that NERC and its various regional re liability entities now administer a comprehensive set of mandatory reliability standards subject to FERC's oversight. Commenters stated that the Proposed Rule acknowledges that reliability is an issue of concern, but ultimately rests on a conclusion that i t provides sufficient flexibility to avoid reliability concerns.

Commenters stated that EPA has not adequately consulted with FERC or NERC regarding its conclusion on the potential reliability implications of the Proposed Rule or other issues related to NE RC's reliability standards approved by FERC. Commenters stated that there is every indication, however, that the massive changes in generation dispatch that the Proposed Rule would require will lead to conflicts between EPA's policies and NERC's reliabilit y standards. Commenters stated that EPA contravenes Section 215 of the FPA by supplanting FERC as the ultimate authority over the reliability of the bulk

- power system.

Commenters explained the process by which the Arizona Cooperation Commission monitors

r eadiness of facilities to meet energy demands, and address issues of quality and reliability. The commenters stated that the EPA's proposal will overtake well thought out existing state processes designed to ensure reliability electric service to customers , and jeopardize reliability of the grid and electric service in the state.

Commenters claimed that the EPA did not consider reliability in their analysis for the CPP. Commenters stated that the requirement to redispatch NGCC units to achieve a 70% capacit y factor may require significant transmission upgrades that are necessary to maintain system reliability. The commenters referenced the NERC's and SPP's Reliability Impact Assessments of the CPP, NERC's report published in November 2014, entitled " Potentia l Reliability Impacts of EPA's Proposed Clean Power Plan " and SPP's assessment published October 2014. Commenters referred to the FERC's reliability standards.267 Commenters stated, EPA's assumption that the Proposed Guidelines' emission reductions could be a chieved on the contemplated timetable without significant negative impacts on electric reliability and reliability markets is contradicted by independent expert analyses. Commenters extensively referenced the " Initial NERC Report " and also noted some other expert analyses. Commenters said, these detailed comments are related to the " arbitrary and capricious " issue but are more specifically related to technical concerns of electric system reliability and so are presented in section 8.10, Reliable affordable electricity.

Response 39: Since issuing the proposed rule, EPA has held many discussions concerning the potential reliability concerns with the proposed rule, and has modified the proposal to address reliability in this final rule. On reviewing the comments that appear throughout this section, EPA notes that some comments on reliability express concerns that the rule will adversely im pact reliability, while others do not foresee such impacts, and some see benefits in terms of modern izing the generation fleet. EPA believes that reliability can be addressed in the state planning process in ways that will ensure that conflicts with relia bility requirements and compliance with this final rule will be very unlikely, and also provides a R eliability Safety Valve mechanism in the event of such unlikely and unanticipated occurrences. See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule.

Comment 40: Multiple commenters discussed reliability concerns with the proposed rule.

Commenters stated that the timing and scale of the expected changes needed to reach the CO2 emission goals could have a harmful impact on grid reliability given curren t regional market designs and existing transmission infrastructures. The commenters stated that there is a limit to how fast compliance can be achieved within applicable reliability criteria and that resource mix changes will force the following reliabilit y impacts: retirement of up to half of existing coal capacity in the ERCOT region and an associated loss of dispatchable generation capacity, increased challenges to integrate renewable resources and the associated costs to procure additional regulating se rvices, improve forecast accuracy, and address system inertia issues, improvements in transmission systems to integrate resource mix changes, and changes to energy market design and their associated costs

. The commenters stated that the final rule must inc lude a process to effectively manage electric system reliability issues and a more flexible implementation timeline to address each state's or region's unique market characteristics.

Commenters stated that the proposed rule could jeopardize the security o f ancillary services, a crucial element to reliability in ERCOT system, due to additional renewables on the grid. The
commenters further explained that because the five

- minute dispatch in ERCOT does not insure that appropriate resources are available to ba lance system generation and system load, ERCOT procures ancillary services to ensure that sufficient resources with necessary characteristics are available to balance any additional variability and to maintain system frequency through a variety of potentia l conditions, including unit trips, large up or down ramps, and ensuring enough268 capacity is available. The commenters noted that NERC also recognized this issue in its reliability assessment report and provided supporting text from the report noting ERSs' role in load and resource balance, voltage support and frequency support that may be impacted by a changing resource mix.

Commenters stated that " EPA, [in] its own words, merely assumed that adequate transmission capacity would be available to deliver res ources seamlessly and reliably. However, this assumption may not even be valid for the system that will exists in 2016, after all MATS retirements have occurred, and certainly cannot be assumed to be the case once all other recommended changes introduced b y the CPP take place. "

Commenters stated that EPA's assumption that transmission is adequate within or between regions is flawed and unsubstantiated. The commenters discussed the results of AEP's preliminary power flow analyses for the transmission systems in PJM and SPP based on EPA's modeled unit retirements in 2020 and stated that the analyses identified severe, widespread reliability concerns such as thermal overloads, low voltages, and voltage collapse leading to cascading outages. The commenters note d that the study results are likely to be conservative because they did not include an analysis of inter

- regional impacts or the effects of adding substantial amounts of new renewable generation. The commenters anticipate d that the reliability issues ident ified would require significant upgrades to the transmission infrastructure to maintain system reliability, accommodate new generation, and to support the dispatch of the system in a manner significantly different from historical operations.

The commenter s also noted that the study's reliability analysis showed significant reliability problems within many of the 64 IPM model regions and the assumed ratings of the interfaces between the IPM regions are negatively impacted by the changes to the generation fl eet. The
commenters added that these interface ratings are established using power flow models and often are limited by voltage limitations as opposed to transmission line capacity, and that AEP's analysis shows that the capacity of key interfaces within P JM could be reduced by as much as 20% due to a reduction in voltage support following retirement of coal generating plants. Commenters recommended that at a minimum, RTOs should facilitate development of transmission upgrades necessary to sustain reliabili ty and ensure the integrity of the transmission grid is maintained during the implementation period.

Commenters stated that the proposed rule could negatively impact large industrial customers due to reliability risks stemming from the proposed rule and ot her recent regulatory burdens. The
commenters cited reliability concerns of NERC, SPP and ERCOT.

Commenters discussed reliability concerns associated with the 120 gigawatts of installed coal capacity due to be retired as a result of the previous and propos ed rules and stated that replacing this amount of installed capacity cannot be done with intermittent renewable sources alone. The
commenters noted that events such as the polar vortex may overwhelm infrastructure without coal

- fired plants if enough natura l gas is unable to be secured like previous events.

Commenters also discussed reliability and cost concerns associated with the proposed rule during
extreme events. Commenters further stated that the proposed rule does not account for infrastructure challenges associated with redispatching, and stressed the importance of coal fired269 plants in maintaining fuel diversity and hedging against price volatilities that disproportionate ly impact low and fixed income citizens.

Commenters stated that the difference between previous rules and the proposed rule is that the power grid's fuel flexibility and choice was maintained under previous actions, whereas the proposed rule will displace fuel sources and upset reliability and cost

- effecti veness.
Commenters also stated concerns with the affordability and reliability impacts of the proposed rule.

Commenters stated the proposed EPA rule considers only the adequacy perspective of the reliability impact of the rule and does not address the po tential thermal, voltage, or frequency impacts. The commenters further stated that the rule does not consider the associated potential transmission economic implications of additional facilities required to ensure operational reliability or financial impli cations of stranded transmission investments that become underutilized as a result of the change in system power flows.

Commenters also stated that constructing new facilities requires outages on existing facilities, which are increasingly difficult to sch edule, and coordinating outages across many systems that are attempting to simultaneously develop new transmission facilities will be challenging and likely result in increased congestion costs and longer lead times to commission the new facilities
as sequ encing of outages will be required. The commenters noted that most of the transmission reliability considerations can be mitigated with additional investments in transmission infrastructure, but the impact of these costs and timing of these facility upgrad es on reliability during transitional periods should be considered as part of the proposed rule.

Commenters stated that under Clean Power Plan conditions and forecasts, it should be prudent for EPA to provide leeway for states, for Regional Transmission Or ganizations (RTOs), and the various Independent System Operators (ISOs) to incorporate into EPA's Clean Power Plan safeguards that better protect the reliability of the bulk power system and the resiliency of the bulk power system. The commenters stated t hat EPA needs to consider transitional precautions, such as retaining some of the inactivated coal

- fired generating units in New England as
emergency, or " black start " reserves, to prevent long term regional grid outages during the 15

- year (2015

- 2030) EPA Clean Energy Plan transition.

Commenters stated that EPA Clean Power Plan is based upon a rationale that needs to include greater robustness to cope with emergency grid outages. The commenters stated that NERC conducted a review of the EPA Clean Power Pla n and found greater reliance on natural gas

- fired generation and long distance electricity transmission are likely results of the EPA plan, as well as challenges to reliability. The commenters also provided quotations from a FERC commissioner on planning for gas

- electric interdependence as well as findings of the Lincoln Laboratory at MIT that the electricity generation system has become increasingly dependent on the operation of the natural gas system.

Commenters stated the central issue with the NOPR is that EPA has not adequately assessed its impact on the reliability of the electricity grid and that the rule would have significant adverse impact on grid reliability. The commenters further stated that EPA's failure to fully and properly270 assess and accoun t for the NOPR's impact on grid reliability puts at risk the economic viability of thousands of manufacturing facilities in the United States that are interconnected to their utilities at transmission voltages. The commenters provided examples of the econo mic effects of power outages on the industrial sector.

Commenters referenced NERC's November 2014 report, which identifies concerns related to the changes in resource mix and the consequent reliability issues that would be forced by the NOPR. The commenter s further stated the NERC found that the NOPR would constrain the availability of Essential Reliability Services resulting from the intermittent nature of Variable Energy Resources ( " VERs " ) such as wind and solar. The commenters also noted that NERC indic ated that the number of estimated retirements identified by EPA " may be conservative if the assumptions prove to be unachievable. Developing suitable replacement generation resources to maintain adequate reserve margin levels may represent a significant re liability challenge, given the constrained time period for implementation. The commenters further noted the NERC warned that increased penetration under the NOPR of so

- called Distributed Energy Resources ( " DERs " ), which most commonly are roof

- top photovolt aic arrays, will pose significant challenges to system operators because this resource cannot be dispatched and is generally invisible to the operator.

Commenters stated that the compliance with the proposal for reductions in CO emissions by almost 30 perc ent will directly cost the state by increased energy rates, loss of jobs in industry, and a negative impact of less in energy reliability. The commenters further stated that the U.S. Chamber of Commerce predicts that the compliance cost of these new regul ations will be $28 billion each year to 2030, which is a cumulative total of nearly $480 billion. The commenters noted this is three times larger than EPA's estimate and rising electric rates would damage our gross domestic product (GDP), with the loss in GDP to be $50 billion per year and peaking at $100 billion in 2025.

Commenters stated that energy reliability could be jeopardized because these rules will remove coal from the energy mix and reduce the overall amount of power generation available and that their nursery business cannot continue our record of successful business with rolling blackouts or brownouts and plants that rely on irrigation would not survive.

Commenters stated that by eliminating diversity in fuel choices, this rule creates the poten tial of future electricity shortages and price spikes that would do great harm to those who can least afford it: hardworking American consumers.

Commenters stated that this past winter provided a clear warning that our bulk power system is close to the edg e of breaking, and additional power plant retirements induced by EPA rules would push it over the edge. The commenters stated businesses and families in many parts of the country paid unprecedented high prices for electricity. The commenters stated that c oal based power plants supplied 92 percent of the incremental demand for power this winter.

Commenters stated that an analysis performed by the Energy Ventures Analysis shows that wholesale power prices will rise 27 to 55 percent across different regions o f the country, with no state spared, and businesses and households paying $35 billion more for natural gas. The
commenters continued that EPA's assessment of the economic impacts of its rules inspires little271 confidence in the estimate that would cause les s than 5,000 megawatts of power capacity to close. The commenters stated that it will likely be 10 to 12 times more.

Commenters stated that there are few definitive answers about how this rule can actually work, that the cost and risks are real, but the b enefits are not. The commenters further stated that residents' economic and energy security are put at great risk, control of their electricity and energy supplies and infrastructure surrendered, and their state's full potential for economic growth forfei ted.

Commenters expressed concern about the reliability risks that are created by the proposal and the proposal needs to be carefully analyzed before anything like this is adopted. The commenters stated that EPA's proposal clearly increases the risk that our electricity supply will be less reliable and that EPA's own analysis suggests that roughly a third of the generation fleet will be retired between 2020 and 2030.

Commenters stated that EPA has not made any serious attempt to consider the practical and legal difficulty of getting all the approvals necessary to build not only new power plants, but also the transmission lines and pipelines that will be necessary for those plants. The commenters further stated that extreme weather conditions may expose peo ple who are most vulnerable to energy shortages and blackouts.

Commenters stated EPA claims that it has looked at the 18 reliability impacts. The commenters claimed EPA doesn't have expertise in this area, and there has been no consultation between EPA an d those who really are responsible for reliability, especially those at FERC.

Commenters stated given their experience with MATS those numbers could become far worse and closing so much coal so fast threatens the reliability of the nation's electric grid, creating the potential for widespread blackouts and brownouts during periods of peak usage. The commenters noted that during the recent polar vortex 90 percent of American electric powers coal plants scheduled to be closed under MATS were used to generate electricity and that PJM, a regional transmission authority operating in the Mid

- Atlantic and Eastern Midw est reportedly came within 700 megawatts of being unable to meet electricity demand.

Commenters stated the implementation of the proposed rule would cause serious economic harm, reduce energy diversity, increase electricity prices, jeopardize grid reliabil ity, result in major job losses, hinder coal technology advances, and fail to achieve the administration and EPA's goal of global leadership on CO2.

Commenters stated that the discussion needs to include the critical importance of the reliability of our e lectricity supply. The commenters stated that coal is, from all accounts, the most reliable fuel source to generate electricity on this plan[e]t and as Americans we take it for granted how reliable our electricity is. The commenters noted that in many case s it is literally a life giving and sustaining resource and for [EPA] to tamper with the reliability of electricity by forcing the switch to less reliable fuel sources is wrong

- headed and simply dangerous.

Commenters stated that the reliability risk create d by this proposal are significant and need to be analyzed carefully prior to the adoption of climate change policies at the federal and state level.272 The commenters further stated that EPA's building blocks require the states seeking EPA approval to reconf igure how electricity is generated and how it is dispatched. The commenters stated that at the end of the process the proposal promises that almost a third of the existing coal fired generation fleet will be retired between 2020 and 2022 and that these pla nts currently provide electricity that sustains our economy and the health and well

- being of our citizens. The
commenters noted that when these plants are shuttered, our electricity supply will be entirely dependent on EPA predictions about energy efficie ncy and the growth of costly underdeveloped alternative energies.

Commenters stated that EPA is not in the best position to craft reliability policies, and EPA has never been tasked with this authority by Congress. The commenters stated that the most effe ctive reliability policies result from the careful coordination between the federal energy regulatory commission, state and regional regulators, reliability organizations and other stakeholders, and under this proposal, EPA would be given the power to trum p their decisions by approving or disapproving state energy policies.

Commenters provided a review of available generation sources as an argument about reliability of coal and stated that coal accounts for 38 percent of the electric power generated, which is 1340 terawatts per hour, and the overall demand is expected to grow by 15 percent by 2030. The
commenters summarized the status of nuclear energy, noted that the current pipeline infrastructure for natural gas cannot support the required growth to cov er the loss of coal, production of solar panels is not economical due to global oversupply, and wind produced less than 3% of the current need. The commenters noted that energy production by solar and wind are weather dependent. The commenters also identi fied what other energy sources could replace coal, including biomass and algae, which are still in early stages and ethanol, which costs 3 dollars for every dollar's worth of fuel.

Commenters stated that closing coal plants and increasing the amounts on na tural gas for generation are adversely impacting reliability, affordability and supply. The commenters noted that American Electric Power relied on over 89 percent of its coal fired capacity from sources slated to close in April 2015 to meet the demand du ring the " polar vortex " , and the Southern Company relied on 75% of its announced closures.

Commenters stated concerns about the loss of jobs due to the EPA's proposed Clean Power Plan and estimates that the Clean Power Plan could kill 52,000 direct jobs and more than 100,000 associated positions by the year 2020 and EPA projects that this rule will cause the loss of 41 to 49 gigawatts of coal

- generating capacity by the year 2020. The commenters noted that these retirements are in addition to the 92 gigaw atts of coal capacity that the EPA is already projecting will shut down between 2012 and 2020, due in large part to the compliance with the 2012 Mercury and Air Toxic Rule. The commenters stated that these things raise serious, serious concerns for the re liability of the electric power supplies and that gas alone is not the answer.

Commenters recommended that the proposed rule provide credit to states that have already reduced carbon emissions to help meet EPA targets and also a delay in the implementation of the Clean Power Plan to give states and utilities adequate time to implement compliance with these strategies.273 Commenters stated that one of the keys to achieving those goals is maintaining a stable electric grid that delivers reliable and affordable p ower, but the electricity service that we take for granted is under stress from market dynamics, from inadequate transmission infrastructure, from too few new power plants that we need for supply, and new federal regulations. The commenters further stated that the federal government does not have a plan to ensure the stability of the grid and instead, has taken a series of piecemeal and ad hoc actions without a complete understanding of how they all interact together and impact the grid.

Commenters state d that this country's course on the electric grid is unsustainable and recommended to stop ad hoc regulation and changes to the electrical system, to appoint a task force with representatives from the EPA, Department of Energy, the Nuclear Regulatory Commi ssion, the Federal Energy Regulatory Commission, plus regional transmission operators, electric generator companies, and others to develop a comprehensive, integrated cross

- functional national grid policy and an action plan that will help to ensure an adeq uate, affordable, and reliable electric grid.

Commenters stated that they believe the EPA's expedited timeline to replace Florida's baseload coal generation with natural gas and intermittent renewables has serious implications for the reliability of Flori da's electric grid. The commenters made several points to support the conclusions: first, under normal circumstances it takes more than 5 years to plan, permit, and construct a natural gas combined

- cycle plant, which is the only new baseload capacity that can be added within the CPP's timeline; second there is the question of whether there will be enough pipeline capacity in Florida to supply natural gas to all of the new generators that would be required by the CPP. The commenters stated that reliability issues must be fully evaluated before the CPP can be adopted and this must be coordinated with the states and federal agencies that have exclusive jurisdiction over the reliability of the electric grid.

Commenters stated that the CPP appears to usurp the authority of FERC and NERC even though Congress clearly has granted this responsibility to the FERC and the states, and has not granted any such authority to the EPA. The commenters noted that both FERC and NERC ha ve expressed concerns about the CPP.

Commenters stated that the reliability of the electric grid is vital to the health, safety and wellbeing of everyone in the United States and to our economy, and reliability issues must be fully vetted with the states a nd with PERC before the EPA issues its final rule.

Commenters stated that compliance with the emission limits contained in the proposed rule has the potential to raise electric system reliability concerns associated with the shutdown of coal

fired generati ng units. The commenters further stated that the transmission system is planned and built to ensure reliable delivery of system resources to identified load centers and all of the planning work is performed in accordance with NERC planning standards.

Comme nters stated that transmission planning analysis focuses on a future horizon that allows sufficient lead time to complete corrective measures before the identified issues can occur and that the corrective measures are chosen based on cost effectiveness. T he commenters identified a concern expressed by NERC with the transmission and timing constraints that EPA's proposal ignores.274 Commenters stated that when generating resources are affected by new environmental regulations, and compliance with those regulat ions affects continued operation of those resources, the approach to compliance must recognize that any resulting changes to generating resource operation, up to and including possible shutdown of that resource, will affect the pattern of system flows on t he transmission system and potentially have a negative impact on transmission system reliability. The commenters stated that significant changes to the pattern of power flows could result in cascading outages or voltage collapse under contingency conditio ns that were not considered in the original planning if there is not sufficient time to implement corrective measures on the transmission system.

Commenter s stated the real impact to a specific system cannot be known without study of the specific effects of proposed environmental regulation on the generation fleet. The commenters further stated assumptions cannot be made as to whether or not there will be a serious impact without completion of a transmission planning analysis based on the best estimate of generation impacts, and it would be imprudent to establish a compliance deadline for the environmental regulation without consideration of the transmission reliability effects.

Commenters stated the proposed regulations will push the system over the bri nk and trigger rolling blackouts during times of peak electricity demand in the winter and summer.

Commenters stated that the rule would substantially reduce the use of coal fired generation. The
commenters listed some of the advantages of using coal. Th e commenters stated that the rule would increase dependency on natural gas, which is delivered in real time and not stockpiled like coal, for power generation. The commenters further stated that the rule would also increase reliance on renewable energy, w hich can be very expensive and is also unreliable. The
commenters stated that grid reliability problems lead to electricity curtailments of manufacturing facilities that can cost small manufacturers tens of thousands of dollars a day, and large manufacturing companies tens of millions of dollars a day and is especially troublesome during peak demand periods.

Commenters stated we have the energy resource to continue to provide cheap and efficient power, yet we throw it all away for hope and a prayer. The commenters stated that this policy will simply not be sustainable w hen fully implemented and no one can tell what the actual impact will be on the power grid that cannot react to immediate increased power needs on a lower scale. The commenters also stated it is certain wind and solar cannot meet any of these instantaneous demands and if we continue to travel down this road towards energy deficiency, somebody had better written another rule to determine power rationing.

Commenters stated that several organizations that are responsible for electric reliability or efficient grid operation have expressed serious concerns about the proposed rule's threat to on electric reliability. The commenters identified these organizations include the North American Electric Reliability Corporation, the Southwest Power Pool, the Midcontinen t Independent System Operator, and the Electric Reliability Council of Texas. Part of the concern expressed by these organizations is the short period of time EPA proposes between approval of state compliance plans and the substantial CO2 reductions requir ed during the first years of the CPP. The commenters noted this front

- loading of the CO2 reduction requirement has the effect of requiring states to achieve, on average, 75 percent of the total reductions required during the275 first 10

- year implementation p eriod (2020

- 2029) there is simply not enough time to achieve these reductions due to the limited opportunity to build out the additional generation capacity and natural gas and transmission infrastructure that would be necessary.

Commenters stated that to assure the reliability of the electric grid, NERC and the various other regional transmission authorities must have an opportunity to evaluate the potential reliability impacts of state plans. The commenters stated further that due to the interconnections of the electricity grid across state boundaries, a comprehensive evaluation of potential reliability impacts can be accomplished only after all state plans are finalized. The commenters stated that this is not possible under the compressed schedule as curr ently proposed nor does the proposed schedule allow enough time for transmission operators to begin the design and permitting process for new infrastructure.

Commenters stated that independent, third

- party studies in Georgia project that the CPP alone will cause significant increase in electricity prices for all Georgia consumers. The commenters stated that NERA Economic Consulting projects that the CPP alone will cause a 12

- 13% increase in retail electricity prices and the National Mining Association esti mates similar impacts, including a peak year wholesale electricity price increase of 15.5% for Georgia consumers. The
commenters noted that the CPP will dramatically increase electrical grid stress and reliability challenges.

Commenters stated that NERC r eviewed EPA's rule and concluded that the agency's proposed regulatory deadlines " would increase the use of controlled load shedding and potential for wide

scale, uncontrolled outages " and the impact of the January 2014 polar vortex had on energy markets f urther demonstrates the importance of a diverse electricity power fleet.

Commenters stated it is imperative that these cost and reliability concerns be addressed, and accordingly, respectfully requests that EPA work with economic and reliability experts, s tates, and industry stakeholders to undertake a detailed, comprehensive analysis of potential cost and reliability impacts of the CPP before it is finalized.

Commenters stated that EPA has not adequately considered or explained its determination that the proposed rule will not affect electric grid reliability and that rather than conduct a sufficient review of reliability issues, the EPA flatly dismisses them. The commenters provided several (cited) quotations from several documents to support the positi on.

Commenters stated that EPA's dismissal of these serious reliability concerns cannot be explained. The commenters stated that FERC has raised significant concerns with the proposed rule that the EPA appears to ignore. The commenters stated EPA claims th at it has met on several occasions with staff from FERC and the Department of Energy to discuss EPA's approach to the rule and its potential impact on the power system but EPA does not indicate what, if any, position FERC or DOE staff has taken with respec t to these critical issues. The
commenters stated that moreover, the EPA appears to have ignored critical reliability observations made by FERC Staff and noted some of the correspondence between EPA and FERC. The commenters stated that regarding infrastr ucture development needed to meet the requirements of building blocks 2 and 3, FERC's Office of Electric Reliability alerted the EPA that such development could lead to significant costs for new pipelines and transmission.276 Commenters stated several concern s by NERC, and among other things, that the proposed rule introduces potential reliability concerns that are more impactful than prior environmental compliance programs due to the extensive impact to fossil

- fired generation. The commenters also noted NERC 's concern that a number of studies and analyses must be performed to demonstrate reliability, and industry must closely coordinate with the states to ensure the SIPs are aligned with what is technically achievable within the known time constraints. The

c ommenters stated that NERC also raised significant concerns about the EPA's analysis (or lack thereof) of the four building blocks. The commenters provided brief comments about each of the building blocks.

Commenters stated that similar concerns have been raised by other organizations that have evaluated the impacts of the proposed rule on their service territories. The commenters stated that SPP found that serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP regio n and that it is clear that the proposed rule will impede reliable operation of the electric transmission grid in the SPP region. The commenters further stated that ERCOT performed an analysis of the proposed rule and warned that, if implemented, the rule is likely to lead to reduced grid reliability for certain periods and an increase in localized grid challenges as well as have a significant impact on the planning and operation of the ERCOT grid.

Commenters stated implementation of the Proposed Rule as i t is currently structured will negatively impact reliability in the MISO region by forcing retirements of baseload coal plants earlier than they would have otherwise ceased operating. The commenters stated further that relative to an analysis in which the Proposed Rule is not implemented, EPA projects in its RIA that about 30 to 49 gigawatts of coal

- fired capacity is projected to be uneconomic to maintain (about 12 percent to 19 percent of all coal

- fired capacity projected to be in service in the base case) by 2020.

Commenters stated that compliance with the proposed rule will threaten the reliability of electricity generation and the reliability of electricity delivery to manufacturers. The commenters said conventional fossil fuel generators and hydro provi de many essential reliability services, including frequency response, voltage support, reactive power operating reserves and ramping capability to ensure that high

- quality power is always available to manufacturing customers, as well as others. The comment ers said , with the exception of hydro, zero

- emissions sources such as wind and solar, which are contemplated under EPA's plan to at least partially supplant generation lost due to retiring coal plants, generally cannot provide these services in the same

wa y. The commenters said more fossil

- fueled generators (mostly gas

- fired) will need to be kept on standby or operated part

- loaded to provide important reliability services, which will increase capital, operating and maintenance costs throughout the electric generation industry.

Commenters stated that EPA may want to consider the potential impact of the Proposed Rule on grid reliability. The comment ers stated that as a company with large, energy intensive manufacturing facilities in the U.S., reliable electric ity is critical and power outages have severe economic impacts. The commenters stated they develop contingency plans to prepare for these outages in their facilities and that these plans, along with investments in alterative electricity supply options, are costly. The commenters asked EPA consider the severe impact of outages and the importance of grid reliability to U.S. manufacturers in developing the final Clean Power Plan.277 Commenters stated that MISO estimates that within MISO 14 GW of coal units will b e retired as a result of the CPP, on top of the 12.6 GW retired due to MATS. The commenters stated that MISO projects that it will be short on capacity as the CPP is implemented and that energy will have to be imported to meet peak demand; however adjacen t systems will also be impacted by the CPP meaning additional energy may not be available for import. The commenters stated that MISO and similar energy markets operate based on reliability

- centered economic dispatch of resources and since 2003 MISO has ap proved $20.6 billion in reliability

- centered projects. The
commenters stated that changing the dispatch parameters may reduce the value of the previous infrastructure investment and the proposed CPP forces a fundamental change by requiring environmental di spatch of resources without consideration of reliability or economic impacts.

Commenters stated that numerous studies and analyses of the CPP have been conducted and these studies uniformly conclude that the CPP, as proposed, will negatively impact the rel iability of the rural electric power supply. The commenters stated that EPRI explained in its comments on the CPP that if the levels of RE, nuclear credits, and EE (Building Blocks 3 & 4) contemplated by the proposed CPP are not achieved, power generators may be forced to choose between compliance and reliability, resulting in a shortage of electricity if the CPP is not properly implemented. The commenters stated further that comparable findings were made by NERC in its reliability study.

Commenters stated that in the proposed CPP, EPA is taking an unprecedented approach to environmental regulation and that EPA is directing utilities how to generate electricity. The
commenters stated that because the proposed CPP places severe restrictions on utilit y operation, and because it impacts nearly all power generation in a relatively short time frame, impact on grid reliability will be greater from the CPP when compared to prior environmental regulation
programs.

Commenters provided an example in which the CPP's EE goals far exceed recent trends and projections included in reports and analysis conducted by NERC, the Energy Information Administration (EIA), EPRI and various utilities. The commenters stated if a state cannot meet the EE goal, offsets in the f orm of coal retirements may be required. The commenters stated that separate pending EPA regulations could also require some coal units to be retired, which would cause additional strain on the system and could negatively impact reserve margins and reliabi lity.

Commenters stated that according to a study by IHS Energy, several states in the North Central region face significant compliance gaps between their assigned CPP emission rate goals (both interim and final 2030). The commenters presented IHS calcul ations of the compliance gaps for several states. The commenters stated that accomplishing the EE goals and obtaining RE alternatives is highly unlikely, therefore, the primary compliance action would be eliminating enough coal

- fired generation to meet EP A's proposed goal. The commenters stated that the IHS energy report indicates that reliance on coal

- fired generator retirements as the compliance mechanism would mean significantly reducing the amount of coal

- fired generation.

Commenters stated that NERC' s studies show that as variable sources of energy generation increase, maintaining voltage stability becomes challenging. The commenters stated further that coal

- fired generators are able to respond automatically to frequency changes, provide operating278 re serves ramping capability and disturbance performance, and that RE sources are not similarly capable of. The commenters stated that NERC concluded that the RE goals established in the CPP may overestimate reasonably achievable expansion levels for RE sourc es and do not fully reflect reliability consequences of RE sources. The commenters stated that FERC is also concerned the CPP will hamper reliability of the energy grid and that FERC commissioners' testimony makes clear that the agency is gravely concerne d about impacts that the proposed CPP will have on grid reliability.

Commenters stated that studies and analyses undertaken by, and on behalf of, numerous rural electric cooperatives all reached the same conclusion: the reliability of the power supply grid will be significantly harmed by the CPP's proposal to retire numerous EGUs, nor does the CPP provide adequate mechanisms to successfully replace these lost power sources with NGCC, RE or through reduced demand in the form of EE.

Commenters summarized the findings of the NERC's November 2014 major conclusions:

• The number of estimated retirements identified in EPA's proposed rule may be conservative if the assumptions prove to be unachievable; developing suitable replacement generation resources to maintain adequate reserve margin levels may represent a significant reliability challenge.

• The assumed improvements in heat rates may not be realized across the entire generating fleet.

• Increased natural gas use will require pipeline expansion to maintain a reliable source of fuel, particularly during the peak winter heating season.

• With such aggressive energy efficiency expansion, the EPA assumes that energy efficiency will grow faster than electricity demand, with total electricity demand shrinking after 2020. If the EPA

- assumed energy efficiency growth rate cannot be obtained, additional carbon reduction measures would be required.

• State and regional plans must be approved by EPA which is anticipated to require up to one year leaving as little as 6 month s to 2 years to implement the approved plan. Areas that experience a large shift in their resource mix are expected to require transmission enhancements to maintain reliability.

Commenters concluded that based on the Initial Reliability Review, it is appar ent that EPA did not fully consider the serious reliability impacts of the proposed CPP rule and that many of the NERC reliability concerns could be ameliorated by extending the initial, interim and final compliance goal deadlines for the rule to account f or NERC and industry reliability concerns.

Commenters stated that separate studied by independent parties (NERA Economic Consulting and Energy Ventures Analysis) will cause increases in retail electricity prices ranging from 12% to 31%. The commenters sta ted that independent experts and key stakeholders are increasingly alarmed that the CPP will dramatically increase electrical grid stress and reliability challenges. The commenters stated that NERC's review of EPA's rule would increase the use of controlle d279 load shedding and potential for wide

- scale, uncontrolled outages. The commenters stated further that the impact that the January 2014 polar vortex had on energy markets further demonstrates the importance of a diverse electricity power fleet and how furt her federal regulations aimed at limiting fuel options could threaten the nation's electrical grid.

Commenters stated that EPA work with economic and reliability experts, states, and industry stakeholders to undertake a detailed, comprehensive analysis of potential cost and reliability impacts of the CPP before taking any further action on the proposal.

Commenters stated that the CPP will reduce the reliability of electricity to consumers because it forces dramatic reductions in the use of some of the more highly reliable forms of generation, including early retirement of conventional generating units, and potentially forces limits on the hours of operation, while requiring the increased use of less reliable and more expensive renewable energy generation.

Co mmenters stated that the rule also poses a threat to electric reliability and that nationwide, 132 gigawatts of generating capacity is projected to retire between 2016 and 2020, of which 68 GW is directly attributable to the Clean Power Plan, while in Colo rado, 645 megawatts of fossil fuel electric generating capacity is projected to retire, and it is uncertain if Colorado, and neighboring states similarly impacted, can afford to lose this capacity.

Commenters stated that the Edison Electric Institute cauti oned that, " The dynamics of compliance, under circumstances of any unexpected shortfall in the non

- emitting resources required for compliance, creates the risk of multi

- state compliance failures that would disrupt interstate power flows. " The commenters al so noted comments by the FERC Commissioner warned that the rule threatened the 15

- State MISO footprint. The commenters provided further comments from other RTOs and electric power companies: the Southwest Power Pool, a regional transmission organization s panning eight states, warned that the Clean Power Plan

" introduce[ed] the very real possibility of rolling blackouts or cascading outages " ; the CEO of Southern Company, which services a multistate region in the southeast, said that " I don't think we have t he ability to maintain a reliable system " ; and ERCOT, the independent service operator that maintains Texas's grid, warned the rule " could result in transmission reliability issues due to the loss of generation resources in and around major urban centers. " The commenters also stated that the proposal would have serious consequences for Colorado and its citizens.

Commenters stated that these dangers potentially could have been avoided if EPA had included a safety valve in its plan, and if EPA had not propos ed to require states to make dramatic cuts in GHG emissions by 2020, front

- loading compliance burdens through a rapidly approaching date that does not provide adequate time for states to make the major planning decisions necessary to comply.

Commenters sta ted the Proposed Rule threatens reliability of electricity for their Members. The
commenters stated that MISO has expressed growing concern of the effect on reliability caused by multiple environmental regulations. MISO is already anticipating impacts fro m MATS that include significant coal retirements, increased challenges with outage coordination, shrinking reserve margins, and a growing dependence on natural gas. The commenters stated that MISO's280 goal is to maintain a reserve margin of 14.8% and that t he Proposed Rule significantly adds to an expected shortfall resulting in the reserve margin falling to

- 3.3% in 2020 and

- 11.8% in 2023.

Commenters stated that numerous studies and analyses of the Proposed Rule have been conducted by (and on behalf of) ru ral electric cooperatives, concluding that that the Proposed Rule will significantly impact the reliability of the rural electric power supply. The commenters stated that comparable findings were made by NERC, concluding that the projected energy efficienc y (EE) goals will lead to reliability issues and that the EE goals far exceed recent trends and projections included in reports and analysis conducted by NERC, EIA, EPRI and various utilities. The commenters stated further that the Proposed Rule EE goals a ppear to underestimate costs and the capital investments necessary to sustain EE performance through 2030, and if a state cannot meet the EE goal, offsets in the form of coal retirements may be required.

Commenters stated that the Proposed Rule anticipates shifting a substantial percentage of electricity generation to existing NGCC units; however, there is not enough existing NGCC in this country to make up for the forced reductions in coal generation, and EPA recognizes this fact in the Notice of Data Avai lability (NODA) that was issued in this docket. The commenters stated that that these NGCC units were not designed to operate at capacity factors close to EPA's 70 percent redispatch goal.

Commenters stated that separate from the Proposed Rule, demand for natural gas is expanding and additional reliance on NGCC sources may not be feasible considering the natural gas market and infrastructure is already at its edge. The commenters continued that without considering the NGCC expansion proposed in the Propose d Rule, the Interstate Natural Gas Association of America (INGAA) estimated that the U.S. and Canada will need 28,900 to 61,600 miles of additional natural gas pipelines through 2030.

Commenters stated that NERC's reliability study also identified reliability concerns with increased reliance on natural

- gas

- fired generation. The commenters stated further that NERC's studies show that as variable sources of energy generation increase, maintaining voltage stability becomes challenging and pointed out that voltage stability is essential to a reliable electricity grid.

Commenters stated that existing generation methods serve as a foundation for reliable electricity for ratepayers and cooperative memb ers served. The commenters stated that testimony from FERC commissioners makes clear that the agency is concerned about the impacts that the Proposed Rule will have on grid reliability and that FERC is eager to work collaboratively with EPA to ensure relia ble electricity remains available to all.

Commenters stated that EPA is taking an unprecedented approach to environmental regulation in attempting to regulate what type of energy source a utility can use to serve its members. The
commenters stated that rat her than allow a utility to determine how best to provide reliable and affordable power to its customers and regulating the emissions produced from that generation, EPA is directing the utilities how to generate electricity.

Commenters stated that although they support the EPA's decision to encourage states to reduce CO 2 emissions, we are concerned about the Proposed Rule's potential impacts on electric281 reliability. The commenters stated that emission goals the EPA proposes to establish under the Proposed Rule will likely result in significant changes to the electric power sector and some of these changes could lead to significant electric reliability issues in certain areas or during certain

seasons.

Commenters stated that in California, significant increa ses in RE generation are already leading to major, short

- term electric reliability problems during peak hours and the changes needed to comply with the Proposed Rule could further exacerbate these problems.

Commenters stated that NERC's preliminary study o f the Proposed Rule finds that new reliability challenges may arise with the integration of generation resources that have different essential reliability service characteristics than the units that are projected to retire.

Commenters stated that in approv ing state plans, the EPA must, at a minimum, consider the potential impacts that other state plans in the region will have on local and regional electric reliability and that EPA should establish a process or procedure to approve an initial state plan with an extended implementation schedule in those cases in which additional time may be necessary to ensure the reliability of electricity grid.

Commenters stated that another issue with EPA's assumption that NGCC units could increase their capacity factors to 70% is that doing so could compromise electric reliability on a local or regional basis. The commenters stated that if NGCC utilization were to increase to the levels that the EPA assumes, the system could become even more vulnerable to periodic blackouts or curtailments during high

- demand, low

- variable

- supply scenarios, as well as periodic weather

- or natural disaster

- related reliability issues.

Commenters stated NERC's concern over the number of coal unit retirements, reliability, time period for impleme ntation, and construction of resource additions and transmission enhancements. The commenters stated that the proposed rule threatens the U.S. electrical grid reliability, and, if implemented, would harm more citizens than it would ever protect. The

comme nters identified studies by regional transmission organizations warning that EPA's proposal will create electricity generation capacity shortages with a greater likelihood of rotating or cascading outages.

Commenters reported on a two

- part assessment of th e impacts that the proposed CPP will have on reliability in the SPP region. The commenters noted as a result of the assessment that the SPP region will experience numerous thermal overloads and low voltage occurrences under both scenarios studied. Commente rs stated r esults of the first part of the transmission system impact evaluation indicate that if the assumed EGU retirements were to occur absent requisite transmission and generation infrastructure improvements, the power grid would suffer extreme reacti ve deficiencies that would expose it to widespread reliability risks resulting in significant loss of load and violations of NERC reliability standards.

Commenters stated that coal needs to remain within the energy resource mix to provide for a high degree of reliability for power generation during times of peak demands. The commenters stated that in terms of renewables, the reliability of these energy sources is tied to the unpredictable nature of weather and the ability of fossil fuel power generation to supplement282 power demands. The commenters stated that keeping coal as part of the energy mix of our nation will not only provide support for gas and renewable energy production, but it will provide a reliable cost effective source of energy that will divers ify the energy portfolio of the nation and help maintain jobs and stabilize the economic base of energy producing states and communities across the nation.

Commenters stated industry's concern on how the proposed CPP will impact reliability of power and is as significant as our concern regarding increased energy prices. The commenters stated that reliability of the power system is vital for our country to have a productive manufacturing sector and that reliability concerns are fully analyzed and addressed before this rule is finalized.

Commenters stated EPA fails to include adequate information that clearly demonstrates the proposed BSER, when applied state

- by

- state and nationally at the levels proscribed by EPA, could be implemented without negative impact to the electric system. The commenters s tated that the proposed guidelines do not take into account the regional nature of the electricity markets, and the potential adverse system impacts that the proposed BSER would have on the adequacy and reliability of electricity supply. The commenters sta ted that NERC challenges some of EPA's assumptions about reliability under the proposed guidelines and recommends EPA address NERC's concerns and provide a clear demonstration of how the proposed BSER, as implemented state

- by

- state and nationally, will not negatively impact electric system reliability.

Commenters stated concerns about EPA's proposed rule that would result in several adverse effects in that it would have the unintended consequences to threaten or to disrupt the reliability of the Eastern in terconnection transmission grid.

Commenters stated that under the Proposed Rule, Arizona becomes very dependent upon two natural gas pipeline systems and loss of one for any period may result in substantial service disruptions and significant reliability i ssues would be likely in the event of a pipeline failure.

Commenters stated that the electric reliability issues from CPP are associated with both supply and deliverability and the elimination of existing coal

- fired generation reduces overall electric
supp ly. The commenters stated that the assumption that incremental, lower

- emitting generation resources can be permitted and brought online in a two to three year period from state plan development to compliance is not possible and would drive lower reserve ma rgins. The
commenters estimated that 3.5 GW of new natural gas capacity by 2020 and over 10 GW by 2030 would be needed to meet reserve margin requirements in Arizona by 2030 following the retirement of all affected coal capacity within the state.

Commenter s stated that the rule poses a distinct threat to electric reliability. The commenters stated that on account of both the retirement of coal

- fired electric generating capacity due to EPA regulations and the inadequacy of existing natural gas pipeline capa city in the region, there is a distinct possibility that the CPP, if implemented in its current form, would lead to trouble with keeping the lights on, especially in the event of unusually cold temperatures.

Commenters stated that Arizona relies on its bas e

- load coal generation to meet summer peak load needs when ambient temperatures can exceed 115 degrees and questioned if EPA analyzed283 the impact of its proposal on the state's ability to continue to reliably serve customers when energy is needed most.

Comm enters stated the Proposal would create unnecessary reliability risks relating to electricity and natural gas service.

Commenters stated removing coal as a power source from the generation portfolio unnecessarily reduces reliability and market flexibility while increasing costs.

Commenters stated the electric power industry has raised numerous concerns about the potential impacts of EPA's proposal on both grid reliability and cost to the consumer and urge EPA to listen to all stakeholders and evaluate the t rue costs and technical feasibility of implementing what amounts to sweeping changes to the nation's electric system.

Commenters stated that their organization recommends that EPA establish a formal process with the FERC for review of the potential reliabi lity impacts of the Clean Power Plan to identify and enable EPA to address any reliability risks that flow from the design of the rule; 2) to provide guidance to states on potential reliability risks arising from various implementation options; and 3) to a ssess the potential reliability impacts of proposed state implementation plans. The
commenters noted that that NERC has already indicated its intention to conduct a multi

- stage review of the potential reliability impacts of the Clean Power Plan and the co mmenters indicated their proposed process would align well with NERC's schedule and could draw upon NERC's
assessment.

Commenters stated that in addition to the challenges to utilities posed by the building blocks in the Plan, they are concerned about how the implementation of the Plan will impact grid reliability in coming years. The commenters also presented supporting arguments from NERC, MISO, and SPP.

Commenters stated that changes to the composition and operation of the nation's electric system, withi n a relatively short period of time, and changing the operating characteristics of units has the potential to adversely impact system reliability. The commenters suggested that EPA include

a " reliability safety valve " mechanism to provide additional compliance and/or enforcement flexibility to ensure electric system reliability.

Commenters stated the mandates in the Proposed Rule stand to disrupt the provision of reliable electric service at just and reasonable rates, and will cause direct, immediate, and long

- term harm to organization members.

Commenters stated that the Proposed Rule raises significant electric reliability concerns. The
commenters stated that CO2 emission rate EPA proposes for Wyoming and neighboring s tates directly or indirectly threatens the retirement of a significant amount of coal

- fueled generation in a timeframe that compromises the continued reliable distribution and delivery of generated electricity. The commenters stated that the Proposed Rule incorporates generic and unsupported expectations of levels of integrated renewable generation and energy efficiency that, when applied to Wyoming, are extremely ambitious, almost certainly unachievable, and uneconomic under traditional standards.284 Commente rs stated that EPA's rule will cause a dramatic shift in the way the United States produces electric energy and maintains reliability of the electric grid, and that EPA remain committed to understanding the reliability impacts of the rule, adjusting the fi nal rule as necessary to avoid detrimental impacts to electric reliability.

Commenters stated that the EPA needs to consider the impacts of the Proposed Rule on reliability of the electric grid. The commenters stated that the Proposed Rule will potentially cause the early retirement of fossil fueled electric generation, and that the time frame needed to install new renewable resources and replacement fossil fueled electric generation will most likely exceed the allowed timeframe proposed by the CPP

Commente rs reiterated the primary areas of concern expressed by SPP in its comments on the proposed rule: 1) the CPP will impact reliability of the bulk electric system; 2) the timing proposed by EPA for compliance is infeasible; and 3) the proposed CPP will have material impacts on the market

- based dispatch of electric generating units within the SPP region.

Commenters stated that there appears to be a high likelihood that implementation of the proposed EPSP could threaten grid reliability and stability.

Commenter s stated that as traditional fossil

- fired generation is retired as a result of the Clean Power Plan to reduce CO2 emissions, the availability of Essential Reliability Services (ERS)

- load and resource balance, voltage support, and frequency support

- will decline and will adversely impact bulk

- power system reliability. The commenters stated that ERS is not typically provided by non

- conventional generation resources, such as renewable resources.

Commenters stated that the lack of certainty as to the require ments that will be included in the final rule and the required state plans make it impossible to assess the impacts on grid reliability or the economic costs of the proposed requirements.

Commenters stated as large coal

- fired generation units are retired, utilities must be provided sufficient time to plan, obtain regulatory approvals for, and construct replacement generation; generation planning and transmission planning must include sufficient lead time to identify issues and develop corrective measures to ensure reliability in the system. The commenters said EPA should allow utilities and other organizations with the expertise in generation planning and transmission planning to determine how the rule impacts South Carolina's generation mix and the state's transmission system to ensure a reliable and cost effective solution is obtained. The
commenters listed the following areas of concern with regard to reliability of the electric system:

The substantial amount of fossil fuel generation retirement, which wil l likely result in stranded assets that increase consumer costs,

Insufficient time to address transmission constraints and resource reliability,

Significant reliance on energy efficiency ( " EE " ) to displace demand growth,

Considerable reliance on variable e nergy resources and natural gas

- fired generation,285 • Impact of resource mix change, and

• Fast track of the Proposed Rule scheduled to begin in 2020.

The commenters said South Carolina has limited capacity to bring additional natural gas volumes to our state, a nd expansion of interstate and intrastate pipelines to meet the increased demand of natural gas would be required. The commenters said the intermittent nature of solar and other types of renewable generation create challenges in the need for new backup cap acity, and modeling potential compliance costs will be necessary to determine which existing fossil

fired generation units will be needed as backup and to assess which grid infrastructure upgrades will be needed to tolerate fluctuations in power supplies a nd increased bi

- directional line activity associated with renewable generation.

Commenters stated EPA should set a consistent and practical state goal which includes consideration of the effects on grid reliability.

Commenters stated EPA estimates that 12,400 megawatts of fossil fuel electricity generating capacity would retire in Texas due to the rule, and it is uncertain if Texas, and neighboring States similarly affected, can afford to lose this much capacity. The commenters said ERCOT warned the rule " could result in transmission reliability issues due to the loss of generation resources in and around major urban centers, " and the FERC Commissioner warned that the rule threatened the 15

- State Midcontinent Independent Service Operator region

- which includes pockets of eastern Texas

- with " widespread rotating blackouts. " The commenters said the SPP cautioned that the CCP " introduce(s) the very real possibility of rolling blackouts or cascading outages. "

Commenters said the propos ed rule would require state plans to achieve a 30 percent reduction in CO2 emissions from existing power plants below 2005 levels, and while the full level of reductions is not required until 2030, substantial CO2 reductions are required under the state pl ans as early as 2020. The commenters stated while each of the building blocks generates reductions that are used to develop a total required reduction, the Proposed Rule allows states to have the flexibility to develop plans to meet these emission reductio n targets, and this flexibility necessarily allows for greater

- than

- anticipated reductions to offset lower

- than

- anticipated reductions in other areas. The commenters said it is possible that more coal

- fired power plants will need to be retired than origina lly projected in order to make up for shortfalls in emission reductions from other categories. The commenters cited NERC and their concerns about reliability.

Commenters stated EPA's Proposed Guidelines are founded upon numerous fundamental factual

error s that violate the " reasoned decision

- making " requirement under the Administrative Procedure Act ( " APA " ). 5 U.S.C. 706(2)(A). The commenters said the Proposed Guidelines wrongly assume that various " technically feasible " but impracticable objectives can be achieved without serious harm to wholesale electric markets or to BPS reliability, the EPA has unreasonably excluded FERC from a substantive role in developing the Proposed Guidelines and has irrationally deprived itself of the input of the federal agency that has real world expertise overseeing electricity markets, transmission grids, and electric reliability.286 Commenters stated that the draft rules go beyond the authority of the Clean Air Act, jeopardize reliability, and drive

- up costs by essentially dictating to states which generation resources will be deployed and at what time.

Response 40: See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule

. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the an alysis of the impact of this final rule.

Comment 41: Commenters asserted there are potential legal outcomes associated with reliability

concerns.

Commenters stated that " potential legal outcomes associated with reliability disruptions are also severe. Pow er plant owners might be trapped between lawsuits and federal enforcement actions, all because EPA neglected to adequately consider the implications of the CPP on our nation's electricity supply. "

Commenters stated that the finding that the CPP will not si gnificantly impact electric reliability involved no substantive coordination with FERC, and that EPA's failure to adequately consult with, and defer to, FERC concerning issues that fall squarely within its expertise is arbitrary and capricious.

Commenters stated that neither EPA nor the states can force retirement of units that must run to ensure system reliability.

Commenters stated that the CPP is legally flawed and should be withdrawn in its entirety. Commenters stated that the rule needs to address reli ability

- related issues in a diligent fashion through the development of a reliability

- based study process that would include a number of regional technical conferences, conducted jointly between the EPA, the FERC, state regulatory commissions, and regional transmission organizations/reliability organizations.

Response 41: Commenter s are ill informed regarding EPA’s consideration of reliability and EPA’s extensive and ongoing coordination with FERC regarding the final rule.

As for commenters asserting that neither EPA nor the states can force retirements of units , the meaning in the context of the final rule, which does not force retirements of units, is unclear

.

Comment 42: Reliability concerns are needlessly pessimistic

Commenters stated EPA has calculate d that implementation of the CPP could lead to retirement of an additional 50 GW of coal

- based electricity production over the base case by 2025. The
commenters stated that according to EPA's BSER formula, lost generation will be replaced through a combina tion of capacity factor increases at gas facilities, increased generation from renewable energy resources, and demand

- side energy efficiency, and renewable generation and287 efficiency improvements would also replace lost capacity, along with increased electr icity storage and demand response, as discussed further below. The commenters stated that one of the broadest critiques of EPA's overall calculations has come from NERC, in its Initial Reliability Review, in particular, NERC questions the viability of EPA' s proposed renewable energy, transmission, and energy efficiency build

- out goals. The commenters stated these critiques paint a needlessly pessimistic view of what is achievable, and run contrary to several studies demonstrating the potential for renewable energy and energy efficiency to replace existing generation.

Commenters stated NERC and other grid operators dismiss transmission planning as an excessively long

- term solution, arguing that it takes too long to fully install new planned transmission lines . The commenters said NERC in particular uses an assumed 10

- 15 year timetable to justify its calls to delay implementation of the CPP, arguing further that regional grid operators cannot even begin to plan transmission until state plans are approved under the CPP, which would give them less than two years to build out the necessary transmission. The
commenters said NERC's use of this supposed transmission " bottleneck " is inapposite for several reasons; first, transmission lines simply don't take 10

- 15 years to build on a regular basis. The
commenters said ERCOT, in its analysis of the CPP notes that major transmission projects can be planned, routed, approved and constructed in five years. The commented said furthermore, the process of building out transmission to transport renewable energy to load centers has already begun in recent years, and will ramp up significantly if grid operators take appropriate steps to prepare for CPP implementation; multiple RTOs are considering transmission improvements alread y . The commenters said, in particular, Clean Line Energy Partners is currently working to construct five major transmission lines to move 15.5 GW of largely wind

- sourced electricity in the middle of the country out to load centers in the Midwest, So uthwest, and on the West Coast.

Commenters stated that NERC misstates the timeline on which transmission projects could be planned and needed. The commenters said states and grid operators do not need to wait until plans are approved to begin studying what transmission upgrades may be needed, and grid operators have an obligation to assess and respond to policy developments and how they will affect the need for generation and transmission; forthcoming regulatory obligations such as the CPP therefore give ri se to their duty to begin planning for future transmission needs despite some degree of uncertainty about some details in state plans. The commenters stated CPP's compliance schedule contemplates a slow ramping of stringency, and transmission improvements are generally considered to be a mid

- to long

- term need, rather than an immediate

one

Commenters stated that NERC overlooks numerous alternatives to new transmission projects that also could resolve its predicted transmission constraints including: adding lines to existing transmission corridors, reconductoring, or otherwise upgrading existing facilities. The
commenters said these types of projects take far less time, both for regulatory approval and construction, require no siting process, they are less ex pensive than building new transmission lines, and can be implemented more quickly and at lower cost than new transmission. The
commenters pointed out that transmission system planners are required to consider non

transmission alternatives to new wires proj ects such as demand

- side management. The
commenters also stated NERC's evaluation fails to reflect how energy efficiency will lessen the288 need for new transmission infrastructure in general, or how states could design targeted demand

side management progra ms to resolve areas of congestion.

Commenters stated with regard to ( " ride

- through " and quick

- start or " black

- start " capabilities, transition to cleaner electricity sources will unambiguously help: wind and solar plants are often more able to ride out dist urbances, and return to service more quickly, because they are already necessarily designed to deal with fluctuating power over time, and they lack complicated thermal or mechanical systems that require significant amounts of time to restart. The commenter s said the smaller capacity and more distributed nature of wind and solar plants address some of the root of the problem

- a malfunction at a 50 MW solar facility is less likely to cause a large system shock than when a 800 MW central

- station generator tri ps offline.

Commenters stated NERC has raised concerns that increasing the share of electricity produced by gas

- burning power plants would make the grid more vulnerable to disturbances like that where single events act to reduce the supply of gas over a la rge region such as the polar vortex. The commenters said the polar vortex did not result in widespread power losses in the region, even though it was by any measure an extreme weather event; and improved electricity transmission infrastructure can alleviat e the risk that any one region suffers from a power shortage. The commenters added that sensible planning and low cost power plant upgrades would have avoided a large part of the problem, in which a big part of the problem leading to these capacity constra ints was that coal and gas plants were simply unprepared for these climatic conditions. The commenters said most of the plants that were out of service were unavailable because of operational and mechanical problems like frozen coal stockpiles, boiler tube failures, and faulty ignition, and grid operators are working on corrective measures and are evaluating additional financial incentives to reward plant operators that deliver higher performance levels. The commenters also said pipeline capacity and gas s upplies were not the problem; rather sufficient gas supply was available, but an anomaly in the power and gas markets kept some gas

fired generators from obtaining sufficient fuel on high

- demand days. The commenters said in October 2014 FERC shared its int ention to better coordinate daily natural gas and electricity markets; enable gas

- burning power plants to run temporarily on oil during emergencies; and make other market changes to resolve the issues that led to the capacity crisis during the polar
vortex

.

Commenters stated that the obvious solution to NERC's concerns is increased fuel diversification which the commenter s cite NERC as acknowledging, though their solution is to continue excessive reliance on coal. The commenters stated that unlike both coal and gas plants, wind and solar plants rely on " fuel sources " that do not need to be imported from anywhere, and the supply of which is far less likely to be interrupted uniformly across broad swaths of the country.

Commenters stated grid operators already have the tools necessary to adjust to the retirement of coal

- burning power plants over the next fifteen years without seriously impacting the reliability of the power grid. The commenters said with penetration rates of renewable resources of up to 30

- 40 p ercent or more by 2030 in some areas, several recent studies have addressed this contingency, considering whether and how it is possible to incorporate those levels of renewable energy using today's resources and technologies, and their common conclusion i s that high levels of integration are feasible. The commenters said the studies call for restructuring the energy market, advanced transmission planning and installation, increased utilization of demand289 response programs, additional electricity storage ins tallations, incorporation of contingency reserve and curtailment capabilities into wind and solar facilities, independent improvements in ancillary service providers, and continued limited use of some fossil fuel plants as " peaker " facilities. The commente rs said these studies were performed by grid operators and experts seeking to understand the implications of underlying market and policy trends favoring renewable energy development.

Commenters stated to the extent feasible, EPA should help ensure that st ates and grid operators plan for the retirements of coal units as soon as possible, make sure they fully understand the reliability implications of those retirements, and prepare their electricity grids to incorporate significantly higher levels of renewab le energy. The commenters said it is critical that state environmental regulatory agencies work closely with utilities and grid operators to ensure that states' individual plans are designed to minimize any disruptions to grid reliability which may involve regional compliance options for states within a single RTO, or it may simply involve extensive consultations. The commenters also stated NERC should work more with regional RTOs, ISOs, and utilities to help them identify and respond to predictable changes in their resource mixes. The commenters concluded that managing renewable electricity in a way that minimizes disruptions to grid reliability will require advanced planning and understanding, and EPA should help facilitate these conversations.

Commenters stated that states often do not exercise the same level of jurisdiction over municipalities and cooperatives that they do over investor

- owned utilities, making the state plan

driven process less optimal for sources operated by cooperatives and publicly

- own ed utilities. The commenters said support their recommendation that enforcement of the CPP falls entirely on sources (and by extension on all utilities, including municipalities and cooperatives), rather than on states, who have limited control over their own power infrastructure. The commenters said Cooperatives serve some of the poorest and least connected parts of the United States, and so EPA should explore opportunities to enforce the CPP without unduly impacting poor communities. The commenters stated the CPP offers a significant opportunity for community investment in energy efficiency and distributed renewable generation, programs which have the potential to create high

- quality jobs, and EPA should work with RUS to ensure that guidance offered on the se types of programs is appropriate for, and well

- communicated to, cooperatives, and EPA should consult with RUS to understand whether the framework for RUS's existing financing tools could be improved in order to facilitate CPP compliance. The commenters said EPA should also consider other existing mechanisms that already encourage renewables and efficiency build

- out, and explore how harnessing these various support networks can help municipalities and coops to reduce their greenhouse gas emissions with mi nimal disruption.

Response 42: The EPA agrees with the commenters that proper planning and implementation of the CPP will not lead to reliability issues with the electricity grid. States in their planning can anticipate infrastructure needs and other requirements relating to changes in the network. See the GHG Resource Adequacy and Reliability Technical Support Document for more information on the treatment of resource adequacy treatment in analyzing the impact of this rule.

Comment 43: Commenters discussed beneficial aspects of upgrades to the electricity grid.290 Commenters stated the rule must respond to grid reliability which will set the stage for a more efficient transportation system with modern engineering considerations. The commenters also stated infrastructure project of t his size and importance could generate jobs and promote apprenticeship opportunities all while reducing energy loss and consumption, setting the stage for a new era in energy generation, and meeting the standards for clean power.

Commenters described indep endent modeling conducted by the commenters ’ organization that showed likely reductions in energy consumption and GHG emissions resulting from linked recycling and replacement rebates. The commenters noted that while the main driver for ER programs would b e the achievement of energy savings and GHG reductions, other benefits would be realized as well, such as declines in electricity bills, declining emissions of conventional pollutants, and boosting manufacturing output and retail activity.

Response 43: Reg arding reliability, See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the analysis of the impact of this final rule. Thank you for your comments.

Comment 44: Comment stating that reliability planning within the Western Electricity Coordinating Council (WECC) electrical grid is crit ical to support significant changes in generation resource mix required by the CPP.

Commenters stated that reliability planning within the Western Electricity Coordinating Council (WECC) electrical grid is critical to support significant changes in generat ion resource mix required by the CPP. The commenters stated that the electric generation and transmission grids across the nation, including the WECC grid, are already losing a significant proportion of their base

- load coal generation. As such, the comment ers noted that the grids were already planning to change their generation mix before EPA proposed the CPP. The commenters stated that the EPA should take into account these existing efforts and promote streamlining of the planning and approvals needed to facilitate the extra work that will be needed to accommodate CPP mandates.

Response 44: The EPA agrees with the commenters and to support a more effective reliability planning process, the EPA is moving the start of the interim period from 2020 to 2022 an d adjusting the interim goals to provide a less dramatic initial reduction requirement and a more gradual glide path to the final 2030 goals. Additional discussion on this topic is found in the final rule preamble, section VIII.H.

Comment 45 : Commenters asserted the building blocks impact reliability.

Commenters stated BBs 3 and 4 cannot be readily quantified, and less than expected energy savings will require additional decreases in fossil

- fuel generation to meet the proposed state emissions reduction go al which is the opposite of what is required to assure the reliability of the bulk electric system as well as provide reasonably priced electric service to consumers. The2 91 commenters estimate that the adoption of building blocks 3 and 4 will result in signi ficantly higher electrical exports from Nebraska than is currently the case which will undercut the longstanding purpose of public power utilities and make them, in effect, more like independent power producers. The commenters stated that if it is physical ly possible to implement the proposed building blocks, the resulting shift caused by the additional amount of energy from renewables and decreased consumption due to energy efficiency reductions will cause a shift from economic to environmental dispatch an d will likely mean that many existing base load units will be dispatched less frequently, if at all, thus reducing their efficiency and their economic usefulness and system reliability will suffer. The commenters cited SPPs in their October 9 letter to EPA that raised concerns of potential cascading blackouts.

Commenters stated that EPA has severely underestimated the net economic impact of Building Block 1. The commenters strongly recommend ed that U.S. EPA work with FERC prior to proceeding with the propos ed rule to address the effects of this proposed rule on electricity grid reliability.

Commenters stated NERC's reliability analysis of the potential reliability impacts of the EPA's proposed rule and " found a number of reliability concerns regarding incre ased reliance on natural

- gas

- fired generation. " The commenters stated that an independent power market analysis of an alternative coal unit retirement scenario, representing a gradual reduction in Arizona coal

fired generation capacity between 2017 and 20 30, addresses the most problematic impacts of the EPA's proposed building block approach (reserve margin, electricity and natural gas reliability) by providing ample time to plan for and make the necessary adjustment to infrastructure, while still achievin g meaningful reductions in CO2 emissions.

Commenters stated concern that Building Block 4 would be implemented de facto by setting annual mass

- based CO2 emission limits for Virginia's EGUs. The commenters stated they do not believe its EGU members or its d emand side members should have to face the possibility of electricity rationing and that manufacturing members cannot be subjected to any such uncertainty about the reliability of the electricity supply they must have to sustain their economic viability.

Commenters stated EPA has not provided a complete analysis of how grid reliability can be maintained if the plan's building blocks are applied as proposed. The commenters stated that the IPM used by EPA to evaluate the building blocks and whether goals are achievable uses less robust data than that possessed and used by MISO. The commenters also stated EPA should engage RTOs, ISOs, and NERC to assist in modeling the impacts of the rule on electric reliability and evaluating the natural gas transfer and stor age capacity requirements needed under this proposal, as well as fully utilize the resources and expertise of the FERC. The commenters stated that EPA's system modeling should also evaluate the rule's impact on the generation reserve margins and understand what resources will be called on to meet those reserves. The
commenters also stated that EPA should provide states a safety valve to ensure the reliability, safety, and security of the electrical system.

Commenters stated that increased penetration of int ermittent resources under Building Block 3 will only serve to exacerbate the negative efficiency performance of the national coal fleet as these resources come on line. The commenters said experiences in California have taught utilities that increased rene wable penetration requires significant fast

- start capabilities as well as292 substantial standby power supplies to meet demand when renewable resources are not available. The commenters stated generator efficiency has been maximized by utilizing NGCC units to fill this role, and EPA's view of the energy market will require coal to fill this role as well.

Commenters stated there has been a recent revelation by the Government Accountability Office that EPA has been inaccurately calculating the costs and benefits of other regulatory policies. The commenters further added if the methodology for calculating costs and benefits were inaccurate for some of the agency's regulations, it stands to reason that the calculations for other regulations will also be inaccurate.

Commenters stated that EPA should defer to the NERC's expertise in the field of bulk

- power system reliability and that NERC, authorized by FERC to establish and enforce mandatory reliability standards for users, owners, and operators of the bulk

- power sys tem, is in the best position to analyze reliability impacts of the Proposed Rule. The commenters stated that NERC identified potential electric reliability concerns of the Proposed Rule, citing potential issues with the underlying assumptions of the four building blocks that are used to determine each state's proposed mandatory emission reductions. The commenters stated further that NERC has announced plans to conduct more detailed assessments and EPA should consider NERC's initial findings and recommendat ions, including a reevaluation of the underlying assumptions used to determine the four building blocks for mandatory emission reductions. The commenters also stated EPA should also closely monitor NERC's future assessments to learn of the reliability impa cts of the Clean Power Plan at every step, and adjust the rule and implementation timelines as necessary to avoid creating a situation in which the rule will jeopardize the reliability of the bulk

- power system and could result in negative impacts on the he alth and welfare of the general public.

Commenters stated that the underlying assumptions used to determine the four building blocks for mandatory emission reductions may be flawed and require further study. The commenters stated that the impacts include a n underestimated amount of fossil

- fired generation retirements, a lack of infrastructure to support increased reliance on natural gas, an inconsistent assumption that energy efficiency aligns with load forecasts, and the reduction of Essential Reliability Services to support the bulk

- power system.

Response 45: EPA disagrees with these comments. EPA believes that reliability has been adequately addressed in this rule. EPA believes reliability can be addressed in the state planning process in ways that wil l ensure that conflicts with reliability requirements and compliance with this final rule will be very unlikely, and also provides a Reliability Safety Valve mechanism in the event of such unlikely and unanticipated occurrences. See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule

. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the a nalysis of the impact of this final rule.

Comment 46: Commenters encouraged the states to begin operational and planning scenario studies.293 Commenters encouraged the states to begin operational and planning scenario studies, including resource adequacy, tr ansmission adequacy, and dynamic stability, to assess economic and reliability impacts and requested regional and multi

- regional industry planning and analysis groups include Building Trades representation. The commenters suggested that state policy makers work with existing utility, labor, and finance industry relationships to ensure there is clear understanding of the complex interdependencies potentially adversely affecting labor, as well as the potential strain on states' power system reliability.

Respo nse 46: The EPA agrees with commenters ’ assertions that states must in their implementation plans consider resource and transmission adequacy and stability. The rule requires states to consult with relevant reliability entities in developing their plans. See Preamble Section VII.G.2 for discussion of reliability issues.

Comment 47: The Proposed Rule interferes with regional and state resource planning efforts and exacerbates existing reliability issues.

Commenters stated that the proposed rule will interfere with regional and state planning efforts and exacerbate issues associated with generation resource mix in the regional energy markets' system plan ning process. The commenters further stated that the proposed rule will create difficulties with respect to state efforts to develop an effective portfolio of generation

resource s. The commenters stated that all of these processes reflect the fact that di fferent types of generation have varying degrees of reliability and provide different benefits with respect to resource adequacy.

Commenters stated that regional energy markets undertake extensive system planning. The commenters discussed ISO New England' s annual regional system plan to identify capacity needs and the ideal mix of resources to reliably provide service to customers in ISO New England's service territory. The commenters noted that gas

- fired generation depends on "just

- in

time " delivery wher eas coal and oil

- fired generation are able to store fuel on site. The commenters quoted a January 17, 2014 filing by ISO New England that defined some of the problems of its existing generation fleet encountered during the 2013

- 2014 winter season. The

co mmenters also discussed PJM's August 2014 proposal to address reliability concerns and that the major fuel switch from coal to natural gas throughout the country is placing the reliability of PJM's generation fleet at risk. The commenters also noted that MISO faced resource performance issues during the 2013

- 2014 " polar vortex " winter season and that FERC held a technical conference on operations in the winter of 2013

- 2014 in which MISO noted outages not normally seen during winter months.

Commenters state d that PJM and ISO New England's proposals, as well as MISO's comments at the technical conference, illustrate that every market has its own unique resource performance issues, and EPA's capacity mandates in the BSER could exacerbate such issues by restric ting the ability of these markets to utilize all types of generation to ensure reliability.

Commenters also stated that the proposed rule's primary goal of replacing carbon

- intensive generation with less carbon

- intensive generation will further complicate the extensive system294 planning processes, exacerbate the resource performance issues faced in New England and elsewhere, and place system reliability at risk.

Commenters noted that one compliance option that has been suggested is " environmental dispatch " ( i.e., dispatching resources based on their environmental attributes, such as carbon intensity), which the commenters oppose as unnecessary, disruptive of the electricity market, and economically inefficient. The commenters stated that while environmental d ispatch would pick the least

- carbon intensive units first, it is not the least

- cost approach to achieving carbon targets and will inevitably lead to inefficiencies. The commenters noted that EPA representatives have also stated that they do not intend reg ions to employ an environmental dispatch as part of the CPP, due to the relatively inefficient manner in which it would help achieve carbon targets.

Response 47: EPA agrees with those commenters that recognize that the CPP is consistent with
current econom ic dispatch practice, and disagrees with those commenters who maintain that the CPP is inconsistent or otherwise problematic for current planning and dispatch of power.

" Redispatch " as used in the proposal was, in practice, just the overall annual shiftin g of generation among resource types. The final rule uses the terminology of generation shifting, not redispatch. However, the proposed rule was intended and designed to work with current environmental regulations that are consistent with the current sec urity constrained economic dispatch (SCED) protocols and to continue that history of compatibility between environmental regulation and economic dispatch. This final rule reinforces that approach by making clear that the concept of emissions rate trading is part of the BSER process and can be implemented consistently with the building blocks on which it is based. See Preamble Section V. The commenters fail to adequately grasp that changes that the final rule encourages are already occurring in the indus try, and the final rule builds on these changes and the planning that is already taking place. The final rule also adopts measures to ensure reliability in state plans and includes a reliability safety valve for unanticipated reliability conflicts that gi ve rise to emergency conditions (See Preamble Section VIII.G.2).

Comment 48 : Commenters gave the following reliability benefits associated with cross

- border electricity trade between Canada and the US:

• "complementarity in the operational characteristics of segments of the grid on either side of the border"

• "Many regions in Canada have winter

- peaking systems, thus enabling them to contribute available surplus to adjoining U.S. regions which experience peak demand season during the summer"

• "As noted by the U.S. National Renewable Energy Laboratory, '[t]he different peaking periods in Canada and the United States allow sharing of reserve services across the border and therefore reduce the need for new capacity in both countries'"295 • "Diversity of load ... means that capacity resources can be shared in order to optimize the fulfillment of overall peak loads, with cost savings achieved by reducing the total resources required to meet system demand"

• "Canada

- U.S. trade can serve to increase the diversity of supply options available in certain regions confronting unique challenges"

• "the ability to manage conditions of oversupply and loss of supply."

• "U.S.

- Canada electric integration enhances affordability of supply for U.S. consumers"

• "U.S.

- Canada electric integrati on helps enable development of clean energy in the U.S."

Response 48: The EPA acknowledges this comment.

8.9.1 Changes in operational capacity

Comment 1 : Commenters noted operational capacity as a concern that must be addressed by the rule.

Commenters noted that the " critical question [is] whether there will be sufficient capability to handle flexible operations duties that are now principally handled by NGCCs. " Commenters noted that " flexibility and reliability could become primary concerns as many NGCCs may move
to baseload while coal generation capacity is reduced and variable generation from renewable energy substantially increases. "

Commenters noted that " assumed improvements may not be realized across the entire generation fleet because many plant efficiencies have already been realized and economic heat rate improvements have been achieved. "

Commenters stated, " The Midcontinent Independent System Operator, the regional transmission operator managing the grid for much of the Midwest and S outh, is predicting a 2.3 gigawatt capacity shortfall in 2016 due to planned coal plant retirements in its territory [reference: Press Release, Former and Current State Utility Regulators Express Concerns of the EPA's Proposed Carbon Rules for Power Plants (Sept. 17, 2014), available at http://www.eenews.net/assets/2014/09/18/document_pm_04.pdf .]. " ).

Response 1 : EPA believes that annual capacity factors NGCCs used in the development of this rule are conservative and will permit continued use of NGCCs to su pport flexible operations. See the GHG Mitigation Measures TSD for discussion of these capacity factors.296 8.9.2 Reduction in excess reserves

Comment 1: Commenters noted concerns with lower reserve margins.

Commenter s noted that the retirement of 6,000 MW of generation capacity would be expected to reduce the system reserve margin by about 8%.

Commenter s noted that the proposed rule would " constrain the availability of essential reliability services (ERSs), such as load following, regulation and ramping se rvices. " According to the
commenter s , the proposed rule would result in reduced reserve capacity due to the retirement of coal

- fired EGUs. The commenter s further noted that the " the reliability of bulk power supply can be diminished when renewable resource s reach 20% or more of total supply "

.

Commenter s conducted a preliminary analysis and noted that " Under Southern Company and NERC Transmission Planning criteria, the transmission system must have available generation to allow for the largest unit on the sy stem to trip. " Commenter s stated that " Using EPA's retirement assumptions, with all available generation online including generation not designated as a network resource in 2020, the Southern Balancing Authority Area did not have adequate generation to allow for the loss of a single generator, " noting that " This would fail to meet reliability criteria. "

Commenter s referenced an SPP reliability analysis that concluded " by 2020 SPP's reserve margin would fall below 4.7%, which is 8.9% below SPP's minimum reserve margin requirement and would result in a violation of SPP's reliability criteria and NERC reli ability standards. "

Commenters stated that the reserve margin in the SPP is projected to fall to 4.7 percent in 2020 and

- 4.0 percent by 2024 under the CP P, below the current requirement of a minimum reserve margin of 13.6 percent. The commenters provided several recommendations to minimize impacts:

• A series of technical conferences jointly sponsored by FERC and the EPA

• Completion of a detailed, comprehen sive and independent analysis of the impacts the proposed CPP will have on the reliability of the nation's bulk electric system

• Extension of the proposed schedule for compliance in order for the necessary electric transmission, electric generation, and gas pipeline infrastructure to be identified and constructed within and across the appropriate planning are

• Adoption of the " reliability safety valve " as proposed by the ISO/RTO Council

Commenters stated that they are very concerned with long term reliability issues associated with the electricity grid. The commenters stated that on

- peak resource mix has shifted recently to be predominately gas fired and the transformation of the resource mix presents new challenges for the electricity industry. The commenters stated further that the tightening of reserve margins increases the need to ensure all risks are accurately captured as policy and changing generation trends drive new potential risks to resource adequacy. The commenters provided estimates by297 MISO of res erve margin shortfalls: falling from the NERC

- required 14.8% to 10.6% due to MATS; by 2020

- 2021, dropping to a

- 3.3% to comply with the additional requirements of CO2 regulation; and by 2023

- 2024, shrinking to

- 11.8%.

Commenters stated that EPA's analysis of the existing NGCC capacity " available " for redispatch fails to consider reserve margin requirements. The commenters stated that out of the fourteen load

- serving SPP members impacted by the EPA's projected EGU retirements, nine would be deficient in 202 0, and furthermore, SPP found that its anticipated reserve margin would fall to

- 4.0 percent by 2024, causing ten of SPP's load

- serving members to be deficient.

Commenters stated their assessment showed that by 2020, SPP's reserve margin would fall to 4.7% , which is 8.9% below the minimum reserve margin requirement and out of SPP's fourteen load

- serving members impacted by the EPA's projected retirements, nine would be deficient in 2020. The commenters stated further that SPP found that its anticipated rese rve margin would fall to

- 4.0% in 2024, increasing the number of deficient load serving entities to ten. The
commenters stated these anticipated reserve margins represent a generation capacity deficiency of approximately 4.6 GW in 2020 and 10.1 GW in 2024.

Commenters stated that the planning reserve margins are trending downward and are below their reference levels for MISO by 2016 and ERCOT by 2018 and are occurring despite the lowest electric load growth on record, with the primary driver being fossil

- fir ed generation retirements occurring at a faster rate than new generation can be built. The commenters stated that many coal units are being forced or anticipated to retire due to compliance with existing environmental regulations, low natural gas markets prices, and now the Proposed Rule and that the combination of economic pressure, existing environmental regulations, and additional environmental regulation in the CPP will likely result in additional fossil

- fired generation retirements that decrease bulk

- power system reliability to unacceptable levels. The commenters stated that they concur with NERC that the assumption for the amount of fossil

- fired generation retirements resulting from the Proposed Rule may be underestimated and require further study to ensure the reliability of the bulk

- power system.

Commenters stated that by considering reliability only after determining emission reductions, the Proposed Rule leads to substantial decreases or deficiencies in reserve margins in many regions, compromises reliability and increases the risk of black outs, brown outs, and other load shedding events. The commenters explained reserve margins and how they are typically calculated so that they are high enough that involuntary load shedding due to inadequate suppl y would occur only once in ten years, as established by NERC standards. The commenters stated that even a small drop below the required reserve margin may result in a violation of NERC's reliability standards and compromises the reliability of the electric grid.

The commenters stated that EPA's assumption that most of the retirements caused by the Proposed Rule will be absorbed by a reduction in excess reserves over time is incorrect and that the retirements more than deplete the excess capacity in several regions. The commenters provided the following examples:

• " SPP reserve margins would be 4.6 GW deficient by 2020 and 10.1 GW deficient by 2024;298 • In the Northwest, the retirements the Proposed Rule imposes would further exacerbate the 2 GW deficiency that w as already anticipated to exist by 2021.

• In Arizona, under IPM Option 1, reserve margins would be 6 GW deficient during peak summer demand by 2030.

The commenters further stated that the proposed rule would force these areas to construct new generation and associated infrastructure to make up for these deficiencies, but until the necessary generation and infrastructure could be constructed, NERC standards would be violated. The
commenters stated that in SPP, " extreme reactive power deficiencies of approximately 5,200 mega volt

- amperes reactive would occur. Reactive power is integral to avoiding power plant and transmission line failures. Even assuming new generation could be constructed to offset the retirements the Proposed Rule imposes, inadequate infrastructure would cause loading on 38 SPP facilities that would exceed equipment ratings and cause cascading outages in some regions. "

The commenters added that EPA c annot rely on IPM projected power imports for the reliability deficiencies because the Proposed Rule requires retirements that would induce reserve margin deficiencies for many states and deficient states cannot depend on out

- of

- state imports because they have no means to require that units outside their borders dispatch power to them. The
commenters further stated that the " Proposed Rule cannot require state actions for compliance while simultaneously depending on out

- of

- state actions for reliability. If c ompliance is to be
state

- based, then EPA must analyze reliability concerns and solutions at the state level. "

Commenters stated that the ability to transmit resources cost

- effectively also may be a factor. Commenters stated that the potential for enhanced transmission and impacts on reserve margins needed for electric system reliability may need to be considered. Commenters stated that an analysis would need to be done to assess the constraints of power supply resources both in the summer and in the winter.

Commenters stated that reserve margins are dropping dangerously low as a result of generation retirements. Commenters stated that in recent years reserve capacity has dropped from near 20% to just over 10%. Commenters stated that EPA assumed excess reserve capacity could account for retirements, but with reserve capacity already down, due in part to MAT reductions, there could be insufficient reserve capacity. Commenters stated that the Proposed Rule commands more use of NGCC units and renewable ener gy sources, which are not especially reliable during periods of extreme weather, such as the 2013

- 2014 polar vortex. Commenters stated that the Proposed Rule's environmental dispatch measures require those low and no

- carbon resources to be used first. Com menters stated that beyond reliability, environmental dispatch will also increase electric rates without exacting much of an emission reduction. Commenters stated that RTOs dispatch the most economic resources first. Commenters stated that environmental d ispatch will require the more expensive resources to be used first. Commenters stated that if coal units run at a lower efficiency level to allow NGCC units to meet the 70 percent capacity factor, the coal units will emit more carbon dioxide per megawatt h our, displacing what reductions may have occurred from heat rate improvements. Commenters stated that EPA should also consider that environmental dispatch will result in less reliable and more costly electricity because significant investments in EGUs to comply with MATs will be absorbed by299 ratepayers without corresponding value since the units will be operate at lower capacity factors or even retire.

Commenters stated that SPP notes that the EPA model projects about 9 gigawatts (GW) of existing coal and g as

- fired generating capacity in the SPP region will retire by 2020 due to the proposed rule, 6 GW more than originally planned by SPP members. Commenters stated that the SPP analysis " revealed the generating

- unit retirements expected as a result of the CPP will cause significant reactive power deficiencies and numerous overloaded facilities. " Commenters stated that SPP also studied the region's reserve margin. Commenters stated that currently, SPP requires a minimum reserve margin of 13.6 percent. Commenter s stated that with the EPA's projected retirements and without new generation and transmission expansion, the region's reserve margin falls to 4.7 percent in 2020 and 4.0 percent by 2024.

Commenters stated that SPP's filed comments included the following a ssessment: " EPA's projected EGU retirements represent approximately 6,000 MW of additional capacity being retired in the SPP region beyond that currently expected by 2020. Commenters stated that this represents approximately a 200% increase in retired gene rating capacity compared to SPP's current expectations. Commenters stated that unless the proposed CPP is modified significantly, SPP's transmission system impact evaluation indicates serious, detrimental impacts on the reliable operation of the bulk elect ric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have significant impacts on human health, public safety and economic activity within the region. "

Commenters stated that Louisiana's el ectric utilities, as well as several RTOs, have clearly indicated that future compliance could hinge on the use of systematic curtailment of service through " brown

- outs " and rolling black

- outs. Commenters stated that the EPA has not provided any informatio n, nor conducted any independent reliability analyses to contradict this assertion.

Commenters stated that he SPP conducted two different analyses: one on the impacts the Proposed CPP would have on transmission system reliability and a second analysis on t he impact of the Proposed CPP on regional reserve margins and generation adequacy.

Commenters stated that the SPP's transmission system reliability analysis considered two potential bulk power system scenarios that included: one where unused/underutilized (existing) generation is dispatched to offset generation anticipated to be retired by the CPP; and a second that assumes new generation will be developed, to supplement existing generation, to meet regional power generation requirements (and offset generat ion retired due to CPP implementation). Commenters stated that the SPP transmission system reliability analysis found, under both scenarios, that the Proposed Rule would result in " extreme reactive power deficiencies " that would expose the system, includin g areas in northwestern Louisiana, to widespread reliability risks and violations of NERC standards.

Commenters stated that the SPP also conducted a generation adequacy analysis finding that the proposed CPP would result in as much as 6,000 MWs of retireme nts: an amount that is some 200 percent above current SPP unit retirement projections. Commenters stated that the SPP notes that it currently utilizes a 13.6 percent minimum planning reserve margin and, based upon its300 estimates, the CPP could drive actual reserve margins to 4.7 percent for the overall region, by 2020 and into a negative level by 2024.

Commenters stated that despite EPA projections that the SPP region can expect capacity reserves of 21.21 percent (well above the 13.6 percent required by NER C standards), the SPP projects that reserves will fall short by approximately 4,600 MW in 2020 and 10,100 MW in 2024.

Commenters stated that SPP's analyses revealed significant impacts on reserve margin, falling well below NERC reliability standards. Comm enters stated that in combination, these results indicate that the proposed rule will have significant and potentially dangerous impacts on grid reliability and led SPP to conclude " unless the proposed CPP is modified significantly, SPP's transmission syst em impact evaluation indicates serious, detrimental impacts on the reliable operation of the bulk electric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have significant impacts on human health, public safety and economic activity within the region "

.
Commenters stated that The Southwest Power Pool concluded that imposition of the CPP as proposed would result in the RTO reserve margin falling to 5% by 2020 and

- 3.8% by 2024.

Response 1: Commenters seem to not have taken into account the many tools that are currently used in the electric power system to meet demand and to maintain reliability. As was said in the preamble to the final rule and they include planning, transmission upgrades, c alling on demand response, installation of new capacity, and demand side actions. The CPP with its long implementation timeline provides ample opportunity for these activities. EPA does not anticipate that reserve margins will be violated.

Comment 2: Commenters noted that the rule will result in the loss of operating reserves.

Commenter s noted that " between 1/3 of the coal plants in Texas (EPA's projection) and all of them (BAML's projection) would be rendered uneconomic by the rule in its first year " putting resource adequacy at risk. Commenter s noted that " The fundamental requirement for electric reliability is to have enough generating capacity to match the energy usage of customers " and " If energy usage exceeds capacity, the entire grid is at risk of collapsing. " Commenter s noted that

" reliability rules require the power system to always maintain enough reserves of generation (referred to as operating reserves) to stand

- in for outages or failures and still be able to meet the highest expected levels of consumption. " Commenter s noted that " If high levels of power consumption and outages cause operating reserve levels to fall below the required level, reliability rules require utilities to intentionally disconnect customers (called 'load shedding') to reduce energy consumption to a level that allows adequate reserve levels. " Commenter s noted that assuring resource adequacy includes " ensuring enough generation capacity exists to meet the highest reasonably expected levels of energy consumption, plus enou gh extra generation on reserve to be able to substitute for other power plants that might experience outages or failures during these high levels of energy consumption. " Commenter s noted that " the amount of needed extra generation to ensure resource adequa cy is called the planning reserve margin. " C ommenter s stated " The retirement of large amounts of existing power plants at once, without301 enough time and forward certainty to plan and build their replacements, is the perfect recipe for resource adequacy prob lems, especially where operating reserves levels are already close to the planning reserve margin. "

Commenter s stated that " The EPA's plan for increasing the utilization of natural gas may place a significant strain on system reliability, including reserv e requirements. " C ommenter s stated

" Coal serves a crucial role in meeting system reserve requirements " due to the large amounts of coal reserves that can be stored on

- site.

Commenter s stated that " many renewable technologies, such as wind and solar plants , produce intermittent generation that is difficult to predict. " C ommenter s stated in order to manage the

" variability and uncertainty inherent with intermittent renewable resources, system operators must have sufficient resources with the operational flex ibility held in reserve, known as operating reserves, to quickly respond to fluctuations in intermittent renewable generation. " C ommenter s stated " High penetrations of variable energy resources will result in an incremental need for operating reserves to maintain system reliability. "

Commenter s noted that " the amount of operating reserves is a critical issue in any power system and particularly when trying to integrate a substantial amount of renewable resources, such as wind and solar power. " C ommenter s stated " From a reserve and reliability perspective, a megawatt of capacity from coal is different than a megawatt from wind " and the proposal, which relies heavily on renewable generation, " does not consider the need for operating reserves. C ommenter s stat ed " the variability of renewable resources over different operational time frames (hours, minutes, and seconds) and the uncertainty associated with renewable production forecasting (i.e., forecast errors) are key operational characteristics of renewable re sources. " Commenter s noted that " the integration of renewable resources requires increased operational flexibility to provide load following and regulation operating reserves at ramp rates fast enough to sustain in a wider operating range. " According to co mmenter s , " Operating reserves can be categorized as non

- event reserves (including regulation reserve and load following reserve) and event reserves (including contingency reserve and ramping reserve) " and variability of wind generation increases the need f or load following reserve and regulation reserve on different time frames. According to commenter s , " the uncertainty of the large

- scale wind generation contributes to ramp events which may yield increased ramping reserve requirements. "

Commenter s offered an example case study to demonstrate how a mandated shift to renewables looks in the real world. " According to commenter s , wind generation may not correspond with customers' electricity needs. According to commenter s , " Wind generation is typically at its h ighest during the spring and winter months, with the summer periods being the lowest wind production months. " According to commenter s " More capacity from traditional resources will be needed to maintain an adequate level of operating reserves during the su mmer peak, when wind is less available. "

Commenter s noted that there may be large swings in generation from hour

- to

- hour, based on historical information. According to commenter s , these fluctuations will result in the need for additional operating reserve s and frequency control.302 Commenters stated that SPP's analyses revealed significant impacts on reserve margin, falling well below NERC reliability standards. Commenters stated that in combination, these results indicate that the proposed rule will have sig nificant and potentially dangerous impacts on grid reliability and led SPP to conclude " unless the proposed CPP is modified significantly, SPP's transmission system impact evaluation indicates serious, detrimental impacts on the reliable operation of the b ulk electric system in the SPP region, introducing the very real possibility of rolling blackouts or cascading outages that will have significant impacts on human health, public safety and economic activity within the region "

. Response 2: EPA does not agree with these comments. Operating reserves are a component of maintaining a reliable electricity system, and EPA has considered reliability in developing this final rule. Regarding reliability, See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule

. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the analysis of the imp act of this final rule.

Comment 3: Commenters discussed other types of reserves, which are essential to the reliability of the electric system

.

Commenter s stated that " Regulation reserves are used to manage continuous load and generation variation whic h results in energy imbalance " and are required to " balance the minute

- by

- minute changes in the system and keep Area Control Error within limits. " According to commenter s ,

" The possibility of short

- term wind generation forecast errors increase regulation r eserve requirements.

Commenter s noted that " load following reserves use online generation on economic dispatch or quick start generation to meet the intra

- and inter

- hour changes in loads " and are required to

" ensure the system has enough capacity on econ omic dispatch to move from one five

- minute dispatch interval to the next. "

Commenter s noted that " Contingency reserves deal with sudden events, such as loss of a large generation unit or a long transmission line. " Commenter s noted that " After the event, the inertia of synchronous rotating machines will either supply or absorb the energy difference due to loss of supply and load " and " generator governors sense the frequency change and begin to adjust the output to increase or decrease the required energy. "

Commenter s noted that " Ramping reserves cover extreme ramp events caused by large unpredictability of wind generation, which may not be covered by load following reserves. "

Response 3: Regarding reliability in general, See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the analysis o f the impact of this final rule

.303 EPA recognizes the need to have flexible resources on the electricity grid, and has developed the rule to be consistent with existing economic dispatch protocols, and designed building blocks from a conservative standpoi nt. EPA believes that annual capacity factors NGCCs used in the development of this rule are conservative and will permit continued use of NGCCs to support flexible operations. EPA also believes that the assumptions on renewables are in the mid

- range of current projections and provide for continued reliable and flexible system operation. See the GHG Mitigation Measures TSD for discussion of these capacity factors.

Comment 4: C ommenters commented on the importance of reserve marg ins in reliable electrici ty.

Commenters cited information from t he Southwest Power Pool (SPP) and stated, " SPP's minimum required reserve margin is 13.6 percent per load

- serving entity. However, SPP's evaluation of the projected EGU retirements indicates that by 2020 SPP's reserv e margin will fall to 4.7 percent. SPP projected that by 2024, SPP's anticipated reserve margin would be

- 4.0 percent, representing a capacity margin deficiency of approximately 10,100 MW. Out of 14 load serving members assessed, 9 would be deficient by 20 20 and 10 by 2024. "

Commenters noted that the rule will result in severe erosion of the reserve margin in the Midwest Independent System Operator (MISO) or Southwest Power Pool (SPP).

Commenter s noted that a preliminary reliability analysis by the Western Electricity Coordinating Council indicated that the rule will leave the region only 0.53 percent above the 15 percent target for reserve margin.

Commenter s noted that the rule could lead to " far below needed reserve margins for 2020 " and

" by 2024, the rul e could reduce generating capacity so much that the region may not have the power needed to meet demand, reserve margins aside. "

Commenter s stated that " Developing suitable replacement generation resources to maintain adequate reserve margin levels may rep resent a significant reliability challenge, given the constrained time period for implementation. "

Commenter s noted that " utilities must maintain a generation capacity reserve margin in order to supply energy in the event existing operating capacity is los t. " According to commenter s , " The policy target envisioned will negatively impact existing capacity and potentially require new dispatchable units to maintain reliability and reserve margin targets. "

Commenter s noted " Most of these coal plant retirements will occur in regions where the reserve margins are already tight. "

Commenter s noted " Results of the PACE modeling show that utilities in Arizona would need to build an additional 3.5 GW of new natural gas capacity by 2020 and 10GW by 2030 to meet peak loa d and reserve requirements. " According to commenter s , " approximately 2.3 GW is directly attributable to impacts from the proposed rule " and " due to the time it would take to304 develop this generation and the transmission to deliver it, reserve margins in Ari zona would drop below required levels in the early part of the compliance period. "
Response 4: EPA agrees with the importance of maintaining reserve margins, but disagrees with comments that assert the rule will harm reserve margins. The final rule provi des provisions to ensure adequate resources and reliability. See section VIII.G.2 of the preamble for the final rule for a discussion of electric reliability and for the important provisions on reliability in this rule. Also see the Resource Adequacy and Reliability Analysis TSD for a discussion of the treatment of resource adequacy in the analysis of the impact of this final rule.

8.9.3 Changes in retirements

[No comments were received on this topic.]

8.9.4 Changes in new capacity additions

Comment 1: Commenters noted that EPA's capacity expansion assumptions are flawed and asked that EPA " revise the capacity expansion assumptions in its analysis to reflect what reasonably can be achieved considering construction and operating resource requirements, economics, and the time required to permit, design, and construct the various generating sources and transmission infrastructure. Consistent data should be used for all of EPA's analyses. "

Commenter s gave many examples of incorrect information:

• " In the sa me April 2014 Draft DAT Replacement Files, there is a tab labeled

" Unit Info. " Focusing on nuclear units there are 5 new nuclear units identified in both the Base Case and Option 1 Case coming on

- line between 2015 and 2018. These can be identified as units at Watts Bar (2015) and Vogtle and Summer (1 each in 2017 and 2018). These 5 units are associated with the correct regions: SERC Central TVA, SERC Southeastern and SERCVACAR. "

• " In the Base Case there are two more nuclear units identified as coming online in 2020 for the SERC Central TVA region. The Base Case assumes exactly 2 new nuclear units in EACH of the U.S. regions in the U.S. and 4 more in Canada for a total of 126 new nuclear units coming online in 2020. The Option 1 Case identifies 404 nuclear un its coming online in 2020 with 14 in the SERC Central TVA region, 30 in NY and 20 in California. This is not realistic and lacks any kind of support. "

• " Further analysis indicates that in Option 1 and Option 2, there are 4,399 new wind installations in the U.S. coming online in 2016 and 2018 with 120 of those305 in the SERC Central TVA region. Also, there are 638 Solar and 748 Landfill Gas units starting up in 2016 in the U.S. The Base Case has exactly half of these numbers as coming online. These are not reali stic estimates as they are 100 to 500 times the average number of annual new builds over the past 10 years. If it were possible to design, permit, and construct such facilities within this timeframe, and it is not, each of the facilities would have to be c onnected to the transmission system. Determining how to do this and doing it without undermining system reliability will require significant additional time. None of this is realistic. "

• " In the Option 1 case there are 257 biomass fired units listed as coming online in 2016 in the U.S. There are 14 listed for the TVA region. Again, it is not reasonable to expect that the number of units coming online in one year exceeds the currently installed units by a factor of 5 or 10. It is also not reasonable to

ex pect that there is enough biomass fuel available for this many units. Although biomass is considered a renewable fuel, it is uncertain as to how to measure it as a carbon neutral generation source and therefore whether it is beneficial in reducing atmosphe ric CO2. Depending on the actual biomass fuel used, the CO2 recovery period will be measured in decades. "

• " In power modeling, it is normal to determine what new generating units are necessary to maintain the required reserve margin in each region and to pl an for the most economical type of unit. It appears that EPA merely took the number of new builds for Solar, Wind and Landfill Gas for the Base Case and multiplied by 2 in each U.S. region for the Option 1 Case new builds. The number of Natural Gas and Bio mass units in the Base Case were increased by integer factors from 2 to 8 for regions in the U.S. for Option 1. It appears that the economics and geographical variability of new generating capacity were not considered in either the Base Case or Option 1 Ca se. "

• " In reviewing the supporting documents named " Proposed Clean Power Plan Option 1 Regional overview file.xlsx " and " Proposed Clean Power Plan Base Case overview file.xlsx, " there are discrepancies in the capacity new build annual patterns as compared w ith the previously discussed data files. For the SERC Central TVA region, the overview files indicate most of the new builds occur in 2018 whereas in the April 14 draft DAT replacement files most of the new builds occur in 2016. The Base Case Overview file indicates only 2 MW of capacity being built from 2016 thru 2020 whereas the " DAT replacement files " indicate 45 units, mostly wind and landfill gas and 2 new nuclear units being built in that time frame. The " overview " files indicate more new capacity in years 2025 and 2030 whereas the " DAT replacement files " show only 1 unit in the Base Case and 7 units in the Option 1 case being build in 2025 and none in 2030. "

Response 1: EPA believes these comments are a misreading of the input files to the IPM modelin g. It reads the " units " listed in the IPM DAT input file as if they represented actual units that were assumed, or expected, to come online is a particular year. These entries in this file are

" model plants " that the units of capacity can choose to buil d in future years, based on economics306 and the conditions existing in the power grid at that time. This is a standard technique in system modeling, as noted in the fifth bullet in the comments.

Comment 2: Commenters noted the importance of excess capacit y.

Commenter s noted that " utilities are required by the WVPSC to have a certain amount of excess capacity for accommodating expected demand growth over specific periods to facilitate grid reliability in the event of unplanned outages. " Commenter s noted th at " utilities must be allowed to recover the costs of this generation, so there should be a component of BSER that accounts for demand growth, even with the use of coal

- fired units. "

Response 2: This rule does not conflict with state requirements for maint aining capacity. BSER is designed as a system for emission reductions. If a state chooses a rate limit, growth in existing resource can occur, as long as the state goal rate is maintained. The design of the mass limit provides for equivalence with this rate based approach. See further information in the GHG Mitigation Measures TSD and the Goal Computation TSD.

8.9.5 Reserve transfers

[No comments were received on this topic.]

8.9.6 Alternative case

[No comments were received on this topic.]

8.9.7 Other

Comment 1: Commenters asserted that EPA's Clean Power Plan does not recognize the unique challenges electric cooperatives and municipalities will face in achieving the carbon emission reductions outlined in the Plan.

Commenter s noted that the rule is driving coal

- fired generation out of the energy market, especially for cooperatives. Commenter s stated that " EPA's proposal doesn't provide a workable solution to address cooperatives' unique circumstances. "

Commenter s noted that " Due to their relativel y small customer base, rural electric cooperatives are particularly vulnerable to the impacts of reduced coal generation ahead of the end of those EGUs useful life. "307 Commenter s noted that not all electric co

- ops are vertically integrated; which means that separate power companies generate and transmit the electric power that co

- ops distribute to our end

- use member

- owners. The commenter s noted that this vertical " disaggregation " distinguishes electric co

- ops from investor

- owned and municipally owned utiliti es; the commenter s ha ve the limited option of supplying less than five percent of its generation requirements to meet member electric demands. The commenter s noted that they and other cooperatives rely on long term all requirements contracts with wholesale suppliers for almost all of its electric capacity; therefore, increased regulatory costs to the wholesale suppliers will necessarily be passed on to the WREA and other distribution co

- ops.

Commenter s noted that " The proposal fails to recognize the signifi cant differences in utility systems...especially electric cooperatives. " Commenter s also quoted Oglethorpe Power Corporation, " '(s)maller utility systems would be placed at a significant disadvantage compared to larger systems " and " these smaller systems, which includes many electric cooperatives, typically have far fewer generation assets and thus considerably less flexibility and fewer options for compliance. " Commenter s noted that " Utilities also vary greatly in the mix of industrial, commercial and resi dential customers they serve.' " Commenter s also noted, " When considering aspects of the Proposed Rule related to increased energy efficiency (Building Block 4), the projected cost versus

- benefit to implement efficiency measures and reduce usage is extremely unfavorable for Flint members ... and in fact is flat out not feasible

. "

Commenters stated that as a vertically integrated municipal utility, providing not only generation, but also transmission and distribution to their customers, they own and o perate 64 miles of 138kV and 66 miles of 69 kV transmission lines for the 80 square miles of their service territory. Commenters stated that their original system and substations were all built on the 69kV transmission line, from which the majority of thei r load is served. Commenters stated that as part of the engineering and economic assessment of options to make APC and EE upgrades, they concluded the cost to retire these units was disproportionate to any gain. Commenters stated that one notable concern i s the impact early retirement will have on their transmission system. Commenters stated that analysis of removal of 31 and 32 generation concludes reliability consequences of sufficient magnitude to require significant transmission upgrades and to mitigate these reliability issues, they would be required to install multiple new connections between the 69 kV to 138 kV system. Commenters stated that two engineering alternatives are available but costly. Commenters stated that the least expensive option that i s deemed necessary but adequate is estimated to cost approximately $8,900,000 for upgrades that include new transformers and a new 138 kV line. Commenters stated that the other option, which provides greater benefits, is estimated to cost more ($12,216,800 in 2012 dollars). Commenters stated that additional facility study would be necessary to determine a more accurate cost estimate, which would include a short

- circuit analysis and stability analysis, and would also require a very coordinated outage schedul e to complete any upgrades and additionally, these investments would have to be proposed analyzed and approved by the MISO, a time consuming and expensive
process.
Commenters stated that other logistical and financial issues arise with the concept of clos ing units 31 and 32. Commenters stated that in addition to the transmission voltage step down costs, the building that serves units 31 and 32 also houses unit 33. Commenters stated that during a unit308 33 outage, heat that is currently provided by units 31 a nd 32 boilers to the building and would no longer be available. Commenters stated that while this may seem inconsequential, the estimate to install building heat is $1.5 million. Commenters stated that closing the plant is estimated to cost an additional $ 1M, to address closure issues such as hydrogen and oil removal and other closure expenses. Commenters stated that sales associated with units 31 and 32 provide significant income to the City's general fund by contributing 30% of revenue of sales from these units. Commenters stated that revenue from sales associated with units 31 and 32 are also directed to fund their energy efficiency programs and therefore, early retirement of units 31 and 32 would require the City to determine not only how to pay for the transmission voltage step down, heating and closure costs, but also how to raise funds for the City services and their energy efficiency
programs.
Response 1: EPA recognizes the importance of variations in utility systems, including the position of cooper atives and other public power entities. That is one of the main reasons why the proposal provided flexibility to state environm ental agencies to design programs for reducing emissions to meet the needs of their utility systems

– including the variety of o wnership and control structures present in their states. In this final rule EPA has made additional changes to make needed adjustments to their systems, such as moving the start of compliance to 2022 and providing a smoother interim path to the 2030 goals , and also to provide more flexible compliance mechanisms to states, such as trading.

Comment 2 : Commenters raised a range of general issues about the ability to maintain reliability under the CPP
Commenters stated, EPA assumes that the proposed guidelines provide sufficient time and flexibility for states to manage the accelerated transition of the existing generating fleet that the rules envision. See, e.g., 79 Fed. Reg. at 34,904; see also Resource Adequacy TSD at 1. Commenters stated as a prac tical matter, and as discussed in greater detail infra, section III, state plans largely will rely on the four Building Blocks because there are few other options to achieve the same magnitude of reductions in states' average emission rates. Commenters sai d states may be able to vary the level of reductions from any particular Building Block to some degree, relative to the assumptions EPA made in setting the state goal rates, but few states will be able to forego completely any one of the Building Blocks an d still demonstrate compliance with the 2030 emission rate goal.] will not require changes to the existing interconnected power system. Commenters said, this is simply not true. Commenters said, a change to any part of the interconnected power system

- eve n one that appears relatively minor, such as increasing the generation produced by an existing unit

- requires an analysis of the potential impacts on the rest of the system. Commenters said, the multiple, larger changes proposed by EPA certainly require

s uch analysis under NERC's reliability standards. Commenters stated the Southwest Power Pool (SPP) released a reliability assessment of the proposed guidelines, which concluded, among other things, that new generation and transmission expansion would be nec essary to maintain reliability while achieving the proposed emission rate goals. See SPP, Reliability Assessment of the EPA's Proposed Clean Power Plan at 7 (Oct. 8, 2014), http://www.spp.org/publications/CPP%20Reliability%20Analysis%20Results%20Final%20Ve rs ion.pdf . MISO also is analyzing the impact of the proposed guidelines will file comments in309 Docket No.EPA

- HQ

- OAR

- 2013

- 0602. Commenters said, in addition to new resources, changes in how the generation fleet is dispatched may cause significant changes in how power flows across the grid. Commenters said, to meet NERC standards, new transmission infrastructure may be required, which is not possible by 2020 because of the numerous transmission studies, planning and construction required to reliably integrate the chang ed system conditions.

Commenters stated that with the GHG Rule as proposed, designating for Illinois and every other state (except one) what it considers the best mix of electricity generation and energy efficiency resources consistent with its predetermi ne goals for reducing CO2, no state could achieve these goals through technological or operating improvement at a facility within the source category that the USEPA is trying to regulate, especially coal

- fired generation. Instead, a state plan would requir e wholesale changes to how the state's utilities provide electricity to the public, dictating electric resource choices that threaten grid reliability and affordable energy for our customers, the citizens and businesses of the City of Springfield.

Comment ers stated that while building blocks 2

- 4 cannot be BSER, EPA still needs to demonstrate it has authority to implement them to ensure that the reliability prong of BSER is met, and as EPA has acknowledged, unless it can show that the coal generation that EPA is ordering to be reduced can be replaced, consistent with the economic prong of BSER, it cannot ensure that reduced generation is economic, and it cannot ensure that grid reliability will be maintained.

Commenters stated that, as EPA notes, states an d electric utilities, like KCP&L, are in the process of transitioning the generating fleet and the interstate transmission system so that it is cleaner and more resilient. Commenters said that KCP&Ls integrated resource plan already includes new wind resou rces additions, significant demand side management efforts, and potential coal plant retirements over the planning horizon. Commenters said the plan already models these components and the value to customers. Commenters said that the proposed state goals a nd compliance period do not account for the complexity of the interconnected power system adequately, nor sufficiently address how the need to maintain reliability affects the pace and timing of implementing changes. Commenters said that an aggressive impl ementation of the proposed guidelines by EPA could reduce the gains made by KCP&L to increase resiliency of the generating fleet and transmission system.

Commenters stated that the need to maintain operational reliability while undertaking significant chan ges to the way in which power is generated, transmitted and consumed has important implications for EPA's BSER determination, the computation of the state

- specific emission rate goals and the achievement of the proposed interim average goals. Commenters sa id it is essential that these changes be implemented in a way that maintains a high degree of reliability for electricity customers. Commenters said that while EPA does not have the expertise to assess fully the implications of the proposed guidelines on t he interconnected power system, that does not mean that the Agency simply can ignore the complexity of the electric system when developing state

- specific emission rate goals and compliance timeframes. Commenters said that EPA should take into account infor mation from experts in system operations and reliability matters to develop achievable final goals and a workable compliance period. Commenters said all of the necessary information about the changes that will be required to achieve the interim and 2030 go als will not be available before EPA finalizes the proposed guidelines next year or310 even before states are required to submit compliance plans for EPA approval. Commenters said that states, electric utilities, system operators and other regulators will nee d sufficient time to assess the changes that will be required to implement the state plans and will need the time required to make the system changes and develop the infrastructure needed to implement the state plans and maintain reliability. Commenters sa id EPA must be willing to allow states to address these changes by proposing revised compliance plans as necessary to meet the 2030 goals.

Commenters stated that the Proposed Rule correctly describes the power sector as a " complex, interconnected grid syst em. " Commenters said they fully agree that " opportunities exist in the power sector " that offer:

" broader, forward

- thinking approach to the design of programs to yield critical CO2 reductions that improve the overall power system by lowering the carbon int ensity of power generation, while offering continued reliability and cost

- effectiveness. "

Commenters stated, however, the Proposed Rule does not adequately reflect the intricate interactions of power sector elements required for a stable, reliable, cost

- ef fective and lower

emissions grid.

Commenters stated that, in suggesting that " the [power sector] operators themselves treat increments of generation as interchangeable between and among sources, " the Proposed Rule overlooks the challenges of the changing, renewables

- based energy supply. Commenters said this lack of consideration of reliability needs prompted the North American Electric Reliability Corporation ( " NERC " ), which is responsible for establishing reliability standards for the nation's energy syste m pursuant to the 2005 Energy Policy Act, to raise concern regarding the Clean Power Plan, as discussed below. Commenters said CSP+TES and other technologies can address the reliability challenges ahead while avoiding increases in greenhouse gas emissions. Commenters said without an explicit Clean Power Plan requirement for State Plans to adequately assess and provide for reliability needs without increasing emissions, emissions from fossil

fueled generation responding to reliability needs could diminish th e results that could otherwise be expected from State Plans.

Commenters stated that the energy system is perhaps best thought of as an ecosystem, relying on a diversity of resources to supply its needs. Commenters said a disruption in the balance of

resour ces serving the grid, just as with an ecosystem, can cause unintended and unwanted results. Commenters said that growing concern in California and the recent experience of Germany highlight the need to take reliable integration of the rapidly changing ener gy supply very seriously. Commenters said solutions to these issues can contribute to the Clean Power Plan's goals, rather than detract from them, and these solutions are increasingly available at manageable cost. Commenters said that failure to plan for i ntegration needs could jeopardize the emission reductions anticipated by the Clean Power Plan, and cause excessive and unnecessary jumps in energy costs.

Commenters stated that in Germany, where the combination of large quantities of renewable power and lo wer

- cost coal facilities have driven natural gas units that normally provide reliability services out of the market, grid reliability responses have instead come from " cycling "311 coal plants. Commenters said cycling coal plants can decrease their efficiency (i.e. increasing their heat rate) and increase their emissions and costs. Commenters said that in fact, despite Germany's remarkable success in deploying solar energy, its carbon emissions have actually increased in recent years, and its residential electr icity rates have risen sharply. Commenters said the unintended consequences of its rapid increase in renewables have caused the German government to reform its renewable energy program. Commenters said that the Clean Power Plan should learn from this exper ience, and avoid repeating the less salutary aspects of the overall German success in renewable energy deployment from the outset

- by requiring State Plans to provide for reliability solutions that will not increase emissions.

Commenters stated, within th is decade, increased renewables in the United States could require conventional fossil

- fired generation resources to operate at or near reliability thresholds, and to ramp up and down at rates that may be difficult to achieve

- increasing their emissions, as well as their costs. Commenters said that, for example, the highest average ramp rate in California, which presently leads the nation in renewable energy requirements, is presently about 30 MW per minute. Commenters said by 2020, the highest system ramp i s estimated to be three times higher. Commenters said that California's energy spot market has already experienced days in which over

- generation (in which more power is supplied to the grid than demand) has caused over 40% of prices to be negative, intende d to induce generators to stop producing power. Commenters said over

- generation has the effect of forcing curtailment of renewable energy units, thereby wasting their low

- carbon energy production potential and increasing the effective cost of these resourc es

- in other words, diminishing the effectiveness and increasing the cost of Building Block 3 measures. Commenters said that over

- generation presents a more serious grid reliability concern than insufficient supply, as it can damage grid elements that are c ostly and time

- consuming to repair (such as transformers), reduce the effective life of transmission lines and other equipment, and even result in blackouts or fires. Commenters said a recent study has shown that these over

- generation conditions could subs tantially increase in California, absent an approach to procurement that better anticipates reliability and integration needs.

Commenters stated that as the California Independent System Operator ( " CAISO " ) has observed, the threat of over

- generation and o ther concerns should be seen as a sign of success in deploying renewable energy, and projected reliability problems should be seen as issues that can be accommodated but these conditions must be addressed before the most significant changes in the
energy s upply take place. Commenters said in a proceeding before the California Public Utilities Commission on the long

- term reliability of the grid, the CAISO recently noted that efforts are underway to better identify the reliability characteristics needed by th e grid as the energy supply changes, due to the increased replacement of conventional fossil

- fired resources that inherently provided those characteristics with renewables and other new energy sources that may not. Commenters said reliance on natural gas t o provide these reliability needs presents its own set of issues. Commenters said that Western states and other stakeholders are raising reliability concerns about a future that substantially relies on natural gas and Building Block 2 measures. Commenters said natural gas

- fired power plants are subject to emissions control and supply constraints in certain areas. Commenters said that, in addition, although natural gas prices have been low in recent years, gas supply remains subject to future price fluctuati ons, which may cause unexpected cost impacts and additional reliability pressure.312 Commenters stated that reliability concerns have prompted NERC to issue a report cautioning EPA on potential negative consequences of the Clean Power Plan. Commenters said th e NERC report provides a perceptive analysis of the potential reliability implications of the Proposed Rule, including the prospects of insufficient load

- following services, ramping, reactive power, and regulation support, as well as risks associated with natural gas supply and deliverability. Commenters said NERC correctly draws attention to the potential that the Clean Power Plan could result in increased cycling and need for increased maintenance of EGUs. Commenters said that these factors could well und ermine and outweigh emissions reductions that the Proposed Rule projects as outcomes of Building Block 1 measures, which are intended to increase the efficiency and heat rate of EGUs. Commenters said that EPA should be aware that the reliability

concerns r aised by NERC can be addressed by CSP+TES, enabling attainment of emission reductions without adverse reliability consequences.

Commenters stated that NREL, in its Western Wind and Solar Study, concluded that greenhouse gas reductions associated with renew ables outweigh increased greenhouse gas emissions associated with increased cycling and maintenance of EGUs

- although, importantly, it did project an overall increase in emission of certain criteria pollutants. Commenters said EPA should note that NREL's study is a " best case " scenario, as it presumes that EGUs across the Western states would be dispatched to optimally serve energy and reliability needs throughout the Western Interconnection, while in reality these EGUs are located within over thirty separ ate grid balancing areas that are, for the most part, independently dispatched and optimized

- effectively limiting optimal dispatch and meaning that cycling and maintenance issues (and their associated greenhouse gas and criteria pollutant emissions) coul d be significantly higher. Commenters said that proper planning and procurement of technologies such as CSP+TES can minimize these cycling and maintenance issues. Commenters said the need for resources that reduce cycling and maintenance without increasing emissions should be addressed by the Clean Power Plan.

Commenters stated that they fully agree with NERC's conclusion that it is imperative to " review system flexibility and reliability needs while achieving the EPA's emission reduction goals. " Commenters said emissions reductions, reliability and affordable cost outcomes cannot reasonably be expected to simply happen; the E3 Study demonstrates that procurement without explicit consideration of reliability consequences is likely to produce significant grid and cost problems. Commenters said in order to ensure the success of the Clean Power Plan, avoid unnecessary emission and energy cost increases, and stave off grid reliability threats, EPA should require State Plans to identify and provide for integration needs in a fashion that reduces greenhouse gas emissions.

Commenters stated that CSP+TES offers many of the key values essential for consideration in a State's integration planning efforts. Commenters said CSP+TES plants can provide essentially all of the electric power products and reliability services provided by fossil

- fueled plants, without their carbon and other emissions. Commenters said that CSP displaces the need to cycle existing EGUs, thereby reducing the emissions issues that result from ineffic ient EGU operation and

wear

- and

- tear on EGU equipment; it also displaces the need to develop additional natural gas

fueled capacity. Commenters said that the flexible, grid

- supporting characteristics of CSP+TES systems can address problems associated with integrating renewable power into the grid,313 enabling renewable resources' share of the energy supply to grow while maintaining grid reliability. Commenters said that CSP+TES can provide a keystone to success for the Clean Power Plan, simultaneously providin g clean energy, reducing emissions from fossil

- fueled plants and enhancing increased deployment of other clean energy generation sources.

Regarding Texas, other commenter s noted that the Electric Reliability Council of Texas (ERCOT) states its " primary con cern with the Clean Power Plan is that, given the ERCOT region's market design and existing transmission infrastructure, the timing and scale of the expected changes needed to reach the CO2 emission goals could have a harmful impact on reliability. Specifi cally, implementation of the Clean Power Plan in the ERCOT region, particularly to meet the Plan's interim goal, is likely to lead to reduced grid reliability for certain periods and an increase in localized grid challenges. " The commenters stated that res ource mix changes, according to ERCOT's assessment, will require major improvements to the ERCOT transmission system and a final rule should allow for effective management of electric system reliability issues that may arise due to implementation of the Cl ean Power Plan. The commenters stated that significantly more time is needed to address the state's and region's unique market characteristics. The commenters stated that there is simply not enough time needed to orchestrate a plan that ensures electric re liability is not compromised.

The EPA has not demonstrated a compelling case that proceeding with unnecessary haste provides any tangible environmental benefit.

Commenters stated that given the system requirements that must be met in order to maintain reli ability, even the seemingly simple decision to close a single fossil base load unit and replace it with a renewable generator requires consideration of the availability of sufficient generation to meet demand, the need for ramping and back

- up power, the av ailability of natural gas supplies and the infrastructure to deliver it, and the implications for transmission use and for providing inertia, frequency and voltage control. Commenters said that choosing to increase the generation at an existing unit that a lready is interconnected to the transmission system requires consideration of similar issues. Commenters said managing these considerations requires a significant amount of rigorous and time

- intensive study and coordination.

Commenters stated the principal functions of the system operator include provision of transmission service and transmission planning to ensure the future reliability of the grid. [See FERC Order No. 2000] Commenters said they also make dispatch decisions, taking into consideration least cost generation, numerous reliability requirements and any existing transmission constraints

-- which determine which EGUs run to meet demand or provide other grid reliability services (this is known as security

- constrained economic dispatch). Commenters said that another key function is to manage congestion. Commenters said that in regional transmission operators (RTOs) and independent system operators (ISOs) this is addressed through competitive markets, including day ahead and real

- time energy markets, capacity markets and other markets to address energy imbalances and provide other ancillary services. Commenters said the market rules and structures are subject to Federal Energy Regulatory Commission (FERC) jurisdiction to ensure that they produce "just and reasonable rates, " as required by the Federal Power Act (FPA).314 Response 2 : EPA believes the final rule will not disrupt any current reliability processes and is fully consistent with continued maintenance of grid reliability. The final rule features o verall flexibility, a long planning and implementation horizon, and the widest possible range of options for states and affected EGUs to achieve the CO 2 emissions goal, and an opportunity to trade credits or allowances. This design reflects, among other th ings, the EPA’s commitment to ensuring that the final rule does not interfere with the industry’s ability to maintain the reliability of the nation’s electricity supply. Given this, it is highly unlikely that there will be a situation where an effected EGU cannot meet its requirements under a state plan. EPA nevertheless requires that states address reliability in their plans and consult with relevant reliability entities in the planning process.

While some have pointed out severe weather or other short

- ter m events as potentially conflicting with state plans, we note that most of those events are of short duration and would not require major adjustments to emission standards on affected EGUs or state plans. However, should such a situation develop the abilit y to use ERCs and allowances in effect provides a safety valve.

EPA recognizes however that some states may choose to place inflexible requirements on individual plants as part of their state plans and not authorize the use of credits and allowances. Tho se states will be more vulnerable to an unanticipated catastrophic event that could create a conflict that would inte r fere with reliability . To addres s this possibility, EPA is providing a safety valve in the nature of a short term modification to the sta te plan

. See Chapter VIII.G.2 of the preamble for EPA treatment of reliability issues in this rule.

8.10 Other

Comment 1: Commenters noted that EPA did not consider the following impacts related to the addition of new, non

- coal generation and transmission facilities.

Commenter s noted " there has been no evaluation of additional operating and planning measures needed to suppor t integration of significant additional renewables and of natural gas availability required to fuel the increased number of gas burning units. "

Commenter s also noted that increased reliance on wind generation will result in a " proportional increase in gas burning generators " to maintain " reliable energy supplies and minimum required planning reserves. "

Commenter s noted that EPA has underestimated energy and electricity infrastructure constraints.

Commenter s noted that financing new infrastructure may be mor e challenging than EPA assumed. Commenter s noted that it is " difficult to finance construction of new pipelines before new markets are established. "315 Commenter s stated, " It is unclear whether APA fully assessed the impacts associated with the changes in ene rgy resources that would occur under the agency's section 111(d) proposal. " Commenter s further stated that " EPA should not proceed to finalize existing source performance standards until the agency conducts a thorough impact assessment and allows for publi c comment on its proposed conclusion. "

Commenter s noted that EPA has failed to consider transmission grid integration issues, s uch as voltage control and natural gas backup power.

Commenter s noted that wind and solar projects are land

- intensive and EPA fails to examine the environmental impacts of this land development.

Commenter s noted that new transmission lines will need to be developed, which could increase the costs of this rule and could have environmental impacts.

Commenter s asked that EPA quantif y the impacts of new generation and transmission facilities that are needed to replace the coal plants being closed as a result of this and other EPA regulations.

Response 1: The EPA disagrees with the commenters that consideration of infrastructure and

en vironmental impacts were not considered by the EPA in developing the final Clean Power Plan. The EPA held extensive outreach with federal, state, tribal and territory organizations regarding these issues in developing the final rule. The EPA has conducted an extensive analysis of the energy and environmental impacts of the Clean Power Plan as reported in technical support document s such as the GHG Mitigation Measures, CO 2 Emission Performance Rate and Goal Computation, Resource Adequacy and Reliability Anal ysis

, Rate

- based Program Accounting and the Regulatory Impact Analysis (RIA) developed for the final emission guidelines. EPA specifically discusses reliability considerations in section II .D . 3 of the preamble for the final rule and section 8.9 of this response to comments document. Impacts of the CPP are discussed in Section XI of the preamble for the final rule.

As discussed in Section XI of the preamble for the final rule, states, tribal governments and territories will make the ultimate decisions as to how the emission guidelines will be implemented. States will be afforded flexibilities in compliance with the CPP. States may choose to tailor their com pliance programs to consider potential local environmental impacts, as well as infrastructure require ments . The CPP allows for flexibilities that guarantee a continued reliance on a diverse energy mix in the generation of electricity , and also allows for a long implementation period in order to ease the impacts associated with transitioning to a lower

car bon energy mix.

Comment 2: Commenters suggested multiple topics related to nuclear energy that should have been included in the secondary impacts of this rulemaking.316 Commenter s stated that " the draft rule does not appear to fulfill CAA section 111(a) re quirement that non

- air quality health and environmental impacts be evaluated. " According to commenter s , the analysis excluded radioactive waste, uranium fuel production, and nuclear accidents.

Commenter s stated that " The draft rule dismisses radioactive wa ste impacts resulting from preservation and/or increased deployment of nuclear capacity. " According to commenter s , " The EPA disregards this impact as equivalent to the solid waste impacts of coal generation, but the judgment appears to be qualitative as th e draft rule does not include a technical analysis to support such a claim. " Commenter s stated " there are multiple forms of radioactive waste that are directly generated by the operation of commercial nuclear reactors, including: (1) Irradiated nuclear fue l and other high

- level radioactive waste (HLRW); (2)Contaminated reactor equipment and other low

- level radioactive waste (LLRW) produced during the decommissioning and site remediation process; (3) Solid and liquid radioactive effluents released to the env ironment during normal reactor operation; (4) LLRW generated during routine operation, from contaminated parts and equipment to uniforms and protective gear; and (5) Highly radioactive solid waste particles ( " crud " ) from the primary coolant system. " Commen ter s stated " The EPA must consider the incremental costs of additional waste generated by the construction of new reactors and the continued operation of existing reactors, which are not only considerable but would potentially surpass the cost of any other energy alternative over the long and indefinite periods under which they may be incurred. "

Commenter s also stated that EPA must also consider " the full cost of decommissioning reactors in construction. "

Commenter s stated that " The production of nuclear fuel entails significant environmental impacts, including public health, environmental justice, and economic costs " and noted that " The impacts of uranium mining and fuel production should also disqualify nuclear from inclusion in the Clean Power Plan's be st system of emissions reduction. "

Commenter s noted that the rule does not account for " the potential for radiological accidents resulting from continued operation of existing reactors and the deployment of additional, new
reactors. "

Commenter s stated that " Ignoring the vast financial costs and human health and environmental impacts stemming from reactor accidents distorts the evaluation of nuclear in the rule. "

Commenter s noted that there are a number of radionuclides released from nuclear ene rgy facilities and chose to focus on the impacts of carbon

- 14 for the following reasons:

• " Carbon

- 14 is released into air as methane and carbon dioxide, and into water " and " is also radioactive, thereby bridging air and non

- air issues as applies to the

curr ent proposed rule. "

• " Carbon

- 14 has a half

- life of over 5700 years and the element carbon is a basic building block for life on earth. Therefore, " it constitutes a potential health hazard, whose additional production by anthropogenic sources of today will r esult in an increased radiation exposure to many future generations. "317 • " Like tritium, it can collect in the tissues of the fetus at twice the concentration of the tissues in the mother, pointing to its disproportionate impact on the most vulnerable stage of the human lifecycle. "

• " In a nasty irony, release of non

- radioactive carbon by fossil fuel combustion had diluted the uptake of naturally occurring radioactive carbon, actually lowering the dose humans received, thereby mitigating natural carbon

- 14's radi oactive impact on human health. Called the Seuss effect, it was overtaken after about 1950 with the carbon

- 14 release from nuclear power and nuclear weapons. What happens when the non

- radioactive carbon from fossil fuel production is replaced by carbon

- 14 producing nuclear power? Will biological systems take up not only more naturally occurring carbon

- 14, as before, but also more carbon

- 14 from nuclear emissions? "

Commenter s stated, " Any non

- air quality health and environmental impact and energy requirements needed study if nuclear was to be part of the performance standards. " Commenter s noted the following: " aging fleet of nuclear reactors, all with significant safety problems and long term storage of highly radioactive nuclear spent fuel on site

. "

Commenter s commented that nuclear energy is not emissions free and noted the following:

• " Nuclear Fission from energy production is one of the hottest activities man conducts and nuclear fission's thermal pollution impacts on the earth's eco and biospher es have not been included in the climate change conversation. "

• " To date nuclear energy only produces approximately 11% of the earth's electricity, yet it produces enough Btus of Nuclear Heat Waste to melt 25% of the earth's ice. "

• " Once started the nuclear fission chain reaction continues producing nuclear heat waste until all the half

- lives of the newly created radioisotopes are exhausted " and

" it remains thermally HOT for thousands of years. "

• " nuclear energy production the most water intensive form of ene rgy production due to the large need of water to constantly cool the hot radioactive elements. "

• after use, the water can be dumped back into water bodies and " The heat shock/thermal impact negatively impacts tens of millions of fish "

• uncontained radioactiv e leaks, including strontium

- 90 and tritium

• " Non

- carbon emission hazards of low level nuclear emissions from nuclear energy production, despite The National Academy of Sciences study from the late 1990s, commonly referred to as the Bier Vll report, stated that no amount of continuous exposure to low

- level radiation is safe "

• " EPA does not consider the health costs, to individual and national health care. "318 • " Nor, has the EPA considered the impacts on low level radioactive emission on reproductive health, wome n, infants, young children, especially young girls. "

• " Uranium and other toxic minerals are the fuel for nuclear energy. These fuels are finite, not renewable. Mining of nuclear fuels negatively impacts human health, water resources and land of many environ mental justice communities. "

• sequestration of nuclear waste includes the following risks: " groundwater seeping into the repository, corrosion of waste containers, leaching of radionuclides, and migration of contaminated groundwater towards areas where it m ight be used as drinking water or for agriculture "

Commenter s noted " The EPA rule contains a number of provisions that could expand or prolong the use of dangerous and polluting fuels, including the burning of coal, garbage, natural gas, forests and uranium, rather than encourage a transition to healthier solutions like energy efficiency and clean renewables. "

Commenter s asked that EPA " fully assess and appreciate the environmental impacts of the nuclear life

- cycle. "

Response 2: In response to comm ents received relating to nuclear generation, EPA has modified the final rule in this regard. The final rule Best System of Emission Reductions (BSER) reflects certain changes from the proposed rule, based on EPA’s consideration of comments received and fu rther analysis. The principal changes are the exclusion from the BSER of emission reductions achievable through demand

- side energy efficiency and through nuclear generation; a revised approach to determination of emission reductions achievable through incr eased renewable energy generation, based on a n alternate approach on which EPA solicited comment in the proposed rule; a consistent approach to determination of emission reductions achievable through all the building blocks that better reflects the regiona l nature of the electricity system; and a revised interim goal period of 2022 to 2029 (instead of the proposed interim period of 2020 to 2029). These changes to the BSER and the building blocks are discussed in more detail in section V of the preamble for the final rule

. In the June 2014 proposal, the EPA also identified the replacement of generation from fossil fuel

- fired EGUs with generation from nuclear units as a potential approach for reducing CO 2 emissions from the affected source category. EPA propo sed to include two elements of nuclear generation in the BSER: an element representing projected generation from nuclear units under construction, and an element representing preserved generation from existing nuclear generating capacity at risk of retirem ent.

G eneration from new renewable energy (RE) generating capacity, generation from new nuclear generating capacity can clearly replace fossil fuel

- fired generation and thereby reduce CO 2 emissions. However, there are also important differences between the se types of low

- or zero

CO 2 generation. Investments in new nuclear capacity are very large, " lumpy, " capital

- intensive investments and the building of nuclear facilities historically has been subject to delays and substantial risks of non

- completion, both of which tend to raise costs. By comparison, investments in new RE generating capacity are relatively small and low

- risk. Based on the small319 number of new nuclear generating projects, it is difficult to ascertain a trend of increasing nuclear generation i n the industry. These differences create greater uncertainty regarding the achievability and cost of generation from new nuclear capacity as a replacement for fossil fuel

fired generation, two important factors in determination of the BSER. Accordingly , as described in section V of the preamble for the final rule , the EPA is not finalizing increased generation from new nuclear capacity as a component of the BSER.

Th e EPA is likewise not finalizing the proposal to include a component representing preserved

e xisting nuclear generation in the BS ER. On further consideration, EPA believe s it is inappropriate to base the BSER on elements that will not reduce CO 2 emissions from affected EGUs below current levels. Existing nuclear generation helps make existing CO 2 emissions lower than they would otherwise be, but will not further lower CO 2 emissions below current levels. Accordingl y as described in section V of the preamble , the EPA is not finalizing preservation of generation from existing nuclear capacity as a com ponent of the BSER.

Comment 3: Commenters noted that the rule has impacts on water usage and water resources.

Commenter s " developed a new power sector model that accounts for water use. " According to
commenter s , " neither EPA nor the Energy Information Administration (EIA) have policy models that can estimate changes to water use in the power sector under different regulations. "

Commenter s stated that, when compared to coal use, " energy efficiency, renewable energy, and natural gas also cut carbon dioxid e emissions in roughly the same proportions that they save
water. " According to commenter s , " Since these strategies are the basis for the building blocks proposed in the Clean Power Plan, this means that the plan will not only reduce CO2 emissions, but als o cut water use in the power sector. " Commenter s stated that " the implementation of the Clean Power Plan in Texas would further increase water savings in the State by about two

- thirds more compared to the baseline, from a 15 percent drop to a 25 percent dr op. "

Commenter s noted that water usage " could also be an Achilles he e l in the long

- term sustainability of hydraulic fracturing and natural gas production. "

Commenter s noted that " The U.S. energy policy must soon take a more accurate accounting of reduci ng water usage in a sustainable strategy. " Commenter s stated, " The issues with too much water usage going to energy generation can no longer be separated from energy policy, air quality policy and greenhouse gas reduction policy. We need sustainable policy solutions. "

Commenter s stated, " The entire energy market is increasingly vulnerable to the current and future drought conditions found in the U.S. and the larger issue of high water usage from the energy sector is not being factored into strategic planni ng. " Commenter s asked " What are the best adaptive management strategies in the energy sector for controlling water use and generating more power from low water use generation sources? " and " Should these water resource management strategies be included in t he EPA rules or development further in other regulatory schemes? "320 Commenter s stated that " The EPA should have conducted a more meaningful evaluation of the water resource impacts of including nuclear in the BSER, particularly considering the impact of nucl ear in areas of the country that have experienced droughts, such as Georgia. "

Commenter s asked that the costs to the water sector be considered in any reliability analyses.

Commenter s stated, " The electricity sector's current and future resiliency should be considered while EPA finalizes its CPP, especially in terms of the sector's water intensity. " Commenter s also stated, " The smart, resilient and less water

- intensive energy choices we make today will have long

- lasting benefits for the country's economic and environmental health. "

Response 3: Comments received on this topic were mixed with some commenters asserting that the CPP will create more demand for water resources and other commenters stating that " energy efficiency, renewable energy, and natural gas also cut carbon dioxide emissions in roughly the same proportions that they save water. " The EPA agrees with the commenter’s statement that

" The smart, resilient and less water

- intensive energy choices we make today will have long

lasting benefits for the country's economic and environmental health. " The EPA recognizes that qualitatively assessing water impacts of the CPP is complex and is dependent in part on actions ultimately taken to comply with the emission guidelines. The CPP is designed to reduc e CO 2 emissions from electric generating units

, the largest domestic stationary source of emissions of CO 2

, and CO 2 is the most prevalent of the group of air pollutant GHG that the EPA has determined endangers public health and welfare through its contribu tion to climate change.

Climate change impacts touch nearly every aspect of public welfare. Among the multiple threats caused by human emissions of GHGs, climate changes are expected to place large areas of the country at serious risk of reduced water supp lies, increased water pollution, and increased occurrence of extreme ev ents such as floods and drought. As previously stated, this rulemaking is designed to reduce CO 2 emissions that contribute to climate change and these negative impacts
on water resourc es.
While certain types of electricity generation and fuel sources do use water resources, t he EPA also recognizes that increased use of renewable energy (RE) provides numerous benefits in addition to lower CO 2 emissions . Specifically, RE typically consu mes less water than fossil fuel

fired EGUs. Wind power and solar PV systems do not require the use of any water to generate electricity; water is only needed for cleaning to ensure efficient operation. States will make the ultimate decisions regarding impl ementation planning and will be able to address water related issues specific to their state.

Comment 4 : Commenters noted that the rule will have an adverse effect on stormwater compliance at an energy generation site in Orlando Florida. Although not subj ect to the rule, the loss of coal units will have an adverse effect on this energy generation site owned by
commenters

. Commenters stated the following :321 " The site was designed in the early 1980s with a visionary approach. It utilized recycled water from a nearby wastewater treatment plant to be used in the cooling towers and prohibited the runoff of any stormwater from the site. Florida has an average of 54 inches of rainfall each year, which makes managing and storing stormwater a significant undertaking. The water is directed and stored in ponds 2

- 6 as depicted on figure 1, which are all lined to meet the requirements for contact water on an industrial site. There is no offsite discharge of stormwater at SEC, so the contact water never conveys to waters o f the United States. This stored stormwater is then processed through the SEC Stormwater Treatment Facility, consisting of a brine concentrating crystallization falling film evaporation process. A common description of this process in the industry is a coo ling tower blow down treatment facility that converts it to steam through hydric scrubbers to achieve compliance with the Section 112 requirements. The SEC site also utilizes wastewater from Orange County, Florida to meet other generation needs and that wa ter is evaporated as a part of the generation process. This partnership has provided a large scale use for treated wastewater while limiting the demand at SEC from potable resources to be zero. OUC relies on the resource to produce steam and Orange County Utility Department relies on OUC as a source for beneficial use of the county wastewater. If the OUC demand is removed the County does not have the infrastructure to re

- route the entire volume of wastewater, especially during the wet season and will have t o discharge this beneficial resource in a wasteful manner. "

" An additional side effect of CPP on OUC is that, with the loss of full operation of both of OUC's coal units, the efficient design of our site does not provide for the management of the Florida summer rains (which average 54 inches) and the associated industrial contact and the additional stormwater. Therefore, OUC would be required to design, permit, and construct other means to manage and store this stormwater at an additional projected cost of at least $50 million. Because OUC does not discharge into Waters of the United States we now are not included in the new Proposed Rule and definitional modification. The alternatives we will have to investigate will include deep well injection in an area without a confining layer or treatment of the stormwater to at least Class 1 standards to meet the water quality criteria in downstream protected water bodies. "

Response 4 : The EPA recognizes there are a variety of potential impacts associated with impleme nting the Clean Power Plan that states, tribes, and terr itories should consider in developing implementation plans including effects on local infrastructure. This final rule allows states considerable flexibility with respect to the timeframes for plan dev elopment and implementation, as well as the choice of emission reduction measures. The final rule provides up to 2030 for full implementation of all emission reduction measures, with incremental steps for planning and then for demonstration of CO2 reductio ns that will ensure that progress is being made in achieving CO2 emission reductions. States w ill be able to choose from a wide range of emission reduction measures, including measures that are not part of the Best System of Emission (BSER) reduction s, as discussed in detail in Section VIII of the preamble.

Comment 5 : Commenters noted that the impacts analysis did not include the consequences of increasing the amount of fracking (unconventional hydraulic fracturing) in the United States in order to respond to the increased natural gas usage that will result from this rule.322 Commenter s noted the following: " There is ample reason to believe that [hydraulic fracturing] has significant and widespread impacts on groundwater contamination and methane leakage, bot h of which have significant impacts on the public health and welfare of the United States. " Commenter s also noted that " increasing reliance on natural gas may lead to even larger climate change impacts, since methane is also a greenhouse gas that the EPA h as recognized as having a far greater global warming potential than carbon dioxide, up to 20 times greater over a 100

- year period. "

Commenter s noted the following:

• " the process of hydraulic fracturing will lead to further contamination of groundwater su pplies "

• " recent reports of earthquakes that appear to be triggered by the injection of hydraulic fracturing wastes into deep wells are troublesome. "

Commenter s noted that there are " considerable impacts to air, land and water resources due to natural gas exploration and development activity. " Commenter s asked for " Better management, mitigation and awareness of the impacts to public resources are needed, especially in relation to public lands, waters, air quality, and GHG emissions. " Commenter s also raised the issue of

" methane leakage from our ever

- expanding network of natural gas fields and distribution pipelines " that could " offset much of the climate benefit expected by converting from coal to natural gas. "

Commenter s noted that the rulemaking did not e valuate the consequences of the following:

• " air and water contamination from drilling and fracking operations "

• " unsafe waste disposal "

• " earthquakes "

• " ecological impacts, and damage to roads, property, and communities caused by the boom

- bust cycle inherent to this extractive industry "

.

Commenter s cited a " compendium of fully

- cited reports, studies, and articles compiled by Concerned Health Professionals of New York, which describe the many risks and harms of fracking, including its impact on climate change. " [Compendium of Scientific, Medical, and Media Findings Demonstrating Risks and Harms of Fracking (Unconventional Gas and Oil Extraction), Concerned Health Professionals of New York, July 10, 2014. http://concernedhealthny.org/compendium/] "

Commenter s noted that fracking can:

• " Fragment forests and mar landscapes with new roads, well sites, waste pits and pipelines; "323 • " Compete with farmers for local water supplies while consuming millions of gallons of water for each fracked well; "

• " Produce massive volumes of toxic and even radioactive waste, the disposal of which is causing earthquakes and putting at risk drinking water resources; "

• " Cause thousands of accidents, leaks and spills each year that threaten public health and safety and put at risk rivers, streams, shallow aquifers and farms; "

• " Pump ha zardous pollutants into the air, at the expense of local communities, families and farms; "

• " Turn homes into explosive hazards by contaminating water wells with methane and other flammable gases; "

• " Put vital aquifers at risk for generations by creating new pathways for the potential flow of contaminants over the coming years and decades "

• " Disrupt local communities, with broad physical and mental health consequences; increased demand on emergency and other social services , damage to public roads, declines in property value, increased crime, and losses felt in established sectors of local economies. When combined with the potential for increased risk of climate change due to methane leakage, these health risks demonstrate h ow misguided this plan truly is. "

Commenters listed the following impacts of increasing the supply of shale gas:

• Groundwater quantity and quality from increased shale gas development

• Air Quality impacts from shale development

• Earthquakes

• Impacts from bui lding out natural gas infrastructure to meet power sector demand for natural gas.

Commenters stated that they are concerned about how the rules define " clean power " and the plan's heavy reliance on conversion from coal to natural gas. Commenters said natur al gas obtained by hydraulic fracturing is not clean from a public health or climate perspective. Commenters said fracking is associated with local and regional air pollution, adverse birth outcomes and contamination of drinking water. Commenters said the metrics used by the EPA to predict the effectiveness of this strategy have been questioned. Commenters said emission estimates should encompass the entire life cycle of fuel instead of just carbon emissions from the smokestack.

Commenters, regional network s of grassroots community organizations, stated that the proposed rule encourages fuel

- shifting from coal to natural gas without considering the significant324 environmental, public health, economic, and societal harms related to the extraction of natural
gas . Commenters stated that gas development today, which often i nvolves the dangerous process of horizontal high

- volume hydraulic fracturing ( " fracking " ), is largely unregulated and enjoys broad exemptions from landmark environmental laws, including the Clean Air Act, the Safe Drinking Water Act, and laws regulating hazardous wastes. Commenters stated that the proposed federal guidelines under CAA section 111(d) go to great lengths to describe the benefits of reducing coal consumption, but the proposed guideli nes fail to evaluate the negative consequences of increased natural gas production and related infrastructure, including air and water contamination, unsafe waste disposal, earthquakes, ecological impacts, and damage to roads, pr operty, and communities cau sed by the boom

- bust cycle inherent to extractive industry. Commenters also submitted a recently assembled compendium of fully

- cited reports, studies, and articles compiled by Concerned Health Professionals of New York, which des cribe the many risks and ha rms of fracking, including its impact on climate change.

Commenters opposed the proposal because of building block 2 and the heavy reliance on expanding the use of natural gas for electricity generation. These commenters believed that increasing the deman d for natural gas will increase natural gas venting and fugitive emissions of methane from natural gas production, transmission, and distribution. These commenters believed that the agency must simultaneously promulgate GHG standards for reducing natural g as venting and fugitive emissions from natural gas systems. Commenters stated that the proposal to designate natural gas and nuclear power as BSER is not based on a documented, internally consistent, or fair analysis because the proposal relies heavily on natural gas for carbon emission reductions. Commenters stated that the proposal was based only on industry data for venting and fugitive methane emissions, and the proposal ignores peer reviewed literature that indicates much higher methane emissions from venting and fugitive sources.

Commenters opposed finalizing the proposed rule before the EPA also promulgates a standard for natural gas venting and fugitives because if the proposed rule was finalized large

- scale investments in new gas

- fired power plants would soon follow. Commenters were concerned that further study by the EPA on fugitive emissions from fracking may indicate emissions are much higher than the estimates used for the proposal, and commenters were concerned that curtailing fugitive emissions from fracking may be an intractable problem. Given these concerns, commenters stated that the Agency will not be in a position to reverse course and require the newly constructed gas plants to retire. For these reasons, commenters believed that fugitive

e missions associated with shale gas must be addressed in the proposed rule.

Commenters believed that the proposed rule's endorsement of natural gas as a strategy for combating climate change is fundamentally flawed and not supported by science. Commenters d isagreed with the proposal's characterization of natural gas as " clean " because commenters believed that the best science shows that systemic venting and leakage of methane that occurs during extraction, processing, and transport, along with carbon dioxide released during its combustion, substantially or completely offsets the benefits that natural gas

- fired generation has over coal

- fired generation with respect to climate change. Commenters recommended that the entire supply chain for gas development shoul d be considered as a single process in analyses published to support the final federal guidelines for state plans.325 Commenters stated that the environmental concerns regarding the use of fracked natural gas are numerous and deserve the agency's attention in conjunction with adoption of these guidelines. Commenters stated that if the goal is to reduce greenhouse gas emissions, then the expected increase in emissions of methane associated with production, transmission, and burning of fracked gas must be fully accounted for, and if the goal is to achieve a healthier environment, then the increase in air and water pollution associated with the production, transmission, and burning of fracked gas must be accounted for and remedied. Commenters provided a link to a compendium of the scientific, medical, and media findings that demonstrate the risk and harms of fracking.

Commenters stated that it is crucial that methane pollution from natural gas production and transport be accounted for and reduced as part of an ove rall strategy to reduce carbon emissions and combat climate change, and President Obama has committed to taking action on methane as part of his Climate Action Plan. Commenters stated that it is vital that EPA, along with its sister agency the Department o f Interior's Bureau of Land Management, move forward with strong rulemaking to limit methane pollution from new and existing sources of natural gas and oil production on both public and private lands; otherwise, emissions reductions from use of natural
gas at power plants may not be realized.

Commenters stated the proposed rule for existing power plants is only a first step in fulfilling our obligation to protect the health of our residents while meeting the challenge of climate change. Commenters urged the EPA to continue to take action in regulation of methane emissions as prescribed in the Climate Action Plan from March 2014 Strategy to Reduce Methane Emissions. Commenters stated that according to the IPCC, methane as a greenhouse gas is more than 80 time s potent as carbon dioxide over a 20

- year period. Commenters stated that wellheads, pipes, valves, pressures, and even abandoned wells are releasing increasing volumes of methane into our atmosphere. Commenters stated that about 30 percent of all methane e missions are derived from natural gas and petroleum systems. Commenters stated that best practices and appropriate regulation must be enacted and enforced to reduce this greenhouse
gas. Commenters stated the EPA must assume responsibility for setting the s tandards to minimize the risk.

Commenters provided comments pertaining to promoting natural gas as a clean alternative to coal in the Clean Power Plan. Commenters stated that by not including limits on methane emissions as well, the EPA is diluting its ef forts to reduce global warming. Commenters noted methane is more potent greenhouse gas than carbon. Commenters stated that when total lifecycle methane emissions from fracked natural gas are included, burning natural gas is equivalent to burning coal in te rms of global warming. Commenters stated the EPA has underestimated methane emissions significantly. Commenters stated methane, like carbon, is a greenhouse
gas. Commenters indicated it is a more potent greenhouse gas than carbon, 100 percent more potent b ecause of the way it works in the atmosphere over a 20

- year period. Commenters stated fracking for natural gas results in releasing unburned methane at all stages of the fracking
process. Commenters stated that experts tell them that if total methane emis sions throughout the lifecycle of fracked natural gas reached three percent and has a fuel that is equal to burning coal in terms of global warming. Commenters indicated the most conservative average for methane released during the lifecycle of fracking is 5 percent to 7 percent, well above the 3 percent.326 Commenters stated the EPA's own study entitled " Improvements Needed and EPA Efforts to Address Methane Emissions from Natural Gas Distribution Pipelines, " issued on July 25, 2014, cautions that methane emi ssions from pipelines have been grossly underestimated. Commenters noted a study entitled " Methane Leakage from North American Natural Gas Systems, " published in the February 14, 2014, issue of the Journal of Science synthesizes diverse findings for more
t han 200 studies ranging in scope from local gas processing plants to total emissions from the US and Canada. Commenters quoted the article, " People who go out and actually measure methane pretty consistently find more emissions than we expect, " says the l ead author, Adam Brandt. Commenters also quoted, " Atmospheric tests covering the entire country indicating emissions around 50 percent more than the EPA estimates, " said Brandt, and that is a moderate estimate. Commenters stated the EPA estimates are based on voluntary reporting of methane emissions from the natural gas industry.

Commenters stated that it is important that the EPA include the release of all greenhouse gas emissions, not just carbon dioxide in its regulations. Commenters stated methane gas, released by high

- volume horizontal hydro

- fracking is 80 times more potent a greenhouse gas than carbon dioxide in the first 20 years of its release to the atmosphere. Commenters stated NASA scientists have found that methane may actually have as much as 10 5 times more potency than CO2 in the same period. Commenters stated the EPA, however, has been using a much shorter 100

- year time frame and, thereby, calculates the effect of methane as only 20 to 25 times more potent than carbon dioxide. Commenters stated due to the potency of methane, any leakage of the gas of more than two percent makes it a more dangerous greenhouse gas than carbon dioxide. Commenters stated studies by NOAA of methane leakage from high

- volume horizontal drilling for gas in the western U .S. shows annual leakage of between 2.3 percent and 17 percent from drilling and venting along pipelines, compressor stations, and storage facilities. Commenters indicated the fracking industry itself admits that some 5 to 7 percent of its high volume well s leak in the first year of their drilling, and that after 30 years, up to 35 percent of its wells leak methane. Commenters stated that a recent study from the magazine Science, finds that the EPA has seriously underestimated the release of methane from fr acking. Commenters indicated that to define methane gas obtained from high

- volume, high

- pressure hydro

- fracked wells as clean energy is erroneous.

Commenters cited a study by Robert W. Howarth entitled " A Bridge to Nowhere: Methane Emissions and the Green house Gas Footprint of Natural Gas " published in Energy Science & Engineering in April 2014 (available at http://onlinelibrary.wiley.com/doi/10.1002/ese3.35/pdf). Commenters stated that measurements by the NOAA and several other independent analyses indicate that at least 3 percent and potentially more than 7 percent o f methane from natural gas is lost to the atmosphere prior to burning

- far exceeding EPA estimates. Commenters stated that based on the most recent IPCC 20

- year GWP for methane, a leakage rate of 2.8 percent or higher actually causes natural gas to be mor e damaging than coal as a driver of climate change.

Commenters cited a study by Robert Howers, et al, from 2011 that concluded fugitive emissions and production losses of methane from natural gas fractured rock production practices have a higher climate ch ange impact than coal

- fired combustion. Commenters stated that the EPA has ignored this study and other studies that reached similar conclusions. Commenters stated that the327 problem with looking at the 100

- year time period instead of the 20

- year time period was summed up in an article by Joe Ron aptly titled, By the Time Natural Gas has a Net Climate Benefit, You Will Likely Be Dead and the Climate Ruined.

Commenters stated that a full review of available data indicates that the level of emission reductions achievable by the proposed federal guideline may be negated by the greenhouse gas impacts of expanding natural gas production and associated venting. Commenters stated that the final rule should include accurate calculations of the expected increases in G HG emissions from the natural gas sector from implementing building block 2) corrected for the GWP of methane over a period of 10 years to ensure the switch from coal to natural gas will have the intended effect on climate change. Commenters also stated th at the leak rates assumed in the proposal for natural gas systems are incorrect based on atmospheric measurements taken by NOAA in 2012. Commenters stated that the measurements by NOAA indicated leak rates ranged from 4 to 18 percent in various regions com pared to the 2.5 percent leak rate used for proposal. Commenters also referenced a series of articles by two Cornell professors, Dr. Tony Agrafia and Dr. Robert Howorth that corroborated the leak rates published by NOAA.

Commenters stated that only EGUs t hat can show they burn natural gas that is supplied by production, transmission, and distribution systems with a leak rate of less than half a percent should be allowed to displace coal units under building block 2. Commenters stated that the Environmental Defense Fund and the University of Texas have shown that a leak rate of less than half a percent is achievable when natural gas systems are properly operated.

Commenters supported the use of building block 1 in the proposal and stated that greater reducti ons of carbon emissions at coal plants are available if power plants simply match the lowest emission rate actually achieved by the plant over the past decade.

Commenters stated total lifecycle emissions from methane gas

- fired plants must be addressed. Co mmenters said, methane is a greenhouse gas even more potent than carbon. Commenters said, the rule does not address total lifecycle emissions from methane gas

- fired plants, including leakage during production, processing and transmission, emissions flaring s at gas wells, and energy consumed in production and transport of liquefied natural gas. Commenters said, researchers found methane leak rates of 100 to 1,000 times greater than the EPA estimates at well pads in Pennsylvania, and the EPA's office of the I nspector General just issued a report citing the Agency's failures to manage methane leaks from pipelines.

Commenters stated that while natural gas is seen as a bridge fuel by the Obama administration, in a State horribly wrecked by hydraulic fracturing, P ennsylvanians know it is not the answer. Commenters stated methane escapes from natural gas drilling have a significantly greater global warming in the short term than carbon dioxide, according to NASA.

Commenters stated, if the goal is to reduce greenhouse gas emissions, then the expected increase in emissions of methane associated with production, transmission, and burning of fracked gas must be fully accounted for.

Commenters called upon the EPA to properly calculate the greenhouse effect of met hane gas over a reasonable timeline, as well as to measure the release of methane from the high

- volume328 horizontal drilling technology. Commenters indicated this will permit the establishment of CO2 equivalents for released methane and to accurately calcula te the greenhouse gas effects of fracked methane. Commenters stated proper steps must then be taken to control methane release and, if necessary, actually to ban high

- volume hydro

- fracking.

Commenters, graduate students, urged the EPA to impose an immediat e moratorium on additional drilling for oil and natural gas in Colorado because their colleagues at the university have empirical evidence that methane emissions are 60 percent higher than assumed for the proposal. Commenters believed the moratorium should stay in place until we have the science that proves beyond a doubt that it is safe.

Commenters stated a range of studies have shown high level of methane leaks from gas drilling and fracking operations, undermining the notion that natural gas is a climate solution or a transition fuel. Commenters noted that major studies have concluded that early work by the EPA greatly underestimated the impacts of methane and natural gas drilling on the climate.

Commenters stated that the EPA's estimate for methane contr ibution to climate change is too low. Commenters indicated the EPA has significantly underestimated emission rates of methane from active gas fields, and has underestimated the warming potential of methane. Commenters noted the EPA must account for increas es in the amount of methane emissions from gas

- fired power plants which result from coal

- fired power plants converting the gas or from new gas

powered plants. Commenters stated the EPA's estimates for methane contribution to climate change still lag far be hind scientific consensus, which deemphasizes the impact that the natural gas sector will have on climate change. Commenters stated a recent study published in the National Academy of Sciences found that emissions rates of methane from active gas fields

w ere 1,000 times higher than EPA estimates. Commenters stated the IPCC recently reported that methane is 86 times more potent at warming our planet than carbon over a 20

- year time period, while research by a NASA scientist shows that methane is 105 times mo re potent when including aerosol effects. Commenters noted the EPA's global warming potential of 25 is inadequate for studying regulations. Commenters indicated the lifecycle emissions from the gas industry may already be worse for the climate than coal. Commenters stated methane emissions will increase if plants switch to natural gas when methane emissions from active gas fields are considered. Commenters stated the EPA should also set methane emission reduction targets for oil and gas industry. Commenter s stated that in addition, the EPA must move quickly on setting ambitious methane reduction targets or regulations for the oil and gas industry.

Commenters stated that the EPA has to step up and directly regulate methane, both from oil and gas and coproduc ing wells, during gas production, during gas processing, and during transport on new and existing wells.

Commenters stated that the Clean Power Plan will not solve climate change in isolation. Commenters indicated that as a nation, we will have to tackle m ethane leaks from oil and gas.

Commenters stated, if you know anything about fracking, the government has given their state [PA] over as a sacrifice zone to the natural gas industry, and commenters hoped at some point [EPA] will also regulate methane, whic h is a much more powerful gas than CO2.329 Commenters stated, one

- hundred miles away they are developing an oil field at an amazing pace in the Bakken Region of North Dakota and Montana. Commenters indicated there is natural gas that is a by

- product and is s imply being flared and wasted. Commenters stated we should salvage all the natural gas now being wasted. Commenters stated methane emissions are a greenhouse gas that must be looked at in addition to carbon dioxide. Commenters indicated it is critical that the BLM's proposal to limit flaring and venting of methane and the EPA's methane pollution standards move forward. Commenters noted that otherwise, switching from coal to natural gas could make climate change worse, not better. Commenters stated even with better controls on methane, though, promoting natural gas is not a good solution to climate change; energy efficiency and renewable energy are much better.

Commenters stated that EPA should account for carbon dioxide equivalents, not just CO2 in order to encompass other greenhouse gases that are emitted from the extraction, storage, transport and generation components of fuel combustion. Commenters cited, as an example, methane emissions that can be released during natural gas extraction and transport.

Co mmenters urged the EPA to act quickly to release meaningful standards for methane, particularly extract[ion] of methane.

Commenters stated that without including limits on methane emissions, the EPA will be leaving out a massively important source of green house gas emissions. Commenters noted that other witnesses have testified that methane has a severe impact on greenhouse gas versus carbon dioxide on the 20

- year term. Commenters thought methane leakage, especially at the point of extraction is a major co ncern.
Commenters stated the International Energy Agency tells us that two

- thirds of proven fossil fuel reserves must be kept in the ground to prevent potential catastrophic consequences. Commenters noted this includes natural gas and oil. Commenters state d about one

- third of the total U.S. methane emissions are responsible for greenhouse gas emissions [sic]. Commenters added the new unconventional gas wells are also emitting toxins like benzene, and radon, that are then sent through compressor stations and pipelines. Commenters stated that several studies have shown that overall, methane emissions are considerably higher than official inventories report.

Commenters stated that without sensible health based regulations for the unconventional, natural gas ind ustry, the economic and health benefits of the proposed rule will be undone and create potentially equally daunting challenges for future Pennsylvanians. Commenters indicated the EPA and Pennsylvania DEP should (1) require best available technology for cap turing unintended methane emissions, green completions and close wastewater systems; (2) create systems and enforcement from monitoring of well bore integrity; (3) weigh out health protective, well permitting guidelines; (4) enforcement authority and resou rces for state and local agencies to oversee this emerging industry; (5) transparency around reduced water components and disposal systems; and (6) a prospective epidemiological investigation of potential health effects which are to date unknown and under investigated.

Commenters believed that replacing coal with natural gas is not a valid solution to climate change and the only long

- term solution is for the U.S. to rapidly develop renewable energy systems that will quickly free us from dependence on all fo ssil fuels. Commenters believed this330 approach makes both environmental and economic sense. Commenters believed the final rule should reflect the potential for using renewables. Commenters opposed regulating methane losses in a later federal regulatory acti on (separate from the current 111(d) action) because the proposed 111(d) rule could lead states to ignore the potential climate benefits of renewables and to make decisions about long

- term investments in electricity generation based only on combustion emis sions. Commenters believed states may make poor choices in their 111(d) plans if they are not presented with all the facts about methane losses. Commenters noted that the proposal's Regulatory Impact Analysis (RIA) indicated the rule would boost the amount of additional electricity generation from natural gas by nearly ten times the gain projected for renewables before 2020. Commenters believed that by accelerating EGU investments in natural gas in the near

- term, the plan could tip the scales toward fossil fuels for decades to come, and commenters believed that once gas

- fired plants are in operation, there will be less incentive for utilities to reinvest in renewables because the capital outlay for gas infrastructure will have already occurred.

Commenters re quested that the EPA protect us against harmful methane and fracking. Commenters stated natural gas is not the answer; clean, renewable energy is the answer.

Response 5 : Commenters contend that EPA did not fully consider the environmental consequences of i ncreased unconventional natural gas development that may result from increased demand for natural gas by EGUs in response to the CPP. Commenters cite d the following as impacts relating to increased natural gas production: increased methane emissions,
cont amination of groundwater, increased water usage, decreased air quality, increased frequencies of earthquakes, increased natural gas infrastructure needs, and a variety of impacts on local communities.

EPA assessed the likely impact of changes in generatio n mix and power plant demand for natural gas that may result from the CPP in an illustrative analysis in chapter 3 of the RIA for the final rule. Table 3

- 16 in Chapter 3 shows that there may be increases in demand for natural gas for electricity production nationwide in 2020, but by 2025, demand for natural gas by electric utilities will decline or not change beyond what would have occurred without CPP. By 2030, the demand for natural gas by EGUs is expected to decline. These estimates are based upon illu strative control strategies that may be pursued to implement the CPP and actual implementation may differ. These illustrative results indicate that the environmental consequences commenters suggest stem from increased shale gas production due to the CPP ar e not likely to materialize in the 2025 and 2030 time frames. To the extent that natural gas production does increase due to implementation of the CPP, EPA has enacted regulations to address air quality impacts. (http://www.epa.gov/airquality/oilandgas/ind ex.html) , and has existing statutory and regulatory authorities to address potential water quality impacts.

Regarding impacts of increased methane emissions due to a greater use of natural gas for electricity production, the EPA assessed the net change in upstream methane emissions from natural gas and coal production and also assessed the potential magnitude of changes relative to CO 2 emissions reductions anticipated at power plants. This analysis found that the net upstream methane emissions from natural gas systems and coal mines and CO 2 emissions from flaring of methane will likely decrease under the proposed guidelines. Furthermore, the changes in upstream methane emissions are small relative to the changes in direct emissions from power331 plants. The tec hnical details supporting this analysis can be found in the Appendix to Chapter 3 of the final RIA included in the docket for this rulemaking. For further information o n potential changes in upstream methane emissions and methane emissions from natural gas systems, please also see response to comment 18 in section 8.2.

The CPP is designed to address carbon emissions associated with electricity production. Regulatory actions undertaken under the Clean Air Act as well as voluntary programs may address emissi ons from other sectors such as the oil and gas industry. As discussed in the President’s Climate Action Plan Strategy to Reduce Methane Emissions 33 , EPA is assessing
met hane emissions from the oil and gas industry and considering regulatory action. Potentia l actions taken to address methane emissions for the oil and gas industry will build upon successful regulatory actions and voluntary programs already taken by the EPA.

Comment 6 : Commenters noted that there are non

- energy benefits of energy efficiency technologies.

Referencing an analysis prepared for the OECD/IEA [Lisa Ryan and Nina Campbell, Spreading the Net: The Multiple Benefits of Energy Efficiency Improvements (International Energy Agency, Insight Series 2012), p. 25], commenter s listed the following benefits:

• provider benefit and infrastructure

• energy prices

• public budgets

• energy security

• macro

- economic effects

• health

• affordability

• access

• development

• job creation

33 https://www.whitehouse.gov/sites/default/files/strategy_to_reduce_methane_emissions_2014

- 03

- 28_final.pdf332 • asset values

• disposable income

• productivity

Response 6 : The EPA agrees with the commenters’ contention that there are non

- energy benefits of demand

- side energy efficiency technologies. A number of these benefits are discussed in the Demand Side Energy Efficiency TSD for the CPP Final Rule and in Chapter 3 of th e Regulatory Impact Analysis for the final rule. Please see these document s for more information

.

Comment 7 : Commenters noted that there are other impacts related to this rule that should be considered by EPA.

Commenter s noted that the elimination of co al plants will impact the pension and health care benefits of retired coal miners and their families.

Commenter s asked that EPA consider the social and cultural impacts of this rule.

Commenter s stated that EPA's reliability analysis " fails to account for s upply assets and relies on overly optimistic assumptions about demand reductions associated with the rules of energy efficiency that will comply. "

Commenter s noted that " energy intensive industries, at minimum, would need carbon allowances and border adju stments to prevent greenhouse gas leakage " as a result of companies moving off

shore to avoid this rule's higher energy costs.

Commenter s noted that the impacts analysis does not account for the increased demand for electricity and " this proposal does not accommodate load growth in any manner. "

Commenter s noted that the human impacts of increased electricity costs must be considered.

Commenter s noted that the rule does not address " the environmental impacts of the whole fuel cycle on the externalities such as air and water qualities, the severe environmental impacts of mountaintop removal mining and other fossil

- fuel extraction methods, and the health and economic impacts on communities overall. "

Commenter s asked that EPA examine " other consequences bes ides just what comes out of a smokestack. " Commenter s elaborated by adding, " For coal you have a lot of damage from the mining, especially in Appalachia " and " With nuclear power there's a lot of nuclear waste disposition problems that have not been resolved. "

Commenter s noted that there are " thousands of deaths and health impacts each year associated with mountaintop removal " and " communities choking on a toxic grip of filthy extraction industries, including coal, fracked gas, nuclear offshore drill ing and industrial biomass. " Commenter s asked that EPA " not promote fracking and the other dirty energy sources " and stop333 mountaintop removal through " a bill in the federal legislation, the Appalachian Community Health Emergency Act, HR526. "

Commenter s st ated, " the expense of dismantling a retired plant is substantial, and such costs may be passed on to government and, ultimately, tax

- and rate

- payers. "

Commenter s noted that greenhouse gas emissions leakage has not been factored into the RIA. Commenter s s tated, " The CPP will result in leakage, as some productive activity flees to foreign shores (where intensities are in many cases higher), diminishing or eliminating global carbon abatement. " According to commenter s , " By failing to take into account this le akage, the RIA thus overestimates the greenhouse gas emission reduction benefit from the CPP. "

Commenter s stated that " policies that substantially increase the cost of energy

- thereby decreasing the competitiveness of U.S. industries

- investments and emiss ions will be sent to other, less efficient countries with higher CO2 emissions intensities. " Therefore, commenter s noted that " overly restrictive and costly U.S. policies to reduce emissions will not only be offset by the rapidly increasing emissions from other countries, but could actually result in a net increase in global emissions. "

Commenter s noted that " there is a real cost in lives when the cost of energy rises " and that " EPA has used the calculation of one pre

- mature death for every $10M in lost dis posable income. " Commenter s asked that EPA " provide a full analysis of the costs of its proposal, especially as it relates to seniors. "

Commenter s asked that EPA work with FERC to include the following issues in the impacts analysis: (1) the supply and d emand of natural gas; (2) natural gas prices; (3) current gas transmission pipelines; (4) the need and timing for construction within a state of new gas pipelines; and (5) the impacts on energy and capacity prices "

Commenter s asked that " EPA conduct an on going analysis of the potential adverse effects of its proposed greenhouse gas standards on impacted communities [low

- income communities of color] and determine the distributive costs and benefits to impacted communities " and that

" States should be require d to do the same analysis. "

Commenter s asked that EPA consider the public health and welfare impacts of higher electricity rates as a result of this rule.

Commenter s noted that " The Clean Power Plan's inclusion of nuclear power, 'waste

- to

- energy', carbon capture and sequestration, biomass incineration and other dirty fuels fails to acknowledge adverse environmental and public health impacts. " Commenter s noted that " These technologies poison our land, water and public health and must not be considered clean energy. "

Commenter s stated, " The Clean Power Plan's promotion of natural gas as an alternative to coal would continue our reliance on fossil fuels for many decades and incentivize more investment in dirty energy infrastructure. Commenter s noted that " According to EPA's own database, burning municipal waste is the most carbon intensive form of energy generation, producing over twice the amount of CO2 per unit of energy than coal plants. " Commenter s noted that " Incentivizing334 any form of combustion energy , whether it be coal, gas, trash, or biomass, raises serious concerns about increased public health impacts, especially for communities that are already overburdened by such industrial pollution. "

Commenter s stated that there are about 1.3 billion people in the world without electricity. The
commenter s said that a greater contribution to human health will be achieved through electrification using coal, which is abundant and low cost, instead of using expensive regulations to limit carbon and stifle economi es and development.

Commenters stated that EPA should be able to protect public health and safety and that emissions from Navajo Generating Station and five other coal

- fired power plants in the region is harming tribal health. Commenters stated that a host of respiratory illness plagued those living on Black Mesa with bronchitis and black lung disease and asthma.

Commenters stated that for this rule to be effective EPA should look at all stages and impacts of coal and fossil fuel and gas, natural nuclea r power plant. Commenters stated that they are downwind from Navajo Generating Station and Four Corners Power Plant and the only feedback from the Department of Interior as the trust responsible party is that they hold trust responsibility for 10 tribes i n Southern Arizona, which is supplied with Central Arizona Project water. Commenters stated that Center Arizona Project water is from the Navajo Sandstone Aquifer only, supplying for mining activities on Black Mesa, which has depleted aquifers and springs

. Commenters stated that of the energy that is produced at Navajo Generating Station, EPA identified, only 320 megawatts is needed to push the water from Lake Havasu to Tucson. Commenters stated that however there's 2,250 megawatts being produced, so the rest of it is all for profit and that this is just a profit issue, not a health issue. Commenters stated EPA has violated the way of worship, freedom of religion.

Commenters stated that EPA failed to show that its proposed " system " is the " best system, " because EPA did not properly account for non

- air quality health and environmental impacts, and other factors in defining its " system. " Commenters said that EPA gives nothing more than lip service to this statutory mandate and does not even identify non

- air quality health and environmental impacts as an important criterion in its decision

- making. Commenters listed the statements presented by the Administrator in regards to those considerations, and stated that EPA cannot turn its head to known impacts from i ts " system " and pretend they do not exist. Commenters said the statute requires EPA to consider " any " non

- air quality health and environmental impact, and EPA has not discussed known impacts.

Commenters stated that EPA noted that NGCC combustion does not p roduce solid waste and uses less cooling tower water than coal combustion. Commenters argued that natural gas extraction creates solid waste, contributes to ozone formation, and carries risks of potential groundwater contamination, and that land disturbanc e and noise pollution are other known impacts. Commenters said that EPA have recognized these impacts in its comments on the Oregon LNG Export Project and Washington Expansion Project, but that EPA does nothing here to consider these impacts. Commenters ad ded that EPA merely makes a conclusory statement that hazardous waste generated by nuclear electric production is better than the solid waste generated from coal electric production without any evidentiary support. Commenters said that335 these unsupported an d conclusory statements are not entitled to any deference, and highlight the arbitrary and capricious nature of EPA's proposal.

Commenters stated that while EPA tries to hide these deficits by touting benefits from reducing other criteria pollutant emissio ns, which do not qualify as a proper assessment of non

- air quality health and environmental impacts, it is unclear whether EPA's assessment considers upstream criteria pollution emissions increases from the natural gas sector and renewable energy sources i n its system. Commenters said that it appears EPA did not consider that drilling rigs can produce substantial NOx emissions (13

- 15 tons NOx/well) and that its " system " may promote more rapid drilling of thousands of exploratory and production wells. Commen ters pointed out that drilling is also required to install offshore windmills. Commenters also said that EPA did not consider the fugitive emissions impacts from increased road traffic associated with natural gas development and that in some areas of the c ountry, fugitive emissions from natural gas development represents a significant component of the PM10 emissions inventory.

Commenters also stated that it appears EPA did not consider water impacts and hazardous waste production from increased Solar PV ce lls production, which according to the commenters can used between 500

- 800 gallons per MW/hr, same as coal

- fired or nuclear power plant. Commenters added that many of the regions that have the highest potential for solar energy also tend to be those with t he driest climates, so production in these areas will stress water resources, or alternatively require production in alternative locations that increase the cost and impact of transporting the cells onsite. Commenters also said that reducing availability o f coal ash can negatively affect the GHG emissions footprint of other industries, such as concrete and gypsum wallboard.

Response 7 : Commenters raise a variety of secondary impacts associated with the Clean Power Plan that they assert are not fully conside red by EPA including: impacts on electricity reliability; failure to consider electricity demand growth in modeling; secondary market impacts for energy intensive industries and potential leakage; and health and environmental impacts associated with
mounta in

- top mining, natural gas fracking, production and installation of solar PV and wind energy, and with nuclear energy. EPA disagrees with commenters statements that these secondary impacts were not considered in developing the Clean Power Plan.

EPA disag rees with the comment that EPA’s reliability analysis " fails to account for supply assets and relies on overly optimistic assumptions about demand reductions associated with the rules of ene rgy efficiency that will comply. " Projected changes in the demand for electricity expected in future years of analysis (2020, 2025, and 2030) were considered when modeling the illustrative compliance scenarios in the Regulatory Impact Analysis (RIA). See the RIA for more details concerni ng the modeling conducted for the CPP. Electricity demand and supply assets were directly considered in the reliability and resource analysis completed for the CPP. See the Reliability and Resource Technical Support Document for more details concern ing t his analysis. T he analyses conducted by EPA show that the emission guidelines will result in cleaner generation from the existing power plant fleet and will support continued investments by the industry in cleaner power generation to ensure reliable, affor dable electricity now and into the future.336 The EPA recognizes that electric generating units are predominately domestically located and movement of generating units outside the U.S. due to the CPP is unlikely. Thus, direct CO 2 emission leakage in the elect ricity sector is not likely. EPA addresses energy impacts for secondary markets including energy intensive manufacturing in chapter 5 of the RIA. The implementation approaches designed by the states, and the compliance strategies adopted by affected elect ric generating units (EGUs), will ultimately drive the magnitude and timing of secondary impacts from changes in the price of electricity, and the demand for inputs by the electricity sector, on other markets that use and produce these inputs. The flexibil ity afforded to
states in their state plans allows them to encourage compliance methods which include design elements that may mitigate or promote particular impacts based on their priorities. For example, states in the Regional Greenhouse Gas Initiative u se the revenues from allowance auctions to support direct bill assistance for retail consumers, fund investments in clean energy and electricity demand reduction for business consumers, and support employment in the development of clean and renewable energ y technologies. In its recent regulations to limit greenhouse gas emissions, California’s Air Resources Board designated a portion of allowances to be allocated to electric distribution companies for the purpose of mitigating electricity rate increases and their associated impacts. Other states may encourage compliance methods by affected EGUs with particularly robust deployment of renewables, energy efficiency, or natural gas to promote manufacturing demand or employment in those sectors. For example, ener gy efficiency investments may be targeted towards reducing both electricity consumption and natural gas or heating oil consumption, such as weatherization projects. The state plan approach and the composition of these programs will influence the effects of compliance with the final rulemaking.

In Chapter 5 of the RIA, the EPA recognizes that changes in the price of electricity, natural gas, and coal can impact markets for goods and services produced by sectors that use these energy inputs in the production process. The direction and magnitude of these impacts is influenced by a number of factors discussed in the RIA. Changes in cost of production may lead to changes in price, quantity produced, and profitability of firms within secondary markets. If regulati on results in changes in domestic markets that lead to an increase in imports, increases in production in countries with more energy

- intensive production may lead to changes in CO 2 emissions elsewhere. See chapters 3 and 5 of the RIA for a discussion of po tential energy price changes for the illustrative CPP control scenarios. As previously stated, t he flexibility afforded to states in developing their state plans allows them to encourage compliance approaches which include design elements that may mitigate or promote particular impacts based on their priorities.

With regard to the comment suggesting that EPA collaborate with the Federal Energy Regulatory Commission concerning natural gas markets, EPA consulted extensively with FERC and the United States Department of Energy (DOE). The final rule reflects changes in the CPP that are the product of compelling information and analysis provided to the EPA via the comment record

– and by the work of, and consultation with, other federal agencies, notably the F ERC and the DOE. Earlier this year, FERC conducted a series of technical conferences comprising one national session and three regional sessions. The information provided by workshop participants echoed much of the material that had been submitted to the c omment record for this rulemaking. On May 15, 2015, the FERC Commissioners, drawing upon information highlighted at the technical conferences, transmitted to the EPA some suggestions for the final rule. In addition, via337 comments, states, utilities, and rel iability entities asked us to ensure adequate time for states, utilities, and grid operators to implement strategies to achieve CO 2 reductions and the final emission guidelines reflect relaxing compliance timelines.

Finally, several commenters take issue w ith the consideration of nuclear power, 'waste

- to

energy', carbon capture and sequestration, biomass incineration , coal generation relying on mountain top mining, and other dirty fuels in the Clean Power Plan, because the commenters contend these forms of electric energy generation pose health risks. See the response to comment 2 in this Response to Comments Section 8.10 for a discussion of changes made in the CPP final relating to nuclear energy. Specifically, nuclear energy is excluded from the Best Syste m of Emission Reduction determination in the final rule. With respect to coal electricity generation, the EPA illustrative analysis indicates that coal generation will decline in the future as a result of the CPP. See the Regulatory Impact Analysis Chapte r 3 for additional information relating to expected mix of electricity generation under the CPP. Regarding health and environmental impacts associated with natural gas exploration, production of solar energy and installation of wind energy, the EPA as well as state and local governments have existing environmental programs to address these impacts on federal, state and local levels, respectively. For example ozone is addressed in the National Ambient Air Quality Standards. See Appendix A of Chapter 3 of the RIA for an analysis of the potential changes that may occur in methane emissions due to possible changes in electricity generation fuel mix for the illustrative scenario analyzed in the RIA and the response to comment 18 in section 8.2 of this response to comment document . In addition, states may choose to tailor their com pliance programs to consider potential environmental impacts such as increased localized demand for water . The CPP allows for flexibilities that guarantee a continued reliance on a diverse energy mix in the generation of electricity , and also allows for a long implementation period in order to ease the impacts associated with transitioning to a lower carbon energy mix.

Comment 8: Commenters stated Building Block 2 must be adjusted t o allow for preservation of 10% to 12% of coal

- fired steam generation in each state because such generation could otherwise be completely displaced by re

- dispatch to NGCC units and is necessary for ensuring reliable and affordable electricity

. Response 8: The goal setting methodology (preamble sections VI and VII) for the final rule is calculated at the regional interconnect

- level, consistent with BSER (section V), and incorporate s

va rious elements that ultimately d o not see a full realization of all of the building blocks combined, and the effect that would have on higher emitting steam generation using the adjusted 2012 baseline. For example, the least stringent interconnect sets the performance rates for each technology category (and thus state goals) fo r each year, such that the full level of BSER is not incorporated in the performance rates and states goals. This approach in the final rule is responsive to many comments, including those that pointed out the ability for some states higher emitting steam generation to be entirely phased out in the calculation of state goals for the proposed rule. In addition, states have ample flexibility to design and implement appropriate plans (preamble section VIII) in accordance with particular state climate and ene rgy policy objectives.338