From: Frey, Nathan J. <Nathan_J._Frey@omb.eop.gov>

Sent: Saturday, August 1, 2015 11:52 AM

To: Culligan, Kevin; Harvey, Reid; Hutson, Nick; Vasu, Amy

Cc: Szabo, Aaron; Grossman, Andrea Subject: Summary of Interagency Comments Under EO 12866 and 13563 -- Clean Power Plan Draft Final rule

Attached for your consideration please find a summary of interagency comments under EO 12866 and 13563 on the EPA draft final Clean Power Plan rule as well as one minor comment on the 111(b) preamble.

Thanks very much and please let me know if you have any questions.

Nathan

<< SummaryofinteragencycommentsunderEO12866_13563_EO 12866_CPP 2060 AR33 Final_2015_8_1.docx >>

### Summary	of	Interagency	Working	Com ments	on	Draft	Language	under EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

1 CPP RIA

 P. 3-11 [ If accurate, suggest adding ]

o The analysis is a reasonable expectation of the incremental effects of the rule, and is consistent with past EPA analyses of power sector regulatory requirements. The EPA has separately analyzed and considered the cost and feasibility of implementing the emission reduction meas ures in BSER, which do not rely on energy efficiency measures. For this analysis, see section V.A.4.d. of the preamble to this final rule.

CPP Preamble

 P. 642 [ The following point, which was included in your earlier draft, seems like it would fit well in your revised text on BB4. Som ething like the following, defer to EPA ]: “Building block 4 is outside our policy paradi gm as it targets consumer-oriented behavior and demand for the good, which would reduce th e amount of electric ity to be produced. In addition to being outside our paradigm because it focuses on reducing the amount of electricity generation overall, we note that commenters asserted that as a practical matter, demand-side energy efficiency programs invol ve the participation of more entities, including end-users, which crea tes levels of complexity in implementation not found with the other building blocks. Commenters also asserted that the record for the proposal
lacked information demonstra ting that a number of states could implement demand-side energy efficiency programs in the amounts and on the time-table that the proposal called for, or that certain segments of the in dustry –- independent power producers, who comprise some 35-40 percent of the indus try, but do not have a direct business relationship with end-users –- could do so.”

 P. 996: “ Furthermore, We therefore do not interpret the term “implementation of ... such standards of performance” broadly enough to authorize the EPA to approve state plans with obligations enforceable against that impose federally enforceable obligations upon
the a broad array of non-emitting entities that would have been implicated by the portfolio approach .”

 P. 443: “ It is worth noting that an earlier state plan submission date provides regulated sources with more certainty and time to plan for compliance, but has no effect on the time when compliance must be achieved, as the mandatory compliance period begins in 2022
for all states . Some states that already have established programs for limiting CO2 emissions from power plants may be able to adopt and submit to the EPA state plans by September 6, 2016. In those states, sources will already have developed compliance approaches to meet state law requirements. Ot her states that may decide to submit plans by September 6, 2016, may be expected to work with their affected EGUs to determine a reasonable compliance approach, in light of th e fact that compliance is not required to begin until 2022.

### Summary	of	Interagency	Working	Com ments	on	Draft	Language	under EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

2  Conforming edit to regulatory text: “(E) If a state plan pr ovides for the ability of renewable energy resources located in stat es with mass-based plans to be issued ERCs, consideration in the projection that such resources must meet geographic eligibility requirements, based on power purchase agreements, RECs or related documentation; and”

 P. 669: “For example, had some type of add-on control such as CCS been available
identified as the BSER for coal-fired EGUs, s ources that complied by installing that control would incur higher cost.”

 P. 544: “Finally, we briefly note a dditional constraint s that focus the BSER identified for new sources under section 111(b) on controls that assure that sources are well-controlled
at the the time of construction.”

 P. 634: “As discussed in the Legal Memorandum and briefly below, the BSER identified
for EGUs under section 111(b) is designed to assure that affected sources are well
controlled at the time of cons truction, and that approach is consistent with the design expressed in the legislative history for the 1970 CAA Amendments that enacted the provision. “

 [T here is an inconsistency with the way that public engagem ent is described on p. 40-41 and p. 247 :]

o P. 40-41: ” These components are: an iden tification of final plan approach or approaches under consideraton, including a de scription of progress made to date; an appropriate explanation for why the state needs additional time to submit a final plan by September 6, 2016; and a demonstration or description of opportunity for public comment on the initial submittal and meaningful engagement with stakeholders, including vulnerable communities, during the time in preparation of the initial submittal and plans for engagement during development of the final plan, as described in section VIII.E of this preamble.”

o P. 247: “The third required component for st ates to address in the initial submittal is a demonstration of how they have been engaging with the public, including vulnerable communities, and a description of how they intend to meaningfully engage with community stakeholders during the additional time (if an extension is granted) for development of the final plan.”

 Footnote 564 on p. 500 [ Editorial suggestion for your consideration to make more consistent with 111(b) discussion ]: “In many respects, there are indications that Congress prefers CAA section 111(b) standards of performance to be based on technological
control methods. There are numerous reasons to find th at particular CAA section 111(b) standards of performance should be based on cont rols installed at the source at the time
of new construction. This is due in part to the r ecognition that new sources have long

### Summary	of	Interagency	Working	Com ments	on	Draft	Language	under EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

3 operating lives over which initial cap ital costs can be amortized.”

 Footnote 301, p. 304 [ It appears the highlighted final clause is not needed for this
discussion ]: “We also discuss our interpretati on of the requirements for standards of performance and the BSER under section 111(b ), for new sources, in the section 111(b) rulemaking that the EPA is finalizing simulta neously with this rule and in the Legal Memorandum for this rule. Our interpretations of these requirements in the two rules are generally consistent except to the extent th at they reflect distin ctions between new and existing sources. For example, as discussed in the section 111(b) rule, the legislative history supports the view th at the BSER for new industrial facilities, which were expected to have lengthy useful lives, should include the most advanced pollution controls available, installed at the time of new construction., but Congress had a broader conception of the BSER for existing facilities.”

 P. 1074: “In this final rule, the EPA is fina lizing these as appropriate explanations for seeking an extension beyond 2016, but makes clear—as explained further below—that other appropriate explanations will be acceptable as well .”

 P. 1080 “States may meet the first requi red component by describing these steps such as
these already undertaken”

 P. 1080: “The EPA underscores that states that have taken these steps since proposal may easily address the first component of the in itial submittal by describing such steps, and also address the second required component by identifying next step s (which may be a
natural extension of these al ready implemented activities), and laying out a schedule for development of a final plan.”

 P. 1076: “Given the opportunity for states to submit appropria te explanations other than the ones detailed here, the EPA believes addressing this component requiring an appropriate explanation for an extension is easily achievable by September 6, 2016 , with relative ease by states intending to su bmit a final plan by September 6, 2018 .”

 P. 1455: Note for consistency that same f ootnote as 1054 in 111(b) preamble has been
modified.

 Found missing or incorrect language in RLSO version p. 889 – the redlined sentence doesn’t read right. It says, “As a result, notwithstandi ng the fact that mass goals for existing sources are quantified in a way that is an equivalent expression of the BSER, the form of mass goals is only equivalent if leakage is satisfactorily addressed in performance state plan’s establishment of emission standards and implementation
measures.”

### Summary	of	Interagency	Working	Com ments	on	Draft	Language	under EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

4  Pg 365 -- Commenter suggests removing the following sentence that would make the paragraph internally consistent, because later it points out ho w new NGCC could be consistent with long-term climate goals: “U nlike emission reductions achieved through the use of any of the building blocks, emi ssion reductions achieved through the use of new NGCC capacity require the construction of additional CO2-emitting generating capacity, a consequence that is inconsistent w ith the long-term need to continue reducing CO2 emissions beyond the reductions that will be achieved through this rule”.

111(b) Preamble

 P. 612: “In addition, it is not possible to count on new sources being able to trade with existing sources, for several reasons. First, we could not assume that states would provide for existing sources to tr ade with new sources under their state plans. AS noted, there are indications in the le gislative history that new sources
should be well-controlled at the s ource, which casts doubt on whether new
sources should be allowed to meet their standards through the purchase of emission credits. Second, new sources must meet their standards of performance as soon as they begin operations. If they do so before the year 2022, when existing sources become subject to s ection 111(d) state plan standards of performance, no existing sources will be available as trading partners.”