November 27, 2013

Mr. Mark Smith

Branch Chief 

Air Permitting and Compliance Branch

U.S. EPA Region VII

11201 Renner Blvd.

Lenexa, KS 66219

Re: Missouri Utilities General Principles Discussed at EPA’s Clean Air Act Section 111(d) 

Stakeholder Forum

Dear Mr. Smith:

On behalf of the Missouri Utilities (Ameren Corporation on behalf of Ameren Missouri, 

Associated Electric Cooperative, Inc., City Utilities of Springfield, Empire District Electric

Company, Kansas City Power & Light Company, and KCP&L Greater Missouri Operations 

Company), we thank you and the other EPA attendees for the opportunity to participate in the 

Missouri Utilities Clean Air Act (CAA) section 111(d) Stakeholder Forum conducted on 

November 7, 2013 in Jefferson City, Missouri.

As you know, EPA is currently developing a proposal under section 111(d) of the CAA to 

establish carbon emissions guidelines for states to regulate existing fossil-fueled electric 

generating units (EGUs). According to the Presidential Memorandum issued in June 2013, EPA 

is to issue draft guidelines by June 2014, finalize them by June 2015, and require state plans to 

be submitted by June 2016. 

EPA is seeking pre-proposal input from stakeholders as it prepares to draft emissions guidelines. 

We appreciated the opportunity to provide input into the pre-rulemaking discussion. As 

requested, this letter documents some general principles regarding the section 111(d) rulemaking

submitted on behalf of the Missouri Utilities. The Missouri Utilities submit these general 

principles with the understanding that we may comment on any proposed rule consistent or 

variant depending on the details of the proposal when promulgated. 

Authority to Regulate

The Missouri Utilities believe that EPA is not authorized to undertake section 111(d) emission 

guidelines for existing power plants. Section 111(d) of the CAA was amended by Congress in 

1990, and somewhat conflicting amendments passed by the House and the Senate were never 

reconciled in conference committee before the president signed the amendments into law. The 

Missouri Utilities believe that the proper reading of those conflicting amendments (in the context 

of their legislative history and principles of statutory construction) is that EPA does not possess 

the authority to regulate source categories that are already regulated under section 112 of the Act. 

Because EGUs are a regulated source category under section 112 pursuant to the Mercury and 

Air Toxics Standards (MATS), EPA may not regulate EGUs under section 111(d).
Mr. Mark Smith

November 27, 2013

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Necessity to Regulate

The Missouri Utilities believes that not only is EPA not authorized to undertake section 111(d) 

emission guidelines for existing power plants, but that it is not obligated to do so.

Cooperative Federalism Framework

If EPA nevertheless proceeds despite this lack of authority to propose emission guidelines for 

existing EGUs, EPA’s authority under section 111(d) to regulate existing EGUs is narrowly 

tailored and that Congress intended for section 111(d) regulation to employ a cooperative 

federalism framework. In section 111(d), Congress directs EPA merely to “establish a procedure 

... under which each State shall submit to [EPA] a plan which . . . establishes standards of 

performance” for existing sources within the state. 

In addition, section 111(d) requires that state-established performance standards reflect what is 

achievable at each existing unit. Congress, however, has provided states with flexibility and 

discretion regarding how to implement section 111(d) within their borders. Once standards are 

established that are achievable at each existing unit, states have the authority to grant individual 

sources flexible options (including but not limited to renewable portfolio standards, energy 

efficiency programs, demand-side management programs, and state and regional cap-and-trade 

programs) to comply with such standards. 

Section 111(d) operates through a cooperative federalism framework. EPA should not “set the 

performance standard for state plans” as it suggested in its September 23, 2013, pre-proposal 

considerations document on section 111(d). Performance standards apply to sources, not state 

plans. Congress did not give EPA the authority to devise any federally enforceable standards of 

performance for existing sources, except when a state fails to submit a “satisfactory” plan. 

Unlike the very different language in section 111(b) governing the standards of performance for 

new sources, section 111(d) gives EPA no direct regulatory authority over existing sources, and 

instead gives states broad discretion to develop such plans subject to a general requirement that 

the state’s exercise of discretion be “satisfactory.” Section 111(d)(1) limits EPA’s authority to 

setting up procedures – the states are given the authority and responsibility to establish the 

actual, substantive standards of performance.

Under section 111(a)(1), the EPA is authorized only to set “emission guidelines” addressing 

factors relevant to the states’ determination of the “best system of emission reduction” (BSER) 

that has been “adequately demonstrated” and is “achievable” for each source type. Importantly, 

EPA’s guidelines are not legally binding or directly enforceable on sources – they simply set out 

considerations for states to address in adopting their own standards for existing sources. 

Accordingly, EPA’s approach to determining BSER for limiting CO2 emissions from EGUs may 

inform the content of EPA’s emissions guidelines and the considerations states need to take into 

account in setting standards achievable by each source, but does not determine the resulting 
Mr. Mark Smith

November 27, 2013

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standards established by the state. What the EPA determines to be BSER is merely one of the 

many factors states must consider in determining the level and form of any existing source 

performance standard as applied to a specific EGU.

State Flexibility and Discretion

The CAA requires states to “submit . . . a plan . . . which establishes standards of performance,” 

and requires EPA to “permit the State in applying a standard of performance to any particular 

source . . . to take into consideration, among other factors, the remaining useful life of the 

existing source to which such standard applies.” State plans under section 111(d) must be 

approved by EPA if they are “satisfactory.” The CAA provides criteria for establishing whether a 

state plan is “satisfactory,” including the definition of “standard of performance,” and a direction 

to consider the remaining useful life of sources, “among other factors.” In other words, the Act 

leaves to the states substantial discretion as to the factors to be considered in formulating a state 

plan and how those factors are to be weighed, and it does not dictate any particular outcome for 

the state. States thus have significant discretion to adopt state plans that vary from EPA’s 

emission guidelines.

States have considerable flexibility to deviate from EPA’s emission guidelines in adopting plans 

and emission standards. For example, states may apply “less stringent emission standards or 

longer compliance schedules” to particular facilities or classes of facilities if the costs of 

adopting the standards suggested by the emission guidelines would be unreasonably costly, 

physically impossible, or for other reasons. States have significant discretion in designing their 

own plans and determining how individual sources or classes of sources may demonstrate 

compliance, including taking into account the “remaining useful life of the existing source.” 

Applying this criterion, states may grant individual sources or types of sources longer periods of 

time to comply, or may apply less stringent standards than set forth in EPA’s emission 

guidelines. EPA has also stated that “[s]tates will be free to vary from the levels of control 

represented by the emission guidelines . . . . In most if not all cases, the result is likely to be 

substantial variation in the degree of control required for particular sources, rather than identical 

standards for all sources.” Thus, EPA may publish several emission guidelines for existing fossil 

fuel-fired EGUs, and states have further flexibility to implement such guidelines as they deem

“reasonable” where costs are determined to be “unreasonable,” where they would be “physically 

impossible,” or otherwise “unreasonable.” EPA also made clear that “[s]tates will be free to set 

more lenient standards [than those set out in EPA’s emission guidelines], subject to EPA review . 

. . in cases of economic hardship.”

Standards of performance must, among other things, be “adequately demonstrated” for each 

source type, and be cost-effective. A work practice approach or best management practices may 

be justifiable instead of a specific, numerical standard in a state plan. Furthermore, once a 

standard is set that is achievable by each existing unit, states have discretion to allow sources to 

comply with such a standard through a range of flexible mechanisms.
Mr. Mark Smith

November 27, 2013

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In short, unless a state fails to submit a satisfactory plan with due consideration for the flexibility 

allowed to the states under section 111(d), EPA has no authority under the CAA to impose 

substantive requirements on existing EGUs – that is the responsibility of states.

Application of State flexibility

The Missouri Utilities believe that states can and should have broad flexibility in the range of 

compliance options they utilize in developing state plans to implement the EPA guidelines, and 

that EPA’s emissions guidelines should not limit state discretion otherwise available under 

section 111(d). 

EPA’s emissions guidelines should not foreclose the use of any state option, including the 

following, in complying with the standards of performance which are set at levels that are 

achievable at each existing unit:

 Improving unit heat rates

 Equivalency for state programs

 Averaging/bubbling that could include new, lower-emitting units (i.e., across a fleet, 

across units in a particular state or region, among sources in the same source category or 

in different subcategories, among existing and closed facilities, etc.)

 Trading

 Unit-specific or generally applicable variances

 Purchasing energy efficiency credits generated by the increased deployment of end-use 

efficiency programs

 Shifting dispatch to lower-emitting generation

 Adding new lower-emissions fossil fuels and renewable energy

 Offsets

 Other cost containment mechanisms

Need for Adequate Time for State Plan Development and Implementation

Section 111(d) imposes no rulemaking schedules or deadlines on the EPA or states. The statute 

provides no timetable by when state plans must be proposed, finalized, or implemented. Because 

this is likely to be a significant endeavor, EPA should afford states and regulated entities 

adequate time to study, consider, comment on, and implement guidelines and state plans. EPA 

should consider extending the deadline for the submission of state plans under section 111(d) to 

three years so as to parallel the requirements for state implementation plans. 

Effective Compliance Date 

As noted above, EPA’s schedule calls for submittal of state implementation plans by the end of 

June 2016. States are concerned that it could take more than one year to finalize their compliance 

plans, given the required state-specific processes necessary for public comment and stakeholder 

engagement, before then submitting those plans to EPA for approval. 
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November 27, 2013

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The Missouri Utilities are concerned about the timing of actual compliance obligations. 

Compliance should not begin until state plans are approved, and should provide adequate time 

for regulated sources to comply. There are a number of ways that EPA could give states more 

time to comply. As described above, EPA could allow states more time to submit and have their 

plans approved, or not require the first compliance milestone to be met until some later date. 

States already have the authority to allow longer compliance schedules for certain covered 

sources when circumstances merit doing so. The Missouri Utilities believe that compliance 

should not be before 2020 and phased in for older units to incorporate "remaining useful life". 

States have the authority to consider the remaining useful life of units when setting standards.

Supply-side Energy Efficiency (heat-rate) Improvements

EPA may consider supply-side energy efficiency (heat-rate) improvements as an onsite activity 

that could be considered when assessing BSER. EPA’s technical analysis indicates that heat rates 

hypothetically could be increased by at least 2-5 percent across existing units, which the 

Missouri Utilities believe significantly overstates the actual potential (i.e., of one percent or less). 

Many EGUs already have undertaken available projects that have been identified as options for 

improving efficiency. A further challenge is that energy efficiency improvements tend to be 

temporary and degrade over time, making it necessary to revisit these actions. In addition, 

supply-side energy efficiency improvements, especially those improvements at power plants, 

should not be subject to New Source Review (NSR).

Fair share

The President’s Climate Action Plan reaffirmed a U.S. GHG emissions reduction goal of 17 

percent below 2005 emissions by 2020. Under the CAA, this goal cannot be the technical basis 

for emissions guidelines. This goal, however, may be informative of EPA’s thinking with respect 

to existing source performance standards. The Missouri Utilities believe this is an economy-wide 

goal and not a power sector only goal. We further believe that the power sector should not have 

to make more than its equitable share of reductions. The Missouri Utilities believe that carbon

reductions achieved to date should be recognized in the rule.

Stranded Investment

The Missouri Utilities are making major investments in their plants, and considering or retiring 

others, in order to comply with MATS and other existing environmental regulations. There may 

also be additional investments in the next several years to comply with pending environmental 

regulations, including Clean Water Act Section 316(b), effluent guidelines and coal combustion 

residuals. These investments could be at risk depending on the stringency and timing of the 

existing source carbon standards. As a result, the Missouri Utilities believe that EPA should take 

these actions into account in developing the guidelines in order to minimize potential stranded 

investments.
Mr. Mark Smith

November 27, 2013

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Baseline and Credit for Early Action

While there is no agreement on the baseline used, the Missouri Utilities believe that state plans, 

and the EPA guidelines, should allow for the recognition of actions taken prior to 

implementation of the existing source carbon standard. In addition, a longer baseline period 

(three or four years) may be sought. 

The Missouri Utilities believe that credit should be received for changes in the composition of 

generating fleets and other actions taken before the existing source carbon standards are finalized 

that have the effect of reducing carbon emissions associated with providing electric service (e.g., 

plant retirements and repowerings, investments in zero-emitting generation such as nuclear 

uprates, investments to comply with state renewable energy standards or to improve heat rates, 

etc.). In particular, EPA should ensure that its approach to BSER allows states to include early 

emissions reductions activities in compliance plans. 

Rate-based or Mass-based Standard

The Missouri Utilities believe that EPA should allow states to convert a rate-based (lbs 

CO2/MWh) standard to a mass-based (annual tons of CO2) standard, or vice-versa, but not 

mandate either one. In addition, states should be allowed to consider alternatives to either a rate 

or mass standard which could include a technology or efficiency standard. Any standard should 

take into consideration and promote the acceptance of lower-emitting fuels such as renewable 

and bio-mass energy even if the use of those fuels result in increased emission rates because of 

higher cycling and transmission inefficiencies.

Remaining Useful Life

Consistent with the language in section 111(d), the Missouri Utilities request EPA allow states to 

consider the remaining useful life of existing units when developing compliance plans. 

Carbon Capture and Storage

The Missouri Utilities believe that the BSER for existing sources should not be defined to 

require partial or full Carbon Capture and Storage (CCS) on existing coal or gas units. CCS has 

not been adequately demonstrated for any new coal or gas unit, let alone an existing unit. 

Coordination with Regional Transmission Organizations

The Missouri Utilities suggest that EPA coordinate with the Region Transmission Organizations

(RTO). Missouri is covered by both the Southwest Power Pool (SPP) and the Midwest 

Independent System Operator (MISO). Discussions directly with these RTOs will provide 
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November 27, 2013

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insight into your questions regarding unit dispatch and transmission efficiency among other 

matters.

 

Sincerely,

Paul M. Ling

Paul M. Ling

Director of Compliance

Kansas City Power & Light Company

KCP&L Greater Missouri Operations Company

On behalf of the following Missouri Utility representatives

Steven C. Whitworth

Director, Environmental Services

Ameren Services

Brent Ross

Manager, Environmental, Health & Safety 

Associated Electric Cooperative, Inc.

Dave Fraley

Director – Environmental Affairs

City Utilities of Springfield

Tim Wilson

Director of Energy Supply Services

Empire District Electric Company