1 TABLE OF CONTENTS

CHAPTER 6 STATE PLAN S

................................ ................................ ................................ ...... 2 6.1 Timing

................................ ................................ ................................ ................................ ...... 2 6.1.1 Performance demonstrations

................................ ................................ .............................. 3 6.1.2 Timing of emission reductions

................................ ................................ ............................ 3 6.1.3 Start date for performance period for interim goal

................................ ..................... 103 6.1.4 Duration of performance periods for final and interim goals

................................ ..... 173 6.1.5 Program implementation milestones , tracking of emission performance, and corrective measures

................................ ................................ ................................ ...... 254 6.1.6 Consequen ces if actual emission performance of a state plan does not meet state goal

................................ ................................ ................................ ................................ ......... 297 6.1.7 Out

- year requirements

................................ ................................ ................................ .... 3062 CHAPTER 6 STATE PLANS

This chapter addresses comments received on the EPA’s proposed guidelines for state plans. Comments received on the following topics a re covered in this chapter: timing related to the interim performance periods and overall complian ce deadline, tracking of performance, out

- year requirements, state flexibility, and planning approach for alternative state goals; criteria for approving state plans including issues related to enforcement, quantifying and verifying performance, reporting, and corrective actions; components of state plans such as identification of affected entities, geographic scope, state emission performance level, demonstrations that plans will achieve state’s emission performance level and that plan is quantifiable, non

duplicative, permanent, verifiable, and enforceable, milestones and reporting, and plan certification; and the process for state plan submittal and review covering approvability criteria, process for EPA review of state plans, making modifications to stat e plans, and issues concerning regional/multi

- jurisdictional plans.

Commenters also raised issues on topics that are not covered by this chapter. Please refer to the following chapters for responses specific to those issues:

• Chapter 1: Legal

• Chapter 2: App licability

• Chapter 3: GHG Mitigation Measures

• Chapter 4: State Goal Computation

• Chapter 5: State Plan Consideration s

• Chapter 7: Interactions With Other EPA Programs and Rules

• Chapter 8: Impacts and Cost Analysis

• Chapter 9: Statutory and Executive Orders

• Ch apter 10: Rule Language Corrections

6.1 TIMING

This section addresses comments on Timing related to CPP state plans and compliance. We have organized the comments in the section under ten subsections, 6.1.1 to 6.1.10 . Responses to the comment topics of these subsections are discussed below along with summaries of the specific public comments.3 6. 1.1 Performance demonstrations

[ See RTC chapters 6.1. 6.2, 6.3, and 6.4 for comments related to this topic .]

6.1.2 Ti ming of emission reductions

This section discusses the timeframe for achi eving emission reductions, and specifically the compliance deadline of 2030. Some commenters agreed with the proposal, while others either felt that proposed timeframe was too short o r too long.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Comments agreeing with the proposed timeframe for achieving emission reductions, and that the EPA refrain from extending its compliance timeline.

Response 1: The EPA thanks these commenters for their support of the CPP. See section s V.A.3.g and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment

. The following are summaries of the specific public comments under this comment:

Commenter s noted that there is a 15

- year period between the time the rule is expected to be finalized and its final compliance date, adequate time for the modest transitio n to cleaner generation sources required by the rule especially in light of the rapid market changes already underway that favor such a transition. The commenter s also indicated that dramatically falling costs of renewable energy resources like wind and so lar energy and the eroding economics of coal

- fired power are among the reasons the CPP goals are eminently achievable and affordable.

Commenter s stated that EPA should hold to the timelines proposed in the draft rule. The
commenter s said it will be difficu lt for EPA to issue the final rule by the date it has proposed but it should hold to that schedule, promising to issue corrective rule modifications at a later date rather than re

- proposing the rule and sliding the dates. The commenter s stated that it is i mportant for this rule to be in place prior to further international negotiations.

Commenter s agreed that Option 1, carbon reductions over a 10

- year horizon, is preferable over Option 2, a lower carbon target achieved in half the time. The commenters reasoned that deploying BSER in Option 1 will provide the state and its utilities the needed time to deploy
cost

- effective technologies and programs necessary to reduce the state's carbon emissions.4 Commenters expressed optimism that implementation of t he EPA Clean energy plan can be accomplished successfully by the proposed deadline (if not before) in Colorado.

Commenters stated that EPA should do everything possible to avoid any delays in issuance and enforcement of the final rules. The commenters said delay will only contribute to further build up of CO2 in the atmosphere.

Commenters urged EPA to hold firm with its pr oposed timeline for compliance, including the 2012 baseline, the 2020

- 2030 interim deadline, and the final 2030 deadline for compliance. The
commenters strongly opposed any efforts to extend the compliance timeline, as well as any efforts to reduce or weak en Missouri's carbon reduction target. The commenters noted that, on November 21, 2014, Missouri Governor Jay Nixon submitted comments to EPA, advocating for an extension to the carbon reduction timeline. The commenters pointed out that this extension mirr ors the position that has been put forth by Missouri's largest and most polluting utility, Ameren Missouri. The commenters noted that Renew Missouri strongly objects to any extension to EPA's proposed compliance timeline, with respect to both the interim a nd the final compliance targets. The commenters noted that Missouri is well on its way to achieve its needed 21% reductions simply by relying on already

- announced plant retirements and policies currently in place. The commenters contended that giving in to a timeline extension would severely undermine EPA's auth ority, and would only give further reason for Missouri utilities to fail to achieve compliance with their legal responsibilities in the state

. According to the commenters, the reasons why Missouri do es not require a delayed compliance timeline can perhaps be seen most clearly in the example of Ameren Missouri. The commenters noted that, in its most recent integrated resource plan (IRP), Ameren Missouri's preferred resource scenario would not have the utility achieving compliance with its required reductions until 2034. The commenters contended that Ameren Missouri's preferred scenario shows not only a flagrant disregard for federal authority, but also envisions renewable and efficiency investments that will cause the utility to fall short of the targets in Missouri law. The commenters particularly noted that Ameren Missouri has severely underestimated its energy efficiency potential, according to several national, regional, and statewide energy efficien cy experts. According to the commenters, the reasons why Ameren Missouri has underestimated its potential are too numerous to fully cover here. The commenters offered one example below of why EPA should reject Ameren Missouri's position that Missouri requi res a delayed compliance timeline.

The commenters noted that Ameren Missouri's 2013 Market Potential Study identified a maximum achievable potential (MAP) efficiency portfolio of 3.7% savings by 2018 and 15.9% savings by 2030. By contrast, the commenters p ointed out that Illinois utility ComEd estimated a MAP scenario of 10% savings by 2018 in its potential study (conducted the same year as Ameren Missouri's). The commenters noted that the American Council for an Energy Efficient Economy (ACEEE) recently ra nked Missouri 44th in energy efficiency, while Illinois ranks 11th. According to the commenters, one would expect Missouri to contain far more potential and low

hanging fruit than Illinois, having not implemented such mature and long

- running programs, yet Illinois' largest utility identifies nearly three times the amount of efficiency potential as Missouri's. The commenters also noted that a 2011 ACEEE report estimated a 17% savings potential by 2025 for Missouri.5 Even with its drastically

- underestimated M AP scenario of 15.9% savings by 2030, the commenters contended that Ameren Missouri would easily be able to comply with its needed reductions in the time allowed by EPA. However, the commenters noted that the utility has selected an even lower efficiency p ortfolio in its IRP: the so

- called "realistic achievable potential" (RAP) portfolio identifies 11.7% savings by 2030, a level which several utilities have already achieved in the U.S. According to the commenters, Ameren Missouri selected the RAP scenario d espite the fact that the MAP scenario actually scored the highest according to the utility's own scenario scoring methodology. At a minimum, the commenters believe d that Ameren Missouri's MAP portfolio represents what is realistically achievable by a utili ty in Missouri. The commenters indicated that the difference between MAP and RAP is enough to close the gap between Ameren Missouri's compliance in 2030 as opposed to 2034.

Accordingly, the commenter s recomm ended that EPA reject the request of the Governor and Ameren Missouri and refrain from extending the compliance timeline

.

Comment 2 : Comments asserting that the proposed timeframe for achieving emission reductions is too long, and arguing that the EPA should set more aggressive targets for CO2 reduction for the nation to meet and set more aggressive compliance dates without reducing tar gets.
Response 2 : The EPA thanks the commenters for their support of the CPP, and for reasons discussed in the preamble to the final rule we are finalizing this rule with the requirement that States demonstrate emissions reductions in a progressive manner to year 2030 and thereafter. While the final rule outlines the goals that States must meet by that time and maintain afterward, we allow individual States the flexibility to create their own plans and establish their own emissions reduction goals. While this rule publishes a minimum achievement value for any State to achieve by 2030, many States are likely to not only meet but exceed these minimums and that the overall impact of the CPP will result in substantially lower CO 2 emissions when compared to

an extrapolation that assumes all States achieve only minimum reductions. See section s V.A.3.g, VIII.B and VIII.D of the final rule preamble of the CPP for EPA’s response to this comment.

We are not finalizing any position with respect to the implications of the 8

- year review of the NSPS with respect to possible future revision of this guideline; it is unnecessary to address this issue at this point in time. Therefore, these comments are generally moot.

The following are summaries of the specific public comments under this comment:

Commenter s noted that the Proposed Rule allows up to 15 years for full implementation of the emission reduction measures after the proposal is finalized. The commenter s stated that scientists agree that emission levels this decade will determine our fate and may push beyond tipping points from which we cannot return. The commenter s questioned how this delay will affect our nation's response to the urgency of the crisis and the need to reduce emissions at sufficient levels
to avoid unsafe levels of heating and further acidification of our oceans.

Commenter s urged EPA to shorten the time for putting the measures in place, but did not support setting weaker standards to accommodate that shorter time frame. The commenter s s tated that6 five years would be reasonable and provide more time to implement than other large measures adopted by EPA in the past, including the NOx SIP Call.

Commenter s argued that, just at face value, the Clean Power Plan fails to act quickly enoug h or decisively enough. The commenter s stated that, by giving energy companies so much time to come into compliance and presenting a number of ways that they can safeguard old, inefficient modes of energy production, the plan serves primarily to kick the p roblem further down the road.

Commenter s argued that the new rule does not require the nearly one thousand coal

- fired power plants, more than 60 percent of which are over 40 years old, to actually clean up their pollution, but have states develop th eir own plans that would not be implemented until at least 2016.

Commenter s stated that substantial reduction should be required sooner than 2030 (i.e., by 2020) with even much greater reductions required in the future. The commenter s stated that GHG remain in the atmosphere from decades to centuries after they are released, so they have a strong and persistent cumulative effect. The commenter s argued that because emissions must peak within the next few years and decline sharply thereafter to be succe ssful in this endeavor, waiting 15 years for meaningful reductions is an unacceptable, indefensible, and irresponsible delay.

Commenter s stated that EPA should not delay full implementation of the rule until 2030. The
commenter s argued that when states (such as Colorado) get serious about increasing clean energy and decreasing reliance on dirty fossil fuels, they can quickly ramp up renewable energy generation. The commenter s stated that there is no need to wait over 15 years for full implementation of this rule.

Commenter s stated that the proposed goal is too conservative and allows far too much time for compliance. Commenter s urged EPA to shorten the time frame for compliance to 5 years, without setting weaker standards to accommodate the shorter time frame. Commenter s supported the President's plan, but expressed concern that it is not fast enough to protect those who are most vulnerable.

Commenter s argued that EPA must have stronger and faster pollution reduction targets. The commenters noted that the proposed targets give states 15 years to achieve reductions in carbon pollution from 2005 levels that we are alread y halfway to achieving. The commenters stated that both the science and the President's pledge to reduce overall U.S. carbon pollution by 2020 requires far more from the Clean Power Plan. The commenters urged that reductions of 35 to 40 percent from the en ergy sector below 2005 levels be required by 2020, and greater reductions by 2030. Commenters stated that the proposed 10

- year averaging period for compliance needs to be broken down into more than one compliance schedule so short term gains are real ized and the program stays on track to meet its goals.

Commenter s stated that the proposed goal is too conservative and allows far too much time for compliance. Commenter s urged EPA to shorten the time frame for compliance to five years, without s etting weaker standards to accommodate the shorter time frame. Commenter s supported the President's plan, but expressed concern that it is not fast enough to protect those who are most vulnerable.7 C ommenters noted that, as proposed, the Clean Power P lan will only result in a 30 percent reduction of carbon dioxide emissions from 2005 levels. C ommenters pointed to the President's November 11th announcement of a commitment to reduce the nation's net greenhouse gas emissions up to 28 percent below 2005 le vels by 2025 and said that, to accomplish that goal, this plan must require more reductions from the existing electric sector. C ommenters urged the EPA to set targets that will secure at least 35 percent to 40 percent reductions from the 2005 levels.

C ommenters acknowledged that states do need time to phase in some measures. However, commenters contended that the EPA proposal offers an excessively long period for phase in compared to other similar major rules. C ommenters urged EPA to shorten the t ime for putting these measures in place, but without reducing the required reductions as the EPA suggested as an option.

Noting that all state plans must be complete by 2018, commenters stated that the states would have twelve years to meet their goals in 2030. The commenters argued that five years would be reasonable and provide more time to implement than other large measures adopted by the EPA in the past, including the NOx SIP call and the Mercury and Air Toxics Standards. However,
commenters stat ed that EPA should not weaken the standards to accommodate that shorter timeframe. C ommenters recommended that EPA revise the compliance schedule to ensure states
start reducing emissions as soon as possible, and move the completion date to no later than 2 025 without reducing the targets. C ommenters also said that EPA must require regular review of the implementation and these guidelines no less frequently than once every 8 years.

Comment 3 : Comments arguing for immediate action to reduce GHG emissions.

Response 3 : The EPA thanks the commenter s for their support of the CPP and acknowledges that timing is important and in the final rule we retain the proposed goals, though are allowing additio nal time for States to formulate their plans and begin meeting the first interim goal. To the point that the commenters state that accelerated emissions reductions are achievable, the commenters did not acknowledge that there are already projects underway that will aid in meeting this first goal. See section s I.A and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

C ommenter s argued for immediate action to reduce GHG emissions. C ommenters noted that greenhouse gas emissions and atmospheric carbon concentrations have continued to rise in the years since EPA made its endangerment finding. For instance, c ommenter s stated that glob al greenhouse gas emissions are now rising faster than the IPCC's highest emissions scenario from 2007, as illustrated in a figure compiled by the European Environment Agency, comparing six IPCC emission scenarios with actual atmospheric carbon measurement s from two sources. C ommenter s stated that, in the last decade, global emissions have rapidly increased to match, or even slightly outpace, the most aggressive IPCC scenario, which assumes a "world of very rapid economic growth" with "fossil

- intensive" ene rgy systems.8 C ommenters indicated that domestic action to combat climate change will have benefits that extend far beyond our borders. C ommenters noted that, as of 2012, the United States was responsible for approximately 13.4 percent of global anthropoge nic GHG emissions and 15 percent of CO2 emissions). According to the commenters, the U.S. power sector alone contributed approximately 4.5 percent of worldwide GHG emissions and over 6 percent of all CO2 emissions. C ommenters contended that steep cuts from large sources like the U.S. power sector are therefore critical to prevent truly disastrous climate impacts. C ommenters referred to the NRC's 2011 report on climate stabilization, which emphasized that worldwide emissions reductions on the order of 80 per cent by the century's end are necessary to prevent temperatures from exceeding 2 degrees Celsius above pre

- industrial levels. According to the commenters, the IPCC has determined with "high confidence" that " [d]elaying mitigation efforts beyond those in pl ace today through 2030 is estimated to substantially increase the difficulty of the transition to low longer

- term emissions levels and narrow the range of options consistent with maintaining temperature change below 2 degrees C relative to pre

- industria l l eve ls ." Without swift and significant emissions controls for the U.S. power sector, the commenters argued that the odds of preventing the most extreme effects of climate change are virtually nil. According to the commenters, the IPCC, in its 2014 synthesis report, warned that without immediate action to curb GHG emissions, climate change will have dire and irreversible impacts worldwide C ommenters argued that climate change is no longer a distant threat, but is being felt around the globe, and immediate and significant carbon emission reductions are needed to curtail warming of the planet. C ommenters cited the U.N. secretary general, Ban Ki

- moon, who, at the report's launch, said "Science has spoken. There is no ambiguity in the message. Leaders must act. Ti me is not on our side."

C ommenters also referred to the United Nations Environment Programme's 2014 Emissions Gap Report, which stated that, even with the U.S., China, and EU's recent pledges to limit GHG pollution, the world is not on track to achieving the emissions reductions needed to keep global temperature increases below 2 degrees Celsius above pre

- industrial levels by 2100 and avoid the worst impacts of a changing climate. C ommenters argued that further immediate action, such as heavy investments i n renewable energy and energy efficiency, is needed to keep global average temperature rise below the internationally agreed 2 degrees Celsius goal to avoid the most devastating consequences of climate change. C ommenters also argued that a strong Clean Pow er Plan alone would not be enough to achieve the reductions set out in the U.S.' pledge; C ommenters indicated that other federal regulatory standards being implemented under the Obama Administration would play an important role in significantly reducing GH G pollution. According to the commenters, the proposed regulations limiting carbon emissions from new and existing power plants, combined with other regulatory actions, such as the new fuel economy standards for vehicles, mercury and air toxics standards, ozone standards, initiatives to reduce methane emissions from the oil and gas industry, and efforts to boost energy efficiency and renewable energy standards at the state level, would all be needed to achieve the Obama administration's pledge, cement US le adership, and help keep global temperature rise below the internationally agreed 2 degree Celsius goal. C ommenters argued that the greenhouse gas emissions reductions required to meet the more stringent 2025 targets are achievable with the implementation o f a stringent Clean Power Plan in combination with other critical federal regulatory actions.9 Comment 4 : Comment agreeing that utility system changes are achievable in the time allotted by the CPP, or sooner.

Response 4 : The EPA acknowledges both the severity of delay, and the timing balances necessary to maintain the electrical grid stability and capability of serving America’s energy needs. In this final version the EPA is adding flexibility to States to aid in managing their
programs acros s the va rious regions and power grid service areas of the Country. For instance, States now have additional time to finalize their plans, along with credit for early action. I n their plans, states will be able to choose either to impose federally enforceable emission standards that fully m eet the emission guidelines directly on affected EGUs (the “emission standards” approach) or to use a “state measures" approach, which would be composed, at least in part, of measures implemented by the state that are not in cluded as federally enforceable components of the plan but result in the affected EGUs meeting the requirements of the emission guidelines. The additional flexibility in this final rule is intended to provide States the ability to determine, effect, and ma nage their reduction plans on sched ule, without a negative infrastructure and reliability impact. See sections V.A.3.g., VIII.B and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenter s stated that i n response to perceived reliability concerns , NERC has called on EPA to " consider a more timely approach" to implementation of the CPP. C ommenter s stated that this call mirrors similar requ ests from SPP, which explicitly asks EPA to extend its proposed compliance schedule, and several other utilities and grid operators, including PJM. C ommenters noted that it is to be expected that grid operators and especially utilities would want more time to adapt, but any needed system changes anticipated by EPA's rule are achievable in the time allotted, and in fact are probably possible on a faster timeframe. C ommenters stated that grid operators have already begun the process of integrating higher leve ls of renewable energy and responding to coal plant retirements caused by the worsening economics of coal. C ommenter s stated that the CPP provides sufficient flexibility and lead time for utilities and grid operators to adapt. C ommenters stated that there are no targets that need to be met in 2020, nor are any sources specifically subject to continuous emission rate requirements. C ommenters stated that this absence of hard mandates early in the compliance period alleviates the ne ed for the requested delays in implementation of the Clean Power Plan

. Finally, c ommenter s noted that unlike other EPA rules, such as the Mercury and Air Toxics Standards (MATS), that impose continuous emission rate requirements on coal plants, the Clea n Power Plan imposes only annua l emission rate constraints (see below for a more comprehensive comparison of CPP and MATS requirements). C ommenters stated that the danger climate change poses to our society is too great to be held hostage to the apparent r eluctance of grid operators to update their policies and infrastructure to accommodate clean electricity sources. C ommenters stated that President Obama's international commitments, especially the recent U.S.

- China agreement, require that we achieve gree nhouse gas reductions at least equal to those required by the CPP from the power sector; failing to meet those objectives would set back global efforts to mitigate climate change significantly, when time is already of the essence

.10 Comment 5 : Com ments arguing that the proposed timeframe for achieving emission reductions is too short.

Response 5 : For the reasons submitted by the commenters, as well as other reasons, t he EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g

, VIII.B , VIII.E, and VIII. G of the final rule preamble of th e CPP for EPA’s response to this comment

. The following are summaries of the specific publ ic comments under this comment:

Commenters recommended a delay in the implementation of the Clean Power Plan to give states and utilities adequate time to implement compliance strategies, and share those strategies with the public for comment. Commenter s argued that state permitting agencies are currently not staffed or funded to meet the aggressive schedule established by the CPP.

Commenter s requested that EPA extend the compliance schedule to allow a reasonable time for states and utilities to comply. C ommenter s stated that the proposal appears to be based on assumptions that are unrealistic and will have a damaging effect on the nation's bu siness and
economy.

Commenter s requested that EPA extend the timing and reduce the stringency of state goals to fully consider practical constraints. Commenter s recommended that EPA allow additional time to create and implement plans to avoid d isruption to supply and limit the exorbitant costs imposed on consumers. Commenter s supported a smooth transition to a lower carbon future, provide states and impacted utilities with a more realistic timeframe in order to conduct reliability
assessments and prepare for initial compliance with CO2 reduction goals.

Commenter s stated that the proposal assumes renewable power and energy efficiency goals that are well above achievable levels in the given compliance timeframe. Commenters contended the compliance timeline to meet the stringent 2020 goals is unreasonable considering that state implementation plans will not be finalized and approved until 2018 or 2019.

Commenter s suggested that EPA extend the compliance date of 2030 by five years to allow the orderly transition to cleaner energy in a responsible way. Commenter s also argued that the target compliance date should not be set in stone in 2030. C ommenter s stated rather, states should be given the flexibility to extend the date in order to allow the orderly transition of generation fleets. C ommenter s stated that this will help mitigate the potential for liability concerns and rate shock which would be particularly harmful to our fixed and low income customers.

Commenter s similarly requested cross

- the

- board extensions of five years for proposed timeframes on affected coal

- fired EGUs, in the event their state was not granted an exemption from the rule. C ommenter s argued that their state does not have the infrastructure, interconnectedness, transmission capacity, or population to offset losses associated with any environmental gains envisioned by the EPA. C ommenter s sought to focus on the ability of their state's c oal

- fired EGUs to address proposed standards in the rule and to educate EPA as to measures already taken.11 Commenters noted that, up to four years ago, 60 percent of the power at GreyStone Power was coming from coal

- burning power plants, but in 2013, that had fallen to 9 percent of coal. Co mmenter s noted that most of that was filled in with a large amount of natural gas, but also nuclear and hydro assets. C ommenter s urged the EPA to go slowly on this proposal because coal is still going to be part of t he equation. Commenter s noted that, as professionals, they understand that it takes careful planning and time to phase out older technology and replace it with newer technology, especially if newer technology is not quite where it needs to be to replace the old technology. To illustrate the kind of scenario commenter s feel they are in right

now, commenter s stated that, if you're waiting on a liver transplant, you don't unplug your life support machine, hoping the donor organ will get to you more quickly.

Commenter s described the diversity in size, geography, access to transmission facilities, ownership, and power supply arrangements for Iowa's municipal electric utilities and expressed concern about the challenging timeframe states have been given to comply.

Comm enter s argued that the four building blocks are not achievable within the proposed timeframe and requested that EPA withdraw or amend the rule and its timeline. Commenter s similarly stated that even if the proposed goals were attainable, they could n ot be attained within the timeframes proposed by EPA. Commenter s argued that the interim and final goals for Arizona cannot be achieved within the proposed timeframes. C ommenter s noted that application of the four building blocks for Arizona resulted in a 52 percent reduction in the CO2 emission rate (from a 2012 baseline), which commenter s said is arguably the most aggressive reduction requirement in the nation. C ommenter s said most of that reduction occurs as a result of the second building block.

C ommenters indicated that time is needed for retirement of existing plants

. Commenter s suggested that states should be given the flexibility to extend the compliance date to allow the orderly retirement of coal plants as states implement their transit ion plans.

Commenters stated that EPA's analysis assumes retirement of large amounts of 24/7 generating capacity in such a short period

-- with insufficient time to provide replacement power plants or transmission lines

-- that reliable electric s ervice is placed at risk. Commenter s stated that this is especially true for AEP Southwestern Electric Power Company's East Texas region within the Southwest Power Pool, where EPA envisions all of the company's base load capacity to be retired by 2020.

Commenters asked the EPA to modify the proposed unrealistic assumptions, extend the schedule to allow a reasonable opportunity for compliance, and allow flexibility for the continued operation of base load generation where it is needed to support rel iability.

Commenter s asked that the EPA rework the proposal to include more realistic targets and timelines. C ommenters stated that electric utilities need more time to build replacement generation and make significant investments in transmission and other mitigation to maintain reliability.

Commenter s stated that the EPA's proposals to regulate carbon emissions from existing, modified, and reconstructed power plants threaten to increase electricity costs for their members.12 C ommenters stated tha t a longer ramping up phase would allow electricity cooperatives to better prepare for fuel and technology developments necessary to meet these standards, provide greater economic recovery, and would help members better prepare to manage the unavoidable el ectric cost increases.

Commenter s stated that the Clean Power Plan creates a de facto ban on older coal fired power plants while not allowing for new technologies to become on line to reduce emissions. Considering that coal currently accounts for 20 percent of the power in America's electricity generation, commenters questioned what will make up the megawatt difference as existing power plants are retired.

Commenter s stated that the EPA should allow Pennsylvania and other states to set less stringent performance standards and longer compliance schedules for power plants within their jurisdiction, and Pennsylvania and other states should be given maximum flexibility b y the EPA to implement carbon dioxide performance standards for fossil

- fueled power plants within their jurisdiction. Commenter s stated that the are a number of key considerations that are critical to ensuring a national program supports individual stat es' progress, including allowing sufficient time for states to transition to a cleaner utility sector with the ultimate goal of decreasing the average emission rate, and total emissions, of the fossil generating fleet on a national basis and bringing highe r carbon states in line with more proactive states, such as California.

Commenters stated that the rule is unworkable given the timeframes that EPA has set for compliance. C ommenters said that EPA should allow the states to adopt compliance deadlines that are based on the remaining useful lives of each of the designated existing facilities. The commenters also argued that, given the extensive legal, regulatory, and physical changes that must occur first, EPA should give the states until 2035 to achiev e compliance with any emission reduction targets.

Commenter s stated that the compliance timeline should be extended to allow recent investments in other emission control technologies to be amortized over their useful lives. Otherwise,
commenters note d the inevitable result will be premature closings and stranded assets.

Commenters stated that the time frames for compliance with State goals are too short due to the difficulty States will face in reaching them. C ommenters noted that the complexiti es of organizing a regional plan among multiple States will require additional time to build and implement. C ommenters recommended extending the compliance dates.

Commenter s contended that many states highly dependent on coal

- based generation have a lready achieved significant emission reductions, noting that since 2005 CO2 emissions from the fossil fuel plants have decreased by 13 percent, but commenters stated they still face the additional burden of further reducing their CO2 emissions on the short time table set by the EPA's rules.

Commenters stated that the rule requires a complex and aggressive air, climate, clean tech, utility and electric market policy reform for the states to carry out, that will in many cases require contentious state legislation, in a very short time. Commenters noted t hat the possibility of legal review will make early action to comply with the rule less likely.13 Commenter s contend that the timeframe allotted for this formation and development of a regional structure is inadequate.

Commenters said the emission rate goals in the proposed rule are front

- loaded, meaning that the reduction required to get on EPA's path in 2020 is daunting, and there is insufficient time to achieve the proposed emission rate by 2020 due to the State planning and subsequent actions t hat must take place between now and 2020.

Comment 6 : Comments supporting less stringent interim goal requirements and timelines to accommodate challenges faced by smaller utilities, and arguing th at states should have the discretion to adjust the complian ce schedule for certain small utilities that have a single jurisdictional asset in order to moderate the adverse impacts the proposed rule will have

. Response 6 : T h e final guidelines provide states with additional flexibility in developing their state plans to give s tates the ability to determ ine, effect, and manage their reduction plans on schedule

. T his rule includes options that provide states flexibility in assembling state plans through the use of emission rate plans, state measures plans , or as part of a larger regional plan. Within these plans

, states have the ability to set their own glide path slopes to meet interim compliance target s , and decisions that will be made at the state or regional planning level. Additionally, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 See section s V.A, VIII.B

, and XII.D of the final rule preamble of the CPP for additional response to this comment.

The following is a summary of the specific public comment:

C ommenter s indicated that EPA seeks comment on whether there are special considerations affecting s mall rural cooperative or municipal utilities that might merit adjustments to the BSER proposal, and, if so, possible adjustments that should be considered. According to commenters
, Iowa Agencies noted some unique challenges that may confront smaller utili ties in developing the compliance building blocks within the proposed interim and final compliance timeframes. C ommenters referred to Iowa Agencies' proposal of less stringent interim goal requirements and timelines

. C ommen ters were supportive of the Iowa Agency request, not to delay implementation of sensible, cost

- effective CO2 reduction strategies, but to ensure that Iowa stakeholders have adequate time to develop an optimal and cost

- effective compliance plan. C ommente rs said the allowance of additional time to meet interim goals will help accommodate the challenges faced by smaller utilities and assist them in designing strategies to develop certain building blocks approaches, possibly through trading or a multi

- state approach.

C ommenter s noted that the proposed rule established a compliance implementation schedule from 2020 through 2029, with full compliance required by 2029. C ommenter s recommended that EPA grant states the flexibility through the SIP process, to permit a small utility with a minority ownership in a single jurisdictional EGU, to delay the compliance implementation schedule by five years, beginning in 2025. The commenter s indicated that EPA need not alter the actual emissions reduction requirements , but delay their total effective date to 2034. By this state discretion, the commenter s indicated SIPs could be drafted with stakeholder input to ensure that14 the total emission reductions of a small utility's share from a jointly owned jurisdiction EGU

re sult in the overall level of emissions levels during the 15 year period 2020 to 2034. The
commenter s contended that permitting the small utilities to have five extra years to achieve compliance would help to balance out the inherent inequities that small u tilities would otherwise face in implementing the proposed rule. According to the commenter s , states are best positioned, and have the expertise and familiarity with their state

- specific resources to craft SIPs in a manner, through reasonable implementatio n of the proposed rule, while considering the unique circumstances of each individual state.

Comment 7 : Comments requesting that the CPP be modified to allow more time for compliance, and stating that targets and timelines in the CPP are unrealistic and unreasonable.

Response 7 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

In the event that the EPA does not withdr aw the proposed ru le, commenter s requested that the EPA modify the proposed rule to pr ovide sufficient time for states and affected entities to (1) adopt necessary laws and regulations, (2) evaluate electric system options and efficiency opportunities, (3) coordinate interstate activities, (4) assess the system for reliability issues, (5)

r educe economic impact on end users, and (6) implement plans that reflect the best interests of the citizens of the state.

Commenter s argued that the proposed rule is not necessary in Oklahoma given the state's documented success in reducing CO2 emissions on its own initiative. According to the commenters, even if federal regulation were appropriate, the targets and timelines set by the CPP are unrealistic and unreasonable . The commenters noted that they have preliminarily reviewed the NODA which was recently released and stated that the NODA, which proposes alternative methods of determining a State's target, still relies on the same legally and technically flawed basis and in many regards, creates more uncertainty and more stringent targets.

Comment 8 : Comments arguing that the rule is unworkable, given the timeframe EPA proposes, and says that compliance date should be based on “remaining useful life,” and that the proposed rule shows a lack of consideration for the useful life of existing co al assets.

Response 8 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 and has added flexibility to allow State programs t o include considerations for Emissions Performance Rates as well. The final rule includes this additional time and flexibility due to reasons the commenters specifically mention, among others. Where a newer unit provides for more efficient operations we b elieve15 these facilities will find their place in such plans. See sections VIII.B and VIII. G.1 of the final rule preamble of the CPP for further response to this comment.

The following is a summary of the specific public comment:

Commenter s proposed that EPA abandon the proposed rule's interim emission reduction targets and abandon its requirement of a definite, one

- size

- fits

- all final compliance date. The commenters contended that the final compliance date should instead be based on the en d of the useful life of a facility as demonstrated in loan document filings on record with various loan institutions as of January 1, 2014. The commenters indicated this unit

- specific final compliance date would itself comply with the Clean Air Act's expre ss requirement that remaining useful life of each facility be factored into State plans. The commenters also indicated it would eliminate the overwhelming financial burden many cooperatives face in complying with the proposed rule. Finally, the commenters indicated a staggered compliance date would allow for staggered retirement of facilities, which would ensure that the resources and services necessary to restructure the American energy industry (i.e., engineering, design and permitting, transmission and g eneration asset manufacturing, and construction and labor) will be available when needed at a reasonable cost. If EPA insists on its arbitrary final compliance date in violation of the Act's instruction that state plans be based on the remaining useful liv es of existing facilities, the commenters contended that EPA must then establish 2035 as the earliest date with which any standards of performance must be complied

.

C ommenter s noted that Arizona has a relativity young coal fleet. According to the commenter s , closing a significant portion of these plants would not only burden ratepayers with billions of dollars in stranded costs, but it would also require expensive new infrastructure. In addition, the
commenter s noted that these coal plants have bee n retrofitted with billions of dollars' worth of emission equipment stemming from other EPA rules. Therefore, the commenter s concluded it would be socially and economically suboptimal to close a majority of these plants before their useful life. The commen ter s noted that the interim goal and the re

- dispatch assumptions combine to guarantee a wide scale shutdown of these plants. Moreover, the commenter s noted that the shutdown would occur within five years

-- preventing rate gradualism and not allowing a prope r transition for communities reliant on coal related economic activity

.

Comment 9 : Comment saying that the suggestion that states should begin legislative changes based on the proposed (not final) CPP is not reasonable, reinforcing the fact that the EPA has not allowed enough time to develop a state plan.

Response 9 : The EPA recognizes that many decisions will remain to be made until the final rule is published and clarity about the proposed goals and timelines is made public; and ye t the EPA also expects that States are having conversations about how programs may be structured, who may oversee those programs, and what agencies and logistics will be involved such that by that time these crucial early discussions have been had and Stat es will be abl e to ‘hit the ground running’. See sections VIII. E and XI.E of the final rule preamble of the CPP for EPA’s response to this comment.16 The following is a summary of the specific public comment:

Commenter s noted EPA's suggestion that in order for states t o have an opportunity to meet the timeframes proposed in this rule, states should not wait until the final rules are issued but start to prepare for this rule based on the proposal. The commenters argued that this approach is impractical and unreasonable . The commenters stated that it is not possible for states to discuss legislative changes based on a proposal; the commenters argued that there must be a final goal or target promulgated . According to the commenters, these statements also imply that EPA do es not intend to carefully consider and modify the proposal based on comments. The commenters contended that this reinforces the fact that EPA has not allowed sufficient time to develop the state plan for such a sweeping requirement that completely modifie s the manner that electricity is produced and generated in the United States.

Comment 1 0 : Comment arguing that the EPA has set arbitrary and capricious deadlines related to its rulemaking schedule, state plan deve lopment, and source compliance.

Respon se 1 0 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section V.A.3.g. and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

The commenter s stated that the EPA's proposal is one component of "The President's Climate Action Plan," which directed EPA to propose emission guidelines for existing sources by June 1, 2014, and to finalize them by June 1, 2 015. The commenters noted that as part of the President's Plan, and as EPA has proposed, states must then develop and submit their state plans, or at least a firm commitment regarding the content o f the state plan, by June 30, 2016. If a state needs more time, the commenters noted that the EPA has provided an option for a two

- step process for submitting a final plan. The commenters noted that states that opt for this approach would need to submit an initial plan by June 30, 2016, that documents the state's progress in preparing a complete plan and that both: (1) demonstrates the state is on track, and (2) includes meaningful steps that clearly commit the state to complete an approvable plan. The comm enters noted that if the state is developing an individual state plan, the final plan is then due by June 30, 2017, and if the state is working with other states to develop a multi

- state plan, a second progress report is due by June 30, 2017, with the fina l plan due on June 30, 20 18. The commenter s noted that sources must then act i mmediately to meet their obligations under the interim compliance period beginning in 2020. The commenter s argued that these arbitrary and capricious deadlines do not provide an adequate opportunity for public comment or for EPA or states to respond thereto, do not provide adequate time for state plan development, and do not provide adequate time for sources to comply

.

Comment 1 1 : Comment asserting that EPA's own compliance modeling results detail the unworkable nature of this proposal.17 Response 1 1 : For this and other reasons t he EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2 020 to 2022 . A discussion of this is included in section VIII.D.2.b of the final rule preamble of the CPP

. The following is a summary of the specific public comment:

C omm enter s stated that based on EPA's proposed regulatory timeline, guidelines are anticipated to be finalized by June 2015 and state plans must be submitted to EPA between June 2016 and June 2018 and EPA has 1 year to approve a state plan after its submittal. Assum ing that EPA's proposed schedule does not shift, the commenters noted that state plans will be approved no earlier than June 2017 and no later than June 2019. The commenters stated that EPA's IPM compliance results, however, depict that significant complia nce actions will be made in 2016, 2018, and 2020. According to the commenters, these compliance actions for Alabama, Florida, Georgia, and Mississippi include: fossil fuel

- fired unit retirements, NGCC new builds, coal

- fired unit heat rate improvements, and demand

- side energy efficiency deployment. Even after complying with all proposed regulatory timelines, the commenters stated that according to EPA's IPM compliance results, states must then implement a collection of impossible to achieve measures to compl y by 2020. The commenters asserted that EPA's own compliance modeling results detail the unworkable nature of this proposal

.

Comment 1 2 : Comment stating that implementation time is too short.

Response 1 2 : As stated above, the EPA has extended the time all owed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g., VIII.B and VIII.D of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s stated that even if the Building Blocks were technically feasible to implement, the short amount of time that EPA has provided for compliance will make implementation impossible. The comm enter s stated that to meet required interim 2020

- 2030 emission targets, facilities would have to begin compliance by 2020.

The commenters noted assuming that state plans will not be approved until 2017 at the earliest, provides just 3 years to design, spe cify, contract, build, install, and test hundreds of millions of dollars' worth of facilities and equipment, much of which has manufacturing lead

- time in excess of 12 months.

The commenters stated further that the compliance time periods mandated by the CPP fail to account for the complicated jurisdictional issues that exist between FERC and the States. The commenters noted that given the narrow jurisdictional divide between FERC and the States, it is unreasonable for the CPP to expect States to devise a state plan within such a short period of time. The commenters noted that in many instances

, States will be required to obtain FERC approval of their proposed plans.18 Comment 1 3 : Comment stating that two conditions are necessary for a more efficient approach in reducing emissions

-- gradual reductions and time for state and other key stakeholder policies and practices to evolve

. Response 1 3 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g., and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summar y of the specific public comment:

The commenter s stating that two conditions (gradual reductions and more time for stakeholder policies to evolve) are needed. R egarding the first condition, the commenter s stated that dramatic shocks to the power system that require substituting combined

- cycle plants for coal plants need to be avoided. The commenter s indicated that a suitable "glide path" with a gradual emission reduction trajectory, tailored by each state to meet its unique circumstances, is necessary to achieve greater overall emission reductions at a lo wer cost. Regarding the second, and equally important, condition, the commenter s noted that states, power plant owners, renewable energy developers and other stakeholders

-- including the many who determine the rules and capabilities of FERC

- regulated wholes ale electricity markets and gas pipelines

-- need time to develop the innovative policies and business models that will support lower carbon, equally reliable solutions to the BES' complex constraints. According to the commenter s , many of these policies will need to evolve iteratively over the coming decades to keep pace with changing technologies and business models in the power sector.

Comment 1 4 : Comment stating that given the sheer regulatory reach of the proposed rule, and the coordination that will be required for implementation, the EPA needs to allow for a longer compliance.

Response 1 4 : The EPA is finalizing this rule to include Emissions Performance Rate regulatory options for States that make “inside the fence” options available for inclusion i n State programs. As described in the preamble to the final rule, this is done to provide enhanced flexibility to State plans in glide path projection toward interim and final goal achievability. See section s V.A.3.g., , VIII.B , VIII.E, and XII.E of the final rule preamble of the CPP for EPA’s response to this
comment.

The following is a summar y of the specific public comment:

Commenter s stated that EPA's interpretation of section 111 sets goals for states that they can only achieve through "ou tside

- the

- fence" (beyond the infrastructure and equipment of individual electric generating units/plants) actions. The commenter s indicated this will require extensive legislative and regulatory actions at the state level. The commenter s noted that the tim e to take these actions is not built into the rule. According to the commenter s , in many states, no single state agency has the authority required to implement EPA's outside

- the

- fence measures, meaning state legislation would be necessary to fill those aut hority gaps. The commenter s noted that, with some state legislatures meeting only once per year, even states that are eager to comply may end up being unable to adopt or approve the necessary legislation. The commenter s further noted that19 these administrat ive changes will create a domino effect that will result in complicated and time

intensive issues for individual business owners, particularly their members, such as applying for permit revisions based on new operating restrictions.

The commenter s stated that many states will not even be able to submit summary plans within one year, let alone submit full plans within two years. The commenter s noted that under other CAA programs, states are typically given up to three years to submit implementation plans to EPA. The commenter s further noted that the extensions currently contained in the plan are illusory because a majority of the state's commitments must be agreed to early on in order to figure out the details. According to the commenter s , while EPA's proposal gives states the option of taking two years to submit a plan under certain circumstances, states must still submit an "interim" plan within one year in which they make the critical decisions. The commenter s noted that the proposal also allow s a third year for plan submission, but only if a state opts into a regional plan, which the commenter s indicated will be even more difficult to negotiate given the inevitable interstate bureaucracies that will be encountered. By rushing the states through the planning process, the commenter s argued that EPA is undermining the very work they are trying achieve. The commenter s indicated that states should at least be given an appropriate amount of time in which to formulate a plan that is both legal and well researched.

Comment 1 5 : Co mment s stat ing that t he ambitious compliance deadlines within the CPP do not account for the multiple layers of structural changes that would have to take place prior to developing an implementation plan.

Response 1 5 : As st ated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . A discussion of this is included in the preamble to the final rule, and includ es addressing the issue(s) raised above in regard to forward capacity marketing. See section s V.A.3.g., VIII.B and VIII.D of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summar y of the specific public comment s :

Commenter s argued that the CPP's timing and implementation schedule is neither credible nor viable. (The commenter s provided a list CPP deadlines on page 23 of their comments.) According to the commenter s , it would take at least several years for state legislatures and administrative agencies to amend and revise their respective statutes and administrative rules. Even if the CPP could be established on a more aggressive timeline, the commenter s indicated that the earliest possible date for performance to start based on the proposed plan would be 2022

. The commenter s also noted that the timeline ignores necessary planning that must occur within the RTO construct as well as reliability planning that must occur with NERC. The commenter s made the following three arguments:

First, the commenter s argued that the proposed schedule does not provide adequate time for changes in state law. Under the current proposal, the commenter s said their state (Ohio) would be given at most two years to no t only develop and create an implementation plan, but to implement necessary legislative revisions through the Ohio General Assembly and subsequent20 rulemaking through state agencies. As the commenter s set forth within their comments, significant time would be necessary to draft legislation and engage in the implementation
process. The commenter s indicated a minimum of six months would typically be required to draft all necessary legislative changes to Ohio's current competitive retail electric service laws. The commenter s noted that this legislation would then need to be introduced before the Ohio General Assembly, hearings held and the statutory language vetted and eventually adopted. The
commenter s indicated that the Ohio General Assembly would likely need to devote several years to implementing the extensive overhaul necessary to meet the path charted in the CPP. After the Ohio General Assembly takes action, the commenter s indicated the burden would shift to state regulatory agencies like the Public Utilit ies Commission of Ohio (PUCO) and Ohio EPA to update and amend administrative rules. The commenter s noted that PUCO is familiar with this process, and it could take anywhere from 18 to 24 months to complete. According to the
commenter s , the PUCO is specifi cally required by law to conduct an initial workshop on any proposed rule revisions, open a docket for that rule and solicit feedback from stakeholders. Once the PUCO approves new or amended rules after allowing an open and participatory process, the

comme nter s indicated the rules remain subject to a rehearing process. The commenter s stated that this rehearing process typically takes at least six months to complete. In light of these two processes, the commenter s said that Ohio legislative and rulemaking pr oceedings would likely require extensive time beyond the CPP's overly ambitious timeline.

Second, the commenter s argued that, because the CPP changes the treatment of generation resources, additional time must be allocated for the regional transmission org anization to amend its tariffs and update its structure. The commenter s noted that t here are 14 jurisdictions that are members of PJM, each with their own policy objectives and generation resource mix. The
commenter s stated that it would take an extensive amount of time for each state to develop an implementation plan in order to meet the CPP's stringent timeframe. The commenter s indicated that PJM would need to review each of these plans in order to determine how to structure the current marketplace, deter mine any reliability implications and update its tariffs.

Third, the commenter s argued that the proposed schedule does not contemplate the intricacies of a forward capacity market. The commenter s reiterated that PJM's RPM capacity construct is based on mak ing capacity commitments three years ahead of the actual electricity delivery year. According to the commenter s , the rationale behind a forward capacity market, as opposed to a short

- term capacity market, is to stimulate investment in new generation and ma intain existing generation by creating long

- term price signals. In order to participate in the RPM process, the
commenter s noted that generators are required to meet "must offer requirements" during the actual delivery year. The commenter s stated that PJM depends upon these generation units to offer their resources into energy markets during the actual delivery day. By the time the final rule is issued in June 2015, the commenter s indicated that PJM would have already conducted its capacity auction for the 2018/2019 delivery year. The commenter s argued that the CPP appears to be unfamiliar with this concept. The commenter s noted that RTOs depend upon all existing generation units and plan ahead for future years in order to ensure there is sufficient generati on to meet demand. At a minimum, the commenter s contended that the availability of certain generation units that have already been earmarked to produce energy would be placed in doubt, causing uncertainty for PJM, states, markets, the economy and all energ y consumers. The
commenter s indicated that it would be unclear whether units that have already committed to produce energy in the forward capacity market would be able to perform as originally21 contemplated. The commenter s argued that the CPP does not addre ss impacts on forward capacity markets or provide additional time for implementation in light of forward capacity markets. The commenter s contended that it would be impossible for state plans to be implemented by the latest possible deadline of 2018, parti cularly when capacity generation resources will have already been procured through 2021/2022. Assuming there are no administrative challenges or burdens, the commenter s said the earliest possible compliance year for all states in the PJM footprint would be 2022.

Commenter s stated that t he EPA acknowledges in its July 2012 Roadmap Guidance that a "high level of coordination among multiple government agencies" and "early coordination" between responsible agencies will be needed in developing strategies, determining their effectiveness and und erstanding each agencies role in the process. Commenter s said the short timeframe provided in this proposal to design a state plan does not provide states enough time to work across state agencies and sort out complex legal and logistical issues. Commenter s stated not to mention, from a practical matter, to have multiple agencies legally responsible for different elements of a CAA requirement will become highly complex and under current resource constraints, virtually impossible.

Commenter s s aid that the Florida Legislature would need to act before EPA's building blocks could be enforced in Florida. Commenter s said, Florida's Legislature meets for two months every year in March and April, and most bills have to be filed many months in advance. Commenter s said if EPA has an effective date of June 30, 2015, Florida will have approximately six months to determine what legislative actions may be needed in the 2016 and 2017 Sessions. Commenter s said that this can only occur after it undertakes the enormous task of understanding what the final guidelines require, deciding which measures could achieve the state goal, determining the costs of each of these measures on the affected parties and Florida's economy, so as to minimize the economic impacts, and coordinati ng with the FPSC to ensure that there are no adverse impacts on the reliability of Florida's electric grid. Commenter s said EPA 's timeframe of a SIP completed by June 30, 2016 cannot be met.

Commenter s said that the CCP requires the decision on the opti ons to be made within a 13

- month deadline. Commenter s said that establishing energy policy is a complex undertaking involving balancing a multitude of factors, primarily affordability and the ability to produce enough energy to keep our electrical grid sta ble and reliable. Commenter s sa i d that CPP requires a reduction of all electricity use by 1.5 percent per year until demand is reduced by almost 10 percent, increase natural gas combined cycle capacity factors by over 40 percent, increase electricity from renewable energy sources by 300 percent, and gain efficiency at coal

- fired units by 6 percent. Commenter s said that changes to the state 's energy policy of this enormous magnitude would take considerable time and planning. Commenter s said tha t regulators s hould not have to push aside the many important issues so that resources are directed to meet EPA 's onerous and arbitrary deadline.

Comment 1 6 : Comments implying that compliance deadlines are too tight for utilities to comply, preferring a compliance date of 2030, and claiming that time frame in CPP eliminates the potential to do retrofits using advanced carbon capture and sequestration technologies.22 Response 1 6 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . With the added time to finalize State plans and demonstrate interim goal compliance, as well as proving options for States to set Emissions Performance Rate standards to help m eet those goals, we expect that this may incentivize Carbon Capture and Storage options, making them more realistic and attractive options to help meet these goals. The EPA is promulgating a final rule with interim goals that together form a glide path tow ard a final goal in 2030. See section s VIII.B and VIII. I of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summar y of the specific public comment:

Commenter s state d that several EPA regulations will cause utilities to retrofit existing generation plants, close older coal

- fired electric generation plants and develop new supply and/or demand

side resources over the next 3 to 5 years (e.g., MATS, a CWA rule, coal combus tion residuals rule, NAAQS, regional haze SIPs, and potential GHG reduction requirements). The commenter s stated that development of demand

- side resources, building new generation and/or making extensive upgrades to existing coal plants requires adequate l ead time for engineering, procurement, construction and regulatory review, and impacts rate payers. The commenter s stated that insufficient compliance timelines could unnecessarily raise prices. For these reasons,
commenter s urged the EPA and other relevant policy makers to implement environmental regulations taking into account the following considerations:

• Compliance timelines must make reasonable allowance for the physical, financial, and regulatory challenges associated with the engineering, procurement, construction, and regulatory review of new demand

- side resources, supply

- side resources and/or upgrades at existing electric generation plants;

• Compliance timelines must allow state regulators sufficient time to fully eva luate utility compliance proposals in evidentiary hearings;

• Compliance timelines must provide sufficient time and flexibility to maintain the integrity and reliability of the existing electric system; and

• Compliance timelines must take into account the imp act of rate increases that can result as utilities seek recovery from customers.

Commenter s preferred a compliance date of 2030 for all of the reductions because the utilities in Florida must add zero

- carbon electrical generating capacity to achieve the propos ed reductions. According to the commenter s , conversions from coal to gas, energy efficiency, heat rate improvements, and demand

- side management are insufficient to achieve EPA's targeted reductions. The commenter s stated that adding that zero

- carbon capacity will take many years to license and construct, and some existing generating capacity must continue operating through at least 2030 to allow a reasonable return on prior investments. Otherwise, the commenter s no ted, those assets become stranded and the utilities in Florida, including the commenter s ', would incur significant losses.23 Commenter s argued that the time frame provided in the Clean Power Plan effectively eliminates the potential to do retrofits usi ng advanced carbon capture and sequestration technologies because these measures remain in the early stage of commercial development, thus are prohibitively high

- cost options. The commenter s noted that FutureGen2.0 will not be operational before the com pletion of the state plans or by dates generators will need to make compliance decisions.

According to the commenter s , no incentives are provided in the Clean Power Plan to promote the retrofit of carbon capture and sequestration technology on the exis ting coal fleet, despite the size and importance of this in

- place coal fleet. The commenter s said incentives such as flexibility in compliance dates, tax credits, and/or incentive credits for this compliance approach could create a more favorable investmen t environment. The commenter s also stated that the ultimate costs of the Clean Power Plan within each state do not reflect the costs associated with the premature loss of coal generating capacity and reductions in coal production.

Comment 1 7 : Comment s tating that EPA can extend the time frame for rule compliance.

Response 1 7 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g., VIII.B and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summar y of the specific public comment:

Commenter s’ Comment stating that the EPA has within its power the authority to extend the time frame of the 111(d) rule to a more reasonable time frame that gives both states and regulated industry a chance to plan and make changes in a safe, reasonable, and cost effective

manner. The commenters noted that state statutes and the EPA's regulations in 40 CFR 60.24 allow states and the EPA to set less stringent standards or longer compliance schedules for existing sources when warranted , considering cost of control, remaining useful life of the facilities, location or process design at a particular faci lity, physical impossibility of installing necessary control equipment, or other factors making less stringent limits or longer compliance schedules appropriate.

Comment 1 8 : Comments stating the complianc e deadline of 2030 is not reasonable and unworkable because it does not allow enough time for affected sources to comply before states finalize their CPPs and EPA approves the plans, and does not allow enough time to: plan, permit, and construct new transm ission systems; accommodate reliability enhancements; and, undertake compliance measures or bring new sources online. Comments also request a compliance deadline of 2035 or later.

Response 1 8 : As stated above, the EPA has extended the time allowed for States to finalize their plans an d has moved the start of the interim period from 2020 to 2022 . T he EPA agrees with the commenters in that state legislative and review processes require extended time for States to finalize their plans . The final rule includes this additional time and flexibility for States in24 constructing their plans and adjusting their legislative requirements to manage the complexities that commenter s mention, among others.

The EPA disagrees that an additional five years is required for assembly of state planning efforts, but agrees with the commenter s that additional time is required both for plan assembly and for meeting the first interim goal. Discussion of these details is i ncluded in the preamble to the final rule.

See section s V. A.3.g., V.D., VIII.B , VIII.C, VIII.G

, and VIII. I of the final rule preamble of the CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenter s expressed concern regarding EPA's proposal creating final state

- specific goals that must be met by 2030, and interim goals that must be met on a 10

- year average from 2020 to 2029. The commenters noted, as EPA has acknowledged, that l eaves states with only 1.5 to 3.5 years between the state plan submittal deadline and the start of the interim compliance period. The commenters stated that the compliance timeframe is further reduced as states must begin taking action to reduce emissions before 2020 in order to achieve their interim emission rate goals. According to the commenters, such actions include implementing end

- use energy efficiency programs as early as 2017 and increasing utilization of NGCC units prior to 2020. The
commenters not ed that EPA rationalizes such a short compliance timeframe by pointing out that affected sources "will have knowledge of state requirements as they are adopted" and thus will have more time to act. The commenters argued that it is unreasonable for EPA to e xpect affected sources to undertake expensive compliance measures before states finalize their plans and before EPA has approved the plans. The commenters stated that, given the amount of time it takes to site, permit, and construct new pipelines, transmis sion lines, and EGUs, it is impossible for states to begin implementing their plans as early as would be necessary to comply with EPA's proposed goals. For example, the commenters noted that once EPA approves a state's plan, it will take approximately 2 ye ars for generation and transmission entities to analyze the potential requirements of their systems. According to the commenters, plans for additional electric generation and transmission must then be developed and analyzed in an open regional planning
pro cess, which usually takes at least another 2 years. The commenters stated that additional time is required to permit and construct new units and transmission lines so the result is a 6 to 7

- year timeframe before necessary new facilities and transmission li nes can be built. The commenter s noted that this timeframe is optimistic, and yet, would be inadequate for a state to meet EPA's proposed goals. The commenter s concluded that EPA's timeframe for compliance is thus arbitrary and unworkable

.

Commenter s stated that more time for CPP implementation may be needed to accommodate reliability enhancements : State and regional plans must be approved by the EPA, which is anticipated to require up to 1 year, leaving as little as 6 months to 2 years to implement the approved plan. The commenter s noted that areas that experience a large shift in their resource mix are expected to require transmission enhancements to maintain reliability. The commenter s noted 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. The commenter s stated that while the EPA provides flexibility for meeting25 compliance requirements within the prop osed time frame, there appears to be less flexibility in providing reliability assurance beyond the compliance period.

According to commenter s , given the system requirements that must be met in order to maintain reliability, even the seemingly simpl e 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

- u p power, the availability of natural gas supplies and the infrastructure to deliver it, the impact on the transmission system and the need to maintain inertia, frequency and voltage control. The commenter s stated that choosing to increase the generation at an existing unit that already is interconnected to the transmission system requires consideration of similar issues. The commenter s noted that managing these considerations requires a significant amount of rigorous and time

- intensive study and coordinati on. The commenter s noted that any a ddition or change to the transmission system has to go through the interconnection study and analysis process. The commenters stated this is true whether the change is to the capacity of an existing generator or a new generator is proposed. The commenters stated that the purpose of these studies is to assess the impact of a new generating unit (or increase in generation from an existing unit) on the existing transmission system. The commenters stated that the required studies consist of thermal analyses, st ability studies and assessments of possible faults in the system that could result in cascading failure of the transmission system. The commenters stated that no generator can be attached to the transmission network unless and until these studies show that the system can withstand the injection of energy at that particular point.

Commenter s noted that 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. The commenter s stated that this assumption is predicated on the idea that implementing the proposed Building Blocks will not require changes to the existing interconnected power system which is simply not true. The commenter s stated that a change to any part of the interconnected power system

- even 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 s ystem. The commenter s stated that the multiple, larger changes proposed by EPA certainly require such analysis under NERC's reliability standards. The
commenter s stated that in addition to new resources, changes in how the generation fleet is dispatched ma y cause significant changes in how power flows across the grid. The commenter s stated that 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 changed system conditions.

Commenter s stated that once the required studies are completed, actually building new generation, new natural gas delivery in frastru cture and new transmission lines can also take years to complete , especially when involving rights

- of

- way crossing federal or tribal lands. The
commenter s stated that as the Department of Energy (DOE) has recognized: Infrastructure projects

- such as high voltage, long distance, electric transmiss ion facilities

- often involve multiple Federal, State, local and Tribal authorizations and are subject to a wide array of processes and procedural requirements in order to obtain all necessary permits and other authorizations. Delays in securing required statutory reviews, permits, and consultations can threaten the completion projects of national and regional significance. The commenter s stated26 that the RRTT was created in response to a Presidential Memorandum recognizing the critical need to expedite the review and permitting of major electric transmission infrastructure projects. See Presidential Memorandum, Speeding Infrastructure Development through More Efficiency and Effective Permitting and Environmental Review (Aug. 31, 2011). The commenter s stated that the RRTT recognized that "[a]t least three problems may arise when trying to develop this type of infrastructure: (1) Non

- synchronous evaluations by all governmental entities with jurisdiction; (2) uncertainty about whether all necessary permits and approvals will be received; and (3) significantly different development times for generation and transmission."

However, the commenter s noted that EPA does not propose to wait until these studies are complete or until needed system changes are effect uated to finalize the proposed guidelines or require states to submit compliance plans. The commenter s stated therefore, the final proposed section 111(d) guidelines can and should recognize the complexity of what the Agency is asking states, electric util ities, system operators and other regulators to do in order to achieve the 2030 goals. The commenter s stated that to the extent possible, EPA's final state goals should reflect the operational reliability needs of the interconnected power system as they currently are understood. The commenter s stated that in addition, the final guidelines should include a compliance timeline that provides states with sufficient time to analyze the impacts of their proposed plans on the interconnected power system and ensure that the power sector has sufficient time to implement the required changes to the entire interconne cted power system.

Co mmenter s stated that EPA has grossly overestimated the ability of new units to come online quickly . The commenter s noted that EPA proposed creating final state

- specific goals, which must be met by 2030, and interim goals that mus t be met on a 10

- year average from 2020 to 2029. The commenters noted EPA's acknowledgement that this leaves states with only 1.5 to 3.5 years between the state plan submittal deadline and the start of the interim compliance period. The commenters noted th at this compliance timeframe is further reduced, as states must begin taking action to reduce emissions before 2020 in order to achieve their interim emission rate goals. According to the commenters, such actions include implementing end

- use energy efficie ncy programs as early as 2017, and increasing utilization of NGCC units prior to 2020. The commenters stated that EPA rationalized such a short compliance timeframe by pointing out that affected sources "will have knowledge of state requirements as they ar e adopted" and thus will have more time to act.. The commenters contended that it is unreasonable, however, for EPA to expect affected sources to undertake expensive compliance measures before states finalize their plans and before EPA has approved the pla ns; and, given the amount of time it takes to site, permit and construct new pipelines, transmission lines, and EGUs, it is impossible for states to begin implementing their plans as ear ly as would be necessary to comply with EPA's proposed goals

. As an example, the commenter s pointed out that once EPA approves a state's plan, it will take about two years for generation and transmission entities to analyze the potential requirements of their systems. The commenters also noted that plans for additional electric generation and transmission must then be developed and analyzed in an open regional planning process, which usually takes at least another two years. The commenters further noted that additional time is required to permit and construct new units a nd transmission lines. According to the commenters, the result is a six

- to seven

- year timeframe before necessary new facilities and transmission lines can be built . The commenters stated that this timeframe is optimistic, as it does not account for any si gnificant delays in permitting, design, or construction, and yet would be inadequate for a state to meet EPA's proposed goals. The commenters also noted that NERC27 has also expressed concern with the timing constraints EPA's proposal ignores, pointing out t hat siting, permitting, and governmental approvals for new transmission lines "often take much longer than five years," in addition to the time required to design, engineer, and construct them. The commenters therefore concluded that EPA's timeframe for co mpliance is thus arbitrary and unworkable

.

Commenter s expressed concerns with the compliance timelines in the proposed rule, compared to the amount of time needed to plan, permit, and construct new transmission systems . The
commenter s provided a map of the Western Electricity Coordinating Council (WECC) transmission paths. The commenters noted that the WECC, anticipating additional changes to the electric grid in the West (beyond the WECC portion), initiated a study of the grid reliabi lity issues that are likely to occur as WECC states proceed with integration of renewable energy (RE) sources on public and private lands that are suitable for intermittent solar and wind generation resources. The commenters noted the following observation from WECC staff:

• Many existing WECC transmission path ratings are dependent on the location, size and type of nearby generation. If these generation resources are changed (or removed), path ratings could be impacted, and studies would be necessary to re

- evaluate the individual path ratings. Several path ratings depend on the ability to trip large amounts of generation to maintain reliability of the system. If this generation was removed due to implementation of the CPP, the path rating could be impacted.

The commenter s stated that the above

- referenced WECC study must be completed prior to states' filing CPP compliance plans. Furthermore, as individual projects are planned, the commenter s said they must be studied for impact on the WECC grid. The commen ter s noted that changes in generation resources, dispatch, and delivery require comprehensive local and regional reliability assessments. The commenter s stated that these assessments are needed to identify necessary transmission system enhancements to prov ide for reliable delivery, system stability, voltage support, and other system reliability needs. Accordingly, the commenter s indicated that the resulting reliability challenges warrant further consideration by policy makers. The
commenter s noted that reli ability assessments will be coupled with extensive work to permit and construct new energy infrastructure. According to the commenter s , the timeline from the start of planning to startup will likely range from 5 to 10 or more years or more in the western s tates (the WECC grid area). The commenter s also cited a Lawrence Berkeley National Laboratory (LBNL) study in 2010, which found that new transmission requires 7

- 10 years or even longer to plan, permit, and construct and that, once built, its economic life can span multiple decades. The
commenter s also cited a 2010 Western Governors' Association study, which reported and illustrated that timelines for new electric transmission

-- from conception and study phase through permitting, environmental and public revi ew time periods through engineering and construction

-- take at least 7 years to complete.

Commenters expressed concern that the time set aside from proposal to compliance is overly ambitious. The commenters acknowledged that the timeline the EPA is fo llowing is the result of a Presidential Memorandum, but stated that President Obama's timeline may not adequately account for the magnitude of this rule. The commenters noted that the complexity of the Rule has required considerable analysis and even with the 165 days allowed for comment, significant uncertainty remains as to the real impact of the proposal on the electric sector given the inability28 to fully analyze how individual states may act under the rule. The commenters noted that the electric utility sector has had a myriad of considerations to evaluate prior to submitting comments, including:

• EPA concedes its projected coal unit retirement estimates will impact reliability, but how? Generators and system operators must examine the retirements tha t might result and how they could impact system reliability. Such an exercise isn't completed in 165 days in most areas and in areas with organized markets, the analysis can take far longer.

• EPA assumes that by 2020, the electric grid will transition from economic dispatch to environmental dispatch with a notable emphasis on dispatching natural gas plants ahead of coal plants. Generators must analyze whether they have access to adequate gas pipeline infrastructure, the delivered cost of the fuel, whether th ere are permit constraints or other operational constraints in order to verify EPA's assumptions regarding natural
gas.

• In RTO regions, entire multistate dispatch models must be analyzed and modeled for potential modification based on plausible state actio ns to understand the impact on the electric markets.

• States with utilities with multiple jurisdictional models (cooperative, public power, merchant power, federal utility and investor utility) must determine which regulatory agency has the appropriate j urisdictional authority to establish and enforce compliance with the BB approach.

• States seeking to deploy more variable wind generation and distributed generation (DG)

- such as solar PV, and CHP

- will need to understand the impacts of high penetrati on on the transmission grid and the distribution grid.

• EPA asserts states will be responsible for intra

- state activities, but energy is more complex than EPA proposes. Before states and utilities can substantively comment, they will need to understand how states will apportion multi

- state projects like wind farms built subject to purchase power contracts for load located in another state. How states agree to address these issues directly impacts the utility sector.

EPA leaves up to the states how to apport ion actions like energy efficiency improvements taken by third parties. Unfortunately, because energy efficiency is such a large part of the overall compliance regime, leaving this for resolution until after the state goal is set virtually assures that aff ected entities cannot adequately comment on EPA's proposed goals.

The commenters noted that utilities, regulators and states continue to grapple with these and a host of other considerations and FERC is just beginning to assess the reliability impacts of t he rule on the electric grid. The commenters stated that a North American Electric Reliability Coordinating Council (NERC) report is being examined by industry.

The commenters expressed concern that the EPA will have insufficient time to analyze and
sy nthesize the comments it receives into a cohesive final rule prior to needing to provide a final29 draft of the rule for interagency review. The commenters noted that if EPA maintains the current schedule to finalize the rule in June 2015, the EPA will allow itself slightly more than 6 months to analyze the comments received, weigh the merits of both legal and technical matters raised, revise the rule in a manner consistent with the CAA that can be attained without jeopardizing the economy, submit the proposa l to OMB for inter

- agency review, and release the rule by the proposed deadline of June 2015. The commenters noted that given that this proposal anticipates incorporating the application of CAA authorities over large segments of the economy heretofore

neve r regulated, this is no small endeavor.

The commenters asserted that the state process is compressed to a degree as to virtually assure regulator y and c ompliance mayhem . The commenters noted that under the proposal, a state which requires sufficient time to develop multi

- state compliance options may require until June of 2018 to submit a final plan to the EPA. The commenters noted that this allows a very short 18 months for "affected entities" (which constitute a very broad segment of the economy) to under stand their obligations under the state plan and to react accordingly. The commenters stated that while some actions can certainly be taken by "affected entities" in advance of submission of a final rule, major investments may not be prudently undertaken u ntil such time as the State Plan is complete and approved by EPA. The commenters stated that for electric utilities, whose investments generally require significant planning, design, engineering and permitting even before construction begins, 18 months is a blink of an eye.

The commenters stated that the rule is unrealistic and unworkable, based on timelines for both state plan development and complia nce t hat are totally unrealistic , and likely to introduce far greater uncertainty into forward utility and s tate planning. The commenters stated that EPA has asked for comment on a multitude of fundamental issues of rule design that this Proposed Rule should have been put forward as an Advance Notice of Proposed Rulemaking

.

Commenter s stated that the propo sed guidelines do not provide states with sufficient time to comply as noted in public comments provided by MISO, SPP, and NERC. The commente r s noted that specifically, MISO stated in comments to the Louisiana Public Service Commission on October 2, 2014 t hat "the compliance timeline challenges resource adequacy." The commenters noted that likewise, Southwest Power Pool also stated in comments to EPA on October 2, 2014 that "the timing proposed by EPA for compliance is infeasible." The commenters noted that in November, NERC released a report on the Potential Reliability Impacts of EPA's Proposed Clean Power Plan, stating that "developing suitable replacement generation resources to maintain adequate reserve margin levels may represent a significant reliabil ity challenge, given the constrained time period for implementation."

The commenter s stated that to continue to satisfy existing NERC standards, new transmission infrastructure may be required to support the changes to the bulk power system that EPA's proposal would require. However, the commenter s stated that the proposal's compliance sc hedule does not allow adequate time for the needed reliabi lity as sessments and system changes to be accomplished before the compliance obligations begin in 2020 . The commenter s stated that such studies can take years to complete. According to the commenter s , building new generation, new natural gas delivery infrastructure, and new transmission lines will also take many more years to complete.30 The commenter s stated that the EPA has also failed to allow states sufficient time to develop their state

- specific plans or sufficient time for EPA to review and approve (or disapprove and revise) those plans. The commenter s stated that typically, state implementation plans require 3 years to prepare and 2 years for EPA to approve, based on provisions in Section 110 th at often apply to much less complex planning requirements. Because the Section 111(d) planning procedures must be "similar" to those found in Section 110, the commenter s stated that the EPA should employ at least the same 5

- year planning period under its S ection 111(d) Clean Power Plan, given that it is perhaps one of the most complex rules ever proposed. Of course, after allowing an appropriate period of time for planning, the commenter s stated that the EPA must also adjust the compliance timeframes accord ingly. As such, the commenter s recommended that EPA allow an addi tional 5 years for both planning and compliance purposes, with the final compliance goal set for 2035 or later.

Co mment 19 : C omment express ing concern that the proposed implementation timeframe unnecessarily increases the reliability risk through over

- reliance on natural gas in Florida, reduced fuel diversity, and reduced operational flexibility.

Response 19 : The EPA recognizes the contingencies and complexities that must be considered and accounted for when assembling State plans to meet the interim and final goals. In the final rule we allow additional time for development of these plans, as well as moving back the initial interim goal to 2022, to provide for the additional considerat ions necessary to resolve these and similar concerns. See section s VIII.B and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s ex press ed concern that the proposed implementation timeframe unnecessarily increases the reliability risk through over

- reliance on natural gas in Florida, reduced fuel diversity, and reduced operational flexibility. The commenters stated that approximately half of their company' s generation capacity is coal

- based, a higher fraction than the State in general. The
commenter s noted that they were only able to meet load demand during the January 2010 extended cold snap in Florida by utilizing stockpiled coal and oil supplies (because natural gas demand was high). The commenter s noted that similar supply curtailment is experienced during storms affecting transportation of fuel across the Gulf of Mexico, impacting not only coal shipments, but also natural gas production and distribution to the two pipelines serving peninsular Florida consumers.

Comment 2 0 : C omment s express ing concern that the CPP does not address the time required for transmission system upgrades or gas delivery infrastructure

, and stating that the EPA's assumptions that transmission infrastructure can be implemented by 2020 are not supportable and that the time required to receive state authorizations, build new assets, and new/upgraded transmission lines will go beyond the mid

- 2020s. Also, comments recommend ing the EPA allow more time to adequately develop and implement necessary controls and infrastructure to ensure the delivery or rel iable, economic and clean power, and more time to develop effective demand

-31 side EE programs, and recommending speci fic changes in ti meline based on strong industry concerns about timetables and impact s of SIPs on the nation's bulk electric system reliability

. Response 2 0 : The EPA has extended the time allowed for States to finalize their plans and has

move d the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to States in constructing their plans to manage the complexities that

commenter s mention, including infrastructure needs among others. The EPA disagrees comment that the final rule should be delayed, and that interim goals should be eliminated in the final rule. Given the increased flexibility added to the final rule, the EPA has not extended the time allowed to meet the ultimate compliance deadline as we believe the added flexibility allows states and regional planning efforts the ability to balance the complexities necessary and develop a glide path that meets the ultimate goal. The EPA is extending the time provided for States and regional planning groups to finalize their plans and meet the requirements of the first interim goal. See sections V.A.3.g., V.D, VIII.B, and VIII. G of the final rule preamble of the CPP for additional EP A response to th ese and similar comment s

. The following are summaries of the specific public comments under this comment:

C ommenters expressed concern that the CPP does not address the time required for transmission system upgrades or gas delivery infrastructure

.

Commenter s expressed concern that no consideration was given to transmission and pipeline construction. The commenter s stated that expanded use of natural gas and renewables prescribed in the proposed rule would require the addition of thousands of miles of transmission lines and pipelines. The commenter s stated that they, and most utilities in the west have found it challenging to gain approval and construct new transmission lines. The commenter s ' experience has been that it can take 8 to 10 years to get a transmission line permitted, and in some cases they are denied permits.

As part of their request for more time, commenter s stated that the CPP has not provided enough lead time for the new infrastructure that the increased utilizat ion of NGCC and RE mandated by the CPP requires. The commenter s noted that States will need to work with energy companies, investors and energy regulators to finance, permit and build new pipelines, new transmission lines and new RE generators.

Commenter s stated that compliance with the proposal's interim and final goals will result in changes to the sources and location of generation resources, requiring sufficient time to plan and build the necessary infrastructure. The commenter s believe that the EPA' s schedule for achieving these goals is unrealistic and will result in serious risks to the electric system reliability.

Commenter s also expressed concern that EPA has considered neither the cost nor the time required to plan and construct electric tran smission facilities. The commenter s stated that, in their region, as much as 8.5 years to study, plan for and construct new transmission facilities has been required. The commenter s argued that compliance with the proposed CPP is impossible due to the tran smission expansion that will be required and the time it takes to complete the required transmission expansion.32 Commenter s w ere concerned that the priority of operating power plants could be, or will be, dictated by environmental outcomes and will over shadow the requirements for reliability and compliance with reliability standards established by FERC. The commenter s noted that t he CPP calls for more renewable resources and natural gas plants to be added to the grid. The
commenter s said these resources will likely result in transmission constraints on the bulk electric system without the proper planning and construction. The comme nter s asked EPA to allow for sufficient time for the planning and construction of the necessary electric and gas infrastructure in order to maintain the reliable electric system. Commenter s similarly urged the EPA to extend the compliance timelines to e nsure that the reliability and infrastructure concerns can be adequately evaluated and addressed.

Commenter s stated that the kind of generation (traditional vs. variable renewable) and where it is located matters when it comes to grid stability and reliable electric service. The commenter s stated that utilities may be able to reduce the risk of service disruptions through transmission system upgrades, but these can take 8 to 10 years to implement, while EPA's timeline allows only 2 to 4 years from st ate plan approval to 2020 when compliance requirements begin. The
commenter s stated that this is not enough time to determine what transmission line upgrades may be necessary and then to implement them. The commenter s stated that, if EPA persists in its proposed approach, it should eliminate the initial 2020

- 2029 compliance period and begin compliance in 2030.

Commenter s stated that long lead times for transmission development and construction require long

- term syst em planning

- typically a 10 to 15

- year outlook. The commenter s stated that in addition to designing, engineering, and contracting transmission lines, siting, permitting, and various federal, state, provincial, and municipal approvals often take much longe r than 5 years to complete. The commenter s stated that the CPP analysis assumes that adequate transmission capacity is available to deliver any resources located in, or transferred to, the region. The
commenter s noted that given the significant changes and locations anticipated to occur in the resource mix, it is likely that additional new transmission, or transmission enhancements, will be necessary in some areas. The commenter s stated that new transmission lines will be required to transport the amount of renewable generation coming online, particularly in remote areas, and that creates additional timing considerations. The commenter s noted further, as replacement generation is constructed, new transmission may be needed to interconnect new generation. The
commenter s noted that mitigating transmission constraints identified from the proposed EPA regulations in a timely way, consistent with CPP targets, presents a potential reliability concern. The commenter s stated that construction of new interstate high

- v oltage lines would require transmission owners to confer to state and federal laws with respect to environment impacts, siting, and permitting. The commenter s stated that a construction timeline for a new high

- voltage line can range from 5 to 15 years depe nding on the voltage class, location, and availability of highly skilled construction crews. The commenter s stated that the construction of transmission assets is a very lengthy process starting from planning to the actual physical construction . The

commen ter s recommended that any policies that could potentially impact the reliable operation of the transmission system also consider the associated timeline for implementing plans.

Commenter s stated that location of additional transmission resources will be informed by the outcome of the transmission planning studies. The commenter s stated that the transmission planning process will not be able to fully incorporate the impacts of potential retirements until33 those resource addition requirements are made known to the system operator. The commenter s stated that for ISO/RTOs, this will likely not happen until the final state plans are developed.

According to commenter s , t o support variable generating capacity increases, the power industry would need to inve st heavily to expand transmission capacity to access more remote areas with high

- quality wind resources. The commenter s stated that developing a resource mix that has sufficient ERSs to support integration and reliable BPS operation is also a consideration . The
commenter s noted that given the natural wind variability in these locations, incremental wind project resources would have relatively low capacity factors (20

- 35 percent) that would require complex financial decisions to support transmission capacity

.

Commenter s stated that NERC anticipates that after the CPP guidelines are finalized in 2015, and SIPs are developed and approved by the EPA in 2016/2017, entities will work with their state utility commissions or other appropriate governing entitie s to assess resource and system options. The commenter s noted that extensive transmission reliability screening assessments will be performed to support these decisions and will include comprehensive local and regional reliability analyses, which must be c oordinated with states and neighboring entities. The
commenter s stated that as resource decisions are made, reliability screening will transition into the established NERC reliability assessment processes. The commenter s stated that consistent with the NER C Reliability Standards, transmission enhancements to address reliability constraints will be identified, incorporated into transmission expansion plans, and coordinated with other projects locally and regionally. The commenter s noted that because committe d transmission projects typically require three to five years to be completed, and often longer for major projects with significant right

- of

- way needs, NERC is concerned that reliability

- related enhancements may not be able to be completed for a 2020 imple mentation. The commenter s submitted a NERC report (Appendix A to comment 23224 ) entitled Potential Reliability Impacts of EPA's Proposed Clean Power Plan: Initial Reliability Review (Nov. 2014).

Commenter s also referred to the NERC reliability report and NERC's claim that EPA underestimated the amount of time required for the construction of infrastructure needed to comply with building blocks 2, 3 and 4. The commenter s stated that before new generation

res ources can be built, the necessary transmission and distribution infrastructure must be in place to support system reliability. This type of system planning takes 10

- 15 years, according to the NERC report. In addition to designing, engineering, and constru cting transmission lines, federal permitting can take much longer than 5 years to complete. The commenter s stated that EPA's aggressive schedule of the interim goals would not provide enough time to build the necessary infrastructure needed to ensure grid stability and reliability to support the amount of renewable generation required to meet state targets over the next 5

- 15 years while continuing to provide safe and reliable electric service.

Commenter s noted that under Building Block 2, the bulk of the CO2 reductions result from the retirement of coal

- fueled generation. Because these reductions are front

- loaded, the commenter s indicated most of this generation will need to be replaced by either existing gas units, new gas units, or the development of additional renewable generation sources in this same short timeframe. The commenter s cited the NERC reliability report, which stated that "the EPA and policy makers should recognize the complexity of the reliability challenges posed by the rule and34 ensure the rule provides sufficient time for the industry to take the steps needed to significantly change the country's resource mix and operations without negatively affecting BPS reliability."

Commenter s argued that the lack of sufficient time to implem ent EPA's aggressive proposal may present a risk to reliable electricity service. The commenter s said that, without more time to implement the shift in energy resources needed to meet EPA's goals, significant risks to the reliability of the bulk power syst em could develop. The commenter s noted that energy regulators have recently warned that EPA's proposal appears to require too much change too fast to ensure the electric power system will remain sufficiently reliable.

Commenter s recognized that provi ding time for careful study and deployment of new gas infrastructure development is an important and necessary part of any CPP provision that would seek to advance deployment or operation of new or expanded natural gas generation. The
commenter s argued tha t EPA should establish 2030 as the earliest CPP compliance date, eliminating the interim targets between 2020 and 2029. The commenter s stated that EPA should not compel states to study their natural gas infrastructure needs on a "hurry up" basis in order t o receive potential relief that might compensate for the many shortcomings in EPA's proposed 2020 interim target date. The commenter s noted that siting of natural gas pipeline infrastructure is done on a national level by the Federal Energy Regulatory Comm ission (FERC) and that development requires cooperation between multiple states and across large regions that require considerations beyond the boundaries of energy decisions being addressed within a single state's planning.

Commenter s argued that the currently

- proposed EPA timeline is too aggressive and will likely lead to reliability

- related challenges in the very near future. According to the commenters, the bulk power system infrastructure is currently insufficient to meet the current EPA CPP timeli ne. The commenters further argued that the proposed rule provides little insight into whether or not there is enough natural gas infrastructure to support some of the dramatic wholesale power generation market changes anticipated by the CPP. The commenters indicated that additional time for implementation would assist in minimizing these potential negative market outcomes.

Commenter s stated that the transmission grid will need to be expanded to accommodate the increased generation and movement of rene wable energy between and throughout states. The commenters stated that the Regional Transmission Organizations' (RTOs') planning and the resulting construction processes currently take between 5 and 10 years for grid expansion . The commenters stated tha t with new transmission lines crossing multiple states and jurisdictions, issues involving route selection, cost allocation, and construction could lengthen this process even more. Under the proposed rule, the commenters noted that the interim compliance b egins in 2020. The commenters stated that the rule will leave insufficient time for any new transmission lines to be built to support compliance in the early 2020s, which would have to be energized in 2019 for compliance in 2020. The commenters stated that would be 4 years after the rule is finalized and only 3 years after compliance plans are to be submitted to the EPA. The commenters stated that there is simply not enough time to complete any new projects not already in the RTO planning process. Also, the commenters noted that the RTOs use different calculation methodologies (e.g., for resource adequacy and transmission system capabilities) and capacity market constructs. The commenters stated that these differences will have to be resolved to ensure effec tive regional compliance. The commenters stated that the tariff changes will likely be35 needed, which will require approval from the Federal Energy Regulatory Commission (FERC). The commenters stated that resolution of these differences and changes will tak e a significant amount of time and more time than allotted for by the proposed rule

. According to c ommenter s , the biggest driver of many state GHG reductions is the potential for increased utilization of existing NGCC units or renewable energy, w hich mainly occurs before 2025 under EPA's assumptions. The commenter s cited EPA's own analysis, which indicates that most of this shift occurs before 2020, including 46

- 49 GWs of coal

- based unit closures in addition to closures that have already been anno unced, in part due to compliance with the Mercury and Air Toxics Standards. The commenter s also cited EPA's assumption that adequate infrastructure to support coal

- based unit closures and increased utilization of NGCC units can be put in place in as little as two or three years, but said this is not realistic given the time needed for both perm itting and construction. With respect to importing energy from other state's NGCC resources, the commenter s indicated transmission congestion may develop, which would necessitate the construction of high voltage transmission lines. The commenter s cit ed the analysis by Southwest Power Pool's "Grid Reliability and Build

- out Issues," issued October 1, 2014, which indicated this process can take 8 to 10 years and add significant cost. The
commenter s noted that NERC also raised the same concerns in the Nov ember 2014 study

" Potential Reliability Impacts of EPA's Proposed Clean Power Plan," stating on page 20:

"...Mitigating transmission constraints identified from the proposed EPA regulations in a timely way, consistent with CPP targets, presents a potentia l reliability concern. Construction of new interstate high

- voltage line can range from 5 to 15 years depending on the voltage class, location, and availability of highly skilled construction crews..."

Commenter s stated that it is wholly possible, and we are seeing this now, that utilities will invest in newer, cleaner electric generating assets such as NGCCs, wind power and the like. The

c ommenters said most utilities plan to invest in new cleaner technologies; however, the time needed to obtain the r equired monies, permits, authorizations from state and federal agencies, physical asset structures and manpower to build the assets and build new or upgrade existing transmissions lines necessary to meet the energy needs will likely go beyond the mid

- 20 20s.

Commenter s stated that a major portion of the country's power grid is operated and/or dispatched by Regional Transmission Organizations (RTOs) or Independent System Operators (ISOs) which are entities that often encompass very large regions and cover multiple states. The commenters stated that EPA's plan will introduce significant challenges as these organizations strive to ensure reliability and the delivery of economic power, which is their responsibility. Therefore, the commenters recommended the EPA allow more time to adequately develop and implement necessary controls and infrastructure to ensure the delivery or reliable, economic and clean power. The commenters also recommended that EPA provide more time for the states to develop demand

- side energy efficiency programs that will be effective.

Commenter s specifically recommended that the EPA:

• Provide operators of coal

- fired EGUs the time necessary to conduct site

- specific engineering analyses to determine if there are remaining opportuni ties for heat rate36 improvements through implementation of operational best practices or capital investments.

• Allow the state the time to conduct a review of its NGCC fleet to determine if they have the operational capability to operate at a 70% capacity fa ctor.

• Allow the states adequate time to conduct a rate impact analysis of the proposed CPP.

• Provide adequate time to construct replacement capacity for the 108 to 134 GW of capacity lost as a result of the CPP.

• Provide adequate time to construct gas pipeli ne infrastructure necessary to meet demands of growing NGCC and CT generation.

• Provide adequate time to construct electric transmission to meet growing RE generation and to accommodate changes in power flow as a result of the CPP.

• Allow ISO/RTOs and system operators time to develop reliability assessments based on power grid changes as a result of the CPP.

• Allow ISO/RTOs and system operators time to develop appropriate processes, tools, and operating practices to adequately address operational changes on th e system.

Specifically, commenter s proposed the following recommendations:

• require states to consult with ISOs/RTOs during the development of their SIPs,

• allow 5 to 10 years of additional time for state SIP development, including more time to consider regional responses,

• delay final rule until the completion of NERC/FERC and ISO/RTO reliability studies based on state plans,

• delay final rule until completion of the EIPC study, and

• eliminate interim goals within the final rule.

C ommenter s noted that in their recent November 2014 report, Potential Reliability Impacts of EPA's Proposed Clean Power Plan, NERC did not agree with EPA's assessment that there would be no impact on electric system reliability. The commenters stated that EPA must co ordinate with FERC and NERC on making fundamental changes in the electric system to provide sufficient time to allow markets to develop actionable plans . As a result, the commenters indicated more time for Clean Power Plan implementation may also be needed to accommodate reliability enhancements. The commenters noted that state 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.37 Commen ter s stated that g eographic diversity and a complex regulatory environment present challenges to the development of electric power infrastructure. The commenters stated that the time required for these facilities to be developed and placed in service ma y exceed the proposed Clean Power Plan's compliance timelines . In addition, the commenters stated that all regions throughout the United States will be implementing their plans simultaneously. Therefore, the commenters stated that it is uncertain whether a dequate equipment (e.g., turbines, conductor) and resources (e.g., engineering, procurement, construction) will be available.

Comment 2 1 : Comment arguing that NSR permitting will add time to the capital improvement process, contradicting the EPA’s suggestion that capital improvement can be undertaken promptly.

Response 2 1 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 202 2 . A discussion of this is included in the preamble to the final rule. See section s X.A, V.A.3.g., VIII.B and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Comm enter s disagreed with EPA's suggestion that capital improvements are effective in meeting front

- loaded compliance requirements because they can be undertaken promptly. The
commenter s noted that their own experience indicates that efficiency improvements require a planning to execution period of nearly three years. The commenters said this is understandable when considering the enormous costs associated with power generation projects. Following approval, the commenters said each project must undergo New S ource Review permit screening and, if necessary, the permitting process. The commenters said this step is required even if the change is merely operational, as opposed to physical, and, by itself, will add months and may add years to a project timeline.

Comment 2 2 : Comment arguing that state and regional power redesign will require more time than allowed by compliance timeline.

Response 2 2 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section s V.A.3.g. and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the spec ific public comment:

Commenter s stated that EPA should recognize that such a coordinated state and regional power market redesign would be significantly complex and would require materially more time than the agency affords in the proposed compliance timeline.38 Comment 2 3 : Comments t hat based upon a NERC Reliability Study, the CPP and its ambitious implementation timeframe could inflict serious harm by jeopardizing reliability, and arguing that more time for CPP implementation may be needed to accommodate reliability enhancements.

Res ponse 2 3 : The EPA is finalizing this rule to include additional time for States and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022

. Additionally, the EPA will work in concert with these planners and other Federal agencies to review the plans prior to finalizing and make certain that reliability concerns such as those expressed by commenters here, are adequately addressed prior to plan approval. A discussion of this is included in sections V.A.3.g., VIII.B and VIII. G of the final rule preamble of the CPP and addresses the reliability concerns expressed by the commenter.

The following is a summary of the specific public comment:

Commenter s argued that EPA, through the CPP, takes an approach whereby it seeks to act in the energy industry without the requisite knowledge or understanding of the plan's far

- reaching impacts. The commenters referred to a study by NERC, entitled "Po tential Reliability Impacts of EPA's Clean Power Plan" (NERC Reliability Study) which expresses concern that the schedule proposed by EPA is too ambitious , stating that "[s]tate and regional plans must be approved by the EPA, which is anticipated to requir e up to one year, leaving as little as six months to two 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. Constructing the resource ad ditions, as well as the expected transmission enhancements, may represent a significant reliability challenge given the constrained time period for implementation. While the EPA provides flexibility for meeting compliance requirements within the proposed t ime frame, there appears to be less flexibility in providing reliability assurance beyond the compliance period ."1 According to the commenters, the NERC Reliability Study goes on to expound upon transmission development and construction, stating that "long lead times for transmission development and construction require long

- term system planning

-- typically a 10

- 15 year outlook."2 The commenters said the NERC Reliability Study highlights that the risks to reliability are legitimate. The commenters argued tha t the reliability of the electric grid cannot be compromised, as the health of this nation's economy and populous depends on the delivery of reliable energy. Based upon the NERC Reliability Study, the commenters said it appears that the CPP and its ambitio us implementation timeframe could inflict serious harm by jeopardizing reliability

.

Commenters argued that the lack of sufficient time to implement EPA's aggressive proposal may present a risk to reliable electricity service, and that essential reliability services may be strained by the proposed Clean Power Plan. The commenters stated that more time for Clean Power Plan implementation may be needed to accommodate reliability enhancements.

Without more time to implement the shift in energy resou rces needed to meet EPA's goals, Commenter s indicated significant risks to the reliability of the bulk power system could develop. The commenters noted that energy regulators have recently warned that EPA's proposal appears to require too much change to o fast to ensure the electric power system will remain sufficiently reliable. For example, the commenters noted that the North American Reliability Corporation (NERC) recently completed a study intended to "identify the reliability implications and39 potenti al consequences from the implementation of the proposed Clean Power Plan and its underlying assumptions." The commenters referred to the final report documenting the results of its study, in which NERC warns that the proposed Clean Power Plan could present a threat to reliability because it will not allow enough time to replace "essential reliability services" provided by fossil fuel

- fired generating units that renewable energy resources will need and do not provide. The commenters cited the executive summ ary of the final report, which explains:

• The anticipated changes in the resource mix and new dispatching protocols will require comprehensive reliability assessments to identify changes in power flows and [Essential Reliability Services]. [Essential Reliab ility Services] are the key services and characteristics that comprise the following basic reliability services needed to maintain [Bulk Power System] reliability: (1) load and resource balance; (2) voltage support; and (3) frequency support. New reliabili ty challenges may arise with the integration of generation resources that have different [Essential Reliability Services] characteristics than the units that are projected to retire. The changing resource mix introduces changes to operations and expected b ehaviors of the system; therefore, more transmission and new operating procedures may be needed to maintain reliability.

Commenter s noted that state 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. According to the commenter s , areas that experience a large shift in their resource mix are expected to require transmission enhancements to maintain reliability. The commenter s contended 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. While the EPA provides flexibility for meeting compliance r equirements within the proposed time frame, the commenter s said there appears to be less flexibility in providing reliability assurance beyond the compliance period.

The commenter s also referred to a study of EPA's proposal recently conducted by the Electr ic Reliability Council of Texas (ERCOT), which reached similar conclusions. Citing the recently released report, the commenter s said ERCOT estimates that EPA's proposed Clean Power Plan "could result in transmission reliability issues due to the loss of ge neration resources in and around major urban centers, and will strain ERCOT's ability to integrate new intermittent renewable generation resources." The commenter s quoted the following from ERCOT's report, which elaborates on these concerns:

• ERCOT's primar y concern 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. Sp ecifically, 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. There is a natural pace of change in grid resources due to advancing cost effective technologies and changing market conditions. This pace can be accelerated, but there is a limit to how fast this change can occur within acceptable reliability constraints.40 Accor ding to the commente rs, ERCOT later in the report explains further that the reliability risks presented by EPA's Clean Power Plan are attributable to the accelerated retirement of coal

- fired resources and the associated loss of "essential reliability services, including react ive power and voltage support, inertial support, frequency response, and ramping capability."

The commenters noted that NERC and ERCOT are not alone

-- similar concerns have been expressed by numerous other organizations with an interest and expertise in the reliability of the bulk power system, including the Western Electricity Coordinating Council (WECC) and numerous state and federal energy regulators. The commenters asked EPA to heed the warnings from NERC, ERCOT, and others by, at a minimum, revising the interim goal requirements to extend the time allowed for states and the industry to comply

.

Comment 2 4 : Comment citing the comments from Southwest Power Pool (SPP) in expressing concern with the timing proposed for compliance with the CPP

, stating that the timing proposed by EPA for implementation of the NOPR is infeasible and exacerbates its reliability and cost implications, and suggesting that the EPA should allow considerably more time in which electric utilities can meet the goals set in the C arbon Emission Guidelines, as this would protect electric consumers and the economy from harm caused by implementing guidelines that lack sufficient regard for their effects on reliability or cost.

Response 2 4 : As stated above, for several reasons, incl uding infrastructure needs, as well as timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the commenter s mention

, among others. See sections V.A.3.g., V.D, VIII.B, and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s’ cited the comments from Southwest Power Pool (SPP) in expressing concern with the timing proposed for compliance with the CPP :

• Within the SPP region, the timing associated with CPP compliance is prob lematic at best. Based on SPP's review of the proposed CPP, EPA has considered neither the cost nor the time required to plan and construct electric transmission facilities . In the SPP region, as much as eight and a half years to study, plan for and constr uct new transmission facilities has been required. Compliance with the proposed CPP is impossible due to the transmission expansion that will be required and the time it takes to complete the required transmission expansion

. In addition to more time bei ng needed to develop plans for and construction of necessary infrastructure, a "reliability safety valve", as suggested by the ISO/RTO Council prior to release of the proposed CPP, should be incorporated into the final rule. Such an approach would require that state plans include a process to evaluate electric system reliability issues resulting from implementation of the state plan and require mitigation when needed

.41 • Furthermore, while the proposed CPP provides states with significant flexibility for compliance, EPA has not provided state air quality and economic regulators with sufficient time to take advantage of this flexibility . As a consequence, SPP anticipates there will be few, if any, submitted compliance plans that reflect the regional nature of transmission planning, wholesale energy markets or, in the SPP region, transmission cost allocation. None of these issues are currently addressed on a state

- specific basis within SPP, but rather are addressed regionally in a transparent environment wher e state boundaries are not acknowledged since the grid crosses city, county and state boundaries.

Commenter s argued that the NOPR fails to adequately address the adverse effect of the rule on electricity reliability. According to the commenter s , an overarching concern was the NOPR's wholly unrealistic and arbitrary compliance deadlines. The commenter s noted that EPA would have one year to review and approve implementation plans for each State by June 2017. But, under this schedule, the commenter s noted that affected generating units would have less than three years to develop their respective compliance plans, including the siting and permitting, financing, and construction of any needed replacement capacity and/or transmission facilities

-- a time p eriod that the commenter s indicated flies in the face of all recent experience in this country. The commenter s stated that the construction timeline for a new transmission facility can be 5 to 15 years depending on the voltage class, location, and availabi lity of skilled construction

crews.
According to the commenter s, the timing proposed by EPA for implementation of the NOPR is infeasible and exacerbates its reliability and cost implications . The commenters stated that the NOPR would adopt an aggressive c ompliance schedule that would require States and affected EGUs to complete the lions' share of the required emission reductions within a few short years after the rule is finalized and State implementation plans are submitted to EPA. While EPA included a 1 0

- year interim compliance period and did not impose a final emission reduction target until 2030, the commenters noted that its so

- called glide path only applied to emissions reductions associated with renewable energy and demand

- side energy efficiency. In contrast, the commenters said the EPA projected that all emissions reductions associated with heat rate improvements at exiting coal

- fired EGUs and all redispatch from coal

- fired EGUs to NGCC turbines would be completed before the initial 2020 compliance deadline. Thus, the commenters contended that the NOPR did not call for a phased transition; rather, it would require nearly three quarters of the emissions reductions to occur in the next five years (i.e., by January 1, 2020).

The commenters concluded th at states and affected EGUs would have to take immediate action in planning for and implementation of the rule's mandated changes in view of the time lag required to modify generation and to plan, permit and construct related large scale infrastructure
pro jects such as additional transmission, especially in states with significant coal

- fired generating capacity. The commenters noted that recent experience with transmission projects shows that it is highly unlikely that a state could develop an implementatio n plan, obtain EPA approval, and plan for, design, site, permit and construct massive infrastructure projects in less than a decade. The commenters concluded that, even if EPA completes the rulemaking on schedule, it seems apparent that states would not be prepared to implement significant portions of their plans until 2025, or halfway through the interim compliance period.42 Commenter s contended that EPA did not even model transmission system impacts or consider transmission as a critical path for gett ing VERs deliverable to load. In this regard, SPP concluded: "Based on SPP's review of the proposed CPP, EPA has considered neither the cost nor the time required to plan and construct electric transmission facilities... Compliance with the proposed CPP is impossible due to the transmission expansion that will be required and the time it takes to complete the required transmission expansion." The commenters concurred with SPP's findings and believes that they equally apply on a nationwide basis.

Commente r s stated that, given the effect on existing coal facilities, it appears that additional generation and transmission resources will need to be constructed to achieve the goals proposed to take effect in 2020. The commenters questioned if the proposed guideli nes adequately considered the long timeline needed to study, plan, design, and obtain regulatory approval for new generation and transmission facilities. The commenters stated that the Southwest Power Pool, of which the three major transmission

- owning util ities in Nebraska are members, has indicated that there would be significant reliability issues that could not be addressed in the timeframe required by the Carbon Emission Guidelines. Although the process to construct wind generation facilities can be rel atively short, the commenters stated that is not the case with conventional, dispatchable generation facilities and significant transmission projects. The commenters noted that the SPP indicated that it may take 6 to 8 years to plan and construct large
tra nsmission projects, which would make the installation of transmission by the start date of the Carbon Emission Guidelines impossible, and potentially have a detrimental impact on reliability. The suggested that the EPA should allow considerably more time i n which electric utilities can meet the goals set in the Carbon Emission Guidelines, as this would protect electric consumers and the economy from harm caused by implementing guidelines that lack sufficient regard for their effects on reliability or cost.

Comment 2 5 : Comment that time is needed for additional transmission system planning studies and analysis to determine transmission constraints caused by generating station retirements.

Response 2 5 : As stated above, the EPA has extended the time allowe d for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See sections V. A.3.g., V.D and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s stated that time is needed for additional transmission system planning studies and analysis to determine transmission constraints caused by generating station retirements. The

commen ters pointed out that the bulk

- power system was planned around the delivery of energy from large central power stations to distribution stations through the bulk

- power system. According to the commenters, any retirements or significant changes in generatio n must be studied and well understood to determine the reliability impacts. If there are significant reliability impacts, such as the creation of a new transmission constraint as the result of the retirement of a unit, the commenters indicated that transmi ssion reinforcements or expansion may be necessary. According to the commenters, the time to identify an issue through transmission planning studies and develop a solution could take up to two years, but the commenters said it is not the most43 significant t ime constraint. The commenters contended that the time to permit, finance, and actually build a new transmission line can take significantly longer to complete. The commenters noted that permitting alone can take 10 years or more. Thus, the commenters a rgued that EPA needs to allow more time for implementation to allow a more orderly transition from fossil

- fired units to minimize transmission system constraints and other reliability impacts on the bulk

- power system

.

Comment 2 6 : Comment s inquiring abo ut compliance deadline extensions in exchange for lower final state goal, and stating that because compliance with E PA's carbon limits cannot be achieved in the CPP's timeframe, the limits should be relaxed, the compliance deadline extended, or both.

Response 2 6 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See section VIII.B of the final rule preamble of the CPP for EPA’s response to this comment. We are not finalizing the alternate final goals representing emission performance that would be achievable by 2025 , so comments on this topic are moot.

The following is a summary of the specific public comment:

Commenter s inquired about compliance deadline extensions in exchange for lower final state goal. The commenters advocated for Clean Power Plan revisions that provide states with compliance timing flexibility to accommodate resources that produce greater long

- term reductions. In effect, the commenters requested that the final rule enable state plans to adopt credible emission goals that are lower than the 2030, but require an implementation period that may run beyond 2030 due to the nature of the resource mix relied upon. The commenters stated for example, longer lead times associated with state plans that involve implementation of dispatchable, carbon

- free resources such as traditional nuclear and small modular reactor (SMR) should be accommodated. The commenters st ated that often these carbon

- free technologies may be more advantageous long

- term than NGCC, which may be the default technology necessary to meet 2030 goals. The commenters stated that in an instance in which a state plan contemplates a longer implementat ion period such extended compliance timing can be accompanied with more aggressive final emission goals

.

Commenter s stated that because compliance with EPA's carbon limits cannot be achieved in the CPP's timeframe, the limits should be relaxed, th e compliance deadline extended, or both.

The commenters stated that the carbon reduction goals EPA would establish for Arkansas are unrealistic and unachievable in the timeframe of the CPP. The commenters stated that efforts to meet the aggressive goals p roposed for Arkansas within the accelerated timeframe of the CPP would cause economic dislocation across a large part of the Southeast (e.g., if meeting the goals necessitated premature retirement of Plum Point, the harm would be in Arkansas and in other

s tates where the plant's co

- owners and off

- takers do business

- namely, Mississippi, Missouri, Texas, Kansas and Oklahoma).44 The commenters stressed that the issues are not merely problems of compliance that may be considered at a later stage of EPA's delibe rations, but rather, are issues concerning whether EPA's BSER modeling accounted for real

- world impediments that impact the timeframe for compliance. The commenters stated that no amount of "flexibility" will make possible the attainment of unattainable go als.

The commenters urged the EPA to recognize that its BSER modeling does not fully or properly reflect the many practical, economic and social factors that limit the ability of any state to reduce its carbon emissions in a relatively compressed period o f time. The commenters stated that the EPA should modify its BSER modeling so that the goals established for Arkansas and other states give effect to the real

- world limitations on achievable carbon emission reductions . The commenters also urged the EPA to recognize that the drastic reductions proposed for Arkan sas cannot be achieved in the narrow timeframe the CPP would impose . The commenters stated that those deadlines should be relaxed so that the necessary infrastructure build

- out can keep pace with the mandated schedule of emissions reductions . The commenters stated that a more extended phase

- in of the limits would mitigate the economic impacts of such significant emissions reductions to some degree

. Commenters requested that the following option ( s ) (among others) be implemented to improve the workability of the proposed guideline rule and to provide additional compliance flexibility to meet the emission targets established in the proposal:

• EPA should eliminate the interim target and allow states mor e flexibility on the glide

path demonstration to meet their interim and final targets, particularly if a state has new

non

- emitting generation under construction or in development. There is a need for a compliance mechanism for the glide path or final targ et which accommodates for longer installation times of low

- or non

- emitting generation.

• EPA should grant additional flexibility by allowing states the option to select compliance with the alternative 2025 target.

• EPA should allow state plans to provide credit for unit efficiency improvements, including nuclear uprates, made prior to 2012 and allow for "early action" credit for emission reductions achieved prior to 2020.

Comment 2 7 : Comments stating that compli ance schedule is too aggressive and does not allow adequate time for States and affected EGUs to achieve heat rate improvements and work in concert with States, ISOs, and RTOs, arguing that the implementation of the EPA's compliance tools, including heat

- r ate improvements and redispatch, is unrealistic and requires more time than is allowed under the proposed rule, and favoring phase

- in of Block 1.

Response 2 7 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The final rule includes this additional time and flexibility to States in constructing their plans to manage the complexities that commenter s mention, among others. See s ections V.A.3.g., V.D and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.45 The following is a summ ary of the specific public comment:

Commenter s stated that the proposed rule is causing irreparable harm to affected EGUs . The commenters noted that EPA proposed to adopt an aggressive compliance schedule that will require States and affected EGUs to complete the lions' share of the required emission reductions within a few short years after the rule is finalized and Sta te implementation plans are submitted to EPA. The commenters contended that while EPA includes a 10

- year interim compliance period and does not impose a final emission reduction target until 2030, this so

- called glide path only applies to emission reductio ns associated with renewable energy and demand

- side energy efficiency. In contrast, the commenters stated that EPA projects that all emission reductions associated with heat rate improvements at existing coal

- fired EGUs and all re

- dispatch from coal

- fired EGUs to NGCC turbines will be completed before the initial 2020 compliance deadline. The commenters noted that what might appear on the surface to be a smooth transition over time actually resembles a cliff, as nearly two

- thirds of the emission reductions required by EPA must occur in the next 5 years (i.e., by January 1, 2020).

The commenters noted that States and affected EGUs will have to take immediate action to implement the proposed rule if States are to achieve EPA's projected emission reduction tar gets and fully implement Building Blocks 1 and 2 by the initial January 1, 2020 compliance date. As an initial matter, the commenters noted that the heat rate improvements contemplated by EPA cannot be implemented overnight . The commenters noted that these projects require careful planning and may require affected coal

- fired EGUs to be offline for a significant period of time to make the necessary operational changes. The commenters stated that for larger utilities and for States with significant coal

- fired generating capacity, there are significant logistical concerns associated with implementing heat rate improvements on such a large scale, and, as NERC asserts, the outcome may be earlier retirements of coal

- fired EGUs than EPA assumes, "which creates addi tional uncertainty in future generation resources." NERC Report at 8. The commenters noted that to ensure grid reliability, heat rate improvements will have to be staggered over time so that sufficient generating capacity remains online to meet consumer de mand. In addition, the commenters stated that bottlenecks may occur if facilities seeking to implement heat rate improvements exceed the supply of labor and materials needed to install those improvements. The commenters stated that to ensure that all affec ted coal

- fired EGUs can make the necessary changes by 2020, utilities

- working in concert with States, ISOs, and RTOs

- will have to begin planning and implementing these changes immediately upon finalization of the rule.

The commenters stated immediat e action will be needed to implement Building Block 2. According to the commenters, in some markets, significant infrastructure improvements will be necessary to ensure that existing NGCC facilities can reliably run at a 70% capacity factor and provide ele ctricity to the consumers who demand it. The commenters stated new pipeline infrastructure will be necessary in some cases to ensure that there are sufficient supplies of natural gas to meet demand. The commenters stated NGCC facilities depend on real

- time delivery of natural gas, and existing pipeline capacity may not be able to accommodate an increase in capacity to 70%, particularly on a seasonal basis when demand for natural gas is strong in other sectors. Likewise, the commenters stated existing NGCC f acilities are rarely co

located with the coal

- fired EGUs whose generation they will replace. As a result, the commenters stated that in some cases additional transmission lines will be necessary to ensure46 that these facilities can transmit electricity to t he consumers currently served by coal

- fired EGUs. The commenters stated that such large

- scale infrastructure projects routinely take 5 or more years to complete, so States and affected EGUs will need to begin implementing these changes as soon as EPA final izes the rule to meet a 2020 compliance deadline

.
The commenters stated that utilities with coal

- fired EGUs will face immediate questions regarding the retirement of existing facilities in the face of an EPA

- mandated reduction in demand for coal generat ion. The commenters stated that EPA projects that, in addition to the coal

- fired EGU retirements expected in response to existing environmental regulations such as MATS, as many as 49 GW of coal generating capacity

- representing 19% of the current coal
ge neration fleet

- will be retired as a result of this proposal. To meet EPA's emission reduction targets, the commenters stated that these retirements must occur by 2020

- not by 2030 when the interim compliance period ends. The commenters stated that even if utilities had plans to retire some of their generating capacity, this rule will accelerate the retirement schedule and increase the costs associated with the transition from existing coal

- fired EGU capacity to other sources of electricity. According to the commenters, for facilities scheduled for retirement over a longer time scale and facilities that were not projected to be retired at all, there will be a significant cost in the form of stranded assets as these facilities will be retired before the end of their remaining useful lives . The commenters stated that the costs will likely be exacerbated for facilities that have only recently spent millions of dollars to comply with MATS and other EPA regulations

. The commenters stated that these utilities wil l suffer significant economic harm if they cannot recoup their investments before being forced to retire their coal

- fired EGUs.

C ommenter s indicated that this problem is particularly acute with respect to the interim compliance period (2020

- 2029), which may begin within a year of an approved plan. According to the commenter s , the proposed rule does not adequately address the time needed to f acilitate new power generation, including natural gas, nuclear, and/or renewable power generation, nor does it address additional costs necessitated by the abrupt implementation schedule. The
commenter s also noted that the proposal also does not comport wi th the time required for state legislative and regulatory processes, in addition to the time required to comply with other federal regulations. Taken together, the commenter s concluded that these constraints make the time allowed for installing new technol ogy, equipment and infrastructure unrealistic. The commenter s also noted that there is not sufficient time to make the efficiency improvements envisioned under Building Block One. The commenter s noted that turbine upgrades are major undertakings requiring significant lead time. Based on the current time needed to site, permit and modify power plants, the commenter s argued that EPA's timelines for heat

- rate improvements are unreasonable. Regarding Building Block Two, the commenter s noted that the proposed ru le assumes that most of the reductions in carbon dioxide emissions from redispatch can be realized by 2020.

The commenter s contended that the EPA's assumptions regarding the gains achievable through redispatch are questionable, making this timeline for re dispatch unrealistic. Specifically, t he commenters indicated EPA has not adequately analyzed the technical or legal requirements of large

- scale redispatch, nor has it addressed the infrastructure required to support the increased fuel requirements. The com menters concluded that the time needed to site, permit and build the infrastructure and power plant projects suggested by the proposed rule far exceeds the EPA's proposed timelines.47 Commenter s suggested that EPA allow Wyoming to assess measurable hea t rate improvements available to the plants in the Wyoming fleet and then to develop a composite compliance goal. The commenters noted that the state could designate the measurement period for each unit at each plant. The commenters contended that maintain ing flexibility in timing the measurement of best effort is a practical necessity. As an example, the commenters noted that the turbines at Laramie River Station were replaced before those at Jim Bridger, which means that the benefits of turbine replacemen t at the two plants will be on a different cycle. The commenters said a broad window should also be available to accommodate existing overhaul schedules, which tend to avoid making more than one unit unavailable at a time, and to accommodate compliance wit h environmental upgrades.

In response to a request for comment in the Notice of Data Availability (NODA) of October 27, 2014, the commenters considered a phase

- in of Block 1 to be essential . In plants with multiple units, the commenters indicated the cumu lative stress to the grid may be unmanageable if all units are taken off line at once, particularly if plants at different locations are attempting to comply at the same time (the commenters provided a more detailed discussion of the application of the num erous Sargent & Lundy technologies to Wyoming EGUs in their comment). The commenters further indicated that utilities may not have the managerial capacity to take on multiple upgrades and complex environmental compliance projects at the same time. Nonethel ess, the commenters did not claim to have a regional or national perspective that would allow them to advise EPA on the duration or design of a phase

- in period.

Comment 2 8 : Comment that the CPP timeline, with the interim compliance period beginning in 2020, provides no flexibility to states on the timing for implementation of Building Blocks 1 and 2.

Response 2 8 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The final rule includes this additional time and flexibility to States in constructing their plans to manage the complexities that commenter s mention, among others. See section s V.A.3.g. and VIII.B of the final rul e preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s argued that the EPA and states have considerable discretion in setting appropriate compliance deadlines for meeting the CO2 performance standards that states must establish under section 111(d) of the CAA. The commenter s noted that the statute does not pr escribe any specific deadline for compliance with applicable performance standards. Similarly, the
commenter s noted that the Agency's implementing regulations do not impose any specific compliance deadline.

According to the commenter s , the timeline the EP A has proposed, with the interim compliance period beginning in 2020, provides no flexibility to states on the timing for implementation of Building Blocks 1 and 2. The commenter s stated that this inflexibility creates very significant and likely insurmoun table challenges for many states that face very substantial CO2 emissions48 reduction requirements in 2020 due to the EPA's assumption that Building Blocks 1 and 2 are fully implemented by 2020.

The commenter s stated that, if the EPA continues to pursue the overreaching policy reflected in its Proposed Guidelines, in order to correct the many problems that will be caused by the interim compliance period and ensure sufficient flexibility for the implementation of the stringent reduction obligations the EPA has proposed for 2030, the EPA should eliminate the interim compliance period and instead only require states to achieve their final emission rate goals in 2030. Under this approach, the commenter s indicated each state would have the responsibility of develop ing its own glide path for the expeditious implementation of the measures necessary for achieving its final goal by 2030. In so doing, the commenter s indicated that the state would be able not only to determine which actions and measures to pursue to reduc e emission rates, but also to choose a reasonable schedule for implementing those measures consistent with reliability needs, infrastructure development, and least

- cost planning to provide affordable power to customers. The commenter s indicated that there would be no requirement that states achieve any particular target prior to 2030.

According to the commenter s , such an approach is generally consistent with the statutory language of section 111(d), which gives the states the primary responsibility for d eveloping a plan for the establishment and implementation of the performance standards applicable to affected existing sources. The commenter s further noted that the statute does not impose any specific time frame for the implementation of performance leve ls set by the federal guidelines. The commenter s argued that this silence clearly gives the EPA the discretion to allow states to achieve their state

- specific emission goals based on various factors enumerated in section 111, including costs, energy requir ements and the remaining useful life of existing source.

Comment 29 : Comment recommending that EPA consider undertaking a round of focused discussions with states and stakeholders before finalizing its emissions targets to ensure it has appropriately a pplied its assumptions to the on

- the

- ground realities in each state.

Response 29 : The EPA is finalizing this rule with additional time and options that provide states flexibility in assembling their plans through the use of emission rate plans, energy effi ciency plans, or as part of a larger regional plan. This more local planning effort affords utilities opportunity to interact with states and provide input to plans based on local concerns and generation needs, thus allowing for specifics in plans that wo uld otherwise be generalized were the EPA to try and consolidate all stakeholder needs into a rule package. In this view, adding another layer of communication complexity into the rule making process may provide for less effective rulemaking and longer ru lemaking delays. BSER concerns are discussed in sections V.A., V.C. and V.D of the final rule preamble of the CPP . A discussion on state and regional planning options can be found in sections VIII.C, VIII.D., VIII.G and VIII. I of the final rule preamble

. The following is a summary of the specific public comment:49 Given the importance of adopting an achievable target using the BSER, and the many adjustments the commenters ha ve suggested to EPA's BSER assumptions, commenter s recommended that EPA consider undertaking a round of focused discussions with states and stakeholders before finalizing its emissions targets to ensure it has appropriately applied its assumptions to the on

- the

- ground realities in each state. The commenters stated that these s tate

specific negotiations, while not mandated by the Clean Air Act or the Administrative Procedures Act, would nevertheless provide significant benefits to EPA, states, and utility stakeholders. According to the commenters, EPA would benefit from a better understanding of the individual constraints facing each state, while giving state officials an opportunity to ask questions about compliance options. The commenters indicated that utilities would benefit from this additional layer of process because they could be given a more formal seat at the discussion table

-- the commenters noted that CAA section 111(d) does not contemplate a role for utilities despite being, in many ways, the real party in interest. The commenters understood the importance of adhering to a timeline in order to complete the final rule during the President's term in office. However, the commenters believe it is equally, if not more important to get these targets right. According to the commenters, an additional layer of process would prov ide guidance and certainty to states with regard to the achievability of their targets using the BSER and, through direct consultation with EPA officials, the available options for compliance with non

- BSER

measures.

Comment 3 0 : Comments that it is in appro priate to require that the Building Block 2 redispatch be fully implemented by 2020, that the EPA should allow the states to determine how quickly Building Block 2 may be phased in, and disagreeing with EPA's assertion that pipeline capacity can be ad ded t o enable the large

- scale fuel switching called for under Block 2.

Response 3 0 : For several reasons, including timing needs for infrastructure development such as the commenter s mention, the EPA has extended the time allowed for States to finalize their pla ns and has moved the start of the interim period from 2020 to 2022 . Also, t he EPA is finalizing this rule with additional time and options that provide states flexibility in assembling their plans through the use of emission rat e plans, energy efficiency plans, or as part of a larger regional plan. See sections V.A.3.g., V.D and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s argued that the EPA has not shown that Building Block 2 has been adequately demonstrated or is achievable. According to the commenters, the EPA proposed to find that it is achievable for affected EGUs in each state to shift generation from existing co al

- and oil/gas

fired steam EGUs to existing NGCC units until those NGCC units reach a statewide maximum capacity factor of 70 percent (or 65 percent under the 79 Fed. Reg. at 34,928 alternate goals EPA solicits comment on). The commenters noted that EPA b ased this conclusion on its observation that of 464 NGCC plants it identified with generation data in 2012, 10 percent had a capacity factor of 70 percent or greater. According to the commenters, using a different set of data, the EPA also observed that so me units are capable of operating at greater than 70 percent capacity factor on a seasonal basis, with 16 percent and 19 percent of units operating at or above that level50 in the 2012 winter and summer seasons, respectively. Relying on this data, the commen ters noted that EPA "assumed that 70% was a reasonable fleet

- wide ceiling for each state" on an annual average basis.

The commenters argued that EPA's conclusion is not supported by its own analysis, which failed to demonstrate that the 70 percent targ et for Building Block 2 redispatch is achievable by all affected NGCC units in the source category by 2020, the year the EPA assumes in its state goal calculations that all existing and under construction NGCC units begin operating at a 70 percent annual c apacity factor. According to the commenters, the EPA's Building Block 2 analysis is insufficient because it fails to account for factors that can limit the ability of EGU owners to increase utilization of their NGCC units. As an example, the commenters poi nted out that some units are unable to increase generation to any level approaching 70 percent due to technical limitations, permit limits, or gas and transmission infrastructure constraints. The commenters further noted that other NGCC units will not be a ble to generate sufficient amounts above 70 percent to make up for these lower

- utilization units. According to the commenters, the fact that the EPA states that its proposed guidelines do not require that all affected NGCC units operate at a 70 percent cap acity factor is irrelevant. The commenters contended that, because the across

the

- board 70 percent capacity factor assumption is part of the EPA's proposed BSER determination, the Agency must show that it has in fact been adequately demonstrated. The EPA

a nalysis fails to do this.

The commenters argued that EPA's assumption that each state's entire fleet of existing NGCC units can match the operational level of the top 10 percent of units across the country is arbitrary and unsupported by fact. The commente rs stated that EPA did not undertake any assessment of the differences between high

- and low

- capacity factor NGCC units that may have led a small subset of those units to operate above a 70 percent capacity factor in 2012. According to the commenters, the Agency acknowledged that units operating above 70 percent on an annual basis were "largely dispatched to provide base load power," and that units operating above 70 percent on a seasonal basis typically "were idled or operated at lower capacity factors' d uring periods of lower demand. However, the commenters stated that the EPA did not examine whether the NGCC units providing base load power have different characteristics from the other existing NGCC units that were assumed to be capable of operating at a 70 percent capacity factor in the EPA's Building Block 2 application, or whether units that were idled during periods of relatively low demand did so because of economic, technical, or regulatory constraints on their operations. The commenters noted that t he EPA instead assumed that all NGCC units are identical. According to the commenters, the EPA has failed to establish that the 10 percent of existing NGCC units operating at 70 percent capacity factor or higher in 2012 are representative of the remainder of NGCC units in the source category.

Commenter s noted that, in reality, many existing NGCC units face constraints that will prevent them from increasing their utilization to a 70 percent capacity factor. According to the commenters, some units may be l ocated in areas that are designated as in non

- attainment for a NAAQS, and as a result could have operating permits imposing mass limits on carbon monoxide ("CO") or NOx emissions that would effectively establish a cap on those units' operations. The

commen ters noted that other units were designed and maintained for the specific purpose of operating in cycling duty rather than as base load. According to the commenters, many of these units would not be able to achieve the target utilization rate without signi ficant upgrades and51 testing to ensure that they are technically capable of operating near full load on a continuous annual basis. In addition, the commenters indicated that their permitted emission limits may not allow them to operate at a 70 percent capac ity factor. The commenters further noted that, for many existing NGCC units, there is simply insufficient pipeline natural gas availability, or transmission infrastructure to permit operating year

- round at a 70 percent capacity factor.

According to the commenters, the EPA did not acknowledge or adequately address the constraints preventing existing EGUs from operating at a 70 percent or higher capacity factor. The commenters stated that the EPA completely ignored potential permit limits on NGCC unit oper ation and dismissed infrastructure concerns. The commenters argued that the Agency's primary response

-- that the allowance for "emission rate averaging across multiple units" within a state in the proposed emission guidelines

-- does not demonstrate that a 70 percent overall capacity factor is achievable. According to the commenters, the EPA has made no attempt to determine whether each state will have a sufficient number of existing NGCC units that are able to generate sufficient electricity above a 70 percen t capacity factor to make up for units that are not able to approach this level.

The commenters noted that EPA also pointed to historic trends in an attempt to justify its assumption that sufficient infrastructure already exists to support Building Block 2

. As an example, the commenters referred to the Agency's statement that NGCC generation increased by 22 percent between 2011 and 2012, supposedly demonstrating that existing natural gas infrastructure can accommodate rapid increases in existing NGCC utiliz ation. According to the commenters, the EPA failed to note that even after this expansion

-- which was largely a function of historically low natural gas prices in 2012

-- over half of the existing NGCC units that EPA examined still operated at a capacity fact or below 50 percent, presumably due to the kinds of constraints the EPA ignores. In addition, the commenters noted that EPA relied on trends in hourly capacity factor to claim that a 70 percent capacity factor is an achievable goal. According to the commen ters, the EPA indicated that nationwide NGCC capacity factor during peak hours of the day averages 11 percentage points higher than the overall annual average, suggesting that the current system is able to support national average capacity factors "in the mid to high 50's for NGCC for peak" (i.e., 11 percentage points higher than the 2012 national average capacity factor of 45.8 percent). The commenters noted that EPA did not explain, however, why it believed it was reasonable to expect that the current sys tem could accommodate an additional 10

- 15 percentage points in order to reach a 70 percent average capacity factor over all hours of the day.

Commenter s argued that EPA's effort to convert these load following or peaking facilities into base load EGUs a lso ignored the obvious question of which units will then become the load following and peaking units, both of which are required to effectively operate the electric generation system. The commenters indicated that each resource has its strengths and weakn esses and is best suited to a specific role in the system of EGUs. The commenters noted that existing coal units cannot be converted into load following or peaking units.

According to the commenters, many NGCC units might be able to increase capacity facto rs, while coal unit capacity factors decrease, but then it becomes unclear which units are then dispatched to provide the power when these NGCC units have hit their limits. If NGCC units become base load units, the commenters pointed out that utilities wil l likely need to build even
more gas

- fired units to operate as load following and peaking units, especially with the increase52 in RE generation contemplated by Building Block 3, but the commenters indicated that building these new units will take time, requ ire approvals, and will put additional strains on the gas supply, pipeline infrastructure, and electric transmission grid. The commenters stated that EPA did not address these issues.

Finally, the commenters argued that EPA failed to adequately consider the time it takes to build the additional natural gas infrastructure necessary to support the 70 percent NGCC capacity factor target in its BSER determination. According to the propos ed schedule, the commenters noted that EPA will be approving, or disapproving, state plans between mid

- 2017 and mid

- 2019. The commenters noted that compliance with the proposed interim goals begins in 2020. Presuming a state plan is approved, the commenter s indicated that there will be one to three years to come into compliance with the state plans. According to the commenters, the Energy Information Administration (EIA) estimates that an interstate natural gas pipeline takes approximately three years to co mplete between announcement and completion. The commenters said there may be additional time necessary to identify the need for additional pipeline and other prior planning actions by the pipeline operator. In individual circumstances, due to localized sit ing and permitting issues, construction may take even longer. The commenters contended that the EPA had not considered the inadequate time their plan allows for the build

- out of additional natural gas pipeline infrastructure when establishing a 70 perce nt capacity factor in Building Block 2.

In summary, commenter s stated that EPA failed to demonstrate that its Building Block 2 target of redispatching generation from existing coal

- and oil/gas

- fired steam EGUs to existing NGCC units up to an overall NGCC capacity factor of 70 percent for every unit by 2020 is adequately demonstrated or achievable . According to the commenters, the Agency also failed to assess whether the subset of NGCC units operating at or above a 70 percent capacity factor in 201 2 is representative of the remainder of existing NGCC units, and that it did not properly address economic, technical, regulatory, or infrastructure constraints preventing some units from operating at the target level. In addition, the commenters stated th at EPA failed to consider the need for additional natural gas pipeline infrastructure to support an overall NGCC capacity factor of 70 percent beginning in 2020.

The commenters noted that the EPA, in its October 30, 2014 NODA, suggested that a way to

re duce the negative consequences of requiring an interim goal would be to phase

- in Building Block 2 over time rather than assuming full redispatch by 2020. The commenter s strongly believe it is inappropriate to require that the Building Block 2 redispatch be fully implemented by 2020. To address this problem, the commenters recommended that the EPA allow the states to determine how quickly Building Block 2 may be phased in.

Commenter s disagreed with EPA's assertion that pipeline capacity can be added to enable the large

- scale fuel switching called for under Block 2 , that "over a longer time period, much more significant pipeline expansion is possible." The commenters argued that EPA's analysis failed to examine whether this significant expansion can happ en by 2020 or even 2030, given the impediments the pipeline industry faces in expanding pipelines, including the time necessary to site, permit, and construct pipelines. The commenters noted that very similar issues exist for the build out of transmission lines. In the commenters' experience, the timeline for placing new transmission projects in service

-- from the planning stage through certification and routing, right53 of way acquisition, procurement, engineering and construction

-- can take five to seven year s. The commenters noted that several states also have a significant fraction of their existing NGCC fleet located in regions where there is not adequate transmission to move the electricity to where it will be needed to replace generation from the reduced utilization of the state's coal

- fired units. According to the commenters, building out the transmission grid is a very lengthy, costly effort, and the proposed rule presumes Building Block 2 can be implemented at the outset of the compliance program.

Comment 3 1 : Comment explaining that construction of new NGCC units could be delayed due to the presence of ozone nonattainment areas in the state, and suggesting that EPA adjust the time frames for submitting state plans and compliance periods in consideration of the forthcoming revised ozone standards

. Response 3 1 : For several reasons, including timing needs for infrastructure development such as the commenters mention, the EPA has exten ded the time allowed for States to finalize their plans

an d has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the commenter s mention, among others. See section X.C of the final rule preamble of the CPP for EPA’s re sponse to this comment.

The following is a summary of the specific public comment:

Commenter s stated that a significant complication to accelerated construction of new NGCC units is the presence of nonattainment areas within a state . The commenters noted that Maricopa County and portions of Pinal County do not meet the current ozone standard of 75 parts per billion (ppb). The commenters noted that the EPA will soon be making revisions to the National Ambient Air Quality Standards (NA AQS) for ozone, and should it be reduced much of the state could transition to nonattainment status. The commenters stated that the project developer would need to obtain emissions offsets (which are not readily available) to construct a source in a
nonatt ainment area. The commenters stated that projects are often delayed to allow for development of needed offsets through other air quality control projects

.

The commenter s noted that many EGUs, including those affected by the proposed CPP, will have new compliance burdens for ozone precursors (NOx and VOCs) once the revised NAAQS for ozone are final. The commenter s indicated that integrated planning for the CPP and SIPs for new ozone standards will be very difficult. The commenter s stated that strategies that work for ozone may conflict with those that work for the CPP (and vice versa). The commenter s noted that revised ozone standards and the CPP would lead to increased reg ulatory costs and additional permitting burdens for industry, as well as increasing the resources required by air agencies for planning. The commenter s suggested that EPA consider parallel rulemaking to allow states to integrate requirements for affected f acilities in both state plans under CAA section 111(d) and SIPs for ozone nonattainment areas.

Comment 3 2 : Comments discussing the timing of emission reductions required in Arizona, specifically: the CPP does not allow sufficient time for implementation in Arizona; and that54 Arizona faces daunting, time

- consuming, extensive and expensive eva luation, siting and
p ermitting processes.

Response 3 2 : For several reasons, including infrastructure needs, capacity and reliability

concerns , and timing and planning concerns such as the commenter s mention , the EPA has extended the time allowed for States to finalize their p lans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the
commenter s mention, a mong others. See sections V.A.3.g., V.D, VIII.B, VIII. G , and X.A of the final rule preamble of the CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the proposed rule will undermine the provision of reliable electric service in Arizona. The commenters stated Arizona utilities would need to construct or acquire other non

- coal resources in order to reliably serve their loads. Based upon an analysis completed by the Arizona utilities, the commented stated that Arizona utilities woul d need to acquire over 2,000 MW of additional generation capacity at a cost of over $2 billion by 2020 to meet their firm load obligations if they stopped use of all coal units. The commenters stated that the fuel and purchase power costs would increase by over $17 billion through 2030. The commenters stated that while the Arizona utilities might be able to meet some of these needs through acquisitions or power purchase agreements with existing NGCC generators, not all of these needs can be met without new capacity being built. However, the commenters stated that the ability to develop sufficient new capacity by 2020 is not possible. According to the commenters, given that a state will not know until 2017, at the earliest, if its plan is approved, there w ill not be adequate time to develop, site and construct new generation, electric transmission and associated gas pipelines if the new generation is gas fired. The commenters stated that NERC acknowledged these same concerns in its November 2014 Report when it concluded that more time would be necessary to implement the Proposed Carbon Rule to accommodate reliability enhancements, pointing out that areas that experience a large shift in resource mix are expected to require electric transmission enhancements to maintain reliability.

The commenters also stated that there may also be significant transmission reliability issues that will need to be addressed if all, or even substantial amounts, of Arizona's coal generation must be shut down. The commenters noted that a recent study completed by the Southwest Area Transmission ("SWAT") Sub

- regional Planning Group (attached as Exhibit 11 to comment 23479) evaluated different levels of coal shutdowns under different resource replacement scenarios in 2019 for the Ari zona

- New Mexico

- Southern Nevada footprint. The commenter s stated that this analysis found that, under a scenario in which about 4,800 MW of coal generation was shut down and replaced with about 3,900 MW of renewable resources and 900 MW of reduced flow to California, there was inadequate inertia and dynamic reactive capability, leading to instability in the electric system under certain contingencies. The commenter s stated that this was a preliminary "book ends" study, and the only conclusion that can reall y be made is that there could be potential problems that will need to be addressed, and that more detailed study is needed. According to the commenter s , a broader geographic area should be considered in order to identify impacts on the broader Western Inte rconnection.55 The commenter s noted that since 2000, the Arizona Corporation Commission ( ACC) has completed Biennial Transmission Assessments ("BTA") for the Arizona Transmission System in accordance with A.R.S. Section 40

- 360.02.G. The commenter s noted that the purpose of the BTA is to ensure the adequacy of the existing and planned transmission facilities in Arizona to meet the present and future electrical energy needs in a reliable manner. The commenter s stated that the BTA is completed based upon 10

- year transmission plans filed annually in accordance with A.R.S Section 40

- 360.02.A by any entity anticipating the construction of transmission within the next 10 years in Arizona. In addition, the commenter s stated that the BTA contains specific studies such as the Ten Year Snapshot and Extreme Contingency Analysis, both of which look at the aggregate impact of all planned transmission. The commenter s noted that over the years, BTAs have also directed the Arizona utilities to perform additional studies to addr ess concerns raised in the BTA process. For example, the commenters noted that the ACC has requested assessments of transmission that would enhance the access to renewable resources. The commenters explained that in the most recent BTA approved in October 2014, the utilities were directed to assess the potential impact on the reliability of the electric system in Arizona of a significant reduction in coal generation. However, the commenters stressed that issues of this magnitude take time to examine and res olve.

The commenters stated that Arizona, along with other western states, has worked to create a reliable, flexible grid that will be impacted, possibly severely, by a shift in the planned resource mix and location that is anticipated as a result of th e Proposed Carbon Rule. The commenters stated that more time is necessary to further study the impacts of these possible changes.

The commenters explained that the electric system is an interconnected grid and reliability issues in one state can have impac ts that reach well beyond its borders. The commenters provided for example, the impact on system stability and dynamic reactive capacity of retiring large amounts of coal could impact the entire Western Interconnect as demonstrated in the SWAT study discus sed above. The commenters concluded that setting state goals that require shutting down coal by 2020 does not allow adequate time for system planning and implementation of the necessary changes that would be required to correct identified issues.

Commenter s stated that the timing of the application of Building Block 2 should be moved beyond 2020 to allow adequate time and flexibility for states to use all of the building blocks to comply with the end goal in 2030 . By applying Building Block 2 fully in 20 20, the commenters argued that the EPA has not reflected the remaining useful life of coal units, allowed time for replacement resources, or allowed adequate time for the development and construction of such transmission, or for natural gas pipelines, whic h can take 5 or more years to develop, permit and construct. The commenters stated that electric transmission system upgrades would be required if increased generation from the existing NGCC plants located west of the load pockets in Arizona are relied upo n as compliance options.

Commenter s stated that despite the EPA's insistence that the renewable energy and energy efficiency targets used to set the interim and final state goals for the states provide "flexibility," the magnitude and timing of that "fl exibility" for Arizona is wholly insufficient to compensate for the massive and immediate changes c alled for under BB2 . The commenters explained that due to energy market circumstances completely unrelated to greenhouse gas emissions or climate change, Ari zona has a large amount of NGCC generation capacity (9,856 MW). The commenters56 stated that the supposed availability of those plants apparently convinced the EPA that all affected coal

- fired power plants in Arizona can be replaced by NGCC by 2020. The comm enters presented a chart showing that Arizona would be required to achieve 90 percent of its total emission rate reduction less than 3 years after the approval of its state plan (assuming the plan is submitted and approved by June 2017).

In addition to the expense related to increasing the infrastructure necessary to support the increased demand and use of NGCC, the commenter s argued that the process for infrastructure improvements is going to include time

- consuming siting and permitting processes fo r pipeline, storage, and other midstream natural gas infrastructure . The commenters stated that modifying the electric transmission infrastructure is a complex, costly, time

- consuming process that will require the cooperation of state and federal agenci es, electric utilities, tribes, the general public, and private landowners. According to the commenters, EPA has not provided guidance for grid updates and infrastructure support, necessary for states to begin such a daunting, time

consuming, extensive, an d expensive process.

The commenters indicated that Arizona faces an extensive planning and review process and will likely face NGCC resource allocation problems. Due to the inflexibility of the 2020 interim goal, the expected problems associated with ra mpi ng up energy efficiency, and the approval states will need to implement the State Plans, the com menter s said Arizona anticipates and expects that this will create complications regarding an uninterruptable supply of natural gas and pipelines and storage sufficient enough to allow available NGCC units to bridge the difference in the electric generating capacity. To further demonstrate this concern, the commenters noted that the Salt River Project (SRP) completed an analysis demonstrating that this extra c apacity does not exist during Arizona's peak summer months. According to the commenters, SRP additionally determined that Arizona has little to no control over how NGCC units are dispatched, as most of Arizona's merchant plant generators have contracts wit h in

- state and out

- of

- state entities; therefore, a combination of all merchant NGCC generation and the existing baseload coal

- fired units will be necessary to meet electric demand in the state and ensure reliability. The commenters further noted that Arizo na faces additional problems in a timeline for implementing new NGCC capacity, as siting and permitting requirements will likely average ten (10) years or

mor e if federal or tribal lands are involved. Further, given federal, state and tribal relations, the commenters indicated it may be infeasible or even impossible to acquire adequate private land for new projects.

Comment 3 3 : Comment arguing that EPA has not addressed natural gas transport limits on redispatch.

Response 3 3 : For several reasons, including infrastructure needs, as well as capacity and reliability concerns such as the commenter s mention, the EPA has extended the time allowed for States to finalize their plans an d has moved the start of the interim period f rom 2020 to 2022

. The final rule includes this additional time due to reasons the com menter s mention, among others. See sections V.A.3.g., V.D and VIII.B of the final rule preamble of the CPP for the EPA’s response to this comment.57 The following is a summa ry of the specific public comment:

As support, the commenter s referenced the Pace Study, which noted that the existing transmission network is designed for coal

- fired EGUs located in the eastern and southern periphery of the State, while the NGCC EGUs are located in and around Phoenix and in the western periphery of the State. According to the study, significant modifications to the transmission network would be required to account for shutdown of the coal

- fired EGUs and still provide reliable electrici ty. See Pace Study Section 3.1, at 13

- 14. According to the commenter s , it does not appear that these issues were included in the proposed timing of BB2 implementation in 2020.

The commenter s noted that Pace similarly reviewed the natural gas pipeline ca pacity in Arizona and determined that there are two major systems: Transwestern and El Paso. According to the study, the Transwestern system is essentially at 98

- 100% utilization even prior to the proposed rule, so increased utilization would thus fall alm ost wholly on the El Paso system, which is also reportedly near full capacity. The study indicated time is short to fully integrate pipeline system improvements prior to 2020, given lead times for such infrastructure projects. See Pace Study Section 3.1, a t 14.

According to the study, Arizona does not currently have a sufficient natural gas pipeline system to support likely proposed rule demand and will not have time to upgrade the system to comply with the interim and final goal timelines . The study fur ther noted NERC

- CAISO's determination that Arizona's "existing pipeline capacity is not adequate to handle incremental gas needs of the state under the CPP." See Pace Study Section 3.6, at 26 (citing NERC

- CAISO Joint Report, "Maintaining Bulk Power System Reliability while Integrating Variable Energy Resources"). According to the commenters, EPA has not given adequate consideration of this issue and must revise the timing of BB2 and revision to the interim goal, at the very least, to accommodate the

necessa ry infrastructure upgrades. Referring to EPA's assumption that states would be able to rely upon one another to comply, the commenters countered that, given that individual states have the theoretical ability to define their own future in terms of complian ce with the goals of the proposed rule, it is not guaranteed that Arizona will have sufficient capacity in its neighboring states to maintain reliable electric service. Consequently, the commenters concluded that Arizona must be afforded the relief request ed to continue a reliable electric grid on it s own as well as a sufficient MW peak reserve margin , as the Pace Study addressed.

Comment 3 4 : C omment stat ing that the few years between approval of state plans and the beginning of the interim goal compliance period offered in the CPP provides insufficient time to develop and implement a state

- wide cap and implementing regulations

. Response 3 4 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to States in constructing thei r plans to manage the complexities that commenter s mention, among others. See section V.A.3.g., VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.58 The following is a summary of the specific public comment:

Regarding mass

- base d programs, commenter s explained that states that choose to develop a

mass

- based program also need significant time to devise and implement the program. Notwithstanding EPA's TSD regarding the translation of emission rate goals into mass

- based standards, the commenter s stated t hat it will take significant time to develop a state

- wide cap and the implementing regulations surrounding a mass

- based compliance program. The commenter s stated that determining what the emissions cap should be and, where appropriate, how to allocate allo wances and potential revenue from a cap

- and

- trade program will take a substantial amount of time. According to the commenter s , then it will take an additional period of time to allocate the allowances and to set up an emissions tracking and trading platfor m. The commenter s stated that power plant owners also will need sufficient time to determine their compliance strategy to limit emissions to their allowance allocations or else to identify likely sellers of allowances. The
commenter s provided, for example, that even though California signed a cap

- and

- trade program into law in 2006, the program did not take effect until 2012, 6 years after the program was conceived. The commenter s stated that the few years between approval of state plans and the beginning o f the interim goal compliance period offered in the CPP provides insufficient time to develop and implement such complex programs.

Comment 3 5 : Comment s claiming that the CPP proposal will have negative effects on coal production jobs.

Response 3 5 : As stated above, the EPA has extended the time allowed for States and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility in constructing those plans to manage the economic complexities that commenter s mention, among others. See section VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific publ ic comment:

Commenter s disagreed with the CPP proposal because of the negative effects the commenter s asserted it would have on coal production jobs. As a Commonwealth of Virginia Hose Delegate, the commenter s stated that their Virginia House Bill 1261 (that took effect July 1, 2014) requires the Virginia Department of Mines, Minerals and Energy (DMME) to work with the Center for Coal and Energy Research (CCER) examine policy options and adopt standards less st ringent than the EPA regulations. The commenters explained that the bill requires compliance schedules longer than required by the EPA to lessen the impact on the coal industry in Southwest Virginia. The commenters stated that the DMME and CCER will be req uired to conduct an in

- depth analysis of new EPA regulations to determine any flexibility within the federal law to adopt standards that will minimize the negative impact on the coal industry, and that new regulations will have to be measured in Virginia t o further the interests of the citizens of the Commonwealth. The commenters urged the EPA to follow Virginia's lead for the benefit of all states that mine coal.5 9 Comment 3 6 : Comment s claiming that all the regulations proposed and/or finalized over the past five years creates uncertainty for their [utility] industry and their association's members.

Response 3 6 : As stated above, the EPA recognizes the concerns voiced by the commenter s and has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to states in constructing their plans to manage the complexities that commenter s mention, among others. A discussion of interaction between this rule and other EPA rules is included in section X.C of the final rule preamble of the CPP ; discussion of state and regional plan timing consid erations specific to the commenters ’ concerns can be found in sections VIII.B, VIII.E, VIII.F, and VIII.I of the final rule preamble

. The following is a summary of the specific public comment:

Commenter s stated that, w ith all the regulations proposed and/or finalized over the past five years, this creates uncertainty for their industry and their association's members . Their basic question as each regulation is proposed and/or finalized is: Should they invest in their current fleet, should they build something new or should they go to the market for their power? The commenters said this is really difficult to answer. The commenters noted that the Cross

- State Air Pollution Rule (CSAPR) and Mercury and Air Toxics Standards (MATS) were finalized in 2011; the three carbon dioxide regulations on power plants and redefining 'waters of the US' were most recently proposed in 2013 and 2014; and the Section 316(b) rule was finalized a few months ago. The commenters expected changes to the regulation of coa l combustion residuals to be finalized at the end of this year and the amendments for startup, shutdown & malfunction events and revisions to effluent limitations guidelines for electric generating units to be finalized next year. The commenters argued tha t it is nearly impossible for electric utilities to adequately prepare for each of these, let alone the sum of these, proposals.

Comment 3 7 : C omment s recommend ing that the EPA implementation period be extended to give states like Louisiana the opportunity to develop additional institutional resources to avoid the rate shock and economic harm that will otherwise result.

Response 3 7 : For several reasons, including infrastructure and capacity concerns such as the
commenter s mention, t he EPA has extended the t ime allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the com menter s mention, among others. A discussion of th is is included in the preamble to the final rule. See section VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary o f the specific public comment:

Commenter s indicated that the EPA takes for granted the institutional infrastructure that is lacking in certain parts of the country for initiating many of the policies included in its BSER approach. The commenter s noted that, rather than implement an RPS and EE tar gets or goals, Louisiana has taken a more measured approach to alternative energy in an effort to avoid the60 imposition of unduly burdensome energy costs on its ratepayers. According to the commenter s , the state is lacking in a broad number of potential mar ket suppliers and alternatives (primarily in RE and EE) and does not have the historical institutional background in the development of regional clean power, clean air, and efficiency markets that exists in places like the Northeastern U.S. The commenter s recommended that the EPA implementation period be extended to give states like Louisiana the opportunity to develop these additional institutional resources to avoid the rate shock and economic harm that will otherwise result. Commenter s concurred, stat ing that since there are states with limited energy efficiency programs and evaluation experience, it will be important to allow for a "ramp up" period to develop the expertise required to both implement and to evaluate such programs.

Comment 3 8 : Comm ents stating that EPA's expedited renewable energy timeline should be pushed back, and noting that, in many states, under blocks 3 and 4, the state will need authority to move on a renewable energy mandate or energy efficiency mandate, and stating that it is unclear how the renewable energy needed to be developed as a result of the Clean Power Plan will be constructed within the time constraints set forth in the proposed rule given the significant barriers to mass construction of new renewable resources.

Re sponse 3 8 : For several reasons, including infrastructure needs, as well as capacity, reliability, and timing concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The final rule includes this additional time due to reasons the commenter s mention, among others. See section s V.A.3.g.and VIII.B of the final rule preamble of the CPP for EPA’s response to thi s comment.

The following is a summary of the specific public comment:

Commenters stated that the EPA is requiring states to begin increasing renewable energy generation by 2017, 3 years before the compliance period begins for the proposed guidelines

. The commenters asserted that this timeline is simply too aggressive and illogical relative to other relevant CPP timelines (e.g., the EPA is not finalizing its rule until 2015 and state plans

- at the earliest

- are not due until June 30, 2016 or June 30 , 2018 for multi

- state plans). The commenters stated that the EPA is requiring states to begin meeting the renewable energy goals contained in plans that may not have even been submitted to EPA, let alone approved. The commenters stated that this timeline not only ignores EPA's own CPP timelines, but fails to acknowledge the contractual and regulatory hurdles inherent in building out renewable energy capacity in order to meet the new goals. For these reasons, the commenters suggested that the EPA should strongly consider pushing back its renewable energy timeline to be more in line with other CPP deadlines and practical realities

.

The commenter s noted that, in many states, under blocks 3 and 4, the state will need authority to move on a renewable en ergy mandate or energy efficiency mandate , if it is allowed to impose such a mandate. The commenters said this is an even more pronounced issue with cooperative and municipal electric utilities. In Iowa, for example, the commenters noted that the state ele ctric utility authority body, the Iowa Utilities Board (IUB), takes its authority from chapter 476 of the61 Iowa Code. The commenters pointed out that the IUB is not allowed to take any action that is not otherwise authorized by statute. The commenters indic ated there is currently no legislative authority for the IUB to implement a renewable energy mandate or an energy efficiency program on municipal utilities or cooperatives. To implement a renewable mandate under a state plan, the commenters said the Iowa G eneral Assembly would need to meet and approve the passage of a mandate or otherwise grant the IUB specific authority to establish such a mandate. The commenters also noted that Iowa Code section 476.6(16)(c) establishes that municipals must develop an ene rgy efficiency plan based on cost effective programs, file their plan and implement it. The commenters said there is no mandate that municipals achieve a percentage savings beyond what their own studies have shown is cost

- effective. In order to mandate

mun icipal electric utilities undertake certain savings, the commenters indicated the statute must be amended to create such a mandate or statutory authority must be granted to the IUB to regulate municipal utilities in such a manner, which would be an unprece dented move. Although the commenters did not advocate for such statutory changes, in order for Iowa to make such changes, the General Assembly would have to meet to pass the appropriate mandate or IUB authorization bill. In either regard, the passage of su ch a bill is not guaranteed; like any legislative process, a bill needed to establish the workability for a state plan would be subject to amendments or even opposition killing the proposed bill. If the legislature fails to authorize the actions in the pro posed state plan, the commenters asked how the state can submit the plan to the EPA for approval. Even if a state plan is approved at the EPA and the state agency seeks legislative implementation of the plan elements after EPA approval, the commenters said there is no guarantee that the state legislature would not significantly amend the proposal or oppose the passage of the bill. In order to successfully navigate state legislative pitfalls, the commenters contended that the timing in the proposed plan must be altered to allow more time for plan development and for implementation.

The commenter s noted that Iowa is not alone in having this potential problem. According to the commenters, in Minnesota, the existing Integrated Resource Planning Statute, Minn. S tat. section 216B.2422 would have to be re

- written and passed by the legislature reflecting the mandatory energy efficiency or renewables, again a statutory change that the commenters did not support. The commenters likewise noted that the Minnesota renewa ble energy mandate, Minn. Stat. section 216B.1691 and the state energy efficiency goal, Minn. Stat. 216B.241, would also have to be revised to reflect the state plan. In North Dakota and South Dakota, the commenters noted that renewable energy statutes are written as goals only, and neither state has an energy efficiency mandate (although energy efficiency is defined as a renewable resource in North Dakota). NDCC sections 49

- 02

- 28 through 49

- 02

- 34; SDCL sections 49

- 34A

- 101 through 49

- 34A

- 105. The commenters noted there are no renewable or energy efficiency goals or mandates in Wyoming as well.

T he commenter s noted that it takes several years to construct the required upgrades and build

- out of transmission necessary to support additional renewable ener gy development, not to mention the time required to complete the associated engineering, land acquisition, permitting and construction of the renewable facilities themselves. The commenters argued that reliance of the Clean Power Plan on block 3 will creat e significant manufacturing demand, which could cause more delays. The commenters further noted that time needed to construct additional natural gas units must also be taken into account because of the intermittent nature of traditional renewables like win d and solar . The commenters pointed out that wind and solar facilities can only produce62 electricity when the wind is blowing or sun is shining, meaning that other generation sources, most likely natural gas units, will be needed to back up those renewables and maintain a reliable flow of energy.

C ommenter s stated that the 111(d) rule does not take into consideration the length of time and cost involved in adding substantial new transmission in order to integrate large amounts of intermittent renewable energy. The commenter s stated that renewable resources are generally (but not always) located in areas that are more remote from customer demand which requires the addition of electric transmission lines to move renewable energy to more populated areas of the state. The commenter s stated that Texas's Competitive Renewable Energy Zone ( CREZ) experience is a prime example of the level of transmission investment necessary to move renewable energy from the where it is produced to where it will actually be used . The
commenter s provided a table with a comparison of key statistics at the beginning of the CREZ program in 2008 and the actual status of the CREZ program as of June 15, 2014. The
commenter s stated that this table illustrates the difficulty of accurately estimating the costs of a project of the size and scope of Texas's CREZ build out. The commenter s stated that what is clear is that projects of this size will, due to a variety of factors, almost always cost more than the initial estimates.

The commenter s explained that it took 9 years (from 2005 to 2014) for completion of the final CREZ transmission lines. The commenters stated that from May 2005 to December 2013, the Public Utility Commission of Texas ( PUCT) designated CREZ zones, selected transmission providers to build the transmission, and decided 37 contested transmission CCN applications which authorized the construction of approximately 3,600 miles of transmission lines. The
commenter s stated that some areas of West Texas have not reached their ful l CREZ capacity build

- out. The commenters stated that other areas, such as the Panhandle, will require a significant amount of new transmission in order to accommodate more renewable resources. The
commenter s stated that as evidenced from Texas's own exper ience, integrating renewable resources successfully requires a significant investment of time and money.

Comment 39 : C omment s argu ing that the final goal of 2030 did not consider NEPA process.

Response 39 : : For several reasons, including infrastructure needs, as well as timing and planning concerns such as the commenter s mention, the EPA has extended the time allowed for States to finalize their plans an d has moved the start of the interim period from 2020 to 202 2

. The final rule includes this additional time due to reasons the com menter s mention, among others. A discussion of Building Block 3 concerns can be found in section V.E of the final rule preamble of the CPP , and discussion of interactions regarding thi s rule and other EPA regulations can be found in section X.C of the final rule preamble . Discussion of state and regional plan timing concerns may be found in sections VIII.B and VIII.E of the final rule preamble

. The following is a summary of the specifi c public comment:63 Regarding Building Block 3 (Renewable Energy (RE)), commenter s argued that the final goal of 2030 did not consider NEPA process. The commenter s noted that RE and transmission projects take many years to permit. The commenter s indicate d that these projects can be very controversial because they involve siting and building above

- ground structures, often in areas of significant wildlife use. The commenter s contended that EPA did not consider the time and expenses involved in the permittin g process when it analyzed the economics of RE development. The commenter s pointed out that RE development in the state is dependent on land ownership and transmission availability. According to the commenter s , over 48% of the land in Wyoming is federal la nd, which triggers the NEPA process. The commenter s noted that RE projects can be built on private land with the owner's consent and customary monetary compensation, but also noted that even projects on private land trigger the NEPA process when a U.S. Fis h and Wildlife Service (FWS) Eagle Take Permit is required. The commenter s noted that golden eagles are prevalent throughout Wyoming, so most of the wind projects on private land require an Eagle Take Permit.

The commenters also noted that the time involv ed for permitting the development of renewable energy can be significant in Wyoming, as the permitting involves not only the facility but also the transmission required to move RE generation. The commenters stated that the permitting process for RE and tra nsmission is particularly time intensive, as it involves the NEPA process and it has been their experience that wind projects often involve multiple NEPA processes. According to the commenters, the NEPA process adds considerable time to RE projects and has increased in duration for the most recent transmission and wind projects in Wyoming. The commenters indicated that NEPA processes for wind facilities and transmission lines have a proven track record of taking at least eight years. In some cases, even aft er such a lengthy approval process, the commenters indicated that only a partial decision is rendered, allowing only a portion of the project to move forward. The commenters indicated that further time may be necessary should additional environmental Impac t Studies (EIS) or Environmental Assessments (EAs) be required for other federal agencies. As an example, the commenters noted that, if the Wyoming Bureau of Land Management (BLM) requires an EIS for a decision regarding a wind facility or transmission lin e on federal land, the elements of the BLM's analysis do not automatically satisfy an EIS process stipulated by the FWS for an Eagle Take Permit. In addition, the commenters noted that research conducted by Wyoming BLM does not necessarily cover the elements for the transmission line that extends to a neighboring state. Thus, the commenters noted, the other state's BLM office may require additional analysis prior to issuing a permit for the entire project.

To further illustrate the timing needs associated with these types of projects, the commenters pointed to the Power Company of Wyoming, LLC's Chokecherry and Sierra Madre Wind Energy Facility. The commenters noted that this facility, on federal land, was considered a high priority project and placed on a federal 'fast

- track' process. According to the commenters, a notice of intent was issued in 2008, and a decision from the BLM was issued in 2012; however, the FWS required an additional NEPA process for an Eagle Take Permit. The commenters indicated that a decision is not anticipated until 2016. If approved, the commenters indicated it will authorize only half the facility to be constructed. The commenters indicated additional approval from FWS will be required to build the entire facility, as planned. The commenters noted that the process is taking 8 years for partial approval on a fast

- tracked project. According to the commenter s, the NEPA process for transmission lines has a similar timeline. The commenters pointed out that64 Trans West Express and Gateway West, both federal ' fast

- track' projects, began the NEPA process in 200~, and both are still awaiting a final decision. The c ommenters stated that Trans West Express anticipates a decision in 2015, and a complete decision on Gateway West is expected in 2016.

The commenters concluded that necessary evaluation of wildlife limitations, land ownership, and federal permitting add si gnificant time to the development of RE resources . The commenters stated that this is the reality of the time required to obtain federal permitting for RE and transmission projects in Wyoming. Once the lengthy NEPA process is complete, the commenters said the Right of Ways and local permitting processes can begin, which also require at least an additional year. According to the commenters, a project may not begin construction until it has received all of the necessary state, federal, and private approvals. Therefore, the commenters concluded that it is unrealistic for Wyoming to build RE and transmission projects within the timeline proposed in Building Block 3

.

Comment 4 0 : Comment s that the approval processes required by other agencies (such as the U.S. Fi sh and Wildlife Service) related to transmission line approval/construction will result in a lengthy compliance process.

Response 4 0 : For several reasons, including infrastructure needs, as well as timing and planning

concerns including interactions with o ther Federal Agencies such as the commenter s mention, the EPA has extended the time allowed for States to finalize their plans an d has moved the start of the interim period from 2020 to 2022

. The final rule includes this addition al time due to reasons the com menter s mention, among others. A discussion of this is included in the preamble to the final rule. Discussion of interactions regarding this rule and other EPA regulations can be found in section X.C of the final rule preambl e of the CPP

. The following is a summary of the specific public comment:

Commenter s stated that Oklahoma faces substantial regulatory obstacles. While the SPP concluded that transmission line approval and construction alone could take as many as eight and a half years to complete, the commenters said factoring in approval processes requi red by other agencies

- such as the U.S. Fish and Wildlife Service's protection of endangered species

- will result in an even lengthier compliance process, not to mention potential delay caused by the interaction with other EPA's proposed rules, including the Waters of the U.S. rule

.

Comment 4 1 : Comment s arguing that there is insufficient time for compliance.

Response 4 1 : For several reasons, including infrastructure needs, as well as timing and planning concerns such as the commenter s mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the commenter s mention, among others. See sections V.A.3.g., VIII.B and VIII.C of the final rule preamble of the CPP for EPA’s response to this comment.65 The following is a summary of the specific public comment:

The commenter s stated that the emission rate goals in the proposed rule are front

- loaded, meaning that the reduction required to get on EPA's glide path in 2020 is daunting. The
commenter s stated that there is insufficient time to achieve the suggested emission rate by 2020 due to the state and utility planning and subseq uent actions that must take place between now and 2020. The commenter s noted that states must submit plans by June 30, 2016, or June 30, 2017 if granted a 1

- year extension, or June 30, 2018 for multi

- state plans, pushing final EPA approval of these plans t o mid

- 2018 or mid

- 2019. The commenter s stated that this creates uncertainty when determining where and when a utility needs to invest in renewable capacity additions. Under EPA's methodology, the commenter s explained that states are expected to begin incre asing renewable energy by 2017, 3 years before the interim compliance period. The
commenter s stated that building renewable capacity requires several years to allow for planning, permitting, and construction, so actions to bring renewable energy on line in 2017 must begin immediately. The commenter s stated that other compliance options, such as coal unit retirements made possible through transmission upgrades and construction of new NGCC units require several years to complete. The commenter s stated that ba sed on EPA's proposal which penalizes States and utilities for early emission reductions when setting state

- specific emission goals, a state or a utility would have to be very wary of investing in compliance measures prior to EPA approval of state plans.

The commenter s stated that, in the NODA, EPA notes that it has received comments on whether states should be allowed to implement state goals prior to 2020 and receive "credit" for such actions, thus allowing a more gradual phase

- in of the required emissio n reductions. The
commenter s stated that this approach would not create credit for pre

- 2020 actions, but would allow states to include them in their compliance plans by moving up the start date of the compliance period. According to the commenter s , it appe ars that EPA would not mandate that the compliance period start before 2020, but is considering allowing states to choose whether to move up the compliance period start date. The commenter s stated that EPA's use of the term "credit" is incorrect and mislea ding. The commenter s stated that EPA's proposed early action "credit" only allows states to begin compliance early and is therefore not truly a "credit" for early action. However, the commenter s argued that EPA should offer true early action credit for
act ions taken from 2005 to the start of the first compliance period. Said another way, the
commenter s offered that emission reductions or credits from early actions should be bankable and allowed to be used for future compliance.

The commenter s stated that th e requirements in the final rule will likely result in the retirement of many coal fired units. The commenter s noted that EPA analysis projects 30

- 49 GW of coal fired capacity will be retired by 2020 as a result of the rule. The commenter s stated, pursuant to Section 215 of the Federal Power Act, as a user, owner, and operator of a bulk power system, that they are required to meet certain performance criteria established in Reliability Standards promulgated by the North American Electric Reliability Corpora tion (NERC) and approved by the Federal Energy Regulatory Commission. As a result, the commenter s stated that compliance with those criteria is not optional. The commenter s also stated that transmission upgrades are frequently required to meet NERC Reliabi lity Standards when generating units retire.66 The commenter s stated that they built and continue to operate one of the largest high voltage transmission systems in the country, and their in

- house Electric Systems Projects group has extensive experience upgrading and extending the system. According to the commenter s , current lead time for large transformer projects typically is 2 years, and environmental review and land acquisition alone for transmission lines can take several years. C ommenter s stated they expect a
t ypical 20 mile single circuit 161 kV transmission line project to take approximately 56 months from initial planning studies to completion, and a project for a 30 mile 500 kV line to take approximately 84 months. The commenter s stated that they completed c onstruction of the 18 mile Unionville

- Rally Hill 161 kV transmission line in 2014, and the actual time from start to in

service for this project was 67 months.

The commenter s agreed with EPA's conclusion that multi

- state compliance plans could significantly reduce compliance costs, but argued that EPA has not considered the complexities involved nor allowed states the 5

- 10 years it will take to develop such plans. The commente r s suggested that a better approach would be utility system

- based plans that work within the realities of power system operations and fleet portfolio management. The commenter s stated that EPA should provide guidelines and sufficient time for development a nd implementation of multi

- state or system compliance plans.

Comment 4 2 : Comment s noting some problems with EPA's assumption that states will use early reductions to help achieve the compliance goals.

Response 4 2 : As stated above, the EPA has extende d the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to States in constructing their plans to manage t he complexities that commenter s mention, among others. See sections VIII.B, VIII.C and VIII. G of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s referred to EPA's statement that states will need to begin taking action to reduce emissions before the interim compliance period starts in 2020 in order to achieve the 10

- year interim emission rate. As an example, the commenters noted EPA's projection t hat many states would begin ramping up end

- use efficiency programs and renewable generation projects in 2017 in order to attain the annual levels of end

- use efficiency and renewable generation included in determining each state's emission rate goals. While EPA assumes that states will commi t to early reductions in order to help achieve the interim and final goals, the commenter s noted that the guidelines focus on accountability and compliance in the interim period.

The commenters noted a further complicati on in the process states must follow in developing and getting their plans approved by EPA. Although state plans are due in 2016, the commenters noted EPA offered states the option of seeking an additional year (for an individual state plan) or two (for mu ltistate plans). Once submitted, the commenters noted EPA has one year to approve a plan. While additional time to develop compliance plans is a welcome flexibility that recognizes the challenge for states in crafting workable plans, the commenters said th is additional time67 means that it could be as late as 2018 or 2019 before a state has a final approved compliance plan. The commenters noted that states that do not have or are not planning to rely on existing state programs (e.g., RES, EE programs) would h a ve very little time to get started on the early reductions that could be used towards compliance.

Comment 4 3 : Comments urging EPA to allow credit for early actions implemented before 2020 to be counted toward a state’s compliance goals, stating that the proposed rule penalizes states and utilities that took action prior to 2012, arguing that EPA's failure to give appropriate credit to states that took early action to reduce their CO2 emissions creates a harmful precedent, expressing concern that the d raft rule provides no incentive to take action to reduce emissions before 2019, and recommending allowance for the use of pre

- 2020 banked megawatt

- hours or avoided CO2 emissions during CPP performance period.

Response 4 3 : The EPA recognizes the value of ea rly actions that deploy CO 2 - reducing investments, such as RE and demand

- side EE measures . For discussion of state plan requirements related to incentivizing early action see s ection VIII. B of the final rule preamble of the CPP.

Commenters ’ concerns about treatment of early action are further addressed by changes from proposal to the BSER assumptions and the methodology used by the EPA to establish the CO 2 emission performance levels and rate

- based state CO 2 goals in the emission guidelines. The specifics of these changes are addressed in section V.A.3.

The following are summaries of the specific public comments under this comment:

Commenters stated that EPA should allow credit for new carbon reduction actions (i.e., increasing existing po licies, enacting new programs and/or adding new qualifying facilities) taken after January 1, 2017, and before the beginning of the plan performance period (2020), to count toward achievement of the state's emissions goals, as detailed in AWEA's comments. The commenters said this would help ensure that states have an incentive to engage in carbon reduction measures prior to th at period and get a jump on being better positioned to achieve their final compliance goals.

Commenter s urged that states should b e allowed to count measures that are implemented after the submittal of the state plan, even though the programs were initiated at a prior time.

C ommenter s noted that, while the Iowa

- specific goals as currently determined give appropriate recognition to Iowa's existing policies, programs, and early actions to support renew able energy, energy efficiency, and consideration of CO2 reduction objectives in resource planning, the CPP provides that measures that a state takes after the date of this proposal, o r programs already in place, which result in CO2 emission reductions during the 2020

- 2030 period, would apply toward achievement of the state's 2030 CO2 emissions goal. (CPP p. 34839). As such, the commenters said the CPP appears to preclude states from t aking credit for existing programs and early actions that take place between 2012 and 2020. The commenters joined the Iowa Agencies in urging the EPA to give states credit for CO2 reductions occurring between 2014 and 2020.68 Otherwise, the commenters indicated there will be diminished incentive to pursue aggressive steps to implement CO2 reducing measures over the next several years.

Commenter s stated that the design of the proposed guidelines penalizes states and companies that took action before 2012 to reduce emissions by giving those states more stringent goals. The commenters explained that the proposed guidelines would penalize leadership in emissions reductions, renewable energy and other clean energy program s. Ironically, the commenters stated that the proposed guidelines would impose greater burdens on utilities and states that have already implemented the very programs that EPA would like to encourage. According to the commenters, this approach punishes sta tes, companies, and utility customers that have invested in building the nation's clean energy resources.

Commenter s noted that EPA asked for comments on whether reductions that are implemented prior to the performance period, i.e. 2020, should be credi ted. As a result of the direct global warming benefits of early action, the commenters urged EPA to allow states to credit reductions generated before 2020. From a policy perspective, the commenters said credit for early reductions is also critical for the power sector, as the investments that are made between the time EPA issued the proposal and 2020 will potentially have 30

- 50 year life cycles or greater . In addition to the emissions reductions that occur prior to 2020, the commenters indicated those inve stments will continue to generate fewer emissions for the rest of those facilities' lives . As an example, the commenters noted that one of their processing facilities will continue to process wastes and increase recycling long after the term of the Clean P ower Plan.

According to the commenters, allowing states to credit emissions impacts of actions that are taken prior to 2020 will also avoid the absurd resu lt of causing power plant owners and operators to delay GHG improvements to their facilities . The com menters noted that, if a power plant owner or operator is faced with a prospective action in 2018 that would dramatically reduce the GHG emissions, but would receive no credit for those actions unless they are delayed until 2020 (and potentially could be f orced to conduct further reductions if the improvements were implemented in 2018), then the incentives that EPA has created would encourage delayed implementation of those improvements. The commenters indicated that the climate impacts would be particularl y contrary to the intent of the Clean Power Plan if one of their processing plants were similarly delayed, as the decaying matter in landfills, that otherwise could be converted to ABFuelTM, will continue to emit methane (a more potent GHG in the short

- ter m than CO2) for decades. The commenters pointed out that EPA has previously allowed the benefits of credit for early reduction of GHGs under the CAA rules for light duty vehicles.

According to the commenters, EPA has noted that, by allowing early reduction credits, states can create a more gradual reduction requirement, and can also allow businesses greater flexibility to determine the most cost

- effective reductions, whether that is quick action, or more dramatic reductions towards the end of the compliance period . The comment ers indicated this additional flexibility should help to reduce compliance costs for affected industries, and ratepayers. According to the commenters, EPA has also noted the potential downside that, by allowing states credits for early emissions reductions, the overall emissions could increase, unless EPA and the states are able to limit early reductions to those that would not have occurred except for the Clean Power Plan. However, the commenters pointed out that attempting to implement causation tests may be problematic, and could result in removing support from those improvements that are69 the most cost

- effective. Given the global warming benefits associated with early actions, if there are additional emissions that are generated later in the performance period, the commenter s indicated that those are likely to be offset by the cumulative benefits of the early actions . The commenters also indicated that technology advances will serve to reduce the costs of later emissions

- reducing action s, thus decreasing the likelihood of significant increases in later years of the performance period.

In the case of ABFuelTM, the commenters stated that their company's investment in recycling and waste

- processing technologies will provide climate benefits for decades to come, and those benefits will only increase more quickly if allowed to receive credit for their emissions reductions prior to 2020.

Commenter s stated that pre

- 2020 (and pre

- 2014 for that matter) RE/EE measures should be accounted toward compliance with the ultimate goal. The commenters noted that EPA requested comments on whether RE/EE projects undertaken prior to 2020 should count toward compliance. The commenters believe this questions is easily answered by posing it in a slightly diffe rent manner: Does the Agency want to see any new RE/EE projects undertaken between 2015 and 2020 or not? According to the commenters, if utilities are not allowed to count new projects toward compliance until 2020, then they would be well

- served to postpon e any planned developments until that date

-- or at least to perform the minimum as may be required under existing state statutes. The commenters indicated that such a disincentive would forebode a dismal business environment for the RE/EE industry that the proposal seeks to support.

Commenter s stated that the proposed rule should give credit to states that have already implemented energy efficiency programs. The commenters explained that early acting states have made substantial investments to accumula te significant energy efficiency resources over several years. As an example, the commenters stated that New York has invested over $4.5 billion during the past 15 years to support the installation of 9,272 cumulative annual GWh of energy efficiency and it is now developing additional strategies that are intended to stimulate private development of energy efficiency resources. Commenter s requested that the EPA consider allowing states to account for natural gas savings in energy efficiency programs. Comm enter s commented that rural electric cooperatives should receive credit for their current and past demand

- side efficiency programs and services.

Commenter s said the guidance should provide states with needed clarity on the following: Create Incentives for Immediate Action to Reduce Emissions. Commenter s stated EPA should provide states with flexibility to take credit for actions taken after the Cl ean Power Plan was proposed and before the interim compliance period begins (2020) and count that credit toward achievement of the state's compliance obligation. Commenter s stated this early

- action provision would help ensure that the states have an inc entive to reduce carbon emissions prior to 2020 and eliminate an unintentional incentive to delay EE projects until after 2020.

According to commenter s, a principal concern with the proposed rule is t hat it fails to give states like California and its utilities, such as the commenters' members, fair credit for significant and quantifiable emission reductions that they have already made and will make prior to 2020. The commenters noted that the proposed rule establishes state

- specific CO2 emissions goals for both an interim period (2020

- 2029) and a final ongoing period to be achieved by and after 2030. The70 commenters noted that these goals are based on the EPA's application of the combination of

severa l BSER Building Blocks, which are applied to each state. According to the commenters, while the BSER and goal

- setting methodology do consider some individual state situations, the BSER assumptions are generally applied evenly to all states without consider ation of individual states' prior emission reduction activities. In particular, the commenters argued that EPA's goal

setting methodology does not consider whether the state and its utilities have already taken measures that reduce CO2 emissions from the p ower sector. The commenters' concerns relate primarily to the methodology that the EPA has selected for calculating state goals and to the EPA's proposed treatment of pre

- compliance period "early action" emission reductions. These concerns are discussed in the paragraphs below.

First, commenter s argued that the EPA's goal

- setting methodology should not disadvantage states that have reduced and will continue to reduce CO2 emissions prior to 2020. According to the commenters, the EPA's goal

- setting method ology fails to account for the significant and quantifiable reductions in CO2 emissions, or the costs associated with those reductions, that leading states (including California) undertook prior to 2012. For example, the commenters noted that California re duced the GHG emissions of its in

- state electric generation sector by more than 13% from 2000 to 2012, despite significant economic growth and the shutdown of the San Onofre Nuclear Generating Station and relatively low hydroelectric generation in 2012. Ov er the same period, the commenters noted that California reduced the carbon intensity of its economy by 17%. The commenters explained that these emission reductions were accomplished by improving the thermal efficiency of California's in

- state natural gas power plants by 17% since 2001, and by investing heavily in EE and RE both inside and outside the state.

According to the commenters, while these reductions support the validity of the BSER methodology to reduce emissions, the proposed goal

- setting methodo logy fails to recognize that additional reductions beyond those already achieved will be significantly more expensive and difficult for states that took early action to reduce emissions than they will be for those states that have done little to reduce the ir emissions. The commenters further noted that, because of the manner in which the EPA has calculated state goals, states with higher levels of RE and EE in 2012 are expected to obtain greater emission reductions from RE and EE during the interim complian ce period than are states with low 2012 levels of RE and EE. The commenters stated that the reason for this disparity is that the EPA assumes that all states will begin, in 2017, with the level of RE and EE deployment that they had achieved by 2012. Thus, the commenters concluded, EPA effectively requires states like California that invested early in RE and EE to reach higher maximum RE and EE deployment rates

- and to achieve those maximum deployment
rates sooner

- than states that failed to make such investme nts prior to 2012. For example, the commenters noted that California is expected to reach a cumulative EE savings level of 9.46% and a RE deployment rate of 20.6% by 2025, whereas Wyoming (which is in the same RE "best practice" region as California) is on ly expected to achieve cumulative EE savings of 6.55% and a RE deployment rate of 15.5% in the same timeframe. The commenters indicated that the only reason for this discrepancy is that California, unlike Wyoming, invested early in policies and other measu res to encourage RE and EE, which resulted in a higher 2012 baseline for RE and EE. Consequently, the commenters argued that the EPA's proposal to base states' interim and final goals in part on the levels of RE and EE improvement they had achieved as of 2 012 penalizes the states that chose to adopt emission reduction measures early. The commenters71 concluded that this outcome is arbitrary and unfair, and would set a poor precedent for future national environmental policy.

In order to avoid punishing early a ctors that have already reduced the GHG intensity of their electric sectors significantly, the commenters recommended that EPA change the way that it quantifies the RE and EE component in calculating state goals. Instead of assuming that states will start to increase their RE and EE deployment from their historic 2012 RE and EE levels, the commenters suggested that the goal calculation methodology assume that all states will phase in their RE and EE investments starting from the same national baseline level of RE and EE deployment, regardless of what each state's actual 2012 baseline was. If a state has already achieved a high level of RE and EE development prior to issuance of the proposed rule, the commenters indicated that it should not be required to inc rease its deployment further merely because it was proactive in developing these zero

- carbon alternatives.

Second, commenter s argued that actions taken before 2020 that are still generating emission reductions during a compliance period should count tow ard compliance regardless of the date on which they were implemented. The commenters stated that, in general, it is important that the proposed rule not artificially advantage one form of emission reduction activity over another. However, the commenters no ted that the EPA's current proposal for crediting existing state programs and activities would establish different rules for claiming compliance credit based on whether the emission reduction was obtained by displacing fossil generation with RE or by avoid ing fossil generation with EE. Specifically, the commenters noted that EPA's proposal that EE measures would only count toward compliance if they were implemented after the date of this proposal (June 18, 2014), whereas RE measures could count regardless o f when they were implemented, should be changed to put these two important techniques for reducing emissions on a level playing field.

To remedy this inconsistency, the commenters recommended that EPA clarify that all EE and RE measures that were implement ed before 2020 and that are still generating emission reductions during a compliance period could count toward compliance with the interim and final targets. Unless this aspect of the proposed rule is changed, the commenters indicated the rule would unfair ly preclude states and utilities from getting credit for some early investments in EE, but allow them to take credit for analogous early investments in RE. The commenters argued that there does not appear to be a rational basis for making such a distinctio n between these two emission reduction strategies and urged the EPA to correct this inconsistency.

Third, commenter s argued that emission reductions achieved after the baseline year and before 2020 should count toward compliance with state goals. Under the proposed rule, the commenters noted that emission reductions obtained in the years before the start of the first compliance period in 2020 but after the 2012 baseline year could not count toward compliance with state goals. However, the commente rs noted that EPA took comment on an alternative proposal in which the agency would allow states to count emission reductions that are achieved prior to the first compliance period. The commenters noted that EPA also requested comment on an appropriate sta rt date for allowing states to receive credit for early emission reductions under this alternative proposal.72 The commenters strongly supported allowing states to count pre

- compliance period emission reductions toward compliance with the interim goal. Acco rding to the commenters, all emission reductions, regardless of when they occur, help to achieve the ultimate goal of the Clean Power Plan, which is to reduce emissions from the electric power sector. Just like emission reductions that occur in 2020 or 202 5, the commenters contended that measures such as RE and EE that are implemented prior to 2020 would avoid significant amounts of emissions from fossil

- fueled power plants by reducing the need to operate these fossil

- fueled power plants. Moreover, the

comm enters noted that these measures would begin reducing CO2 emissions from affected power plants as soon as they are put into effect. Therefore, the commenters recommended that these early emission reductions be credited toward a state's compliance with its emission target.

The commenters further argued that allowing states to count pre

- 2020 emission reductions would incentivize electric utilities and states to reduce their emissions earlier, rather than waiting until 2020 to implement emission reductions. Wi thout this provision, the commenters pointed out that many stakeholders could be incentivized to wait until 2020 to bring their RE facilities online or to invest in EE improvements. According to the commenters, earlier action to reduce CO2 emissions would be environmentally beneficial because it would have the effect of slowing down the rate at which CO2 accumulates in the atmosphere, thus delaying the onset of climate change. Thus, the commenters concluded, early reductions would be even more valuable for avoiding or mitigating the impacts of climate change than reductions that take place later in time, and the commenters recommended that EPA strongly incentivize such early actions.

According to the commenters, such an approach would also benefit the overal l program by allowing states that count pre

- 2020 actions toward compliance to more gradually implement RE, EE, and other emission reductions strategies, rather than implementing these strategies in a rush beginning in 2020. The commenters noted that gradua l implementation would allow states, regions, utilities, and reliability entities to better plan for and adjust to the changes in dispatch and consumption that emission

- reducing activities would require. According to the commenters, the EPA correctly noted in the NODA that allowing states to count pre

- 2020 emission reductions toward compliance with the interim goal would alleviate some of the concerns stakeholders have raised regarding the significant front

- loading of emission reductions from Building Block s One and Two during the first few years of the program.

The commenters noted that EPA offered several alternatives for the date on which early actions to reduce emissions could begin to count toward compliance with the rule. The commenters stated that th e most appropriate start date for crediting early reductions is clearly January 1, 2013. The commenters pointed out that emission reductions achieved prior to this date are already reflected in states' goals because the EPA selected 2012 as the baseline ye ar for calculating these goals. According to the commenters, emission reductions occurring after January 1, 2013 reflect early actions on the parts of states and utilities to further reduce their emissions below the 2012 baseline, and should be eligible fo r credit to the same extent that emission reductions that occur during a formal compliance period are eligible for credit.

The commenters recommended that EPA, in its final rule, clarify that any emission reductions that occur on January 1, 2013 or thereaf ter may be counted toward compliance with a state's emission goal. The commenters further recommended that states that elect to convert their rate

based goals to mass

- based targets be able to receive credit for any tonnage reductions achieved73 by qualifying early actions prior to the start of the first compliance period in 2020. According to the commenters, crediting early actions in this way would provide a strong signal to electric utilities and project developers that they would be rewarded for taking or having taken early action to reduce emissions, as opposed to waiting until 2020. The commenters indicated that this policy would lead to earlier reductions in CO2 emissions than would otherwise occur under the proposed rule, and would help encourage states to begin moving toward their 2030 emission targets quickly and responsibly.

C ommenter s argued that emission reductions from all types of measures should be eligible for early action credit. In addition to providing credit for state programs that generate early emission reductions from RE and EE, the commenters recommended that final rule also clarify that early emission reductions from other activities may also count toward compliance with state emission goals. For example, commenters suggest ed that the final rule clarify that states can take credit for
pre

- 2020 state or utility policies that shift generation from high

- emitting sources to lower

emitting sources, or that encourage divestment from or retirement of high

- emitting resources such as coal

- fired power plants. As with EE and RE activities that take place before the start of the first compliance period, the commenters noted that early retirements of coal

- fired generation or shifts in dispatch from coal to natural gas generation could sig nificantly reduce emissions below the baseline year. The commenters also suggested that states that encourage such emission reductions through policies and other activities be able to take credit for these early emission reductions to the same extent that they could take credit if those reductions occurred during a compliance period. The commenters suggested that the eligibility start date for such

measures mirror the start date for crediting early reductions obtained from RE and EE measures (i.e., January 1, 2013).

Finally, commenter s argued that states that over

- comply in one compliance period should be allowed to apply excess emission reductions toward future compliance periods. The commenters recommended that the EPA, in addition to recognizing emissi on reductions that occur before the first compliance period, should also provide further incentives for early action by allowing states that over

- comply during the first compliance period (from 2020

- 2029) to "bank" any excess emissions reductions and apply them toward future compliance periods. According to the commenters, such a mechanism would reward states and electric utilities that continue to invest early in emission

- reducing activities while maintaining flexibility for states that need more time
to m ake those investments. The commenters stated that this policy would also reduce, potential volatility in carbon markets by providing an additional source of emission reductions during future compliance periods, when the incremental cost of reducing emissio ns further could be higher than expected. The commenters pointed out that EPA has successfully employed a banking mechanism in its acid rain and mobile source emission programs, and the commenters indicated that there is every reason to believe that such a mechanism could be useful in the context of the EPA's proposed limits on CO2 emissions.

Commenter s noted that EPA is also seeking comment in the NODA whether to allow credit for early reductions, which could provide flexibility to defer other emission reductions until later in the 2020 to 2029 period. The commenters supported all measures to give credit for early reductions . Additionally, the commenters stated that their proposed idea of requiring only the final goal enables additional infrastructure im provement projects (e.g., natural gas pipeline74 expansion or transmission improvements) to be incorporated into a long term schedule rather than adhering to an arbitrary phase

- in schedule established by the EPA.

Commenter s recommended that EPA not isolat e and allow the use of pre

- 2020 banked megawatt

- hours or avoided CO2 emissions for use during the Clean Power Plan performance period without consideration of overall emission outcomes in a state. The commenters believe d that each state will have numerous options available during the plan performance period to meet compliance.

According to commenter s , a program that fails to recognize efforts by states and companies to show leadership in reducing CO2 emissions will have the long

- term effect of discouraging states and companies from implementing beneficial environmental measures unless and until mandat ed by EPA. Equally important, the commenters noted that consumers

-- the ratepayers and
customers

-- of those companies, along with owners, already are paying for those investments in CO2 reductions.

The commenters indicated that climate change has been an im portant environmental consideration for many companies and states for years. The commenters noted that companies have included carbon values in integrated resource plans when deciding where and how to invest, and have used carbon values in deciding which p lants to retain, which to retire, and at which to invest in further pollution controls. According to the commenters, some companies have made public commitments to reduce GHG emissions and carried out those commitments through multi

- million dollar investme nts. The commenters noted that states and companies have cooperated to promote and enact state legislation to encourage RE development, subsidize home and business EE and conservation programs, and establish low

- carbon resource plans. The commenters furthe r noted that some states have entered into compacts to establish carbon trading programs to limit CO2 emissions from power plants. According to the commenters, the effect of these prior state and company actions is that their CO2 emissions are significantl y lower today than they were in 2000 and will continue to decrease over the next several years. Instead of rewarding these states for their early action, however, the commenters contended that the proposed rule would penalize them by mandating even more st ringent CO2 emission reduction requirements.

According to the commenters, EPA has acknowledged that these early actions have resulted in substantial CO2 emissions reductions. As an example, the commenters pointed to Colorado's Clean Air, Clean Jobs Act of 2010, which required Colorado investor

- owned utilities with coal plants to develop multi

- pollutant plans in cooperation with the state's environmental regulatory agency to meet existing and reasonably foreseeable CAA requirements. The commenters noted that Xcel Energy, Colorado's largest investor

- owned utility, submitted a plan that was approved in 2010. The commenters further noted that, with this plan, by 2020, Xcel Energy's generating units are projected to reduce CO2 emissions from 2005 levels by 35 per cent.

Commenter s indicated that EPA could recognize and provide credit for such early action in two ways: (1) by providing an earlier baseline year, or (2) by allowing states that took early action to use both new and existing RE and EE to comply with t heir emission rate goals. The commenters further indicated that EPA could provide credit for early investments in EE by employing the same baseline electricity savings rate for all states. According to the commenters, an earlier75 baseline period would recog nize and reward state and company leadership in reducing emissions. The commenters noted that displacement of fossil

- fuel fired generation by early investment in RE, EE, and natural gas would not be "built in" to the goal calculation, so states that made t hese investments would not be assigned overly stringent emission reduction goals.

Alternatively, the commenters indicated that EPA should allow states to count avoided CO2 from existing RE and EE measures toward their emission goals. See I d. at 34,918. Sp ecifically, the commenters indicated that EPA should allow states to count CO2 avoided from existing RE and EE measures between 2012 and 2020 towards compliance with their emission rate goals. The commenters contended that this approach would appropriately reward states with existing RE and EE programs and result in less stringent interim emission goals. The commenters stated that this could allow states greater flexibility in developing a plan demonstrating progress toward the 2030 final goal or allow them to extend by a few years the onset of the final goal requirements.

The commenters further indicated that EPA could provide credit to states that invested in EE programs early by using the same baseline electricity savings rate for all states. According to the commenters, because the baseline electricity savings rate would have to be a rate that states without existing EE programs could achieve, states with existing programs would already have achieved the baseline electricity savings rate in 2020 and would not have to ramp up their electricity savings until later in the performance period. The commenters indicated that many states with existing EE programs would still have an incentive to ramp up their EE programs. According to the commenters, in many cases , EE programs reduce CO2 emissions more cost

effectively than other CO2 emission reductions options, like fuel switching. Id. at 34,874, n.188. Thus, the commenters concluded, states could ramp up their EE programs beyond the electricity savings rate targe t for compliance purposes.

Commenter s expressed concern that the draft rule provides no incentive to take action to reduce emissions between the June 2014 release of the draft rule and the end of 2019 since renewable energy deployed during this period w ould not be able to generate compliance credits until January 1, 2020 , as proposed. The commenters suggested that the EPA should allow credit for emissions reductions from renewable energy facilities deployed in this period to count toward compliance durin g the plan performance period (2020

- 30).

Commenters state d that creating more stringent standards for clean energy leaders will create disincentives for others to take early actions to reduce emissions. The CAA does not require states and electric utilitie s to be punished for reducing emissions before EPA required them to do so. The design of the proposed guidelines for existing EGUs should make clear to states, electric utilities and other source categories that will be the subject of future 111(d) guideli nes to reduce CO2 emissions that early action is needed and will be recognized appropriately. EPA's proposed approach to setting the state

- specific emission rate goals in these proposed guidelines send a clear message to the contrary. Commenters stated tha t as a policy matter, EPA should recognize and incent investments that result in early emissions reductions.

Commenters stated that the Proposed Rule would send the wrong signal to the regulated community, i.e., that those who voluntarily chose to be proactive and elected to reduce their overall carbon footprint before being required to do so, will receive no credit for suc h beneficial76 action, and moreover, that result would, in tum, create unfortunate incentives for the regulated community not to be similarly proactive in the future, as it would lead many entities to delay such proactive, beneficial measures by perhaps seve ral years in order to wait until EPA promulgates a new regulation that enables those entities to get credit for their actions.

Comment 4 4 : Comment s requesting that the EPA strengthen the overall stringency of Iowa's interim and final emissions rate targe t because changes underway in Iowa's electric system will put Iowa in compliance with the proposed rule before 2020.

Response 4 4 : The EPA thanks the commenters for their assessment of the status of Iowa in respect to meeting interim deadlines. We are appr eciative of states that are taking initiative and moving forward to meet the challenges this rulemaking will bring. We are not finalizing any early action on the part of Iowa or any other state as this final rulemaking may bring about new discussions, such as regional partnering, that would take additional time to review, plan for and finalize before state plans are to be submitted. See sections VIII.C and VIII. I of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a su mmary of the specific public comment:

Commenter s stated that Iowa's electric system is dynamic and is already in the process of reducing its carbon emissions intensity. Since 2012 (EPA's proposed baseline year) Iowa utilities have 1) retired or announced for retirement some coal

- fired power plants, 2) c onverted or announced for conversion some coal plants to natural gas, 3) announced and begun construction on a new, natural gas plant, and 4) built or announced construction of significant new wind generation. The commenter s stated that these changes are u nderway and will largely be concluded by 2016 or 2017.

The commenter s stated that Iowa will likely be in compliance with the proposed rule before the plan performance period even begins in 2020

- and will potentially be in compliance before Iowa is require d to submit a state compliance plan in 2016

. According to the commenters' analysis of changes in Iowa since 2012 (including coal retirements, coal conversions to gas, construction of a new natural gas plant, construction of new wind generation, and approv al of ongoing energy efficiency programs) the state will be in compliance with the proposed 2030 target before 2020 and will remain in compliance during the entire 2020

- 2030 time frame. The commenters stated that, assuming EPA allows activity between 2013 and 2019 to count towards the compliance obligation starting in 2020, the proposed Clean Power Plan is unlikely to impose a compliance obligation on most or all regulated entities in Iowa . In other words, the commenters stated that simply by 1) accounting for actions taken or planned to date and by 2) continuing existing energy efficiency programs, Iowa will comply with the proposed Clean Power Plan.

Comment 4 5 : Comment s supporting incentives for early action.77 Response 4 5 : The EPA recognizes the value of early actions that deploy CO2

- reducing investments, such as RE and demand

- side EE measures, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both mass

- ba sed and rate

- based plans. For discussion of state plan requirements related to incentivizing early action , see Section VIII. B of the final rule preamble of the CPP.

The following are summarie s of the specific public comments under this comment:

Commenter s supported incentives for early action to encourage investments renewables and energy efficiency and a shift away from fossil

- fired generation, including in the pre

- 2020 period after a state compliance plan has been approved by the EPA, as long as these in centives do not undermine the overall level of emissions reductions achieved by the CPP. The commenters said the quicker we can cut emissions, the better from a climate perspective.

Commenter s contended that EPA should maintain strong 2020 interim targe ts, but allow new renewable energy and energy efficiency actions taken after January 1, 2017, to be banked for 2020 compliance. According to the commenters, strong interim targets are necessary to begin to transition the electric sector towards less

- pollut ing infrastructure and investments in renewable energy and energy efficiency that will create jobs and stimulate the economy. However, the commenters warned that restricting credit for energy efficiency and renewable energy actions until 2020 may distort t he market by encouraging delay in new actions until such time as they are eligible for credit. To alleviate this circumstance and to offer more tools to states concerned about meeting the 2020 interim targets, the commenters supported a limited pre

- 2020 ba nking option.

The commenters recommended that EPA allow credit for new carbon reduction actions

-- including increasing existing policies and adopting new policies

-- taken after January 1, 2017, and before the plan performance period begins (Jan. 1, 2020) to count toward achievement of the state's 2030 carbon emission goal. The commenters indicated this would help ensure that the states have an incentive to reduce carbon emissions by using new renewable energy and energy efficiency measures, as well as other c ompliance tools, prior to 2020. By limiting banking to "new" emission reduction measures (which could include expanding existing programs, measures, or actions

-- or establishing new ones), the commenters said actions taken before 2020 would place states in a better position to comply in meeting the ultimate required emission performance standards. Also, to ensure that states are making meaningful progress throughout the compliance timeframe, the commenter s recommended that EPA divide the ten year period into two five

- year compliance peri ods so that emission reduction actions between 2020 and 2030 are not likely to be delayed until the end of the compliance period.

Comment 4 6 : Comment s arguing that the EPA cannot rely on emission reductions prior to the compl iance period to moderate the consequences of the proposed rule.

Response 4 6 : The EPA disagrees with the commenter s in that early actions taken do effectively reduce GHG emissions and provide both meaningful GHG reductions and significant steps78 forward, bo th in terms of emissions reductions but also infrastructure and partnership pathways that are essential to driving planning options for meeting interim goals and the 2030 final goal.

The following is a summary of the specific public comment:

Commenter s stated that electric generating sources will not have sufficient notice of their specific compliance obligations to make significant emission reductions prior to the compliance period.

Accordi g to commenters, the reductions that could be achieved betwee n 2017 (the earliest date a state might have an approved plan) and 2020 (the onset of the compliance period) would fall well short of the significant reductions needed to smooth out the emissions trajectory mandated by the promised interim goals. The comme nters also noted that the proposed rule effectively prohibits electric generating companies from taking action independently in advance of the approval of a final state implementation plan because (i) companies will not have certainty regarding their indiv idual compliance obligations until the plan is approved and (ii) it is unclear to what extent any actions would be credited toward compliance. According to the commenters, electric generating companies that take early action would risk significantly increa sing the economic burden on its rate

- payers posed by the proposed rule if such early actions were not credited toward compliance and not fairly allocated in a final approved plan. The commenters concluded that the proposed rule does not afford electric gen erating companies and states with sufficient time and flexibility to deviate from the compliance path mandated by the proposed rule.

Comment 4 7 : Comments related to the s tart d ate for counting electricity s avings

. Response 4 7 : The EPA recognizes the value of early actions that deploy CO2

- reducing investments, such as RE and demand

- side EE measures, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both m ass

- based and rate

- based plans. For discussion of state plan requirements related to incentivizing early action , see section VIII. B and of the final rule preamble of the CPP. 201 2 was selected as the baseline year as it was the most recent year where a complete data set was available and is therefore the most recent data we have appropriate to setting such a mark. Discussion surrounding EE measures can be found in section s VIII.B, VIII.D, VIII. F and VIII. K of the final rule preamble, while a discussion around “banking” of EE credits can be found in section VIII.K of the final rule preamble

. The following are su mmaries of the specific public comments under this comment:

Commenter s recommended that in setting target rates, EPA should count electricity savings from energy efficiency measures starting in June 2014. Commenter s stated estimates of the potential savings states can achieve during the ramp

- up of energy efficiency should be based on the latest available information. Commenter s stated EPA should update the savings potentials based on the latest EIA information available when the analysis is completed.

Commenter s noted that for South Carolina, this effect will be small, but states with significant current programs may have noticeable savings from 2014 to 2016; if Maine maintains its 1.9679 percent incremental savings reported for 2012, and if those savings met M&V requirements, it would have roughly 5 percent incr emental savings for June 2014 to December 2016, of which roughly 1.5 percent would persist until 2029. This would bring its 2029 potential from 12.1 percent to 13.6 percent.

Commenter s stated it is inaccurate to assume that a state will make no prog ress in increasing the annual incremental savings rate between 2012 and 2017. Commenters stated s ome states have already made progress improving their energy savings rate since 2012 while others can be expected to improve by 2017; for example, EmPOWER Ma ryland increased its savings rate by 36 percent from 2011 to 2012 and by 31 percent from 2012 to 2013, which means the 2012 data used in the rule is already outdated in 2014. Commenter s stated EPA should use the most up

- to

date data available on energy savings rates as the starting point and then apply the growth factor to that rate for all years after finalization. Commenter s stated this will more accurately capture the level of savi ngs that would occur even before states adopt compliance plans, and will thus more accurately predict the quantity of savings achievable durin g the compliance period.

Commenter s stated the rule creates timing issues: (1) the rule assumes that states w ill achieve the same annual incremental reductions in 2017 as they did in 2012, even though some states have surpassed their 2012 savings rates already, and (2) the rule's assumptions about how the energy savings from a particular action are distributed ov er time have the effect of pushing much of the benefit of such actions outside of the compliance period. Commenter s urged EPA to address the timing issues, and that adjusting these assumptions will ensure that the emission targets in the final rule mor e accurately capture the full potential of energy efficiency as a cost

effective emissi ons reduction mechanism.

Commenter s stated that as EPA states, there should generally be congruence between the forward

- looking methodology that the EPA used to prop ose state emission performance goals based on the BSER and state compliance options: states should not get emission

- reduction credit for past actions already reflected in the BSER. Commenter s stated additionally, states should be encouraged to build the policy and programmatic infrastructure necessary to make meaningful progress toward targets during the initial performance period, while maintaining the environmental imperative to reduce emissions intensity of electric power production.

Commenter s rec ommended states should be able to claim credit for the post

- 2020 emission reduction impact of energy efficiency measures installed after the date the rule was proposed. Commenter s stated these goals can best be balanced by allowing states to use energy efficiency measures installed after the date the rule was proposed to be used against observed emissions rates at affected EGUs during the performance period. Commenter s stated this would encourage states to launch or maintain energy efficiency efforts ahead of the compliance period, and recognize early action by states to reduce greenhouse gas emissions. Commenter s stated that allowing states to use pre

- 2020 emission reductions in the compliance period would conflict with the purpose of the rule, re ducing the emissions intensity of electric power production, allowing states to trade early performance for later performance.

Commenter s recommended that states be allowed to start tracking energy efficiency measures installed in 2017 or later, not in 2014 as EPA has initially proposed. Commenter s stated that counting energy savings from measures installed starting in 2017 towards each state's emissions80 rate goals is consistent with the Building Block 4 calculation in establishing the emissions rate goals. Commenter s noted that while measures from eligible state and utility policies and programs should be tracked and counted starting in 2017, energy savings credit from these measures should begin in 2020 as the EPA has proposed. Commenter s stated that starting energy savings credits sooner than 2020 will reduce the overall CO2 emissions reductions achieved by the Clean Power Plan.

Commenter s supported EPA's approach in counting programs adopted before the performance period, beginning in 2020, towards compliance as long as they were adopted after the proposal date; however the commenter s stated that it is critical to allow measur es that are put in place after June 18, 2014 that are still in service in 2020 to count towards state compliance. Commenter s asserted that this credit is needed in order to create an incentive for states and utilities to maintain the EE infrastructure that has recently been established in the Southeast. Commenter s stated that this will also encourage states to take advantage of EE opportunities to meet their goals which will keep costs low, create and maintain jobs, and incre ase the quality of life.

Commenter s believed that EPA should recognize savings accruing in the compliance period regardless of when implemented so lon g as the state plan can demonstrate sufficient EM&V was in place. Commenter s noted that they are not recommending a banking of energy efficiency measures, rather, the recommendation is a modest recognition of the fact that states have already taken aggr essive steps to implement energy efficiency programs and invested in a robust EM&V program to ensure that re al savings are achieved.

Commenter s stated that it is important that the energy efficiency efforts that are ongoing, and the results achieved sin ce the publication of the rule in June 2014, should be counted toward compliance with any state plan. Commenter s noted that allowing banking of energy efficiency credits is essential to maintain the momentum of existing programs. Commenter s asserted that utilities and third parties will have little incentive to continue efforts without a ba nking mechanism.

Commenter s struggled to understand the EPA's rationale for proposing to set the baseline for carbon emissions at 2012, while setting the baselin e for carbon emission reduction projects at 2014. Commenter s noted that based on this decision, companies that made voluntary carbon emission reductions in the interim timeframe will not be given credit for those reductions even though they were made af ter the initial carbon emission baseline was established. Commenter s stated that common sense and fairness require these baselines be established at the same time and there not be a gap of two years where a company that has achieved significant reductio ns will not be granted credit for those reductions.

Commenter s supported EPA's assumption that there are no annual incremental savings or expiring savings required until the year of 2017. Commenter s agreed with EPA's assumption that the states will h ave no incremental savings from energy efficiency measures until 2017. Commenter s stated this allows states to receive "credit" for energy efficiency savings incurred from 2012 to 2017 to cou nt towards their goals.81 Commenter s stated that EPA assumes a ramp

- up in EE achievement starting in 2017, several years prior to the proposed rule becoming enforceable. Commenter s stated EPA provides no justification for using a standard of performance that begins prior to the rule taking effect.

Comment 4 8 : Comment s supporting idea of allowing any incremental emission reductions achieved after June 18, 2014 and prior to 2020 that are included in a SIP to be credited towards compliance with the interim and final state emission targets.

Response 4 8 : The EPA tha nks the commenter s for their support in using pre 2014 baseline dates for this rulemaking. As mentioned above we are finalizing this rule using a 2012 baseline year. As the commenter s further mention, the rule finalizes “banking” options that add flexibil ity for states and regional planning groups to meet interim goals. Additional discussion on these decisions are outlined in sections VIII.C and VIII. I of the final rule preamble of the CPP

. The following is a summary of the specific public comment:

Commenter s strongly supported the idea of allowing any incremental emission reductions achieved after June 18, 2014 and prior to 2020 that are included in a SIP to be credited towards compliance with the interim and final state emission targets, regardl ess of the motivation for these initiatives, as long as they meet certain pre

- defined criteria (i.e., quantifiable, surplus, enforceable, etc.)

. The commenters noted that in advance of the Clean Power Plan proposal, many states have been contemplating the design of strategies that would achieve CO2 reductions equivalent to those that could be required by CAA section 111(d) emission standards. The commenters stated that, to the extent that states, electric utilities and others are able to achieve incrementa l emission reductions prior to 2020 that can be banked and later used for compliance, this approach could provide an incentive for earlier emission reductions . According to the commenters, allowing a state to count emission reduction credits created from s tate programs prior to 2020 toward its interim goal would also allow the state to begin demonstrating emission performance earlier and follow a more gradual emission improvement trajectory during the interim performance period of 2020

- 2029. In recognition of this, the commenters recommended that the EPA allow the banking of emission reduction credits created from existing and new emission reduction requirements, programs and measures instituted after the date of the proposed rule (June 18, 2014) and before 2020 to be used for compliance during the plan performance period

. The commenters stated that implementation of measures subsequent to the proposal or promulgation of the emission guidelines is consistent with EPA's forward

- looking goal

- setting approach, as these actions may be necessary to meet a required level of emission performance during the plan performance period or will put a state in a better position to meet the required level of performance.

The commenters envisioned that early reduction credit would be reflected in a state compliance demonstration similar to the manner in which new renewable energy and end

- use energy efficiency projects are factored into the state emission goals, namely by adding MWh generated82 or avoided to the denominator of t he adjusted 2012 emission rate. The commenters provided for example a company's projected 2020 CO2 emissions rate without any early reduction is 1000 lbs/MWh, but the company constructs a renewable energy project that goes into operation January 1, 2016. T he commenters stated that crediting one year of avoided emissions from this

zero

- emitting project would bring down the company's overall rate by 10 lbs/MWh, and starting in 2020 the company's rate would now be 990 lbs/MWh. The commenters noted that with cr edit for early action the company could go back before 2020 and receive four years' worth (2016

- 2019) of MWh generation at zero emissions to add into the 2020 rate calculation, bringing their rate down 10 lbs/MWh each year for four years to 960 lbs/MWh (as suming, for simplicity sake, that the renewable energy project produced the same number of MWh each of the four years).

C ommenters suggested regulatory language they developed that would allow emission reductions ach ieved after June 18, 2014 and the end of 2019 to be used for compliance under EPA's proposed Clean Power Plan.

Comment 49 : Comments stat ing that Bu ilding Block 4 penalizes states that invested early in EE programs and that EPA sets more stringent goals for early acting states, and requires these states to continue investing in EE programs despite the higher costs and significant implementation barrie rs that these states face. Comments supported a crediting mechanism for states that have already made significant investments in energy efficiency.

Response 49 : The EPA recognizes the value of early actions that deploy CO2

- reducing investments, such as RE a nd demand

- side EE measures, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both mass

- based and rate

- based plans. For discussion of state plan requirements related to incentivizing early action , see Section VIII. B of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

C ommenters stated Building Block 4 penalizes states that invested early in EE programs and that EPA sets more stringent goals for early acting states, and requires these states to continue investing in EE programs despite the higher costs and significant implementation barriers that these states face.

C ommenters supported a crediting mechanism for states that have already made significant investments in energy efficiency.

Commenter s stated that the lack of early credit will likely discourage the de velopment of demand

- side energy efficiency programs for a number of years. Commenter s requested that EPA award credit for early action from a program established in June 2014 or after. Commenter s strongly urged EPA to modify its position and allow st ates to gain credit for early action because early action helps prevent the buildup of GHGs in the atmosphere, provides a smooth transition and enhances the likelihood of meeting the target in a timely manner, helps facilitate a staged approach to implemen t what otherwise might be difficult infrastructure modifications, provides an incentive for incorporating EE factors into the decision

- making process, rewards leadership, ensures that ratepayers receive the full value of state policies and investments, enc ourage83 environmental benefits immediately, and brings down incremental costs of later emissions control.

Commenter s supported a robust "credit for early action" mechanism which they believe will give industry and states greater incentives to implement cost

- effective emission reduction steps now, without fear that these steps will have no compliance value when EPA's rule takes effect despite their obvious benefits in achieving the Administration's emission reduction goals. Commenter s stated that the v alue of early action is particularly compelling for EE programs like appliance Early Replacement, which can be scaled

- up quickly, achieve GHG reductions immediately and deliver tangible multi

- year savings in energy costs to consumers without delay, as well as create manufacturing and retailing jobs in the U.S. Commenter s stated that if early action credits are coupled with a broadly accepted ER "toolkit", states and utilities would have confidence that rebate programs implemented now will be approved by EPA and credited toward compliance in 2020 and subsequent years which will increase the willingness of all parties to launch ER programs as early as 2015

- 2016.

Commenter s believe d that EPA should give full consideration to generators that made significant efforts with early action. Commenter s noted that generators have made significant investment in recent years anticipating the need for carbon reduction, however; EPA's proposal substantially excludes these efforts from consideration. Commenter s strongly recommended that EPA develop a method to recognize these investments and efforts allowing states include these in their implementation plans, as it would be consistent with hi storical regulation as reductions in criteria pollutants that were achieved before the implementation of targets were included in compliance.

Commenter s noted, for instance that RGGI states have reduced their GHG emissions by over 40 percent on a mass basis between 2005 and 2012 and stated that the steps that RGGI states and others have already taken to reduce emissions should be instructive to EPA when evaluating comments from states that have not initiated substantive measures to reduce emissions pri or to the implementation of this Rule, as these steps demonstrate the actual potential burdens imposed by the Rule and inform the states' ability to cost

- effectively implement the Rule.

Commenter s stated that an improve building block methodology shoul d be developed to give credit to early acting states while encouraging other states that have not yet implemented robust energy efficiency programs to take advantage of their opportunity to "pick the low hanging fruit" more rapidly in order to achieve grea ter emissions reductions and economic benefits such as energy bill savings. Commenter s added that, in their experience, every $1 invested in energy efficiency improvements yields $3 in energy bill savings to consumers participating in the efficiency programs.

Commenter s detailed EE programs and money saving programs currently available in the state of Florida and believe that EPA should consider how avoided electric sales in the past can be measured and credited, as the commenter s are unable to reap the benefit of its current and past programs and services as the rule is currently drafte d.

Commenter s urged EPA to allow states to credit early action savings that result from measures now in effect or planned for implementation between 2014 and 2020 without reducing the84 baselines for individual states so that states will not be discourag ed enough to postpone developing EE programs and measures.

Commenter s agreed that EE plays an important role in reducing the carbon footprint of the utility industry, but asked that EPA give full credit for early actions. Commenter s noted that highe r

benefit, lower

- cost programs are generally adopted first which leaves lower

- benefit, higher

- cost programs for utilities to implement.

Commenter s stated that if EPA insists on utilizing a 2012 baseline, states that have reduced emissions during the 20 05 to 2012 period should be allowed to claim credit for early actions, whether they be absolute emissions reductions from EGUs or emissions reductions from out

- of

sector offsets.

Commenter s urged EPA to credit states with the generation avoided because of EE measures implemented before June 2014 and which continue to have an impact within the compliance period.

Commenter s urged EPA to recognize and give credit for early action on EE starting in 2005 and results of past EE achievements as published i n EIA

- 861.

Commenters believe d that credit for early action should be applied beginning in 2010.

Commenter s also noted that since Gas DSM programs reduce methane emissions, these programs should count toward compliance with a state goal if the stat e chooses to include it in its implementation plan.

Commenter s urged EPA to recognize and reward EE savings between 2012 and 2017 and recognize early actions on EE taken before 2012.

Commenter s asked EPA to allow states to take credit for EE actions that have occurred since June 2013 up to the beginning of the initial compliance period in 2020.

C ommenters held concerns about the cost of meeting their goals under Building Block 4 if early
act ions for EE were not accounted as most of the "low

- hanging fruit" has already been captured in many states, making it more difficult to achieve additional cost

- effective energy efficiency savings.

Commenters noted that EPA's analysis does not account fo r EE improvements made to date although manufacturers have taken the initiative to invest in and implement cost

- effective EE measures, thus much of the "low

- hanging fruit" has already been captured. Commenters stated that additional measures will be much m ore costly and difficult to achieve and sustain. For example, the commenters noted the EE improvements that have been achieved have occurred in part due to the introduction of LED or other high

- efficiency lighting options, which represent the cheapest and most universal efficiency improvements currently available. Commenters noted that as those lighting efficiency improvements saturate the market, which can be expected in the next few years, states and electricity customers will be forced to move towards mo re aggressive, and less cost

- effective, means of encouraging further efficiency improvements. Commenters felt85 that the Proposed Rule will effectively penalize business and industry for early investments and put them at a competitive disadvantage.

Commenter s stated that by applying an average

- based expectation of future efficiency savings to states that have already achieved significant savings through established programs, the proposed rule serves to punish early adopters of efficiency. Commenter s not ed that a state that is already aggressive in its energy efficiency programs, and which may have invested in increasingly costly energy efficiency investments over time, may be starting out at around a 1.5% savings, a rate which Building Block 4 obligates the state to maintain and achieve again within the compliance timeframe; meanwhile, a state with a modest energy efficiency portfolio may start with a 0.5% annual savings, and would take five years to ramp up the saving to 1.5%. Commenter s stated that the proposed rule is more punitive for early adopters and those states that have already achieved many energy efficiency gains than states that have not.

Commenter s stated that Washington State has added so much renewable power and energy efficiency between 2005 and 2012 that additional gains between 2020 and 2030 will be much more difficult than they would have been if we had not taken early action. Commenter s noted that the state has invested $5.3 billion in wind energy since 2001, add ing over 2,806 MW of wind generation, and that state utilities have also invested heavily in EE programs since 2000 as the state requires utilities to acquire all cost

- effective conservation. Commenter s stated that Washington utilities have spent more t han $200 million per year on EE programs since 2010 and with such robust programs already in place, Washington faces significant challenges in expanding EE programs because the marginal cost for expanding EE in the state will be greater than historic progr am costs.

Commenter s believe d that EPA is penalizing utilities and states that implemented EE and demand side management programs before the 2012 baseline as the cost of EE programs increase exponentially once the most effective programs are in place. Commenter s stated that EPA is implying that utilities and states that have implemented EE programs before the baseline are now left to implement more expensive programs if they want to match EPA assumptions for EE. Commenter s noted the success of the ir voluntarily approved EE and demand side management programs which have generated large energy savings and stated that their current program would have to quadruple in order to match 1.5% of sales. Commenter s noted that given that the program has take n five years to develop to this point, it does not seem reasonable or feasible to achieve such increases in EE.

Commenter s detailed the previous successes of New York's EE programs and investments and noted that these early investments capture the "low

- hanging fruit" of energy efficiency opportunities (e.g., lighting upgrades) and represent the most cost

- effective investments. Commenter s stated that future actions could be more costly, and by not counting these existing energy savings, early

- acting s tates are put at an economic disadvantage when compared to states that have not funded programs to make similar "low

- hanging fruit" reductions.

Commenter s sought clarity on how states that undertake investments between 2012 and 2020 will be assured tha t they will be fairly credited for these investments. Commenter s asked EPA to detail how these pre

- 2020 improvements in EE savings will benefit a state in meeting its EE goals in 2020 and beyond. Commenter s noted that one reasonable interpretation of the proposed86 rule would suggest that states might be better off postponing aggressive EE/DSM until 2020 to get maximum value, which the commenter s doubted was EPA's intent.

Commenter s noted that Florida utilities have made substantial progress over th e last decade by increasing electric generation by 10 percent between 2005 and 2012 but also reducing statewide the CO2 emission rate by 19 percent (from 1,498 lbs/MWh to 1,214 lbs/MWh) and total CO2 emissions by almost 11 percent (134 million to 120 milli on tons) during this same time period. Commenter s suggested that given that EPA's proposal seeks to cut CO2 emissions by 30 percent of 2005 levels, the great progress Florida's utilities have already made to reduce CO2 emissions from 2005 levels should have been taken into account in calculating Florida' s interim and final goals.

Commenter s stated that it will be more difficult and costly to achieve such incremental energy efficiency levels in a state such as Florida which has been implementing utility energy efficiency programs continuously for 30

- pl us years compared to a state which has been implementing utility energy efficiency programs for a significantly shorter time period. Commenter s noted that this is because what would be considered "low hanging fruit" has been harvested in Florida and incremental energy savings from end

- use energy efficiency is much more costly to achieve than in other states that have a much shorter history of imp lementing utility energy efficiency
programs.

Commenter s stated that Oregon has a long

- term commitment to acquiring EE, but the
commenter s had concern that EPA's methodology did not adjust the EE potential by the amount of conservation previously acqui red or the amount of conservation available. Commenter s were worried that this may have the effect of requiring a state like Oregon, with established and robust conservation programs, to acquire conservation at a much higher cost (non

- cost effective).

Commenter s stated that EPA failed to recognize that states with long running EE programs may have achieved near cost

- effective saturation of such programs. Commenter s stated that mandating incremental new EE programs in such cases cannot be achieved at EPA's proposed costs. Commenter s noted that they have a long history of administering demand

side management programs through its member

- owner distribution cooperatives, having already taken advantage of cost

- effective energy efficiency options.

Com menter s stated that some Nebraska utilities have already implemented demand

- side management programs to reduce electric consumption and that these utilities may not have the ability to find additional methods of reducing electric consumption. Commenter s noted that this will cause utilities with successful demand

- side management programs to be punished by the fact that they have already undertaken aggressive and creative policies to reduce their customer's electric consumption.

Commenter s stated th at EPA should address the proposal's inequality between states that have taken early action on CO2 reductions, and those that have not, by removing from the baseline large efforts such as closing a coal

- fired plant from inclusion in the targets, and by giv ing states credit for other early actions as states might propose in their implementation plans. Commenter s believed that this should include allowing states to use EE measures implemented between 2012 and 2020 to demonstrate post

- 2020 compliance.87 Comm enters contended that early action states will find both RE and EE options to be more cost

limited than for states that did not aggressively pursue early action to reduce CO2 emissions and will increase costs to consumers. Commenter s provided detaile d examples of how EPAs proposed goal calculation methodology penalizes early actors.

Commenters contended that there were limited opportunities for low

- cost EE with existing technology, and utilities and states that have been leaders in early reductions are left with higher cost options to achieve additional savings. Commenter s contended that despite this, EPA assumes these states will continue to outperform states where low

- hanging efficiency opportunities still exist. Commenter s contended that St ates and power producers will likely defer implementing programs that reduce energy waste or mitigate pollution until 2017 or later. Commenter s expressed concern that future compliance dates in the proposal (2020

- 2030) would cause some states to suspend investments in the years 2015

- 2019. Commenter s contended there is significant misunderstanding about credit and burden

- sharing explaining Clean Power Plan requirements only apply to fossil plants, and clean plants face little to no additional cost or b urden. Commenter s added that as a result, under the rule as proposed, states that currently have larger than average amounts of non

- emitting generation in fact have much less work to do, contrary to some stakeholders' misunderstanding.

Commenter s stated the goal

- setting methodology penalizes states that have invested early in EE
programs. Commenter s indicated there is a problem with using past EE gains to set targets. Commenter s stated EPA's goal setting methodology does not account for th e coal

- fired megawatts that already have been displaced by EE. Commenter s stated existing (i.e., pre

- 2012) EE therefore negatively impacts early

- acting states by making the baseline emissions rate artificially low. Commenter s noted that energy effic iency has displaced a significant amount of fossil generation in some states prior to 2012. Commenter s noted that Arizona enacted EERS in 2009 that utilities were required to meet EE savings targets of 0.94 to 1.25 percent by 2011 and 1.5 to 2 percent by 2013; Arizona's SRP utility achieve EE savings of 1.8 percent in 2012 by displacing generation from coal power plants, and absent the electricity savings SRP achieved in 2012, Arizona's baseline emission rate and corresponding state goal would have been higher.

Commenter s stated EPA's proposed goal calculation methodology requires states that invested early in EE programs to meet more stringent interim goals, and on a faster timeline than they otherwise would have been required to meet, in that exis ting EE is used to determine states' incremental and cumulative EE goals and the rate at which those goals are achieved. Specifically, commenter s stated existing EE determines (1) how quickly a state will reach the proposed 1.5 percent annual EE impro vement rate, and (2) a state's cumulative EE goal (because the cumulative EE goals depend on how quickly a state reaches the proposed EE improvement rate) (EPA states that cumulative EE savings take into account the lifetime of EE measures, but EPA imprope rly estimated the lifetime of EE measures based on the national average lifetime of EE measures across all sectors.). Commenter s indicated EPA assumes that states with higher historic annual incremental EE levels will reach the proposed 1.5 percent inc remental improvement rate sooner than states with lower historic annual incremental EE levels, resulting in higher cumulative EE savings levels for early

- acting states (EPA's final cumulative EE savings levels are excessive when compared with historical EE savings; even states that have aggressively pursued EE savings, like Minnesota, are expected to achieve EE savings in future well beyond the EE savings they have achieved in the past ). Commenter s88 provided a figure comparing the average cumulative EE savings levels of states with an existing EE incremental rate greater than 1 percent with the average cumulative EE savings levels of states with an existing EE incremental rate lower than 1 percent (see Figure 4 of their comment letter).

Commenter s s tated that EPA adds the cumulative EE savings levels to the states' BSER calculation denominators, so that a higher cumulative savings level therefore results in a lower performance goal Commenter s stated that this means that states that have historica lly high incremental EE levels are faced with more stringent final goals. Commenter s stated imposing more stringent final goals on states that have historically high incremental EE levels means that these states will be faced with more stringent interim goals and final goals, which they will be unable to meet if they cannot attain the ever

- increasing incremental EE savings that EPA incorrectly assumes are achievable. Commenter s provided a figure comparing the average incremental EE savings levels of s tates with an existing EE incremental rate greater than 1 percent with the average incremental EE savings levels of states with an existing EE incremental rate lower than 1 percent

. Commenter s indicated states wit h existing EE incremental savings rates greater than 1 percent begin the performance period with a 1.5 percent incremental savings rate, while states with lower starting EE incremental savings rates have a longer ramp

- up period. Commenter s stated if early

- acting states are unable to continue increasing their EE savings by 1.5 percent per year, they will be unable to meet their interim goals, which assume these constantly increasing EE savings.

Commenter s stated there are limited opport unities for low

- cost EE with existing technology. Commenter s indicated that utilities and states that have been leaders in harvesting energy savings historically are left with higher cost options to achieve additional savings; despite this, EPA

assumes these states will continue to outperform states in which the "low hanging" efficiency opportunities still exist. Commenter s stated these early

- acting states already have taken advantage of the most cost

- effective EE measures, so the more stringent goal s require these states to spend more money on additional EE measures than states that have not already invested in EE, and may force these states to pursue EE measures that are not cost

- effective under current state commission requirements. For example, c ommenter s indicated that in 2012, cumulative EE savings accounted for 10.25 percent of Portland General Electric's ("PGE") retail sales; those savings were achieved through hundreds of millions of dollars of investments in EE made by PGE's customers, a nd not only does the Proposed Rule not reward those investments, it uses those investments to make Oregon's goal more stringent.

Commenter s stated EPA could provide credit to states that invested in EE programs early by using the same baseline electrici ty savings rate for all states. Commenter s stated because the baseline electricity savings rate would have to be a rate that states without existing EE programs could achieve, states with existing programs would already have achieved the baseline electr icity savings rate in 2020 and would not have to ramp up their electricity savings until later in the performance period. Commenter s stated many states with an existing EE program would still have an incentive to ramp up their EE programs. In many cases , EE programs reduce CO2 emissions more cost

- effectively than other CO2 emission reductions options, like fuel switching Thus, c ommenter s indicated states could ramp up their EE programs beyond the electricity savings rate target for compliance purpose s.89 Commenter s stated that EPA could avoid imposing a penalty on early adopters while encouraging significant increases in states that have lagged in EE deployment by establishing a tiered approach to Building Block Four. Commenter s noted, for example, that EPA could set state goals on the assumption that stats with low levels of cumulative EE savings (e.g., less than 6%) will invest heavily in the early years of the program at a rate of 1.5 or even 2 percent annually. Commenter s noted that in such states, there is presumably significant un

- harvested "low

- hanging fruit," such that EE could be expected to initially increase significantly with modest levels of investment. Commenter s noted that states that have already achieved hig her cumulative levels of EE would not be expected to continue increasing their EE at such an aggressive rate; thus, for example, EPA could set the EE target for states with cumulative EE levels greater than 6 percent based on a lower assumed level of annua l incremental savings (e.g., 0.5 or 1% annually). Commenter s stated that this approach would reflect the reality that states with already high levels of EE have fewer cost

- effective opportunities to continue reducing emissions through additional EE and that adopting this tiered approach would avoid penalizing these early adopters while continuing to encourage states and utilities with low levels of EE to invest more aggressively. Commenter s also stated that it is important that all relevant state EE

e fforts

- including codes and standards, as suggested by the EPA in the Proposed Rule

- are counted in an equitable and cost

- effective manner; otherwise, an aggressive EE savings goal would not be realistic for a state like California, which has already investe d heavily in such EE programs, has promoted the construction of zero

- net energy buildings, and is increasingly targeting existing buildings for additional EE savings.

Commenters stated that EPA's assertion that the 1.5% savings rate is inclusive of exi sting state EE programs is patently false because EPA is counting emission reductions that existing
state programs achieve only as a result of actions taken after the date of this proposal. Commenters stated that EPA cannot claim that this 1.5% savings goa l is inclusive of existing energy efficiency programs when it is not counting emission reductions achieved from those programs unless some subsequent action is taken after the promulgation of this rule. Commenters noted that by discounting emission reducti ons achieved by these existing state programs, EPA is implicitly punishing states that have taken the early initiative to adopt energy efficiency programs. Commenters noted that states that have been proactive and adopted programs such as
energy efficient building codes, energy efficient appliance rebates, or smart meter infrastructure will see none of the emissions achieved through these programs count toward its energy efficiency goal unless the state takes some further action on these programs after this rule is promulgated. Commenters stated that by not accounting for future emission reductions achieved via existing state programs, EPA is not only punishing states for being good actors, but including a BSER that cannot "produce the improved performance n ecessary to achieve the goal."

Commenter s indicated that States with existing EE programs will face higher costs to expand their programs. Commenter s stated there are limited opportunities for low

- cost EE with existing technology. Commenter s stated utilities and states that have been leaders in obtaining energy savings historically will now have to turn to higher cost options to achieve additional savings. Commenter s stated nonetheless, EPA assumes these states will continue to outperform states in which lower

- cost EE opportunities still exist. Commenter s stated these early

- acting states already have taken advantage of the most cost

- effective EE measures, so the more stringent goals require90 these states to spend more money on additional EE measures than states that have not already invested in EE.

Commenter s stated relying on the historic average cost of existing EE programs, EPA estimates that the net cost impacts for EE programs in 2020, 2025, and 2030 will range from $16

- $24 per

me tric ton of CO2 emissions. Commenter s stated EPA assumes that controlling the costs of EE programs is possible simply by implementing best practices. (Id. at 34,874.) Commenter s stated EPA fails to recognize that the marginal costs of expanding EE i n states with existing EE programs will be higher than historic costs because states and utilities have already taken advantage of the most cost

- effective EE options first.

Commenter s stated at least 27 states use a cost

- effectiveness test in deciding whether to implement an EE measure. Commenter s stated although EPA claims that EE programs are poised for dramatic growth over the course of the next 10 to 15 years, some of the potential EE programs may not pass state cost

- effectiveness tests and there fore may not be implemented. (GHG Abatement TSD at 5

- 19.) Commenter s stated further, EPA concedes that the greatest potential for EE program expansion is in the Midwest and the South where EE programs are relatively new. (Id.) Commenter s indicated S tates in other regions of the United States that have established EE programs have less cost

- effective EE measures available to them. Commenter s stated as a consequence, states that adopted EE programs earlier will have higher marginal costs to meet the ir higher electricity savings targets, assuming that the targets are even achievable.

Commenter s stated EPA should consider means of incentivizing a greater degree of early action to ramp up EE investments in advance of the 2020 compliance period, and recognize the work that states have already done to invest in EE. Commenter s stated that because the building block four target is based on annual incremental levels of EE, states may choose not to begin implementing EE measures until the start of the c ompliance period. Commenter s indicated that based on the assumptions that early, "low

- hanging fruit" actions are less expensive than subsequent actions and have limited availability, states that have not yet started investing in EE may delay implementing new EE programs until the com pliance period to reach the incremental MWh targets set by EPA for 2020 and beyond. Commenter s stated delaying is also incentivized by the expiration of savings attributed to EE measures installed at an earlier point in time. Commenter s stated such d elays would show the same annual emissions rate during the compliance period, but would lead to fewer cumulative real emissions savings. Commenter s indicated its member states have proven the many benefits of ongoing, cost

- effective EE savings, and encouraged EPA to structure building block four in the final rule in a way that will incentivize earlier investments in EE, for example, in building block three this issue is diminished by setting a cumulative target for renewable energy generation rather than an incremental target.

Commenter s noted that EPA's uniform approach belies the fact that some states

-- like New York

-- have already invested mi llions of ratepayer dollars in energy efficiency programs that have resulted in real and documented emission reductions. Commenter s provided multiple examples of investments New York has made in energy efficiency programs. Commenter s stated that thes e early investments capture the "low

- hanging fruit" of energy efficiency opportunities (e.g., lighting upgrades) and represent the most cost

- effective investments. Commenter s noted that future actions could be more costly, and by not counting these exis ting energy savings, early

-91 acting states are put at an economic disadvantage when compared to states who have not funded programs that have made similar "low

- hanging fruit" reductions. Commenter s suggested that measurable, verifiable, existing energy ef ficiency savings should be incorporated into a state's compliance plan in the same manner that existing renewable energy such as wind and solar are allowed.

Commenter s noted that EPA fails to recognize that the demand side energy efficiency programs it seeks to impose are "theoretical" levels of impact and that several states recently have scaled back EE programs. Commenter s asserted that EPA overstated by a wide margin what can actually be achieved, thereby forcing states to seek additional reductio ns from other sources. Commenter s stated that EPA discounted emission reductions achieved by these existing state programs, thereby punishing states that have taken the early initiative to adopt energy efficiency
programs.

Commenter s noted that the s avings from EE programs cannot be duplicated in the future since the opportunity once realized is lost for that specific technology. Commenter s stated that EPA's proposition that savings from EE programs cannot be counted toward the emissions rate calcu lation until 2017 clearly penalizes states that have had the foresight to legislate mandatory EE savings goals. Commenter s stated that EPA's target for New Mexico and other states should be adjusted to reflect the actual savings potential demonstrated t hrough implementation of mandated EE programs in New Mexico.

Commenter s believed that the proposed rule provides no incentive for states to implement energy efficiency programs prior to 2020, because energy efficiency savings do not provide compliance benefits until 2020. Additionally

, c ommenter s asserted that the rule provides no incentive to implement EE programs or take other, similar measures to go beyond what is required to meet a state goal during a given compliance period. Commenter s stat ed that EPA should assume that all states begin with an initial level of energy efficiency achievement of zero in the goal

- setting calculation to avoid this inequity and penalty on states that have already achieved higher levels of energy efficiency. Comme nter s suggested that EPA allow bank credits generated by pre

- 2020 EE savings to be used for compliance purposes beginning in 2020 and that States be allowed to bank excess credits generated during a compliance period for use during a subsequent compliance perio d.

Commenter s stated that all energy efficiency measures that are still in place during the compliance period will reduce emissions during that period and thus should count towards compliance, whether or not they were installed before or after 2020. Co mmenter s suggested that EPA allow measures installed after the baseline year(s) to count towards compliance since these measures would not have been included in the baseline yet would reduce emissions during compliance. Commenter s stated that if EPA continues to use 2012 as a baseline, this would allow measures installed from 2013 to 2019 to count towards compliance. Commenter s urged EPA to provide banking of these reductions from the baseline year(s).

Commenter s stated that by not including any growth assumption for the five years between 2012 and 2017, EPA significantly reduced the energy savings targets for every state. Commenter s noted that for the five years from 2017 to 2022, EPA assumed that total U.S. e nergy savings could grow from 0.56% of sales

--- the 2012 level

--- to 1.33% of sales, representing a 0.2% annual92 ramp rate, but if EPA were to assume the same ramp rate for the five

- year period from 2012 to 2017, the 2017 levels would be nearly two

- and

- a

- half times as high. Commenter s noted that some may argue that EPA should not assume what might be considered "early action" prior to 2017, but stated that it would be unreasonable for EPA to base its targets on the unrealistic assumption that every state an d every utility is taking a five

- year hiatus from action.

Commenter s stated that the Rule's failure to recognize significant EE projects that occurred before 2013 creates an unrealistic expectation for the commenter s to achieve the 12% energy savings E PA contemplated for Building Block 4 in Michigan. Commenter s stated that if other Michigan utilities find themselves in the same position, as some will, the state's overall target for EE gains will not be met.

Commenter s stated that EPA's energy eff iciency goals do not count efficiency improvements already made voluntarily by individuals and businesses and since many states already have energy efficiency programs, many of the easy, low

- cost efficiency options have already been employed, leaving large r, more expensive options available in order to meet EPA's goals.

Commenter s detailed Pennsylvania's history of administering EE programs since 2009 and encouraged EPA to adopt a framework or to facilitate states use of existing rigorous frameworks tha t similarly establish credibility and give clarity to the benefits of myriad demand side energy efficiency investments that are possible.

Commenter s noted that states with ambitious existing energy efficiency programs tend to have a larger obligation t han states where energy efficiency policies are less advanced and that the effect of such differentiation across states on cost

- effectiveness from a national perspective is an open question. Commenter s asserted that one might expect there to be more low

- cost opportunities for saving energy in the inexperienced states where energy

- using equipment and building stocks are presumably less efficient than in the more experienced states, but it could also be the case that more experience with running energy eff iciency programs results in learning by doing and greater future energy savings at lower cost.

Commenter s noted that under EPA's Proposed Rule, cooperatives would not be given any credit for energy conservation which is currently installed and has ongo ing value. Commenter s stated that because of the demand side successes they've already seen, EPA's Building Block 4 is unattainable and would only drive up costs to the consumer and penalize them for investments already made.

Commenter s supported approaches to provide credit for early action to encourage emission reductions prior to 2030. Specifically the commenter s supported the EPA's proposal for states to be able to choose to implement state goal requirements early (i.e., before 2020) , which could provide states with the ability to achieve the same amount of overall emission reductions, but to do so by making some reductions earlier.93 Comment 5 0 : Comments recommending that states should be allowed to get limited credit ("bank") for MWh generated prior to 2020, stating that early emissions reductions should be encouraged through emissions banking programs.

Response 5 0 : The EPA thanks the commenters for their support in using pre 2014 baseline dates for this rulemaking. As mentioned abo ve we are finalizing this rule using a 2012 baseline year. As the commenter s further mention, the rule finalizes “banking” options that add flexibility for states and regional planning groups to meet interim goals, within limitation as the commenter s sugg est. Additional discussion on these decisions are outlined in sections VIII.C and VIII. I of the final rule preamble of the CPP

. The following is a summary of the specific public comment:

Commenter s p roposed that the EPA allow existing solar measures to receive a credit for a limited time prior to the start of the 2020 compliance period. The commenter s recommended that states should be allowed to get limited credit ("bank") for MWh generated prior to 2020. Specifically, the commenter s suggested that state s should be allowed to bank MWh generated from the date their SIP is submitted, and that those credits be eligible for compliance purposes for 36 months from the date of the start of the compliance period.

The commenter s stated that this approach is consi stent with EPA's goal of compliance flexibility and EPA's rationale that states and EPA will need a few years to create and approve compliance plans prior to 2020. Further, the commenter s stated that limited banking after SIP approval ensures that only mea sures included in approved SIPs are used for compliance and incentivizes states to submit SIPs for approval in a timely manner. The commenter s stated that limiting banking to 2

- 3 years is aligned with best practices of most RPSs and regional markets which allow banking for 2

- 3 years without significantly reducing overall state goals. However, the
commenter s stated that some banking incentives early action and market momentum while reducing large fluctuations in the supply curve, which in turn will reduce co mpliance costs and increase the viability of building block 3 as a compliance option for states.

While the commenter s supported limited banking , the commenters stated that unlimited banking or extended banking of emission reductions beyond a 3 year time frame should not be permitted for states because unlimited banking would undermine the effectiveness of the Plan. Additionally, the commenters stated that the extended or unlimited banking creates distortions in the market by allowing states and EGUs to ch oose not to create new renewables until late in the compliance period or only create new renewables early on. According to the commenters, both create significant uncertainty for renewable energy markets, which may increase compliance costs or lead to stat es failing to comply. Further, the commenters expressed concern that unlimited banking may lead to gaming, higher potential for double counting, and enforcement challenges if the EPA uncovers validation issues with MWhs generated many years prior.

Commenter s generally agreed with the flexible state

- based approach and the specific standards and emissions levels set by the EPA for the states under its Clean Air Act section 111(d) authority. However, the commenters believe d that the timeline must be accelerated to stimulate critical early technology development activities. The commenters indicated this could be accomplished by allowing emissions banking for credits achieved at any point between the date94 of the proposal and later reasonable further pr ogress demonstrations (as EPA has often done in past Clean Air Act programs). The commenter s said this would provide one tool for driving transformative capital investments in technology in the shorter term.

Comment 5 1 : Comment s supporting the EPA's proposal that existing measures should be allowed to count during the compliance period.

Response 5 1 : The EPA thanks the commenters for their support in including existing measures and programs toward the meaningful reductions includ ed in the final rule. As requested by the commenters, the EPA has finalized a baseline for such inclusions at 2012. As requested by the commenters, the finalized version of the rule has more specifics on baseline year, and eligible programs, as well as gui dance for states in assembling their plans. See sections VIII.C and VIII. I of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

C ommenter s interpreted EPA's proposal regardi ng existing measures to mean that state measures which exist after the date of the proposal, June 18, 2014, can be used to drive emissions reductions during the compliance period (2020

- 2030). However, because building block 3 was factored into determinatio n of the state goals, the commenter s noted that existing renewable energy measures and actions can count if implemented prior to June 18 2014. The commenter s therefore concluded that MWh from renewable energy capacity installed pursuant to an existing

meas ure or program any time prior to 2020 can be counted towards compliance during the compliance period (2020

- 2030) if the existing measure is included in a state's implementation plan. For example, the commenter s noted that, if 1000 MW of solar capacity was installed in 2013 pursuant to an RPS and the state includes the RPS in its compliance plan, then emissions displaced by MWh from the 1000 MW of solar capacity during the compliance period (2020

- 2030) can count towards the state's 111(d) compliance requirem ents in that period.

The commenter s stated that existing measures can help states meet interim compliance goals set forth in the original proposal. The commenters believe d that this is consistent with EPA's interpretation of the BSER as including measures taken by states to reduce emissions across the electric system. The commenters further believe d that this is consistent with the cooperative model promoted by section 111(d) and the Clean Air Act, which provides states with significant flexibility in dete rmining the best method for reducing emissions. The commenters stated that allowing states to count existing measures towards compliance recognizes the investment already made by states towards emission reduction, and will allow states to carry forward pro grams that are in motion without distorting current markets.

However, the commenters noted that during the comment period there has been significant confusion regarding exactly which existing renewable energy measures can be counted towards compliance and when credit will be given. The commenters said this confusion is already threatening potential emission reductions by slowing project development because states and EGUs are uncertain which actions will count towards compliance, and when these actions can count. Therefore, while the commenters supported the proposal put forth by EPA as interpreted95 above, the commenter s requested that in the final rule the EPA more clearly state whi ch actions can count towards compliance and when such actions count.

Comment 5 2 : Comment s expressing c oncern that the CPP requires a level of CO2 emission reduction that is unachievable by existing EGUs and also by the short time frames for achieving the reductions due to the proposed deadlines.

Response 5 2 : The EPA disagre es with the commenter s that the levels of emissions reductions sought by this rule are not achievable. In this final rule we are providing flexibility to state and regional planning groups that will enable them the ability and time to legislate and enact t he changes they need in order to meet their interim and final targets. See section VIII.B of the final rule preamble of the CPP for EPA’s response to this comment.

The following is a summary of the specific public comment:

Commenter s stated that the levels of CO2 emission reductions and time frames for achieving them are not attainable. The commenters expressed concern that the proposed Clean Power Plan requires a level of CO2 emission reduction that is unachievable by existing EGUs a nd also by the short time frames for achieving the reductions due to the proposed deadlines. The commenters stated that contrary to the statutory framework under Section 111 (d) of the CAA, "outside

- the

fence" emission reductions from non

- affected sources and measures including re

- dispatching NGCC, RE, and EE would be necessary to meet the targets proposed for Pennsylvania. Because of the potential effects on fuel diversity, energy prices, and other consumer effects, the commenters argued that such policy d ecisions are better left to the United States Congress or other elected officials . The commenters stated that clearly, this is a concern of the Pennsylvania House of Representatives and Senate, both of which passed legislation that was signed into law by t he Governor of Pennsylvania. The commenters stated that this legislation mandates that DEP submit the proposed Section 111 (d) State Plan to the General Assembly for their review and approval. As proposed, the commenters stated that the Clean Power Plan co uld leave residential, commercial, and industrial U.S. consumers exposed to less reliable, more expensive, and more volatile electric markets in the future.

Comment 5 3 : Comment s stating that the EPA should follow the proposed compliance time frame a nd should not extend the proposed timetables unless the state has a valid reason for an extension, and stating that EPA should not adopt the alternative option of a single 5

- year compliance period in combination with weaker CO2 emission performance goals.

Response 5 3 : As stated above, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to States in constructing their plans to manage complexities that are stated by a large number of commenters. The EPA is finalizing the rule with a series of interim goals and a final goal in year 2030. Our reasoning for adapting the final timeframe, and flexibilities afforded states and regional planning partnerships, are detailed in sections V.C , V.D,96 V.E , and VIII.B of the final rule preamble of the CPP

. We are not finalizing the alternate final goals representing emission performance that would be achievable by 2025 , so comments on this topic are generally moot.
The following is a summary of the specific public comment:

C ommenter s stated that, at a minimum, states should file an initial proposal within one year and then can submit their complete plans to EPA if they get an extension. The commenters stated that this approach for compliance timing is reasonable and appropriate and w ould best support the optimization of overall carbon reductions consistent with the statutory requirements. Accordingly, the commenters disagreed with EPA's alternative option, a 5

- year period for compliance, in combination with a less stringent set of car bon emission performance levels

. The commenters argued that existing state programs could immediately play a role in helping to achieve this rule's proposed emission performance levels; thus for many states, development of compliance strategies need not w ait for over 5 years from the plan's announcement. The commenters stated that in anticipation of this proposal, many states were already contemplating design strategies that would achieve carbon reductions equivalent to those that could be required by Sect ion 111(d) emission standards.

The commenters noted that EPA recognizes states can achieve emission reductions in the short

term with many measures. The commenters disagreed with EPA's conclusion that renewable generating capacity can take longer than other methods to ramp

- up . The commenters stated that renewable energy, such as wind, is rapidly scalable and deployable. The commenters stated that land

- based wind power is readily available for development, and totals more than 8,000,000 MW of potential c apacity in the United States, enough to meet the total electricity needs of the U.S. more than 7 times over. The commenter s stated that the wind industry has seen tremendous growth in the past decade, increasing from 6,723 MW of installed capacity in 2004 to 61,946 MW in 2014, and shows continued growth with 13,600 MW under construction as of the end of the third quarter of 2014. The commenter s contended that EPA grossly underestimates the ability of renewable energy to be quickly installed and integrated i nto the grid as a compliance measure.

Commenters stated that EPA should not adopt the alternative option of a single 5

- year compliance period in combination with weaker CO2 emission performance goals. The commenters stated that EPA should not adopt t he alternative option imposing weaker CO2 limits over a 5

- yr time span. The commenters stated that EPA's own data and analysis shows that the best system of emission reduction deployed over this time period would achieve significantly greater emission redu ctions than are reflected in the proposed alternative state goals.

The commenters stated that EPA has not justified the assumptions underlying the reduced stringency of the alternative goals associated with the 5

- year compliance plan alternative. In setti ng the interim and final goals for this alternative option, the commenters stated that EPA made several adjustments to the set of assumptions used to generate the proposed goals associated with the 10

- year compliance period. See I d. at 34,898. The comment ers stated that first, with respect to the anticipated heat rate improvement from coal

- fired EGUs under Block 1, EPA used a value of four percent instead of six percent. Id. The commenters stated that second, under Block 2, EPA assumed that the potential a nnual utilization rate for NGCC units would97 increase to 65 percent instead of 70 percent. Id. The commenters stated that third, under Block 4, EPA assumed that annual incremental electricity savings achievable through a portfolio of demand

- side energy effi ciency programs would be one percent instead of 1.5 percent. Id. The commenters stated that EPA has noted, these assumptions may be "overly conservative," and "underestimate the extent to which the key elements of the four building blocks . . . can be achi eved." Id.

The commenters stated that EPA has provided no analysis to support the adjusted assumptions aside from the assertion that "the time period for implementation relates directly to the emission reductions that are achievable[.]" Id. The commenters stated that if EPA were to establish only a single 5

- year compliance period, the state targets should reflect the full emission reduction potential available during that 5

- year period, commensurate with potential shown during the initial five years of the proposed 10

- year compliance period as strengthened through the recommendations discussed in these comments.

Comment 5 4 : Comments agreeing with a shorter (5 year) compliance time frame, but without setting less stringent standards.

Response 5 4 : The EPA agrees that a 5 year period for compliance is too restrictive for a number of reasons, but the EPA disagrees that less stringent CO 2 emissions performance levels are the solution to that problem. We are finalizing the rule with a series of interim goals an d a final goal in year 2030. A full discussion of this decision making is included in sections V.C , V.D, V.E

, and VIII.B of the final rule preamble of the CPP

. We are not finalizing the alternate final goals representing emission performance that would be achievable by 2025 , so comments on this topic

are generally moot.

The following is a summary of the specific public comment:

In response to the request for comment on an alternative option, a 5

- year period for compliance in combination with a less stringe nt set of CO2 emission performance levels, commenter s agreed with the EPA's consideration of time as a component of the BSER, especially given that climate change may be mitigated best through prompt and early action. However, the commenter s stated that the alternate approach proposed for a less stringent program with a 2025 goal year is overly conservative with respect to achievability by that time.

C ommenter s urged the EPA to shorten the timeframe for compliance to 5 years without setting weaker standards to accommodate a shorter timeframe.

Comment 5 5 : Comments stating that further interim emission performance checks during the plan's performance period and milestones should be added in the final rule to ensure that states are on the trajecto ry of meeting their final targets.

Response 5 5 : The EPA agrees with the commenters and, as stated above, we are extending the time allowed for States to finalize their plans and meet the first of a series of interim goals,98 beginning in 2022. States must a lso check in midway and affirm that they are on target to meet their interim goals or provide a means to reach them if they are more than 10% off target. See section VIII.B of the final rule preamble of the CPP for EPA’s response to this comment. We are

no t finalizing the alternate final goals representing emission performance that would be achievable by 2025 , so comments on this topic are generally moot.

The following are su mmaries of the specific public comments under this comment:

Commenter s supported EPA's alternative proposal with respect to this issue, under which, in addition to submitting a plan demonstrating emission performance through 2030, states would be required to make a second submittal in 2025 demonstrating that their plan measures will a chieve the level of emission performance required in 2030 . If the plan is not on course to do so, the commenters suggested that the state submittal be required to strengthen or add to measures in the state plan to the extent necessary to achieve that level of performance. Commenter s also agreed that it is a good idea to update the state plan with a second submittal in 2025 , to have state program implementation milestones, and to make non

- compliance consequences more than a slap on the wrist.

Commenter s supported the EPA's proposal for tracking of state compliance plan performance as described below and further recommended that the EPA require states to undertake annual tracking of actual plan performance during implementation:

"In addition to demonstrating that projected plan performance will meet the interim and final state goals, the EPA proposes that state plans must contain requirements for tracking actual plan performance during implementation. For plans that do not include enforceable requirements for affected EGUs that ensure achievement of the full level of required emission performance and interim progress, the state plans would be required to include periodic program implementation milestones and emission performance ch ecks, and include corrective measures to be implemented if mid

- course corrections are necessary."

The commenter s also recommended that the EPA require that the state compliance plans include
true

- up provisions to ensure that they are on track to meet the interim and final compliance goals. The commenters indicated this could take the form of true

- ups, at least every 3 to 5 years, for the individual programs that contribute to state compliance goals, or an overall true

- up of the achieved state emissions red uctions. The commenters said this type of regular review will help prevent situations where states fall short of the emission reduction goals and have to rapidly make up deficits. According to the commenters, policy and investment changes in the power
sect or require some time to implement or adjust, so advance notice will be key to ensuring they are well aligned with the goals of the Clean Power Plan. According to the commenters, one example of the importance of this type of review comes from the RGGI state s, which, in 2012, undertook a program review of the CO2 budget. On the basis of changing market conditions, which showed a significant excess supply of allowances relative to actual emission levels in the region, the states chose to take advantage of the additional cost

- effective emissions achievable and reduce the level of the carbon cap. The commenters supported the EPA's proposal that states provide regular review of the performance of state implementation plans could provide important99 information to th e EPA as it reviews and updates the whole Clean Power Plan prior to 2025, as mentioned above.

Comment 5 6 : Comment s requesting definition of “less stringent”, and stating that benefit should be weighed against the outcomes of the more stringent 10

- year plan.

Response 5 6 : The EPA thanks the commenter s for their response s to our request s . We are finalizing this rule to extend the time allowed for States to finalize their plans and meet the first of a series of interim goals, beginning in 2022. See sections V.C , V.D, and V.E of the final rule preamble of the CPP for EPA’s response to this comment.

T h e following is a summa r y of the specific public comment:

Commenter s noted that the agency is also requesting comment on an alternative 5

- year period for compliance, in combination with a less stringent set of CO2 emission performance levels. The
commenter s stated that, while an option for a 5

- year compliance period sounds reasonable, they need to better understand what the definition(s) of a "less stringent" performance level are . The
commenter s stated that the benefit should be weighed against the outcomes of the more stringent 10

- year plan.

Comment 5 7 : Comment s stating that states need the full compliance period through the end of 2030 to achieve their goals, and that planning, permitting and construction could not be accomplished by 2025 as required by the alternate goals.

Response 5 7 : The EPA agrees with the commenter s and, as stated above, we are extending the time allowed for States to finalize their plans and meet the first of a series of interim goals, beginning in 2022. States must also check in midway and affirm that they are on target to meet their interim goals or provide a means to reach them if they are more than 10% off target , as described in VIII.F.3

. See sections V.C, V.D, V. E, and VIII.B of the final rule preamble of the CPP for EPA’s response to this comment. We are not finalizing the alternate final goals representing emission performance that would be achievable by 2025 , so comments on this topic

are generally moot.

T h e following is a summar y of the specific public comment:

Commenter s stated that the timeline EPA established for states to achieve their alternate emission reduction goals is not realistic. The commenters noted that states need to have the full proposed compliance period, through the end of 2030, to achieve their goals . According to the commenters, this time will minimize compliance costs and allow states to prudently plan for these significant changes to the power sector, many of which require considera ble lead time due to planning, permitting and construction time frames and could not be accomplished by 2025 as required by the alternate goals.100 Comment 5 8 : Comment s acknowledging early efforts to achieve higher energy efficiency by this utility seems to have disadvantaged it s customers since the least

- cost options have already been implemented.

Response 5 8 : The EPA is finalizing a means for state and regional planner s to make use of EE advances made during the 2012 baseline year, forward. See sections V.A, V.C , V.D, V.E, VIII.B, VIII.K.1, and XII.D of the final rule preamble of the CPP for EPA’s response to th ese comments.

T h e following is a summar y of the specifi c public comment:

Commenter s listed their efforts to achieve higher energy efficiency for themselves and their consumers. They then stated that by attacking the least cost options in advance of EPA's proposed Rule, they appear to have disadvantaged thei r community under the Rule relative to the state not only in securing credit for their past actions but also in removing the lowest cost

effective options to meet EPA's expectations moving forward, as their lowest cost programs have already been utilized b y eligible customers. The commenter s read and understood EPA's assertion that its model is a national model and that EPA does not expect each utility to meet the scenario utilized for setting the goals but would caution EPA that when a utility or state can not meet one or more expected BB rates, increased compliance in other areas becomes a mandate. Based on the commenter s ' analysis, neither they nor their state will be able to meet BB 1 reductions or BB 2 reductions requiring a significant overweight in BB 3 and 4. Yet, the
commenter s ' efforts to reach those in the greatest need of EE improvements also impair future capabilities. Many of these projects involve capital expenditures that reap important rewards at the location but are not economic. Because capi tal to invest in EE projects is not inexhaustible, these expenditures, while an important component of the commenter s ' community obligation, saps from their ability to make the more efficient expenditures that EPA envisions.

In addition, the commenter s stated that they are a very small vertically integrated utility, having a very efficient transmission system to serve its load. The commenter s stated t hat they ha ve a compact, multi path or looped transmission system that makes their system extremely eff icient. The commenter s repeated that they built a reliable, efficient transmission system that their customers paid for well in advance of this proposed rule. The neighboring investor owned utilities are now trying to upgrade their transmission system and recovers costs from the markets which the commenter s ' customers must cost share, but the commenter s received no compensation from outside for their existing meshed transmission system. The commenter s were gravely concerned that the Rule will drive addi tional, costly transmission projects that have high ROI for transmission providers within the markets, driving up costs for their consumers, with very little to no actual benefit. The commenter s stated that as a small municipal utility principally serving their community, the transmission lines are very short distances, such that increasing efficiencies, even just another 0 .09%, would be relatively impossible for the commenter s to achieve. Commenters stated t he U.S. EPA's expected efficiency increase in tr ansmission did not consider a small municipal utility with a small and networked transmission system in establishing the efficiency goal.101 Comment 59 : Comment s stating that the 2020 interim goal and 2030 final goal are not attainable or realistic.

Response 59 : The EPA agrees with the commenter s that the final rule needs to provide additional time and flexibility to allow states and regional planners a means to manage existing and necessary infrastructure. For this and several other reasons, includ ing infrastructure needs, funding, timing and planning concerns

, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes t his additional time to allow for discussions, legislation, planning, and forging agreements as necessary to manage the very complexities mentioned by the commenter. We are providing additional flexibilities in the final rule with the goal of allowing stat es avenues for encouraging modernization and upgrades to portions of their portfolio as well as make accommodations to existing infrastructure where it is necessary to do so. A discussion of this is included in sections II.E and VIII.B of the final rule p reamble of the CPP

.

T h e following is a summar y of the specific public comment:

Commenter s stated that the Navajo Generating Station supplies power and water to 4 million people in Maricopa County. The commenter s stated that the 2020 interim goal and 2030 final goal is not attainable or realistic. The commenter s stated that they do not have the capacity to comply with the challenges that are in front of them in the next 72 months because the Central Arizona Projec t owes the United States $1.6 billion and is making a $50 million a year payment to the trust fund that distributes all these funds for water right settlements throughout the state.

The commenter s stated that the original deal with the United States when the Central Arizona Project was created was to operate the Navajo Generating Station under the Regional Haze Rules until 2066. The commenter s stated that they borrowed money, made commitments, and signed long

- term contracts with most of the cities in Centr al Arizona and the 10 tribes that they serve. The commenter s stated that now that timeline has gotten shortened in the TWIG agreement and this new set of rules brings them into compliance in 2030 and mostly in 2020 . The commenters stated that the United S tates through their various agencies has not lived up to the original bargain.

The commenter s expressed gratitude for the improvements that these reg ulations bring to the tribe. The commenters noted it raised water rates by 11 percent to pay for the $1 bi llion in upgrades to the Navajo environmental constraints, the coal leases, and the transmission lines that contain the components for the Navajo Generating Station that serves the Central Arizona Project.

The commenter s stated that they do not have the ab ility to just switch fuel sources and go to natural gas . The commenters stated that t he original deal with the United States is 97 percent of our energy was to come from the Navajo Generating Station and it was to be used for the farms and the commitments that we made to the people of Central Arizona and the tribal settlements that the United States made under their fiduciary duty.102 The commenter s stated that the target date has gone from 2066 to 2020 and that they do not have the capacity, the bonding cap acity, or the rate

- making capacity to write a check for $350 million in the next 72 months.

Comment 6 0 : Comment s on counting measures implemented after state plan submittal

Response 6 0 : The EPA recognizes the value of early actions that deploy CO2

- reducing investments, such as RE and demand

- side EE measures, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both mass

- based and rate

- based plans. For discussion of state plan requirements related to incentivizing early action , see Section VIII. B of the final rule preamble of the CPP.

The following are summaries of the specific public com ments under this comment:

The commenter s also urged that states should be allowed to count measures that are implemented after the submittal of the state plan, even though the programs were initiated at a prior time.

Comment 61 : Commenters state d th at significant time will be required to site, plan, design, permit, and construct the new infrastructure required to meet the interim and final goals of a 111(d) program, noting that in Arizona, more than 80% of the land is owned by federal and state
gover nments and tribal nations, and siting and permitting of electricity and gas transmission infrastructure on federal or tribal land is subject to many processes and procedural requirements for compliance that can threaten timely completion of these projects. Commenters explain ed that

“ there are several factors that complicate a utility's ability to construct the new energy infrastructure needed to meet the requirements associated with the Proposed Rule. One of the biggest issues is the lengthy timelines associated with obtaining necessary environmental approvals to construct and operate these facilities. (verbatim) The Western U.S. is unique in the amount of land owned by the federal government, state governments, and tribal nations. SRP is particularly c oncerned that the high proportion of federal, state, and tribal lands in Arizona

- more than 80%

- represents unique challenges to timely completion of new energy

- related projects. Specifically, in Arizona, approximately 41% of land is owned by the federal government, almost 13% is controlled by the state, and about 27% belongs to tribal nations. In addition, 7,220 square miles within the state have been identified as critical habitat for threatened or endangered species listed under the Endangered Speci es Act. Figure 7

- 7 on the following page shows the extensive amounts of federal and tribal lands within Arizona, including critical habitat designations. Siting and permitting of new energy infrastructure on federal land can take 10 years or more. In many cases, obtaining the permits necessary to construct a transmission line can take longer than constructing the line itself. ”

Response 61 : The EPA agrees with the commenters that the final rule needs to provide additional time and flexibility to allow states and regional planners a means to manage existing and necessary infrastructure. For this and several other reasons, including infrastructure needs,103 funding, timing and planning concerns

, the EPA has extended the time allowed fo r States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. See Section VIII.B of the final rule preamble of the CPP.

6.1 .3 Start date for performance period for interim goal

This section discusses the start dates for the interim step periods (i.e., 2022

- 2024, 2025

- 2027, 2028

- 2029). This relatively long planning and implementation period provides states with substantial flexibility regarding methods and timing of achieving emis sion reductions. Comments were received on both sides (for and against) the interim periods and overall compliance deadline of 2030.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Respo nses are provided for these topics.

Additional comments on this topic are in RTC chapter 6.1.2 and 6.1.4

.

Comment 1: Comments opposing any change in the CPP to lengthen the compliance deadline or relax the stringency of the glide p ath.

Response 1: The E PA thanks the commenters for their support in regulating GHG emissions and we are sensitive to the commenters’ sense of urgency. While many meaningful GHG reductions are occurring right now, after review of comments received as well as data and studies th at have been provided, the EPA is extending the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The EPA has not extended the final date of compliance demonstration in the final rule, but recognizes the complexities involved with assembling the workable pieces necessary to enact a state or regional partnership plan and develop a glide path toward 2030. In support of the commenters’ statement, the EPA is aware of

sev eral efforts to reduce CO2 emissions that are already underway across the country and we expect these efforts, and those put in place by State plans, will work to reduce emissions of CO2 to levels below the minimum goal requirements. See sections I, V.A.3 .g , VIII.B

, and VIII. G of the final rule preamble of the CPP for further discussion. Cost concerns raised by commenters are addressed in sections X I.D and X I.E of the final rule preamble

. The following are su mmaries of the specific public comments unde r this comment:

Commenter s argued that the rule is too slow to respond to the crisis at hand. Rather than allowing states to delay action for several more years, the commenters stated that the rule should require that meaningful greenhouse gas reductions occur prior to 2020

.

Commenters strongly opposed any effort by EPA to relax the stringency of the glide path or phase in emission reductions under Building Blocks 1 and 2, an issue raised in the agency's104 recent NODA. The commenters stated that if EPA preserves the current rule schedule, states and utilities will have five years after EPA finalizes the Clean Power Plan and two to three years after state plan approval to prepare for implementation. The commenters stated that moreover, under t he current proposal, the interim goal is based on an average across all years, rather than on performance in any specific year, and the final goal need only be attained at the end of the compliance period. The commenters stated that as such, states are fre e to apportion their emission reductions across the period however they choose, so long as the interim and final goals
are met. The commenters stated that this measure of flexibility provides a sufficient buffer against stranded assets and other technic al challenges toward achieving compliance, and no additional relaxation of the glide

- path is necessary, irrespective of when the compliance period begins and ends. The commenters stated that we therefore urge EPA not to accede to any requests that it es tablish a more lenient pathway toward compliance in the final rule.

Commenter s stated that the Clean Power Plan will play a critical role in meeting the U.S. target for more stringent GHG emission reductions and provide an incentive for other countri es to reduce their carbon pollution. The commenters stated that with President Obama's latest commitment, carbon emissions reductions in the early years of the Clean Power Plan's proposed compliance period will be essential. The commenters stated that a st ronger Clean Power Plan is essential to assure that the U.S. reaches its international climate targets for 2020 and 2025. The commenters stated that yet industry and several states are advocating for a more gradual "glide path" that would give utilit ies additional years to start achieving the reductions from Building Blocks 1 and 2. The commenters stated that States are already given significant flexibility because they are allowed to use averaging over the entire compliance period. The commente rs stated that delaying the phase

- in of Blocks 1 and 2 would weaken EPA's proposed interim targets, and delay long needed carbon pollution reductions. The commenters stated that the interim targets should not be relaxed, but strengthened and, indeed accele rated. The commenters stated that as discussed below, the Clean Power Plan's compliance deadline should end in 2025 and the agency should revise and strengthen the standard afterwards. The commenters stated that not only is a stronger Clean Power Plan n eeded to help meet the more ambitious 2025 target that the U.S. has agreed to achieve, but a commitment to early reductions is also vital to U.S. credibility and leverage over the critical next 12 months.

Commenter s stated that EPA's additional October 2014 publication of the "Notice of Data Availability" for the Proposed Rule is disconcerting because it contains proposals that would further weaken the already weak guidelines. The commenters stated that these proposa ls would undercut and, in some instances, vitiate the purpose and intent of section 111(d) altogether. The commenters stated that delaying compliance implementation even further causes additional costs inherent in delay itself, and increasing the use of na tural gas exacerbates the harmful effects of the Proposed Rule's over

- reliance on this fossil fuel. The commenters urged EPA to discard all but one of these new proposals.

The commenters stated that EPA should strengthen rather than weaken the compliance trajectory or "glide path" of emission reductions. The commenters stated that one of the preferred reasons for weakening the interim compliance targets is that the propos ed interim goals supposedly "severely limit the opportunity to fully take advantage of the remaining asset value of existing coal

- fired generation." The commenters stated that EPA's apparent agreement that this sentiment constitutes a legitimate object ion to the Proposed Rule is lamentable. The commenters stated that105 although section 111(d)(2) states that EPA shall take into consideration, "among other factors, remaining useful lives of the sources in the category of sources" to which a standard applies

, nothing whatsoever requires EPA to devise a standard so lenient that existing sources can "fully take advantage" of their "remaining asset value.' The commenters stated that such an interpretation of section 111(d) would render the statute meaningless, a s it would allow the full fleet of dirty, outdated, and pollution

- spewing plants and factories to foul the air without any additional pollution controls until the last bit of anticipated profit (the "remaining asset value") has been wrung from them. The commenters stated that that is not what Congress had in mind, to the contrary, the "essential purpose" of the Clean Air Act is "reducing emissions as much as practicable" The commenters stated that Section 111 is intended to force the introduction of new technology, not to allow polluting facilities to avoid its application. The commenters stated that allowing old plants to pollute until their operations (not counting the externalities of pollution) run into the red turns the structure of the Clean Air Act on its head: the Act does not protect industry profits but imposes costs so that new technologies are implemented, and approves of those costs as long as they fall short of levels that are "exorbitant," "exorbitantly costly," or "more than the industry could bear and survive." The commenters stated that in short, the desire to allow the entire class of to

- be

- regulated sources to "fully take advantage" of their "remaining asset value" is an unlawful, not a legitimate, consideration under section 111(d).

The commenters stated that the argument is also factually incorrect. The commenters stated that as the Sierra Club comments demonstrate, the median age of a coal

- fired unit in 2025 (assuming no retirements) will be 52 years, whereas the average desig n life assumed at the time of these units' construction was 30 to 40 years. The commenters stated that a review of approximately 300 coal units that retired between 1993 and 2012 indicates that the average age at the time of its retirement is 53 years. The commenters stated that in other words, coal

- fired power plants are well past their useful lives or remaining asset values. The commenters stated that supporting them past that time while allowing them to damage the climate is not EPA's business.

The co mmenters stated that at the same time, EPA should not consider any particular plant's "book life" or the costs of upgrades it may have installed already. The commenters stated that though the remaining useful lives of the affected sources is one factor to be considered, the remaining useful life or particular economics of a specific unit is not EPA's concern. The commenters stated that EPA's job is to establish BSER, an inquiry that does not focus on specific plants, but sets national guidelines based on fo rcing technological change at a cost that is not "exorbitant" or more than the industry as a whole can bear.

The commenters stated that moreover, the Clean Power Plan is premised on the clear understanding that (a) coal

- fired power plants are the main c ulprits among EGUs causing climate change, and (b) the fleet is aging and soon to be obsolete, with many existing plants soon to retire, regardless of any rulemaking. The commenters stated that to now turn about and act to prop up and prolong the existence of these plants contradicts the rulemaking's very premise. The commenters stated that the assertion that coal

- fired plants must be permitted to run longer because only they can ensure electricity reliability during severe weather events is unsupported by evidence. The commenters stated that even if such evidence existed, the Proposed Rule already leaves enormous "flexibility" to remedy such a situation. The commenters stated that for example, a state plan could continue to allow a specific plant t o stay available for back

- up operations during severe weather; it could require that plant to install upgrades so its emissions106 are reduced when and if it must be run; it could use the remaining building blocks to achieve its goals; it could devise othe r carbon reduction measures not included in the rulemaking; or it could link up with other states and, in effect, purchase emission reductions from them. The commenters stated that in short, in light of the plethora of compliance options, allowing all states to delay compliance even beyond the unreasonably long compliance periods already built into the Proposed Rule is unnecessary, unreasonable and capricious.

The commenters stated that as the agency is aware, delay itself increases the damage w rought by carbon emissions exponentially, and these delay damages are recurring, irreversible and permanent. The commenters stated that should EPA indeed reduce compliance obligations further, it must be transparent about the consequences of any such actio n by accounting for the additional damage done by further delay, using the correct data for the GWP and leakage rate of methane as explained above, and using updated social cost of carbon calculations that reflect the latest, peer

- reviewed evidence. The co mmenters stated that at a minimum, those costs must be weighed against actual, as opposed to hypothetical, costs states can prove would be incurred should the compliance dates be made even more lenient, costs that are unlikely to outweigh the damage wrough t.

The commenters noted that industry complaints concerning the purported "infeasibility" of retiring coal

- fired power plants, or even of using them less frequently, because of "recent significant capital investments at some existing coal

- fired units ," simply underscores the inevitable negative consequences of the Proposed Rule's preferment of NGCCs. The commenters stated that the Proposed Rule admittedly spurs further investment in NGCCs, leading to certain claims a decade or two from now that switching from natural gas to renewable energy is equally "infeasible" because of capital investments made in direct reliance on EPA's action today. The commenters stated that EPA must forestall a boom in new gas

- fired power plants for this reason alone.

C ommenter s opposed phasing in the requirements over the 10

- year period, because it will reduce the national stringency of the proposal

. The commenters noted that 2020 is still 6 years away. The commenters noted that in the 6

- year time period between 1999 and 2005, Connecticut added significant quantities of new natural gas fired, combined cycle and simple cycle generation to its generation fleet. In that time period, the commenters noted that natural gas fired generation rose from 27% to 55% of Connecticut's fossil generation. According to the commenters, by 2010, natural gas accounted for approximately 96% of fossil generation in Connectic ut. The commenters contended that Connecticut's experience has demonstrated that the redispatch envisioned in the CPP is reasonable and can be achieved in the allowed time frame

. The commenters did not object to phase

- in that is off

- set by other measure s that increase the stringency of the CPP. However, the commenters objected to state plans that delay implementation to late in the compliance period because, at that point, if states are lagging behind their goals, the emission reductions will likely be u nable to be achieved without significant risk to system reliability.

Additionally, the commenters stated that the Clean Power Plan proposal is not prescriptive, and noted that it offers flexibility for states to use additional EE and RE to compensate for the inability to fully satisfy the heat rate improvements and redispat ch to natural gas required in107 Building Blocks 1 and 2. Therefore, according to the commenters, states have options to avoid the perceived "cliff" discussed in the NODA.

Commenter s stated that EPA should call for more ambitious reductions and ensure states stick to the schedule by allowing for no extensions on plans for 2020.

Comment 2 : Comment s urging the EPA to shorten compliance periods and incorporate ongoing updates to the emission rate standards.

Response 2 : The EPA thanks the commenters fo r their support in the reduction of GHG emissions and we agree with the commenters that shorter interim compliance goals are a more robust approach for helping states and regional planning groups to establish their glide path, perform periodic assessments to demonstrate glide path agreement, and move consistently toward the final goal of 2030. A discussion of this is included in section VIII.B of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comm ent:

Commenter s stated that EPA should shorten compliance perio ds and incorporate ongoing updates to the emission rate standards. The commenters stated that a number of the problems with the Proposed Rule's BSER stem from the challenges inherent in predicting the impact of technological progress to 2030 and beyond. The commenters stated that given the rapid rate of improvement in advanced energy technologies

- e.g., solar PV panel costs declined 12

- 14 percent in 2013 alone

- it is difficult for EPA in 2014 to accurately project emission reduction potentials in 2030.

The commenter s stated that the long compliance period in the Proposed Rule, which does not even b egin for 6 years, also creates a timing issue when it comes to implementation. According to the commenter s , by averaging state emissions over 10 years in the interim compliance period, the Proposed Rule allows for years of delay in action without complianc e implications. The
commenter s stated that given the extensive experience of states in deploying advanced energy technologies through government and utility programs, there should be no need for a prolonged
ramp

- up period in emission reduction. Furthermore , the commenter s stated that greater clarity on the timing of implementation would help the advanced energy industry invest appropriately to meet compliance

- driven demand for technologies that provide emission reductions.

Comment 3 : Comment s that the proposed interim compliance period does not allow sufficient time for RTOs and ISOs to evaluate and potentially alter m arket rules to accommodate changes in dispatch.

Response 3 : The EPA agrees with the commenters that RTO’s and ISO’s, along with other entities involved at key positions, will need additional time to organize their plans, conduct reviews and adjust practices as necessary, and formulate revisions to business models a s necessary to move toward meeting the first interim goal of 2022, and other goals beyond. A108 discussion of this is included in s ection s V.A.3.g., and VIII.B of the final rule preamble of the CPP

. The following are summaries of the specific public comm ents under this comment:

Commenter s stated that the proposed interim compliance p eriod does not allow sufficient time for RTOs and ISOs to evaluate and potentially alter market rules to accommodate changes in dispatch. The commenters stated that the cha nges in how demand is met envisioned by the proposed guidelines

--- increased dispatch of existing NGCC units, increased deployment of RE generation and use of existing RE generation and the preservation of some existing nuclear units

-

-- will have significant implications for the wholesale electricity markets operated by RTOs and ISOs. The commenters stated that current market structures are built around the concept of security

- constrained economic dispatch. But, the commenters noted that state plans could req uire different approaches to dispatch. The commenters stated that because each market has its own set of rules, it is not immediately clear how the RTOs and ISOs will respond to such state plans. As a general matter (and at minimum), the commenters stated that adequate time is required to ensure appropriate consideration and rule changes are made in each market. The commenters stated that replacing rate based interim targets with a state determined glide path with defined and verifiable milestones to achiev e the final 2030 emission target levels help provide adequate time for a reliable transition to new market rules.

The commenters stated that wholesale electricity markets are under the jurisdiction of FERC, and any market changes will require FERC approva l. The commenters stated that under the FPA, FERC is required to ensure that rates are "just and reasonable" and "not unduly discriminatory or preferential." FPA sections 205(a) and 206(a). The commenters stated that after state plans are submitted and app roved, the RTOs and ISOs must evaluate and implement any market changes that will be needed to effectuate state compliance plans. The commenters stated that the RTOs and ISOs will need time to determine any necessary market rule and system changes; vet the se proposed changes through their stakeholder processes; obtain state and federal approvals, including FERC approval; and reliably implement the required changes. The commenters stated that in RTO/ISO markets, the stakeholder process can take six to eight months, even on an expedited basis. The commenters stated that FERC approval can take as long as a year or more, and implementation cannot start before final approval. Accordingly, the commenters stated that even on the most expedited basis, RTOs and ISOs would have very little, if any time, to make market changes before 2020.

Comment 4 : Comment s that the states and regional planning groups should have more time to finalize their plans and has moved the start of the interim period from 2020 to 2022 , because EPA's compliance options will be difficult, if not impossible, to implement to the necessary levels in such a sh ort time period.

Response 4 : In response to this and similar comments regarding timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time and flexibility to manage complexities such as109 reliability, permitting, planning cycles, infrastructure addition and modifications, legislative changes, forward market sales and system operation planning . A discussion of these concerns is included in s ection s VIII.D and VIII. G of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the proposed schedule leaves insufficient time between approval of state plans and 2020, the start of the interim compliance period . The commenters stated that the interim compliance period presents a significant problem with respect to compli ance because of the extremely compressed amount of time between when state plans are scheduled to be completed and approved by the EPA and 2020, the proposed start of the interim compliance period. The commenters noted that, based on the EPA's proposed pla n submittal schedule, states can submit their plans to the EPA as late as June 2018 if they participate in a multi

- state program. The commenters contended that, while it is too early to know what approach states will take with respect to their plan develop ment, the EPA may not approve state plans until mid

2019, just 6 months before the start of the interim compliance period, which is clearly unworkable. The commenters noted that in the Proposed Guidelines, the Agency assumes that Building Blocks 1 and 2 wi ll be fully implemented by 2020, but provides no evidence that states can actually do so. The commenters argued that there is a significant void between the EPA's assumptions and the reality regarding states and affected entities' ability to meet the inter im goals on the schedule the EPA has proposed. The commenters stated that the 2020 start date for the interim compliance period simply leaves inadequate time after state plan submittal and approval for affected entities to develop compliance plans, have th em approved, and implement those plans

.

The commenters stated that the EPA's assumed 6 percent heat rate improvemen t for existing coal

- fired EGUs in Building Block 1 is unachievable for numerous reasons unrelated to the implementation schedule for Buil ding Block 1. Even if the proposed schedule provided adequate time to plan, design and implement heat rate improvements, 6 percent is a technically unachievable level of improvement. However, the commenters stated that because the 2020 interim state goals reflect full implementation of Building Block 1, states and affected entities will be forced to look elsewhere for reductions in 2020 to make up for the Building Block 1 shortfall. The commenters stated that this only exacerbates the problems presented by the interim compliance period and the 2020 goals in particular, because there is not ample time to identify and achieve the extra reductions from other measures. Regarding Building Block 2, which the EPA has also assumed is fully implemented by 2020, the c ommenters state d that the 70 percent capacity factor the EPA assumed for all existing and under construction NGCC units is actually more like 80 percent or higher because the EPA based its calculations on nameplate capacity rather than net rated capacity. Therefore, according to the commenters, it's unlikely that existing and under construction NGCC units would be able to r amp up operations in 2020 to fill the gap left by Building Block 1 to this level of continuous operation, let alone achieve the capacity factor the EPA assumed in Building Block 2. The commenters stated that the full implementation of Building Block 2 could require by 2020 in many states a substantial additional build out of transmission infrastructure and natural gas pipeline capacity and the EPA has failed to even demonstrate that the full implementation of Building Block 2 is achievable by 2020. Being unable to achieve either Building Block 1 or 2 by 2020, the commenters noted that states would have to look elsewhere to make up the diffe rence. Yet, the commenters stated that it is highly110 unlikely that many states could get more out of Building Blocks 3 an d 4 than the EPA has already assumed in the state goals for 2020 , again due to the limited time between state plan submittal and approva l and 2020. The commenters stated that there is also insufficient time to look beyond the Building Blocks to identify and implement other potential CO2 emission reduction opportunities to make up the shortfall. The commenters stated that there are few if a ny options beyond those the EPA used as the basis for its BSER determination to further reduce CO2 emissions that could be implemented in the timeframe required by the interim compliance period. Therefore, the commenters contended that the EPA's decision t o frontload emissions reductions for many states will likely result in the failure of states to meet their interim compl iance period average goal.

The commenters stated that regulated electric utilities have a legal duty to make reasonable and prudent inve stments pursuant to the review of their public utility commissions. The commenters stated that regulated utilities generally need prior commission approval before pursuing new projects such as new generation, demand

- side energy efficiency, and major transm ission projects. For projects needed to comply with the requirements of a state section 111(d) plan, the commenters noted that utilities typically will not seek commission approval, nor would commission approval likely be given prior to the EPA approving a state plan because there is too much uncertainty about the final regulatory requirements for utilities or utility commissions to act before plan approval. In addition, the commenters stated that once the EPA approves a state plan, it can take years for th e utility to complete the necessary planning, receive the required permits and approvals for and implement the need ed projects. Therefore, the commenters contended that the EPA's assumption that states can take significant steps to reduce emissions in advance of the start of the interim compliance period is incorrect. The commenters stated that the implementation schedule must take this reality into account.

Commenter s sta ted that EPA's timeline does not take into account realistic planning cycles that are required to implement the broad array of options that may be required to comply with the standard, especially in implementing measures in the 2015 to 2020 time period to meet the aggressive requirements of the interim compliance period. The commenters noted that the rule proposes the following timeline:

• June 2015

- final rule promulgated

• June 2016

- state plans due to EPA

• June 2017

- 1

- year extension for state plans

• June 2018

- 2

- year extension for multi

- state plans

The commenters recommended that the first compliance period should not begin until a minimum of 5 years after the state's compliance plan is approved by EPA. The commenters stated that the CAA does not prescrib e specific deadlines by when states must submit Section 111(d) plans to EPA, nor does the statute impose deadlines for EPA to approve such plans. Therefore, the commenters suggested that EPA should provide states adequate time to develop workable plans tha t are not constrained by unrealistic schedules.111 The commenters said a rule that will have enormous and far reaching impacts on the U.S. economy should not be rushed by arbitrary deadlines. The commenters contended the 2020 goals are unrealistic and will be difficult to achieve in most states as they do not take into consideration the complexity of initiating and implementing new projects

.

Commenter s argued that sources have an inadequate amount of time to meet the interim compliance targets set to begin in 2020.

Commenter s contended that the emission rate goals in the proposed rule are unreasonably aggressive in the early years for them (and their member LPCs) to reasonably achieve. Because there are numerous state planning actions that must be both es tablished and then implemented by 2020 under the proposed rule, the commenters said the reduction required for them to meet EPA's initial 2020 compliance date is an overly ambitious and unachievable goal

.

Commenter s stated that EPA's proposed glide

- path solution, which is addressed in the NODA, would allow for compliance options to be done sooner and then average these reductions over a longer period of time, for example from 2017 to 2029. The commenters stated that this is not a workable solution. The commenters stated that to have any success in implementing Building Blocks 2, 3 and 4 and achieve the emission rate reductions required by the Proposed Rule, states must permit, site, and construct substantial new infrastructure and promulgate new legislative initiatives . The commenters stated that these changes simply cannot be completed by 2020 . The commenters provided the timeline below to demonstrate that the construction of infrastructure alone is prohibitive.

Anticipated Imple mentation Timeline:

• June 2015

- Final GHG Rule

• June 2017

- State Plan Proposed, with allowed one year extension

• June 2018

- EPA approves State Plan

• 2017 to 2018

- North Dakota Public Service Commission (NDPSC) 2

- yr Integrated Resource Plan completed and su bmitted to commission for proposed generation resources

• 2019

- NDPSC issuance of Advanced Determination of Prudence order of new resource implementation and retirement of existing resource if determined a prudent decision by the commission via certificatio n of public convenience and necessity filing

• 2019 to 2021

- MISO interconnect and network upgrade study completed for existing resource retirement and new resource

- re

- evaluate resources and resource locations depending on network upgrades identified or i f major reliability concern identified

• 2020 to 2021

- Obtain major permits and public service commission siting approval

• 2020 to 2025

- Obtain major permits for electric and/or natural gas transmission infrastructure, depending on location, project length and environmental concerns112 • 2020 to 2025

- Obtain NEPA Record of Decision, if required

• 2019 to 2022

- Design, engineer, develop bid specifications, award bids and procure resource equipment and receive delivery

• 2022

- Begin resource construction

• 2022 to 202 5

- Begin infrastructure construction

• 2025

- Begin resource construction if NEPA review required

• 2025 to 2026

- Commission and resource online, depending on infrastructure construction schedule

• 2028

- Commission and resource online if NEPA review required

The commenters stated that this timeline reflects a realistic timeframe for con structing new infrastructure and generation necessary to achieve the emission rate reductions required by the Proposed Rule. The commenters stated that it is readily apparent th at states and generating companies would not have time to construct the infrastructure necessary to meet the interim goals

.

Commenter s stated that t he glide path alternative recognizing certain pre

- 2020 reductions is intriguing, but more time is needed to fully review the alternatives. The commenters recommended that the final rule provide states with the flexibility to set their own glide paths that demonstrate how each state intends to meet its interim and final state goal.

Commenter s stated that the final guidelines will set the emission rate goals for the states, but how these goals will be achieved depends on the reductions actions and measures that states include in the compliance plans that will be submitted to EPA for review and approval. The commenters noted, as EPA has recognized, states need the flexibility to design plans that reflect a range of state

- specific circumstances. Importantly, the commenters noted that states need real flexibility in order to be able to choose the m ost cost

- effective reductions, as determined by the states, to ensure that electricity remains affordable for consumers. The commenters noted that states also need clarity on a range of topics so that they can craft compliance plans that will be approvable

. Specifically, the commenters noted that states need the flexibility to design emission rate reduction glide paths that reflect the states' determination of the best way to achieve the 2030 goals while maintaining reliability and protecting the affordabi lity of electricity. The commenters stated that the current design of the interim compliance average and period forces many states to achieve the majority of required reductions by 2020 , if not before. According to the commenters, this is not practically a chievable and deprives states of the flexibility to design their own compl iance plans or choose the pace of reductions to respect state

- specific conditions and circumstances. The commenters stated that implementing actions and measures that comprise the fo ur BSER Building Blocks

- which also will comprise the centerpiece of most states' compliance plans

- will require states, electric utilities and other regulators to assess the impacts113 of the Building Blocks on the interconnected power system. The commente rs noted that the complex analysis required will take time, as will making the changes necessary to accommodate the dramatic shift in how electricity is generated and delivered envisioned by the proposed guidelines. The commenters recommended that the fina l guidelines should ensure that adequate time is available, both to design compliance plans and to implement them. The commenters noted that there are a ra nge of ways that states could design compliance plans that accommodate both emission reductions and r eliability. The commenters recommended that the final guidelines should clearly authorize this range of options, so that states have the confidence to pursue them, pending final EPA approval of compliance plans.

Commenter s recommended EPA provide flexib ility in how it will allow affected states to meet the interim goal, particularly if a multi

- state or regional approach is developed by a group of states or a region.

The commenters noted there has been much discussion on the achievability of Washington S tate's interim goal. The commenters recognize d the complicated processes that will need to occur in order to develop, finalize, and approve the state plan. The commenters stated to be hopeful that Washington State may explore the possibility of a multis tate or regional approach. While stating that the goal EPA established for 2030 should remain intact, the commenters recommended flexibility on meeting the interim goal, as noted above.

Commenter s stated that because compliance with the interim goal is to be measured on a 10

- year average basis between 2020 and 2029, any delay in reducing emissions in the early years of this period would have to be compensated for by accelerating emission reductions beyond the final goal in the later years . The commenters noted that since the state's plan may not be approved by EPA until as late as the middle of 2019, requiring such a significant emission reduction beginning only a half year later is not realistic.

The commenters explained that new generation may also be needed for states and utilities to achieve the proposed 2030 goals. The commenters stated that some new generation will be required to meet the goals, but additional new generation will be required to ensure that system reliability requirements are met. Th e commenters stated that properly evaluated generation system modifications requires significant time, capital and planning by states, utilities, system operators, permitting agencies and other regulators in order to integrate them into the interconnected system. According to the commenters, before any generation system modification can be made, system operators and their stakeholders must conduct specific reliability impact assessments. The commenters stated that EPA's rulemaking timeline does not allow ad equate time for the needed reliability assessments and system modifications to be accomplished before 2020.

The commenters stated that companies generally will not commit to large financial investments, nor will state public utility commissions approve su ch investments prior to final EPA

- approved regulatory decisions. Thus, the commenters stated that utilities and utility regulators will not want to undertake the risk of investments to achieve emission reductions until after state plans are approved, which could be well into 2018 or 2019. The commenters noted that this will challenge the state's ability to demonstrate compliance with the interim average emission rates starting in 2020. The commenters stated that the EPA's assumption that states can take114 sig nificant steps to reduce emissions in advance of the start of the interim comp liance period is inconsistent with its own regulatory timeline. The commenters stated that the interim compliance goal does not take into account the lead time necessary to achie ving reductions

.

Commenter s argued that the aggressive compliance timeframe is unrealistic . The commenters stated that the proposed interim emission performance requirement for Florida is only marginally different from the final requirement, and requires a substantial proportion of the 2030 requirement CO2 emissions reductions to occur beginnin g in 2020. The commenters stated that although EPA outlines a few avenues for states to have additional time for submitting their compliance plans, the commenters noted that the Proposed Rule does not allow corresponding flexibility in the interim performa nce period. Regardless, the commenters stated that Florida will have had to make compliance decisions before there is certainty of EPA's final rule and before having an approved state implementation plan. The commenters stated that compliance with the
prop osed emission performance requirements necessitates long

- term decisions and investments, potential legislative action, and must account for the statutory timing of siting and constructing new generation, transmission, and pipeline capacity that will likely be needed. The commenters stated that under Florida's existing statutory and regulatory regimes, the State as a whole will not be able to achieve EPA's proposed emission performance requirements within EPA's timeline.

The commenters stated that complianc e with EPA's proposed emission performance requirements will likely take more time than EPA envisioned, and the time required to complete the necessary infrastructure improvements is particularly problematic. The commenters provided two recent examples in Florida illustrative of project timing:

• A proposed nuclear project in southern Florida was originally scheduled to complete the Florida Site Certification Application review within 14 months, yet the review schedule was waived and ultimately extended to a lmost 60 months. The protracted timeline was required in order to address concerns stemming from electric transmission expansion.

• In 2013, the Commission approved as prudent, a utility's request to enter into a long

- term gas transportation contract associa ted with the proposed Sabal Trail pipeline, which is not expected to commence natural gas delivery until 2017

. The commenters stated that whether these cases are typical of future projects is uncertain; however, they illustrate that 3 years may not be suff icient time to study, permit, and complete infrastructure additions necessary to comply with the interim emission performance requirements. The commenters contended that EPA's 2020 threshold date appears to be more aspirational than realistic when one cons iders the scope of detailed reviews and justification necessary to support additional power plants, transmission, and pipeline investments that could be needed. The commenters noted that EPA's NODA appears to recognize the need for increased flexibility to address the timing of various infrastructure projects.

The commenters asserted that even with the flexibility of expanding timelines, F lorida's interim emission performance requirements should not be mandatory, and Florida's interim goals (used for tracking or reporting) should be established during the state implementation plan development process . According to the commenters, this will allow Florida to review appropriate actions to mitigate the impacts of premature retirements of certain generating units. The115 commenters stated that Florida and the affected entities should be given a more flexible glide path toward the ultimate performance requirement.

Similarly, commenter s stated that under the proposal, Florida's State Implementation Plan would be due to EPA between June 2016 and June 2018 and EPA then has 12 months to review the state's plan. The commenters noted that possibly only 6 months after EPA approves Florida's plan, the state of Florida and Gulf Power will need to begin operating in a c ompliance mode to meet the proposed interim targets. The commenters argued that EPA's compliance option simply cannot be implemented to the necessary levels in such a short time period.

Commenter s stated that, based on EPA proposed implementation timeli ne, affected sources will not have certainty regarding their compliance obligations until between one and three years before the onset of the obligations.

Commenter s noted that the beginning of the performance period, January 1, 2020 begins 3.5 years from the proposed June 2016 deadline for plan submittals, 2.5 years for those with an extension, and 1.5 years for those doing multi

- state plans. The commenters disagreed that 1.5 to 3.5 years is sufficient time for compliance. The comment ers stated that entities will have significant concerns with implementing any finalized state plan strategy prior to EPA approving that strategy as meeting the requirements of this rule. The commenters noted that EPA is proposing to extend their time to re view and approve plans from 4 to 12 months. The commenters stated that it is unacceptable that entities under state plans will have anywhere from 6 months to 2.5 years from the time they are aware a state plan is approvable to begin implementation. The com menters disagreed with EPA's justification for why 2020 is an appropriate and achievable starting period for compliance (e.g., discussion of prompt heat rate improvements, modest upgrades, 70% utilization of NGCC at 79 FR 34905 which the commenters address ed elsewhere). The commenters asserted that the EPA's 2020 start date will not be achievable and only demonstrates the EPA's lack of due diligence in researching the feasibility of this proposal.

Commenter s contended that the timing of State Plan submit tals is unworkable and does not adequately account for timing of Nevada's legislative session or multijurisdictional planning . The commenters stated that the timing of plan submission and approval is insufficient to allow states to meet the proposed interi m goal . The commenters noted that the final rule will not be issued until June 2015, and states will then have 1 to 2 years to submit a plan for EPA approval, an exceptionally short timeframe given the complexity of state planning requirements. The
comment ers stated that even with the provision for a 1

- year extension, this timeframe is inconsistent with planning timelines specified in the Clean Air Act. The commenters noted that section 111(d)(1) of the Clean Air Act states that EPA shall "establish a proce dure similar to that provided by section 110 of this title under which each State shall submit to the Administrator a plan..." The commenters no ted that section 110 of the Clean Air Act generally provides states with a 3

- year period to develop state implem entation plans related to new or revised national ambient air quality standards (NAAQS). The commenters asserted that there is no rationale or justification for providing less than a 3

- year planning period in the proposed regulations.

According to the com menters, plan approvals at the earliest would be accomplished by June 2017 which would give states a scant 2 years to implement their plans, and their plans would116 require most of the implementation to occur on the front end of that time frame. The commente rs stated that while the intent of doing so might be to ensure that greenhouse gas emissions are reduced as quickly as possible, it is not practically achievable to do so in this situation.

Commenter s argued that the interim goal requirements establishe d are too aggressive compared to the timeline allowed for state plans. The commenters said additional time needs to be granted for companies to plan once the state plans are approved. The commenters noted that, under the current schedule, less than two yea rs will be granted. The commenters pointed out that other EPA rules, such as MATS, NAAQS and CSAPR, have allowed at least three years to plan and implement compliance, with an option to apply for a fourth and fifth year before full implementation. The comm enters argued that the CPP is expecting an out of the ordinary, short period for compliance with such a complex rule.

Commenter s noted that, although EPA has recognized the enormous undertaking it is imposing on the states, and allows them an additional year (or two) to develop and submit their plans, the extension of time for the development and approval of state plans means that there could be as little as six months between final federal approval of a state plan and the beginning of the first complian ce period in 2020 , if everything proceeds according to EPA's proposed schedule. The commenters contended that xix months is clearly inadequate to allow for the type of reliability assessment that is typically performed by the regional transmission organ izations to take place, let alone for the construction of the replacement resources and transmission mitigation measures that will be necessary to assure grid reliability. According to the commenters, the magnitude of the coal plant retirements projected i n EPA's integrated planning model runs is ten times the magnitude of the retirements that were projected for MATS, and EPA's projections for retirements under the MATS rule were vastly understated. The commenters also noted that the period for compliance f rom the time of final promulgation of the MATS rule to the extended deadline available through the states was four years. The commenters argued there is simply not enough time to implement changes of this magnitude by 2020, nor should they be implemented

.

Commenter s argued that affected entities need to have sufficient time to implement the state plan

. Under EPA's current proposal, commenter s noted that states could have up to 3 years to submit a compliance plan. Assuming that EPA issues the proposed rule in June 2015, and that EPA receives a year to approve the plan as is currently contemplated in the proposed rule, the commenters pointed out that affected entities that are granted full extensions for plan submittal will not have a final, approved st ate plan until June 2019. The commenters noted this would leave only 6 months before the start of the interim goal compliance period, at which time affected entities must take actions contemplated in the plan

. While EPA may argue that entities can begin planning upon release of the final rule, the
commenters noted that in many states, including Arizona, if adjustments are not made to current goals, compliance plans will require large capital investments in new energy infrastructure. According to the comme nters, affected EGU owners and operators will be reluctant to initiate these investments without the certainty provided by an EPA

- approved compliance plan. The commenters noted that this is a particularly sensitive issue for utilities in the Western U.S., where planning for the Regional Haze rule compliance ultimately was dictated by federal117 implementation plans rather than state plans. According to the commenters, utilities will not invest in system changes that they cannot be assured will be approved. The commenters concluded that EPA must contemplate these constraints and propose a reasonable timeframe for submittal, approval, and implementation of a 111(d) plan.

Commenter s argued that the electric power sector, including their city, which relies on lo ng range planning, is not equipped to abruptly change course based on these ambitious new limits. Assuming the EPA proposed rule survives legal challenge and is finalized in June of 2015, and state plans are submitted to EPA around 2016

- 2017, and approved by EPA within a year of submittal (2017

- 2018), the commenters said this leaves little (possibly only one year) to actually prepare for the changes that must be implemented in order to achieve the interim compliance dates.

Conversely, the commenters stated that it is too risky to a utility's rate payers for the utility to make major and costly changes to its electric generating fleet and operating practices prior to the finalization of this rule and approval of the state plan. The commenters noted that publ ic power utilities, such as their city's, must be particularly cautious when determining which technologies to select for electric generation and when to implement them. As not

- for

- profit entities owned and controlled at the local level, the commenters not ed that public power customers will bear the associated costs of complying with federal and state environmental regulations. As such, the commenters said there is greater risk associated with local governments investing in unproven and un

- mandated technolo gies that could potentially change due to political influences, or that might increase electric rates without achieving the desired goal.

Commenter s argued that EPA's compliance options will be difficult, if not impossible, to implement to the necessary levels in such a short time period.

The commenters noted that, under the proposal, Florida's implementation plan would be due to EPA between June 2016 and June 2018, and EPA would then have 12 months to review the state's plan. The commenters indicated t hat possibly only six months after EPA approves Florida's plan, their company will need to begin operating in a compliance mode to me et EPA's proposed interim targets (2020

- 2029).

Commenters stated that EPA's proposed Clean Power Plan establishes sig nificant CO2 emission reductions for coal

- fueled power plants in their state that will cause disruptive changes in the state's well diversified electricity mix. The commenters indicated that their state would only have 12 to 24 months after EPA approves th eir implementation plans to progress towards meeting their interim emissions target on January 1, 2020.

Commenter s stated that implementation of state plans will take longer than the time allocated by EPA.

Assuming that EPA approves state plans within 12 months of their submittal, between June 30, 2016, at the earliest, and June 30, 2017, at the latest, the commenters said states must begin implementing their approved plans in mid

- 2017 or mid

- 2018. At that p oint, the commenters estimated states would have, at most, only two

- and

- a

- half years to fully implement their approved plans before the performance period begins in 2020. The commenters argued this is118 simply insufficient time to implement the emissions red uctions measures that will need to be included in state plans to achieve the steep reductions required by 2020 (i.e., the compliance cliff), due to the magnitude of the cha nges needed and the implementation barriers states will
encounte r.

The commenters fu rther noted that states that choose to develop a mass

- based program also need significant time to devise and implement the program. The commenters said that determining what the emissions cap should be and, where appropriate, how to allocate allowances and potential revenue from a cap

- and

- trade program will take a substantial amount of time. The commenters indicated it will then take an additional period of time to allocate the allowances and to set up an emissions tracking and trading platform. According t o the commenters, power plants will need sufficient time to determine their compliance strategy by adjusting their operations to meet their allowance allocations or identifying likely sellers of allowances. As an example, the commenters noted that Californ ia's cap

- and

- trade program, while signed into law in 2006, did not take effect until 2012

-- six years after the program was conceived. The commenters argued that the few y ears between approval of state plans and the beginning of the interim standard complia nce period provides insufficient time to develop and implement such complex programs

.

Commenter s stated that

- in order to facilitate collaboration between FERC (which regulates both electric and natural gas utilities), A rkansas Electric Cooperative Cor poration (AECC) , and EPA

- adequate time between SIP approval and the interim compliance period must be afforded for the inter

- utility efforts to ensure NGCCs can operate when and how required, without regard to natural gas delivery constraints.

Commenter s noted that the, under the proposed implementation timeline, there will only be 6 to 18 months between SIP approval and the beginning of the interim compliance period (2020), which the commenters argued is insufficient, especially when it takes approximately 5 years to site, permit, and construct an NGCC facility.

Commenter s noted that public statements made by EPA personnel since the proposed rule's announcement indicate that there is a "glide path" to achieving CO2 emission reductions and t he proposal itself even indicates emission reductions can be achieved in the short term, through interim goal achievements. The commenters noted that while there may be a perceived glide path between 2020 and 2030, the commenters expressed concern that the proposal does not address the sharp drop in emissions that must be achieved prior to 2020. The commenters submitted a chart, which demonstrates that a 37% decrease in CO2 emissions prior to 2020 must be achieved in Arkansas in order to maintain the averag e CO2 emission rate of 968 lb/MWh from 2020 through 2029. For the purposes of this chart, the commenters assumed that the current emission rate of 1,634 lb/MWh does not change until 2020. The commenters noted that Arkansas' interim goal for 2020 through 20 29 is 968 lb/MWh, and the final goal in 2030 is 910 lb/MWh.

The commenters argued that the proposal's assumption that there is low

- hanging fruit to be picked to achieve the interim targets is wrong. In order to meet the interim goals and 2030 targets, the commenters stated that the large majority of emissions reductions must be made prior to 2020. The commenters stated that because utility forecasting and generation planning are long

- term prospects, they will effectively have to comply with Building Blocks 1 and 2 prior to 2020, in order to achieve the interim goals. As mentioned elsewhere, the commenters stated that119 Building Block 1's proposed heat rate efficiency gains are greatly overstated meaning Arkansas will have to achieve more CO2 emission reduction s in Building Block 2 to comply with the proposed Rule. According to the commenters, this means that Arkansas would have to lower its coal

- fired capacity and increase its NGCC capacity even more than what is suggested in the proposed rule to meet the goals

. The commenters noted that under the proposed rule, the commenters noted that a state has 1 year to submit a proposed SIP and a group of states has 2 years to submit a multi

- state plan. Under either a single

- state or a multistate plan approach, there is a n option to request a one

- year extension which the commenters feel confident most, if not all, states and groups of states will request.

The commenters explained that if the final rule is issued in June 2015, a state will have to submit a proposed SIP by June 2017 (assuming an extension is granted), and then the EPA has to approve the SIP, which could take another 1 to 2 years based on past experience. So, the commenters stated that it is likely that a final SIP will not be in place until June 2018, at the earliest, or even as late as calendar year 2019. Depending on the scenario, the commenters stated that EGU operators could have as little as 6 to a maximum of 18 months to prepare for compliance under the final, approved SIP.

According to the commenters, if many states are forced to reduce coal

- fired generation to the point of shutting down coal

- fired units, then it is very likely that those coal

- fired units will be replaced with NGCC units. Based on the commenters' estimates, it takes approximately 5 year s to site, permit, and construct an NGCC facility. Also, as the commenters explained elsewhere, the existing natural gas infrastructure in Arkansas is likely insufficient to handle the expected increase in demand resulting from more generation produced by NGCC facilities. Thus, the commenters stated that the existing natural gas infrastructure must be upgraded in order to support the addition of NGCC units to a generation fleet in the near future.

Even if the proposal were finalized today, the commenters st ated that meeting the emissions targets by the year 2020 would be extraordinarily difficult and very costly. The commenters stated that adding the additional time for the SIP process to be vetted and finalized makes the task almost impossible. In short, th e commenters stated that more time is needed between EPA's approval of a state's SIP and the beginning of the intermediate compliance period.

Based on the information above, the commenters stated that the compliance dates should be extended no less than 5 years (i.e., the interim compliance period should begin no earlier than 2025, and the final compliance date should be no earlier than 2035)

.

Commenter s noted that the initial compliance date for the proposed rule is 2020, not 2030. The commenters stated that the state emissions reduction targets that EPA has pr oposed are steep at the outset, and states must undertake significant emissions reductions immediately to comply with those standards by 2020. As a result, the commenters said utilities are impacte d today, as they and states must take measures now designed to promote compliance with the proposed standards, which take effect in 2020.120 In order to meet the 2020 targets, the commenters said utilities will be forced to accelerate plans to retire certain coal

- fired EGUs before the end of their remaining useful life and, at the same time, will have to accelerate plans to construct alternative generating capacity to replace them. Given the long timeline (five years or more) to obtain permitting approval and construct new power plants, the commenters said utilities will have to begin that process in the immediate future to meet obligations under the initial compliance period of 2020.

Commenter s noted that EPA anticipates finalizing the CPP in June 2015 and will allow up to two years for states to submit plans. Optimistically assuming it takes one year for EPA to approve Oklahoma's plan, the commenters said companies like theirs will have to comply with 85 percent of Oklahoma's target within the interim peri od, starting in 2020. The commenters stated this is simply unattainable given the magnitude of reductions called for and the infrastructure required to achieve them

.

Commenters expressed concern with the timing for compliance. The commenters stated th at there is no possible way to comply within the next 62 months for the interim compliance timeline.

Commenter s requested the EPA delay the interim compliance years to allow for a cost

- effective and efficient modification of their system to meet the fin al emission goals.

The commenters noted that their company has invested in a reliable transmission system that has been studied, planned and built for the use of base loaded coal generation with intermediate and peaking units primarily fueled by natural g as and fuel oil. In recent years, the commenters' company has diversified its generation mix with renewable wind energy in Missouri, Kansas and

soon Oklahoma. The commenters noted that the CPP projects a significant increase in NGCC generation and the idli ng of coal generation to meet electricity demand. The commenters said this shift in generation is a major change to our system and requires additional study to determine the full impact on system voltage stability. According to the commenters, the studies for these types of changes require multiple years to complete. The commenters argued that the CPP is not allowing utilities enough time from the issuance of state plans to the interim target years to fully analyze the impacts in the change in generation mi x to insure the reliability of service to our member owners.

Commenter s recommended that EPA consider establishing more flexible deadlines for compliance that would allow a specific amount of time for compliance from the date EPA issues final approval o f the state plan, instead of a date

- specific compliance deadline. In that way, the commenters said EPA can avoid the timing concerns that could otherwise arise if any delays occur. In this instance, the commenters indicated delays appear to be particularly likely if a state fails to submit a plan on time, if EPA fails to approve a plan on time, if EPA determines that a federal plan may be needed, or if a federal court alters the implementation timeline through either a stay of the rule during litigation or a remand of the rule to address any legal flaws. According to the commenters, such delays could further shorten an already truncated compliance window to the point that compliance would become even more difficult, if not impossible.

The commenters noted that, in the past, EPA's decision to establish specific dates for compliance has led to confusion when delays such as those listed above have occurred. As an example, the121 commenters cited the implementation of EPA's Cross State Air Pol lution Rule (CSAPR), which has been significantly complicated by EPA's decision to impose a date

- specific compliance deadline, due to the significant delays due to litigation. By allowing states and the utility industry at least three years to comply "from the date that EPA fully approves a plan for the state ," instead of focusing on a specific year or years, the commenters indicated EPA can provide the greatest certainty to all parties involved and minimize the risk of imposing an insufficient compliance

w indow.

Commenter s recommended that the initial compliance date of 2020 for multi

- state programs be extended by several years.

While commenter s acknowledged that the proposal rightly provides states seeking a multi

- state compliance plan additional time to develop the plan, the commenters said the proposal does not recognize that covered entities in these states will have significantly less time to comply. According to the commenters, an entity in a state choosing a single state implementation plan will presumably have between 2017 and 2020 to put implementation activities in motion, after finalization of the plan, but entities in a multi

- state pr ogram could have as little as 12 months to prepare for compliance by the time a final state plan is approved by EPA. While the
commenters appreciated the Agency's implicit acknowledgement that a multi

- state, market

- based program will indeed be more efficie nt to implement once it is set up and approved, the commenters said the proposal should ensure that the development of these programs are not rushed. Therefore, the commenters said the initial compliance date of 2020 for multi

- state programs should be exte nded by several years, recognizing the time needed for affected entities to make the necessary investments to reduce CO2 emissions. The commenters noted that in many cases, adequate time for making such investments is critical to the efficient and cost

eff ective functioning of the emissions trading market.

As part of their request for more time to develop SIPs, commenter s stated that the lack of certainty for regulated entities prevents indust ry compliance by 2020

.

Commenter s stated that even if star ted today, the actions necessary to implement the Rule Proposal's requirements by 2020, would be incredibly difficult to achieve. For instance, the commenters noted that permitting new generating facilities and/or constructing new transmission facilities a re multi

- year processes. The commenters stated that these processes may be even more time consuming under EPA's Rule Proposal, given the need to coordinate actions among players in an entire market and coordinate approvals with various regulatory agencies. The commenters stated that considering the time delays associated with passing legislation and implementing rules, it becomes impossible to comply with a 2020 date, and even years after.

The commenters stated that SIPs cannot reasonably be anticipated to be completed by the states until the summer of 2019. The commenters noted that this leaves roughly half a year from the date of submission until compliance is supposed to begin, and does not even consider the time needed for the EPA to opine on the suffici ency of the SIP submission. The commenters noted that this leaves, effectively, no time for utilities and the other affected industries covered by this rule to implement actions to comply with the Clean Power Plan beginning in 2020. The commenters stated t hat compliance timelines must be pushed significantly back in order to122 accommodate legal actions (legislation, rulemaking), resource development (permitting, financing, construction), and associ ated planning

.

Commenter s recommended that the EPA resolve broader issues, such as the proposed rule's impact on electric system reliability and adequate lead time to construct upgrades needed to support implementation of the forthcoming compliance plans. The commenters stated, given that the interim goal complian ce period begins in 2020 and that state plans do not need to be completed until 2017/2018, it will be virtually impossible for any transmission that would be needed to be planned, permitted, an d constructed to be available in time to meet the interim goals

. The commenters recommended that to the degree that transmission expansion or upgrades are required, the length of time required to plan and permit these facilities, even before the construction cycle, should be taken into consideration as the EPA and th e state create deadlines for meeting emissions targets. The commenters stated that the difficulties that transmission faces in federal and state regulatory forums are well

- documented. The commenters provided a figure from the Southwest Power Pool that show s the transmission build cycle.

The commenters stated that the time typically needed to bring projects, including those that are driven by public policies like state renewable portfolio standard (RPSs), from concept to energization, can be 5 to 10 years an d substantially more in many cases. The commenters stated that smaller, more discrete projects take less time to develop than larger or multi

- state projects. The commenters stated that there is remarkable uncertainty about the future of many proposed proje cts. The commenters noted that the length of the planning and permitting processes will have an impact on the ability of many states and regions to set and accomplish reasonable emission reduction goals, especially u nder building Blocks 2 and 3 of the CPP, within a predictable timeframe. The commenters stated that this casts immediate doubt on the practicality of the interim goals.

Commenter s argued that the CPP did not take into consideration the constraints to transmission and distribution systems when requiring the construction of new renewable energy sources. The commenters contended that the transmission system construction timeline does not support the CPP's interim compliance time period and stated that building block 3 should be delayed.

Commenter s argued that EPA's proposed compliance timeline does not allow adequate time for the needed reliability assessments and system changes to be accomplished before 2020 , by which time many states would need to have accomplished significant emission reduct ions.

According to the commenters, NERC, the entity responsible for ensuring the reliable operation of the Bulk Power System in North America, has concluded that "[t]he proposed timeline does not provide enough time to develop sufficient resources to ensu re continued reliable operation of the electric grid by 2020. To attempt to do so would increase the use of controlled load shedding and potential for wide

- scale, uncontrolled outages."

To the extent states desire to engage in multi

- state emissions trading programs, the commenters contended that the emission implementation timeline is simply inadequate. The commenters indicated there is far too little time to allow states to engage neighboring states on the myriad,123 complex issues required for such plans. Fo r example, the commenters noted that states will need to coordinate receiving credit for renewable generation when renewable energy credits have been sold out

- of

- state, incorporating new generation sources and siting interstate gas and electric transmissio n facilities. The commenters also noted that states will need to determine the effects of redispatch decisions between power plants in different states and generators that export their generation under existing agreements with out

- of

- state distribution uti lities.

Commenter s argued that EPA has failed to consider the timing of the infrastructure requirements necessary to support the implem entation of the CPP

. According to the commenters, EPA's proposal to re

- dispatch NGCC units to achieve a 70% capacity factor may require significant transmission upgrades that are necessary to maintain system reliability and cannot be completed in time to meet the interim goals, which are premised on full implementation of Building Block 2. As support, the commenters cite d a report by the North American Electric Reliability Corporation (NERC), entitled "Potential Reliability Impacts of EPA's Proposed Clean Power Plan" (November 2014), which states that "[a] construction timeline for a new high

- voltage line can range from 5 to 15 years depending on the voltage class, location, and availability of highly skilled construction crews. The construction of transmission assets is a very lengthy process starting from planning to the actual physical construction. It is recommended th at any policies that could potentially impact the reliable operation of the transmission system also consider the associated timeline for implementing plans." According to the commenters, NERC's initial reliability assessment of the CPP indicates that EPA has failed to consider these potential infrastructure requirements necessary to support the implementation of the CPP. The commenters noted that the Southwest Power Pool also provided a timeline for construction of transmission system upgrades of up to 8 y ears.

Commenter s argued that the proposed rule's standards, assumptions and timeline are unachievable.

The commenters stated that logistical and technical complexities of the proposed rule necessitate a timeline exte nsion. The commenters argued that, u nder the proposed timeline, the standard is unachievable. The commenters contended that a standard must not be purely theoretical or experimental, but noted that, under the most ideal situation, affected EGUs, regional transmission operators, electric cust omers and state governmental agencies would have four years to comply with the proposed rule. The commenters said it is incredibly unlikely that states, like Indiana, which will feel the greatest impact of the proposed rule will be able to meet the plan

su bmission deadline of June 30, 2016. Therefore, the commenters indicated a more likely timeline for most states is either a two

- year compliance period if a state successfully petitions an individual plan submission extension to June 30, 2017 or six months i f EPA awards a multi

- state plan a submission extension of June 30, 2018. The commenters contended it is purely theoretical to think that all of the affected parties under this proposed rule will be able to meet the 2020 targets.

According to the commenters , EPA expects 108 to 134 gigawatts of fossil fuel

- fired generating capacity to be reduced by 2020, yet the proposed rule does not set forth a realistic path to replace this generation with low

- or no

- carbon resources within the timeframe. The commenters ci ted the NERC reliability study of the proposed rule, which stated that EPA has not reasonably taken into124 account the long lead times required to engineer, permit, obtain right

- of

- ways, construct and integrate th e infrastructure necessary to comply with the proposed rule . According to the commenters, the greatest timeline issues come under Building Blocks 2 and 3, which require an unprecedented amount of infrastructure to be constr ucted in order to take advantage of any carbon emission reductions that may be possible under these measures

. The commenters noted that, under Building Block 2, EPA expects natural gas combined

- cycle (NGCC) units to be dispatched up to a 70 percent capacity factor

-- a potential increase of 440
terawatt

- hours per year, yet under norma l conditions, the nation's natural gas pipeline infrastructure is constrained; a typical timeline to invest in new or update existing pipelines is three to five years. The commenters indicated EPA needs to allow for more time so the country can appropriate ly plan, permit, sign capacity contracts, finance and build the necessary natural gas pipeline infrastructure to make Building Block 2 feasible . The commenters said Building Block 2 poses especial concerns for Indiana, as the state does not have a signific ant amount of existing NGCC generation. According to the commenters, the existing gas pipeline infrastructure is not capable of supplying an amount of new NGCC generation to replace the in kind amount of coal fired generation that now makes up Indiana's po wer supply.

The commenters noted that, under Building Block 3, EPA expects states to use more renewable energy sources, but noted again the current compliance deadlin es do not allow for the time

nece ssary to construct the transmission lines to integrate these resources, often in remote areas, into the electric system . According to the commenters, constructing a transmission line not only consumes time during the engineering, siting and construction processes, but a transmission line can also receive stron g opposition from landowners who do not want this obtrusive infrastructure on their property. The commenters stated that obtaining right

- of

- ways necessary to construct these lines can cause incalculable delays and costs that are not factored into the propo sed rule.

The commenters contended that more time to comply with Building Blocks 2 and 3 is critical, as some units, including two of the commenters', will be unable to take advantage of Building Block 1 . The commenters noted that their municipal power age ncy co

- owns the Prairie State Energy Campus (PSEC) and owns a portion of Trimble County Unit 2 (TC2) in Kentucky. The commenters supported Prairie State Generating Company's comments to the EPA regarding why PSEC should be entirely exempt from the proposed rule. The commenters said EPA should apply the same logic to also exempt TC2, as both EGUs were constructed with the latest efficiency technology. Therefore, the commenters concluded, it is infeasible for these units to make use of further heat rate impro vements or implement better operating practices to achieve a six percent reduction in carbon emissions.

If enough time is not given to make the necessary infrastructure investments for the integration of Building Blocks 2 and 3, the commenters indicated th e reliability of the entire electric system will suffer. For the aforementioned reasons, the commenters requested that EPA should extend the proposed rule's compliance deadlines

.

Commenter s stated that EPA should recognize the complexities and timeframe that will be required for states to develop and implement a policy to meet the building block 2 goal. The commenters noted that states, will face many obstacles due to the complexity in developing a working mechanism, infrastructure constraints, and ensur ing enforceability. The commenters125 stated that the timeframe for states to develop such measures is estimated to be many years, which would make it extremely difficult for states to utilize this building block to help reach the interim goals.

Commenter s stated that the CPP's proposed compliance timeline is unreasonable and likely to lead to unnecessary costs . The commenters stated that the short time frame for compliance with this rule creates a number of resource planning uncertainties for utilities and the Loui siana Public Service Commission (LPSC ) . The commenters stated that the LPSC has solicited information from its utilities and other stakeholders, through a written comment process and is not likely to understand the full impact that the Proposed CP P will have on its regulated utilities given the continued uncertainties associated with this new regulation. The commenters stated that most utilities, to date, have indicated that a number of difficult decisions will have to be made, and are currently be ing investigated, should the CPP continue along its currently

- proposed framework.

The commenters stated that major electric reliability organizations such as the regional reliability coordinating councils (MISO, SPP, as well as NERC), and reliability regu lators, like the FERC, are also in the process of evaluating the CPP's potential impacts. The commenters stated that to date, these analyses are ongoing and preliminary. The commenters stated that most important is the fact that all Louisiana regulated inv estor

- owned utilities have advised the LPSC that they will have difficulty complying with the rule and that it will likely result in considerable cost increases to their respective ratepayers. The commenters stated that the EPA proposes interim reductions of 38 percent by 2020 with the total 42 percent reduction to occur by 2030 such that 90 percent of the overall proposed reductions for Louisiana are expected to occur by the interim goals period. The commenters stated that it will be difficult to meet such requirements within the given time period given the national scope of this rule, and the near

- term transmission constraints noted earlier. While the EPA hails the Proposed Rule's "flexibility," the commenters argued that the proposal is anything but flexi ble, representing a return to the command

- and

- control regulation of the 1970s.

The commenters stated that the currently proposed CPP timeline envisions a final rule being developed by June 2015 where States will be given 12 months to develop initial State Implementation Plans ("SIPs") (June 30, 2016) and 24 months for final SIPs (June 30, 2017), and States developing a regional response are given until June 30, 2018. Thus, the commenters noted that states are likely to have approved SIPs in place sometime i n the 2017

- 2018 time period while interim reductions, however, begin in 2020: some 2 to 3 years after compliance plans are approved. The commenters stated that this is simply not enough time given the Rule's potential compliance requirements.

The commenter s provided for instance, it takes at least 3 years to plan, permit, and develop a new NGCC unit, assuming no development congestion and a relatively normal business

- as

- usual development environment that will likely not be the case given the broad, far

- reac hing national nature of the proposed CPP. The commenters stated that it takes, on average, some 8 years to plan, permit, and develop a new transmission project . The commenters stated that new generation and transmission will likely be necessary to maintain resource adequacy requirements if Building Block 2 is chosen as a compliance option using EPA's estimates.126 The commenters stated that Louisiana will also be required to increase its renewable power generation by 103 percent by 2020 to meet the CPP's propo sed interim emissions reduction goals. The commenters stated that this is equivalent to a 495 MW increase in renewable generation capacity that will have to be developed in a post

- SIP approved 24 to 36 month compliance window. The commenters noted that it has taken some states, such as New Jersey, Maryland, and Colorado, at least 5 to 6 years to increase their in

- state renewable generation shares to six percent of total generation.

Likewise, the commenters stated that Louisiana will be required to increase its commitments to energy efficiency from 0 to 1.14 percent in 2020 and 9.33 percent in 2030. The commenters stated that between 2020 and 2030 represents an increase of 720 percent. The commenters stated that this new requirement is comparable to 1.4 GW of avoided generation capacity that, again, will have to be developed within a 2 to 3 year period: a time period far more escalated that the time it took EPA' best practices states to reach what EPA believes to be an optimal level of energy efficiency adopti on.
The commenters stated that what this all adds up to is offering Louisiana, and other states, a choice between three bad state implementation options. According to the commenters, first, Louisiana can choose speed over cost

- effectiveness by adopting a s et of poorly

- examined emissions reductions strategies included in EPA's deficient building block analysis in order to meet the unnecessarily expedited interim goals deadline. Second, the commenters stated that Louisiana, by adopting EPA's proposed building blocks on an expedited basis, can run the risk of compromising system reliability since the ability of the bulk power system to accommodate these EPA strategies, as discussed earlier, is questionable. Third, the commenters stated that Louisiana can try to develop a more cost

- effective set of strategies, on a more reasonable pace, and run the risk of paying considerable penalties and potential fines for non

- compliance. The commenters asserted that all of these potential outcomes (or any combination of them) are simply unreasonable and inconsistent with its charge to provide safe, economic and reliability electricity service to Louisiana ratepayers.

The commenters referred to the comments offered by MISO which support LPSC's conclusions that EPA's expedited t ime frame will be expensive and could very well challenge system reliability. The commenters stated that in comments before the LPSC, MISO noted that the compliance timeline included in the proposed rule significantly challenges its ability to sustain adeq uate reserve margins; and that CPP compliance costs would be "non

- trivial" and heavily dependent on timing factors. The commenters noted that MISO developed a number of compliance cost estimates, for instance, and found that regional approaches would save MISO states, collectively around $3 billion in implementation costs over a state level approach. The commenters stated that MISO also noted that the expedited timing of the CPP would likely discourage regional

- based solutions, thereby leaving these opportu nities for reducing overall compliance costs on the table.

Commenter s argued that the CPP proposes a timeline that is not affordable, is pragmatically unobtainable and , as the Midcontinent Independent System Operator, Inc. (MISO) explains in its
recent comments on the CPP (MISO, November 25, 2014), threatens reliability

.127 Comment 5 : Comment stating that it is unrealistic to expect sources to take costly actions before states finalize their plans and before EPA has reviewed and approved them

. Response 5 : In response to this and similar comments regarding the need to address infrastructure and financing concerns, as well as timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . A discussion of this is included in section s VIII.B and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments un der this comment:

Commenter s noted that the Proposed Guidelines would create final state

- specific goals to be met by 2030 and interim goals to be achieved on average over the 10

- year period from 2020 to 2029. Id. at 34904. The commenter s noted that EPA claims this approach provides states with flexibility to design their programs and the trajectory of emission reductions. The commenter s stated that this flexibility is an illusion, and noted that EPA itself acknowledges that states will ha ve between 1.5 and 3.5 years from the expected deadlines for plan submittal before compliance actions must commence. Id. at 34905. The commenter s stated that EPA insists this is not unreasonable because affected sources "will have knowledge of state requir ements as they are adopted" and will therefore have more time to act. Id. The commenter s stated that the additional time EPA imagines is itself quite short, and it is unrealistic to expect sources to take costly actions before states finalize their plans a nd before EPA has reviewed and approved them, especially considering the uncharted territory the Proposed Guidelines force states to enter.

Commenter s noted that after a state plan is submitted, states will have between 1.5 and 3.5 years before complian ce actions must commence. The commenters contended that, under any circumstances, implementing such a significant rule would be difficult to achieve on that timeline, yet in this situation, EPA unrealistically expects sources to take costly actions before states finalize their plans an d before EPA has reviewed and approved them . The commenters argued that sources cannot be expected to undertake such actions prior to knowing the rules of the game. The commenters also stated that traditional utilities cannot recover such costs if they

are later shown to be imprudent , while non

- PSC regulated utilities like the commenters

-- with their more limited resources

-- also cannot undertake substantial new construction, which requires financial justification to lenders that such expenses will be prudent and capital assets built will provide the necessary cash flow to service incurred debt . The commenters said it will be extremely difficult

-- some might say foolhardy

-- to implement a plan that has not yet received requisite Fed eral approval. The commenters further noted that states will be equally reluctant to begin implementation without knowing whether their plans have been approved

. The commenters also noted that the reductions that EPA assumes states will be able to make by 2020 represent for many states the majority of the reductions required by 2030. For example, the commenters noted that, in the proposal, Georgia is required to reduce its 2012 emission rate of 1,598 lbs CO2/MWh to 834 lbs CO2/MWh by 2030; almost 83% of th is reduction is assumed by EPA to occur by 2020. The commenters noted many other states would have equally or even more severe reductions required by 2020 (many are > 90%), making the flexibility that EPA thinks the CPP provides an illusion.128 Commenter s stated that the EPA has grossly overestimated the ability of new units to come online quickly by proposing state

- specific goals that must be met by 2030, and interim goals that must be met on a 10

- year average from 2020 to 2029. The commenters noted, as EP A has acknowledged, that leaves states with only 1.5 to 3.5 years between the state plan submittal deadline and the start of the interim compliance period. The commenters noted that the compliance timeframe is further reduced as states must begin taking ac tion to reduce emissions before 2020 in order to achieve their interim emission rate goals (e.g., implementing end

- use energy efficiency programs as early as 2017, and increasing utilization of NGCC units prior to 2020). The commenters noted that the EPA r ationalizes such a short compliance ti meframe by pointing out that affected sources "will have knowledge of state requirements as they are adopted" and thus will have more time to act. The commenters stated that it is unreasonable, however, for EPA to expe ct affected sources to undertake expensive compliance measures before states finalize their plans and before EPA has approved the plans ; and, given the amount of time it takes to site, permit and construct new pipelines, transmission lines, and EGUs, it is impossible for states to begin implementing their plans as early as would be necessary to comply with EPA's proposed goals. The commenters provided for example, once EPA approves a state's plan, it will take about 2 years for generation and transmission e ntities to analyze the potential requirements of their systems. The commenters stated that plans for additional electric generation and transmission must then be developed and analyzed in an open regional planning process, which usually takes at least anot her 2 years. The commenters stated that additional time is required to permit and construct new units and transmission lines. The commenters concluded the result is a 6

- to 7

- year timeframe before necessary new facilities and transmission lines can be buil t . The commenters stated that this timeframe is optimistic, and yet would be inadequate for a state to meet EPA's proposed goals. The commenters concluded that the EPA's timeframe for compliance is thus arbitrary and unworkable, and should be addressed by eliminating the initial compliance period.

Comment 6 : C omment that states cannot complete efforts to permit, site, and construct substantial new infrastructure and promulgate new legislative initiatives by 2020, and that the CPP schedule for developing state plans by 2018 does not allow for the infrastructure upgrades required to meet the rule.

Response 6 : For several reasons, including infrastructure needs, as well as timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the commenters mention, among others. A discussion of this is included in section s V.A.3.g., VIII.B. and VIII.E of the final rule preamble of the CPP

. The EPA disagrees with the commenters in that we find value in the inclusion of interim compliance goals and allowing states and regional planning partnerships to establish glide paths that take such complexities in to account. While allowing great latitude in ho w these plans accomplish the glide path goals, we see value in having checkpoints along the way that both demonstrate real emissions reductions as well as provide feedback and increased confidence that the plan is workable and on track. As the commenters mention, some infrastructure and planning needs are more long term and may be leveraged by states or regional planning groups129 as ways to ‘anchor’ their plans and bring their glide path into alignment with 2030 final goals on time.

The following are summar ies of the specific public comments under this comment:

Commenter s argued that the CPP does not take into consideration constraints to the natural gas supplies and the time to improve infrastructure when requiring 70% capacity of the NGCC fl eet

. The commenters said their company, like many utilities does not currently contract for firm natural gas supply and/or transport of fuel to operate all of its existing NGCC generation plants. The commenters said each plant in their system located in three states (Missouri, Oklahoma and Arkansas) has different natural gas suppliers and transporters. In order to operate the NGCC fleet as required under the 111(d) rule, the commenters said their company will need time to renegotiate some contracts to acquire firm and ratable gas supply. In addition, the commenters said some plants may require infrastructure improvements such as additional compressors and looping to meet the increased plant capacity. The commenters noted that the Dell Power Plant located in Ark ansas which has one of the lowest proposed state emission rates and highest rate for coal generation displacement will require supply infrastructure upgrades. According to the commenters, the time needed to negotiate contracts, design, permit and constr uct the additional infrastructure to meet the supply requirements is not pos sible by the 2020 interim compliance date. The commenters argued that the CPP schedule for developing state plans by 2018 does not allow for the infrastructure upgrades required to me et the rule. The commenters recommended removal of the interim compliance targets to allow utilities the time to properly plan and execute infrastructure upgrades to begin compliance by 2030.

Commenter s argued that the CPP did not take into consideratio n the time required to finance, permit and construct new NGCC plants to meet compliance. The commenters said it can be reasonably expected that the utility sector will be forced to decommission existing coal units, convert to natural gas generation or cons truct new NGCC facilities. The commenters contended that, by the time the final rule is published and state plans developed, the time required to meet compliance by 2020 would not be sufficient. The time required to plan, design, permit and construct repow ered or new natural gas facilities is not sufficient from the time of final state plan approval to the preliminary implementation date. The commenters acknowledged that the CPP gives states flexibility to average emission rates over the interim period, but contended that this is not practical, as rates are set so low that a higher early rate does not allow enough time in the remaining interim period to average and meet compliance. The commenters recommended that EPA eliminate the interim rate to allow for u tilities to properly plan for and contact plants to transition to low er carbon emissions.

Comment 7: Comment that the proposed rule establishes unachievable interim goals, which increase the risk of premature plant retirements, stranded costs, and reliabi lity impacts, and requesting the EPA to allow states to establish their own interim schedules to reach the 2030 final goals

. Response 7 : In response to this and similar comments the final rule allows additional latitude in how state plans accomplish the glide path goals, plans will be able to both demonstrate real130 emissions reductions as well as provide feedback through interim checkpoints and offer increased confidence that the plan is workable and on track. See section VIII.D.2 of the final rule preamble of the CPP for more discussion. As the commenters mention, some infrastructure and planning needs are more long term and may be leveraged by states or regional planning groups as necessary to meet power delivery needs in rural areas while offset by energy efficiency or emissions reduction gains in other areas affected by the plan.

The following are summaries of the specific public comments under this comment:

Commenter s argued that the proposed rule establishes unachievable interim goals, which increase the risk of premature plant retirements, stranded costs, and reliability impacts that would otherwise be avoided with sufficient time to draft and implement responsible statewide plans.

The commenter s noted that EPA anticipates approving state p lans by mid

- 2017 (assuming a twelve

- month review and approval period, which the commenter s indicated gives states very little time to reach the optimistic interim goals established by the proposed rule . According to the
commenter s , it takes years for utili ties and energy providers to plan and develop substantial changes to electricity generation portfolios and additional time to obtain necessary state agency approval of these plans. The commenter s stated that Colorado does not currently have a regulatory st ructure in place to review and grant approval from all affected utilities operating within the state. The commenter s contended that these political, logistical, and jurisdictional issues may make consid erable additional carbon reduction by 2020 unattainabl e

.

The commenter s noted that the proposed rule establishes a Colorado interim goal of 1,159 of CO2 lbs/MWh from all fossil fuel

- fired EGU's by 2020. Due to Colorado's early action, the
commenter s said the most cost

- effective and straightforward improvemen ts have already been made. The commenter s said Colorado utilities will make additional emission reductions by 2020 through compliance activities planned according to Colorado's existing requirements; however, the commenter s indicated these activities are n ot anticipated to meet the stringent interim goals. In an effort to decrease CO2 from the current rate of 1,470 lbs/MWh to 1,159 lbs/MWh by 2020, the commenter s noted Colorado utilities run the risk of premature retirements, stranded costs, and reliability impacts.

According to the commenter s , an emission reduction plan that provides clean, reliable power without burdening customers with excessive costs takes years to plan and execute. To implement Colorado's 2010 CACJA, the commenter s noted Xcel Energy studied hundreds of options and proposed multiple scenarios for the PUC to consider. After reviewing thousands of documents, conducting weeks of hearings, and listening to the more than 30 parties that participated in the process, the co mmenter s said the PUC selected a plan. According to the commenter s , in 2011, Xcel Energy submitted regulatory applications for the individual projects comprising the selected plan. The commenter s said the approved plan included a 2012

- 2017 work plan, with the first project beginning almost three years after the CACJA was passed.

The commenter s pointed out that Xcel Energy's extensive process for the CACJA represents the work of only one utility in Colorado with a small geographic footprint, whereas the prop osed rule will involve every utility within each state with an analysis of the grid as a whole. The
commenter s argued that the proposed timeframe is grossly inadequate for creating and131 implem enting a statewide plan, much less achieving the interim goals. T he
commenter s requested that the EPA allow states to establish their own interim schedules to reach the 2030 final goals. Within their state plans, states could implement timelines based on strategic information and actual data to ensure reliability and r esponsible investment in emission reduction infrastructure.

Comment 8: Comment that compliance will be difficult to achieve in the timeframe provided in the proposed rule

. Response 8 : In response to this and similar comments, the EPA agrees with allowing extended the time for states and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . A discussion of this is included in section s V.A.3.g., and VIII.B.1 of the final r ule preamble of the CPP

. The EPA disagrees with the commenters in that we cannot take into account potential legal challenges and ramifications of those outcomes in considering the requirements or timing of the final rule.

The following are summaries o f the specific public comments under this comment:

Commenter s stated that compliance will be difficult to achieve in the timeframe provided in the proposed rule . Under EPA's schedule, the commenter s noted that states must submit complete plans by 2017 o r, if submitting a multi

- state plan, 2018. The commenter s noted that EPA expects to approve complete state plans within 12 months of submission, but even if EPA meets this ambitious goal (which will be difficult given that states will be submitting plans nearly simultaneously), the commenter s expected that state plans will not likely be approved until 2018 or 2019. Because interim goals are effective beginning in 2020, the commenter s expected the stringent reductions will require states/utilities to take significant steps towards meeting those goals before the st ate plan is even approved (and perhaps even before the plan is proposed).

The commenter s also expected the practical time frame will lengthen subs tantially by the fact that legal challenges to both federal and state plans are almost certain to occur . Acco rding to the
commenter s , legal challenges of recent federal EPA rules have taken approximately three years to run their course through the Court of Appeals for the D.C. Circuit and the U.S. Supreme Court. The commenter s stated that generating companies may not know what the final CPP will be until mid

- 2018 at the earliest, about three years after June 2015, the date when the rule is expected to be issued in final form. The commenter s indicated that any state that waits for the appeal process to be completed before beginning state processes is unlikely to meet the implementation date of 2020.

Commenter s stated that EPA must extend its proposed comp liance deadline . The commenters stated that electric utilities, which have a legal duty to make reasonable and prudent investments, cannot even begin to make investments in the new generation, efficiency and transmission upgrades, a nd end

- use energy effici ency programs that would be required to comply with state plans until after a state plan has been submitted an d approved by EPA or survived any judicial challenges . The commenters stated that even if EPA retains the proposed, overly aggressive schedules for submitting state plans, it is possible that regional plans would not be submitted to EPA until 2018, which c ould mean that litigation over any EPA plan disapprovals could last into132 2019 or 2020. Thus, the commenters stated that utilities in many states, including South Carolina, may not be able to begin making investments in compliance measures until the year in which EPA expects those entities to begin complying.

The commenters stated that these investments cannot be made overnight. For example, the commenters noted that efficiency upgrades to coal

- fired EGUs can take months or years, depending on the complexity of the upgrade, the need to obtain additional permits , and the availability of skilled contractors and engineers. The commenters stated that construction of additional transmission infrastructure to address reliability impacts that could result from significant re

- dispatch to NGCCs or integration of addition al RE capacity will also take years even after a utility obtains permission from regulators to undertake the upgrades. Similarly, the commenters noted that the construction of additional natural gas pipeline capacity is highly regulated and is a multi

- year process. The commenters stated that even before construction can commence, building new major gas transmission lines typically entails pre

- filing, public comment, scoping, and environmental permitting, processes that usually take more than a year and a ha lf to complete; NERC estimates that completion of a new gas pipeline can take up to five years. Finally, the commenters stated that the initiation of hundreds of these projects at the same time in states around the country could strain manufacturing and en gineering resources, leading to additional bottle

- necking and delays that could substantially delay affected EGU owners' ability to comply with the Proposed Rule.

In sum, the commenters stated that EPA's proposal to require entities to begin complying by 2 020 is unreasonable in light of the fact th at stakeholders will be unable to even begin undertaking these costly, complex, and time

- consuming changes until after litigation over state plans is concluded . The commenters stated that EPA should retain the pro posed 10

- year interim compliance period, bu t should not require ent ities to begin complying until at least 3 years after final issuance of a state (or federal) implementation plan

.

Comment 9 : Comment supporting the EPA's approach to addressing concerns w ith the way the
state

- specific CO2 goals are calculated

. Response 9 : The EPA thanks the commenters for their support to our approach for calculating state specific CO 2 goals. In this final rule the EPA is allowing state and regional planners the additional option of including Emissions Reductions as a component of their plans, as well as allowing benefits gained by enacting early reduction taken as early as 2012. Disc ussion of the rationale for this decision is included in the preamble section VIII.D.2 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that in applying the building block formula to each state's 2012 generation and emissions to determine the final goal and the interim year annual rates under State Emission Target Option 1, EPA assumes increasing renewable energy and energy efficiency levels between 2020 and 2029 to r eflect the gradual movement of states toward regional benchmarks.133 Ramping up renewable energy and energy efficiency levels reduces the annual emission rates progressively, starting in 2020 and reaching the final goal in 2030.

The commenter s stated that by contrast, the two other building blocks, coal plant efficiency improvement and re

- dispatch of coal to existing NGCC, remain unchanged between 2020 and 2029. The commenter s noted that reductions related to both these building blocks jump to their final 203 0 levels at the start of the interim period in 2020. In doing so, the commenter s stated that EPA's goal computation formula implicitly factors in all emission rate reductions associated with building blocks 1 and 2, which account for nearly 50 percent of t he total national emission reduction in 2030 under the proposed rule, in 2020. The commenter s noted that this " front

loading" of rate reductions results in an abrupt drop in the goal trajectory in 2020, with relatively little change thereafter through 2030

.

The commenter s noted that in the NODA, EPA addresses two issues that stakeholders have raised with respect to the manner in which EPA calculates the state emission goals in the proposed Clean Power Plan. First, the commenter s noted that the EPA indicates that stakeholders, including states, have concerns with the way the state

- specific CO2 goals are calculated including concerns that the numeric formula for calculating each state's goal is not consistent in its application of BSER for building block 2 as compared with incremental renewable energy generation and energy efficiency generation avoidance under building blocks 3 and 4. The commenter s stated that, in the stakeholders' view, by holding existing fossil generation and the corresponding emissions at 2012 levels in the calculation of the state emission goals, and not reducing them based on the amounts of incremental renewable energy and energy efficiency, the state goals fail to reflect the full potential, under the BSER, for incremental renewable ener gy and energy efficiency to replace fossil steam generation. Instead, the
commenter s noted that simply adding incremental renewable energy and energy efficiency to the denominator, while making no equivalent subtraction from the 2012 levels of fossil gener ation and corresponding emissions, does not clearly indicate whether, and to what extent, that generation will replace existing fossil generation as opposed to future generation increases from existing sources.

To addre ss stakeholder concerns about the pot ential challenges associated with achieving all of the reductions that states may need to obtain as early as 2020, the commenter s noted that the EPA is seeking comment on two additional specific adjustments to the interim goal calculations that would allow for a more gradual phase

- in of building block 2 during the 2020

- 2029 interim compliance period :

1. Replace all historical fossil generation on a pro rata basis. The proposed state goal

- setting formula assumes a constant level of generation for total existin g fossil generation greater than or equal to 2012 historical levels (i.e., the amount of fossil generation in the denominator of the state goal equation is greater than or equal to 2012 levels). In the proposal, incremental renewable energy and energy effi ciency was simply added to the denominator of the state goal formula. An alternative treatment of this incremental renewable energy and energy efficiency would be to assume that it directly replaces 2012 fossil generation levels and the corresponding emiss ions on a pro rata basis across generation types (i.e., fossil steam and gas turbine).134 2. Prioritize replacement of historical fossil steam generation. A second alternative approach would be similar to the one described above, but the adjustment would reflect incremental renewable energy and energy efficiency first replacing fossil steam generation below 2012 levels rather than replacing all fossil generation on a pro rata basis. Subsequent to replacing fossil steam generation, if there were any remaining incr emental renewable energy or energy efficiency, it would replace gas turbine generation levels and the corresponding emissions.

The commenter s supported EPA's second approach to addressing concerns with the way the
state

- specific CO2 goals are calculated

. The commenter s stated that displacing fossil steam generation with renewable energy and energy efficiency is consistent with the manner that EPA proposes to displace fossil steam generation with unused NGCC capacity in building block 2.

The commenter s noted that the other stakeholder concern discussed by EPA in the October 28 NODA is the potential technical challenges associated with achieving all of the reductions that states would be required to make as early as 2020, when the compliance period begin s. Potential approaches EPA requests comment on for addressing this issue include: allowing credit for early reductions, which could provide flexibility to defer other emission reductions until later in the 2020 to 2 029 period, and phasing in building bloc k 2 over time. The commenter s recommended that the EPA consider adopting both of these options for addressing the "2020 cliff" issue.

Comment 10 : Comment requesting that the EPA build longer lead times into the 2020 "compliance cliff" to create a less ab rupt "glide path" and relax the near

- term emission reduction requirements to a level that is attainable, and withdraw attempts to significantly increase natural gas utilization.

Response 10 : The EPA agrees with the commenters in that for these and other re asons, such as timing, planning concerns, legislative processes and reliability concerns the EPA is extending the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . Th e EPA is also including added flexibility in the rule that should aid states and regional groups to better manage the complexities involved in enacting plans to accomplish the glide path goals. A discussion of this is included in sections VIII.B and VIII.E of the final rule preamble of the CPP

. The EPA disagrees with the commenters that the final rule dictates an overly “front loaded” glide path that will result in a “compliance cliff” as the commenters describe as the final rule includes such things as th e banking of emissions credits, early action credits and additional planning time what we expect provide substantial additional flexibility not reflected in the proposed rule

. The following are summaries of the specific public comments under this comment:

Commenter s stated that, without regulatory reforms within the federal permitting agencies, the prospect of significantly increasing natural gas utilization seems unlikely to occur in the time provided. The commenters requested that the EPA build longer lead time s into the 2020 cliff and relax the near

- term emission reduction requirements to a level that is attainable, and withdraw attempts to significantly increase natural gas utiliz ation.135 Commenter s stated that the proposed rule's interim emission go al requires most of the emission reductions to take place in 2020 or shortly thereafter and creates a "compliance cliff" that biases decision making against renewable energy , which often requires longer lead times for investment, development, and policy pl anning. The commenters said the rule should be improved by modifying the interim compliance goal to create a less abrupt "glide path" for the
states , which will allow the right policies to be put in place to incentivize the adoption of renewable energy and allow states to meet their 2030 emission goals through the expanded use of renewable energy.

The commenters noted that the proposed rule sets an interim goal that must be met over a three

year average during the 2020

- 2029 timeframe. The commenters indica ted that the interim emission goals require significant emission reductions and require a majority of states to make 50

- 70% or more of their total reductions during this period

. In order to meet their interim goals, the commenters said a number of states w ill need to make these reductions in the early years of this plan, possibly by 2020. The commenters contended that this "compliance cliff" could result in a number of marginally ef fective outcomes. According to the commenters, transitioning from existing c arbon

- emitting EGUs to truly clean power will require time to support and build modern infrastructure and for states to adopt and implement the appropriate clean energy policies. Thus, the commenters suggested the rule should be improved by revising the 20 20 interim compliance goal.

The commenters noted that the economic viability of existing coal EGUs, when considering the cumulative results of other emerging EPA regulations (MATS, CSAPR, 1

- hr SO2 NAAQS, CWA 316(b), and ash rules) coupled with the interim c ompliance checkpoints, may create reliability concerns . The commenters indicated these concerns will likely be addressed by shifting generation to existing natural gas combined cycle (NGCC) units and/or the construction of new NGCC units with economic li ves that far exceed 2030, cementing gas dependency regardless of the economics of zero

- carbon generating sources. While natural gas and renewable energy generation can complement each other, with natural gas ramping capability balancing variable renewable generation and renewables helping address gas price volatility, the commenters said the sudden retirement of coal

- fired EGUs combined with the lack of sufficient natural gas infrastructure in most states could lead to resource adequacy risks and high power prices. While these outcomes can be avoided by the deployment of cost

- effective renewable energy, the commenters contended that the early compliance target overlooks the timeline, which may be needed to construct these cost

- effective resources at the nece ssary scale.

According to the commenters, the interim compliance period may also prevent states from adopting the most strategic policies to encourage the build out of renewable energy sources because the interim compliance period disallows the amount of time needed by legislative bodies to enact the correct policies . The commenters noted that a number of state legislatures are not in session or have shortened or budget

- only sessions in 2016 during crucial months leading up to EPA's deadline for state pla n submittals. As an example, the commenters noted that in 2016, four states do not convene their legislatures and four more have only budget sessions. In addition, the commenters noted that at least eight states have required legislative approval for state plans. Even if the proper policies are put in place, the commenters contended that the interim compliance period does not allow sufficient time for the construction of new cost

- competitive renewable energy facilities, and, more importantly, the critical e xpansion and improvement of136 the electrical grid needed to more easily integrate increasing levels of renewable energy and to deliver this energy from remote sites to load centers.

The commenters also noted that many states will likely delay designing an i mplementation plan until all legal challenges to the proposed rule are resolved. As a result, the commenters said there could be a forced rush to comply created by the comp liance cliff . The commenters indicated this will likely result in the immediate reti rement of existing coal EGUs and, due to immediate reliability concerns caused by these retirements, substituting other slightly lower emitting fuels in their place. The commenters concluded that this compliance rush could result in thoughtful renewable en ergy policies being ignored or abandoned. The commenters noted that such a rush also places ratepayers at risk, as the price of substitute fuels is likely to dramatically increase as a single source of energy, if history is any lesson. In contrast, the com menters noted that renewable energy has the advantage of zero fuel costs, which actually constrains electricity rates and protects ratepayers.

Commenter s argued that the proposed rule limits are too aggressive for the stated compliance period . From a development standpoint, the commenters contended that the proposed rule limits appear to have been generated through a "top

- down" approach (set a goal and hope to achieve it) rather than a "bottom

- up" approach whereby it is first determined what i s actually achievable, and then a goal and compliance date set accordingly. The commenters stated that the limits are essentially front loaded, with many of the reductions being required toward the beginning of the compliance period (i.e. 2020). A longer a nd smoother compliance glide path is needed

. As an example, the commenters noted that even Form EIA

- 860 plans ahead 10 years for nuclear generators. According to the commenters, this acknowledges that nuclear generators take a very long lead time to come to fruition, even if the massive investment it takes does become available. The commenters noted that no other baseloaded options are available.

Comment 11 : Comment that the timelines are unrealistic.

Response 11 : The EPA agrees with the commenters that a dditional time is necessary to provide state and regional planning group’s opportunity to formulate, revise, finalize and enact their emissions reductions plans. The EPA disagrees that the emissions rate targets are too largely front

- loaded or that renewa ble and energy efficiency projects will be squeezed out by these timelines. We fully expect EE, ER, and RE projects will all be used in state and regional plans, in varying amounts depending on a wide number of factors, and that all will be keys in the

ov erall success of this rulemaking.

The following are summaries of the specific public comments under this comment:

Commenter s argued that the timelines for compliance are unrealistic. The commenter s cited the Congressional Research Service, which on November 3, 2014 stated that "Some industry stakeholders and state agencies have characterized EPA's proposed CO2 emission rate targets for exiting power plants as "front

- loaded," with the disproportionat e percentage of emission rate reductions required in the early years of the program (2020

- 2024); they further state that their137 "analysis provides data consistent with this observation." The commenter s contended that the steep early reductions in the propos ed Clean Power Plan will force many states to turn to natural gas, which will squeeze out renewables and energy efficiency.

Comment 12 : Comment requesting the EPA to reassess the requirements to be realized by the 2020 milestone.

Response 12 : The EPA agre es with the commenters and has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The final rule includes this additional time and flexibility to States in constructing their plans to manage the complexities that commenters mention, among others. See sections VIII.B and VIII.E of the final rule preamble of the CPP for additional discussion on timing of state and regional plans.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the timeframe in which compliance can be practically and economically achieved may need to be re

- evaluated . In order to minimize the financial impact to the general population and industries such as theirs, the commenter s encouraged the Agency to reassess the requirements to be realized by the 2020 milestone

. If these could be delayed or eliminated, the
commenter s said it would help to dampen the burdens that this regulation wou ld place on their small drinking water utility and electrical providers in Arkansas and throughout the country.

Comment 13 : Comment encouraging the EPA to allow enough time to safely plan for natural gas infrastructure improvements by delaying the impleme ntation of the plans interim goals.

Response 13 : The EPA agrees with the commenter s and has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022

. The final rule includes this additional time and flexibility to states and regional planning partners in constructing their plans, manage legislative changes, assess reliability and plan for infrastructure needs and other complexities that commenter s mention. See s ections VIII.B and VIII.E of the final rule preamble of the CPP for additional discussion on timing of state and regional plans.

The following are summaries of the specific public comments under this comment:

Commenter s encouraged the EPA to allow enough time to safely plan for natural gas infrastructure improvements by delaying the implementation of the plans interim goals.

The commenter s noted that the interim emissions goals will require cooperatives to construct new natural gas infrastructure q uickly. In doing so, the commenter s said they increase the risk and possibility of incidents such as fires and explosions if time is not allowed to safely plan, design, and build the infrastructure, the commenter s are concerned that, in a haste to build138 in frastructure containing a highly flammable material to meet interim goals, they will jeopardize the safety of the generating facility and general public.

Comment 14 : Comment that t he EPA's proposal would require all reductions from heat rate improvements , re

- dispatch to NGCCs, and future operation of under

- construction nuclear facilities to occur by 2020, and that this “front

- loading” of the CO2 reduction requirements has the effect of requiring states to achieve, on average, 75% of their total annual red uction target in 2020.

Response 14 : The EPA agrees with the commenter s in that we are including in this final rule added flexibility to include emissions reductions, along with RE and EE reductions into state and regional planning timelines and interim goals. The commenters refer to several infrastructure related concerns, and we have ext ended the initial planning and interim goal timelines based on this and similar comments, with these items discussed in the preamble to the final rule. The commenters’ reference to the BSER options and their impact on facilities are also covered in detail ed discussion in the final rule preamble. The EPA has finalized additional flexibilities both affecting the timing of implementation of the rule, and in the ability for states and regional planning partnerships to manage the complexities covered in their plans. Adding Emissions Reductions to the planning options, and clarifying qualifying existing and preexisting credits, as well as allowing the banking of credits are just some of these added flexibilities that we expect will make the interim goals and th e 2030 final goal attainable for covered entities. See sections VIII.B

, VIII.D

, VIII.E, VIII.G

, and VIII. I of the final rule preamble of the CPP for additional discussion on timing of state and regional plans.

The following are summaries of the specifi c public comments under this comment:

Commenter s stated that EPA's timing assumptions for implementing the building block measures are incorrect and will lead to significant problems for utilities and consumers. The commenter s stated that although EPA h as correctly included a gradual phase

- in period for emission reductions from RE and EE during the interim compliance period (2020

- 2029), EPA has inexplicably failed to include a similar phase

- in period for emission reductions from other components of the B SER. The commenter s stated that the EPA's proposal that all redu ctions from heat rate improvements, re

- dispatch to NGCCs, and future operation of under

- construction nuclear facilities would occur by 2020 is unreasonable, arbitrary, and should be changed.

First, the commenter s stated that even if some of the equipment upgrades cited by EPA in building block one were feasible, these expensive, complex construction projects could require significant time to obtain or update permits, secure contractors, replac e or upgrade equipment, and then test and fine

- tune the upgrades. The commenter s noted that the added burden of undergoing an NSR process could further lengthen the timeframe for implementing these emission reductions.

Second, the commenter s stated that re

- dispatch to NGCCs at the levels anticipated by the Proposed Rule could require significant investments in additional electric transmission and natural gas pipelines to alleviate potential reliability concerns. Moreover, the commenter s stated that because many NGCC units are operated by merchant generators rather than load

- serving139 utilities, accomplishing the anticipated re

- dispatch from in

- state coal generators to in

- state merchant NGCCs could require a major restructuring of the current energy regulatory framework, particularly in states like South Carolina where most utilities are vertically integrated and may be prevented from purchasing power from merchant generators except during times when their customers' demand exceeds the utility's capacity to supp ly electricity. The
commenter s stated that it is unreasonable to assume that all of these changes could be implemented by 2020

- particularly if this rule and state implementation plans are subject to litigation (as they are expected to be).

Third, the com menter s stated that although the five nuclear reactors currently under construction are expected to come online before 2020, construction delays or other complications could well lead these units to open later. In addition, the commenter s noted that new nu clear units typically require an initial period of adjustment and fine

- tuning before they are able to run at full capacity. Therefore, contrary to EPA's assumptions, the commenter s stated that it is possible that one or more of these units will not be full y operational and achieving an annual 90% capacity factor by 2020.

The commenter s stated that the consequence of EPA's approach is that the interim goal imposes a compliance "cliff" requiring many states to achieve very steep CO2 emissions reductions immediately at the start of the section 111(d) program. The commenter s stated that thi s is illustrated by South Carolina, which must achieve 89% of the State's interim goal by 2020 under the Proposed Rule. The commenter s noted that South Carolina is not the only state that faces an almost impossible task of achieving all of its CO2 emission reductions under building blocks one and two by the start of the program in 2020. The commenter s provided a data table showing the steep percentage reductions proposed for 22 states. The commenter s stated that this front

- loading of the CO2 reduction requi rements has the effect of requiring states to achieve, on average, 75% of their total annual reduction target in 2020.

The commenter s stated that the EPA's proposed implementation schedule leaves states with insufficient time to meet their CO2 emissions re duction obligations imposed under building blocks one and two. The commenter s noted that at most, states will only have 2 or 3 years to complete all of the measures (including major infrastructure improvements to generation and transmission infrastructure as well as increases to natural gas pipeline capacity) that would be necessary to achieve these ambitious reduction levels.

Moreover, the commenter s stated that the establishment of a 10

- year averaging period for meeting the interim goal provides virtually no relief from compliance cliff created by building blocks one and two. According to the commenter s , this is clearly illustrated by the fact that a state's failure to implement at least a substantial portion of these two building blocks will leave the sta te with no choice but impose more aggressive RE and EE requirements on EGUs and other affected entities within its jurisdiction in order to make up for the shortfall in emissions reductions from blocks one and two. As a result, the commenter s stated that t he EPA's decision to frontload emissions reductions from these two blocks could, at best, lead to overly stringent RE and EE requirements and, more likely, result in the failure of states to meet their state goals despite best efforts. In addition, the com menter s stated that this aspect of the Proposed Rule will lead to the imposition of very onerous compliance costs on affected entities and consumers within states that are particularly affected by this compliance cliff.140 The commenter s stated, as EPA's Octo ber 2014 NODA recognizes, many stakeholders are concerned that EPA's front

- loading of emission reductions from re

- dispatch, heat rate improvements, and under

- construction nuclear could make it infeasible for many states to meet the interim goals. The comme nter s stated that abruptly phasing out much of a state's coal

- fired generation could also lead to electric reliability issues during periods when the natural gas supply is interrupted or constricted. Furthermore, the commenter s stated that forcing the prem ature shutdown of these existing coal

- fired EGUs in 202 0 will result in billions of dollars in stranded
assets . The commenter s stated that many of these units are far from the end of their useful lives and, in many cases, the units have recently installed expensive pollution control equipment to comply with new EPA regulations, such as the Mercury and Air Toxics Standards Rule and the Cross

- State Air Pollution Rule. Given that there has been insufficient time to recover the capital costs of these investment s, the commenter s stated that consumers would likely incur higher electricity costs as a result of these stranded asset costs.

In addition, the commenter s stated that the EPA's proposal that all emission reductions from blocks one and two and under

- constru ction nuclear would be implemented by 2020 is arbitrari ly different from EPA's approach to RE and EE . Under the Proposed Rule, the commenter s noted that the EPA assumes that RE and EE measures will be added gradually over the 2020

- 2030 compliance period, b ut does not make similar assumptions for other sources of emission reduction, even though all of the measures included in BSER will require significant adjustments to electric supply, distribution, and consumption that require time and significant investme nt. For these reasons, the commenter s stated that EPA s hould either eliminate the interim goal entirely or adopt a phased approach to the implementation of the other building blocks . The commenter s stated that one reasonable approach would be to calculate an average state or regional implementation rate for em ission reductions from building blocks one and two and under

construction nuclear, and apply that growth rate on an annual basis to compute the interim goal

. In the alternative, the commenter s stated t hat the EPA

- in consultation with states, FERC, the NRC, and electric reliability organizations

- should study the potential reliability, safety, transmission, and pipeline constraints on ramping up generation from building blocks one and two and under

- co nstruction nuclear, and assign more realistic phase

- in periods for these emission reductions based on the outcome of this study.

Comment 15 : Comment that the time period provided to achieve the proposed carbon rate reductions contemplated from building b locks 1 & 2 is inadequate

. Response 15 : The EPA agrees with the commenter s concerns about timing and has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . As discussed in the response to previous comment the final rule includes this additional time and flexibility to states and regional planning partners in constructing their plans, manage legislative changes, assess reliability and plan for infrastructur e needs and other complexities that commenter s mention. A discussion of this is included in section VIII.D of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:141 Commenter s argued that the time period provided to achieve the proposed carbon rate reductions contemplated from building blocks 1 & 2 is inadequate

.

The commenter s noted that, in the determination of the final and interim CO2 goals, EPA assumed that there are increasing RE and EE levels between 2020 and 2029 to reflect the gradual implementation of these measures to meet the targets. On the other hand, the commenter s noted that coal plant efficiency improvement and redispatch of coal to NGCC remain unchanged from 2020 to 2029. The commenter s said this front loading of CO2 reductions results in sudd en drops in the go al trajectory in 2020. According to the commenter s , the consequence of EPA's approach is that the interim goal imposes a compliance cliff requiring very steep CO2 emissions reductions immediately at the start of the section 111(d) program . As an example, the commenter s noted that in the state of Utah where they are located, about 84 percent of the state's interim goal must be achieved by 2020, with the remaining reductions divided over the next 10 years.

Commenter s contended that EPA's proposed implementation schedule leaves insufficient time to meet CO2 emissions reduction obligations imposed under building blocks 1 and 2. The
commenter s indicated that, at most, only two or three years is available to complete all of the

measures that would be necess ary to achieve these ambitious reduction levels . As an e xample, the commenter s indicated it is uncertain whether there will be sufficient time to obtain federal and state regulatory approvals that will likely be required to meet the interim goal of increasing NGCC capacity to 70 percent per EPA's assumption.

Fo r these reasons, the commenter s recommended that EPA build in reasonable phase

- in periods for heat rate improvements and redispatch from coal to NGCC to account for the significant regulatory, reliability and capacity issues that will need to be addressed before building blocks 1 and 2 can be fully implemented

.

Comment 16 : Comment that the first interim goal is too restrictive.

Response 16 : The EPA agrees with the commenters and for several reasons, including infrastructure needs, as well as timing and pla nning concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule also includes additional flexibility for state and regional planning groups to include RE and EE planning, as well as Emissions Reductions plans, and to include ability to count emissions reductions starting at the 2012 baseline year, and bank early reductions to help meet later glide path requirements. A discussion of this is included in the section s VIII.E and VIII.F of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Co mmenter s stated that the proposed interim goal is too restrictive because the timing does not allow for orderly energy planning. The commenter s stated that the interim goal fails to account for the manner in which large energy generation shifts generall y occur and is at odds with Minnesota's energy planning processes. The commenter s stated that the interim goal is too strict, and as a result limits Minnesota's flexibility in choosing how to meet the interim and/or final reduction goals.142 The commenter s s tated that EPA's integrated planning model (IPM) predicts Minnesota closing 1600 MW of coal

- fired generation by 2030. According to the commenter s , to replace such large generation resources, Minnesota utilities will need to consider all types of generation . The
commenter s stated that such large generation shifts are not yet identified in utilities' current integrated resource plans (IRPs). The commenter s stated that the effort to accomplish those shifts includes generation resource planning, design, financi ng, permitting and construction, not only of generation, but potentially additional transmission lines and natural gas pipelines. The
commenter s stated that EPA's alternative RE goal could require even further additional transmission investments

- the natu re of wind generation and Minnesota's load would require construction of transmission lines so that nighttime generation could be transferred to the east. The commenter s stated that if no longer able to "sink" energy to the east, they would likely be requi red to curtail more generation.

The commenter s stated that for a long

- term average interim target whose compliance period begins in 2020, it will be difficult for states to achieve the emission performance required by EPA's interim targets set by EPA's bu ilding block assembly. The commenter s stated that setting a stringent interim target that includes an average of emissions performance beginning in 2020 would then require states to over

- control beyond the interim value to offset any year's emissions
rates above the value

- possibly controlling to a level even below the final target value. The
commenter s stated that because of this, states would essentially need to be achieving emissions rates close to the interim target by 2020. The commenter s stated that Minnesota has reduced the carbon intensity of its energy fleet substantially, but these efforts began nearly 15 years ago; EPA's current interim approach affords us insufficient time to implement significant changes to Minnesota's electric gen erating fleet

.

Comment 17 : Comment requesting that the EPA allow utilities to begin compliance within three years after the issuance of a state plan or in the alternative simply abandon the interim goals altogether.

Response 17 : The EPA agrees with the commenters concerns for timing and planning flexibility and we are extending the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . A discussion of this is included in section s VIII.B and VIII.E of the final rule preamble of the CPP

. While we recognize the complexities necessary to form and enact plans and some States needing additional time to plan for, and meet, the first interim goal we are standing fast to the final goal d eadline of 2030. In finalizing this rule, t he EPA cannot consider the possible myriad of legal challenges and decisions that may follow this rule promulgation in our determination of the timeline in the rule itself.

The following are summaries of the spec ific public comments under this comment:

Co mmenter s requested that EPA allow utilities to begin compliance within three years after the issuance of a state plan or in the alternative simply abandon the interim goals altogether.

The commenter s noted that, if the final rule looks anything like this proposed rule, there will be significant state legislative actions that must be taken to achieve a planned renewable and energy143 efficiency program. The commenter s indicated that this, coupled with the timeframes for natural gas pipeline expansion, will push the process back until at least 2019. Once the state plan is approved, the commenter s indicated litigation will likely extend final approvals beyond 2020. At that point, when it becomes clear what t he utility owners of the EGUs must do, the commenter s said huge investments of ratepayer money must be made over a very short period of time. The
commenter s stated that requiring compliance to begin three years after state plan issuance or abandoning the i nterim goals would make more sense.

Comment 18 : Comment requesting that the EPA extend the compliance deadlines, and suggesting that the compliance obligation for the first phase should begin not earlier than 5 ye ars from the date that the state must subm it its section 111(d) implementation plan.

Response 18 : The EPA agrees with the commenters and for these and other reasons, including timing and planning, reliability studies, infrastructure development, and legislation concerns such as the commenters ment ion, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The EPA disagrees with the commenters’ assertion that a full five years are necessary between submission of a final state or regional plan and the beginning of the first interim compliance period. In this final rule we require state plan submission by the year 2018, and 4 interim periods beginning January 1, 20 22, and retaining the final goal of 2030. A discussion of this is included in section s VIII.D and V III.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the compliance deadlines are too short and need to be extended . The
commenter s stated that the timeline for implementation of the state CO2 emission reduction goals is extremely ambitious. The commenter s noted that in addition to showing that state plans
are p rojected to result in carbon intensity rates (or mass emissions, as appropriate) consistent with EPA's goals, states must demonstrate that their plans have actually met the state

- specific interim and final goals. Specifically, the commenter s noted that sta tes are required to demonstrate that they are making progress consistent with the emissions reduction trajectory set out in their plans. The commenter s noted that if a state (or multi

- state group) exceeds an acceptable compliance range in the interim compl iance period, it must institute "corrective measures" to bring itself into compliance. The commenter s noted that each state must demonstrate that it has met the state goals by calculating the actual, average emission rate from all affected entities (along with any EE savings the state achieved) over the 2020

- 2029 compliance period (for the interim goal), and 2030

- 2032 period (for the final goal). The
commenter s stated that for mass

- based plans, the state would need to demonstrate that the total mass emissio ns from affected EGUs were equal to or less than the converted mass

- based goal (regardless of the emission rate). The commenter s noted that following the final compliance period, states would have to demonstrate that they have met the final state goal on a three

calendar year rolling average basis beginning January 1 of each year (i.e., 2031

- 2033, 2032

- 2034, etc.). The commenter s noted that although the ultimate reduction goals are set in 2030, the reduction requirements are front loaded and thereby must be achieved by 2020

.144 The commenter s urged the EPA to extend these compliance deadlines . The commenter s stated that electric utilities have a legal duty to make reasonable and prudent investments pursuant to the review of their public utility commissions (PU Cs). As a result, the commenter s noted that utilities generally cannot even begin to make major capital investments in the new generation, efficiency and transmission upgrades, and end

- use EE programs that would be required to comply with state plans until after a state plan has been submitted and approved by EPA. The
commenter s noted that even if EPA retains the proposed, overly aggressive schedules for submitting state plans, it is possible that regional plans would not be submitted to EPA until June 2018 at the earliest. The commenter s stated that further delays could also result from legal uncertainty regarding the applicable section 111(d) requirements until resolution of any major legal challenges to the federal rule or state implementation plans. Thus , the commenter s stated that most electric utilities will likely be able to begin, at the earliest, making investments until about 1 year before EPA expects those entities to begin complying.

The commenter s stated that this is not enough time for affected utilities and other regulated entities to implement the control measures under the time schedule contemplated by the Proposed Rule. The commenter s provided for example, many utilities will need additional time to implement building block 2 measures (dispat ch natural gas combined cycle (NGCC) generation at 70% capacity factor) by 2020 due to transmission constraints, inadequate natural gas pipeline capacity, and ownership limitations

- just to name a few. The commenter s stated that construction of additional t ransmission infrastructure or pipeline capacity needed for significant

re

- dispatch to NGCC generation take years even after a utility obtains permission from regulators to undertake these projects.

Finally, the commenter s stated that it should be emphasize d that EPA and states have considerable discretion in setting appropriate compliance deadlines for meeting the CO2 performance standards that states must establish under section 111(d) of the CAA. The
commenter s noted that the statute does not prescribe an y specific deadline for compliance with applicable performance standards. Similarly, the commenter s noted that the Agency's implementing regulations do not impose any specific compliance deadline. Rather, the
commenter s stated that the EPA has broad discre tion to specify the compliance schedules for any particular source category in the federal emission guidelines, including different "compliance times" for different types of facilities, where approximate.

The commenters recommended that the EPA should set reasonable compliance dates for meeting the CO2 performance standards that reflect the substantial reduction obligations imposed under the Proposed Rule. Specifically, the commenters suggested that the com pliance obligation for the first phase should begin not earlier than 5 years from the date that the state must submit its section 111(d) implementation plan.

Furthermore, the commenter s suggested that states should be allowed to extend the compliance sched ules based on the ability to install the control measures, the cost of compliance, impacts on reliability, and othe r relevant factors through the case

- by

- case variance procedures established in the implementing regulations

.

Commenter s stated that the d raft guidelines envision an electric generation in transmission system that will be revolutionary, not evolutionary in the near term (e.g., the details of what145 Missouri will require may not be known until 2018, but compliance begins in 2020, achieving

over 82 percent of the final goal in the first 9 years). The commenters stated that a period of less than 2 years is not long enough to implement decisions that will change one of the nation's largest industry sectors forever and raise customer rates by more t han simple double digits for decades in the future. The commenters state d that at least 5 years from the final approved state plan is needed for implementation of the glide path toward final compliance.

Commenter s stated that the proposed rule compresse s compliance dates and specifies future milestones at dates certain in the future. The commenters contended that this is unusual for environmental regulations that by their nature have long gestation periods and may require significant capital improvements . The commenters stated that some of the unreasonableness of the rule schedule could be mitigated if the dates were replaced by implementation intervals of time . The commenters provided for example, state plans would not be due until 2 years after the fina l rule is published in the Federal Register, or 3 years if state is participating in a multi

- state plan. Similarly, the commenters suggested that if the EPA continues to insist upon interim goals, setting the beginning of the interim goal at a reasonable t ime interval (minimum 5 years) after the state's plan is approved will provide utilities the necessary time to complete the plan, permit, and construct new resources needed to diversify energy portfolios.

Commenter s argued that the EPA is in error when they believe that giving states until 2020 provides the necessary flexibility to achieve the goals outlined in the proposed guidelines. Even setting aside the potential inevitable delays created by litigation, the commenters said the proposed schedule as a practical matter only gives states 6 months to begin showing some reductions attributable to the CPP . The commenters noted that states will not know what the final guidelines will be until June or July of 2015, and until that time, it is difficult to have meaningful evaluation of multi

- state agreements, much less begin interstate negotiations or to evaluate the true implications of the rule in a given state. The commenters noted that the guidelines include an additional year of delay based on state request s, assuming that the state can show progress, so the issuance of a state plan may not be required until June of 2017. The commenters noted that the deadline is further delayed until June of 2018 if the state is working on a multi

- state agreement. The comme nters also noted that EPA allows itself a full year to approve the state plan. The commenters said the final result of the delay is that states and the utilities located in them may not know with certainty what actions will be required until June of 2019, with compliance beginning as soon as January 1, 2020 . The commenters said that is unreasonable, not attainable, and would result in the waste of ratepayer's money with no benefit to the environment. The commenters requested that EPA modify the provision th at gives a five year window between state plan and compliance so that compliance is not required until five years after EPA approves a state plan.

Commenter s stated that the compliance dates should be extended no less than five (5) years, i.e., the inte rim compliance period should begin no earlier than 2025, and the final compliance date should be no earlier than 2035.

Commenter s argued that interim compliance timing must be extended.

The commenters stated that the CPP proposal does not allow adequa te time for states to implement the necessary measures to achieve the front

- loaded interim goal in 2020. According to146 the commenters, Michigan's interim goal represents a greater than 27% cut in emissions between 2012 and 2020, and the end target goal in 2 030 is only 4% more at 31%. Thus, the commenters estimated 87% of the 2030 emission reduction goal must be implemented in the interim phase. According to the commenters, this issue is compounded by the fact that, following the timeline in the proposal, a s tate will have, at a maximum, 36 months under a plan approved by EPA until the interim goal begins in 2020.

The commenters contended that the time needed to meet 87% of the final goal under a state's compliance plan will exceed 36 months. The commenters argued that it is not reasonable to expect that they, or any other impacted entity in Michigan, would make sig nificant investments in asset acquisition or strategy deployment, prior to receiving notification that their required compliance plan is accepted by EPA and approved by state regulatory agencies (e.g. the Michigan Department of Environmental Quality (MDEQ) and the Michigan Public Service Commission (MPSC)), and other governing or regulating entities (e.g. Midcontinent Independent System Operator, Inc. (MISO)). The commenters indicated the same can be said of the significant regulatory and legislative change s that will need to occur in Michigan to implement measures contained in the EPA proposal.

According to the commenters, a perfect example of the damaging impacts of rapid, aggressive, change to the existing energy supply chain is occurring right now in Mic higan's Upper Peninsula. Due to a combination of energy deregulation, environmental regulatory changes, and a lack of existing infrastructure, the commenters noted that residents of the Upper Peninsula are facing annual electric billing increases of hundre ds to thousands of dollars, and commercial and industrial ratepayers are facing even higher cost increases. The commenters noted that a combination of representatives from Michigan, Wisconsin, MISO and Federal Energy Regulatory Commission (FERC) have been working to develop a sustainable solution here, with Michigan emphasizing a low cost option, but they have made little progress. The commenters stated that EPA should prudently respect and not underestimate the necessary time needed to implement the broad changes in existing energy policy and infrastructure to achieve compliance with the CPP proposal. According to the commenters, the importance of maintaining safe, reliable, affordable and clean energy, while working within the bounds of our bureaucratic
pr ocesses, concludes that the policy objectives proposed by EPA deserve more time.

Thus, the commenters requested that EPA grant states 3 years from the date of promulgation of the final section 111(d) rules to submit the state plan and at least five years f rom the date when EPA approves a state's respective plan before any sta tes' interim compliance period begins. The commenters indicated that doing so allows the requisite time to ensure compliance and deal with inevitable issues in regulation and legislatio n necessary to implement the approved EPA plans.

Commenter s stated that if the interim goal is retained, EPA should delay the start of the interim compliance period to 5 years after EPA's approval of the state plan . The commenters stated that the currently proposed interim period start of 2020, in combination with the stringent interim goal, requires actions on a schedule that is not realistic (too much, too soon). The commenters stated that according to the emissio ns rate schedule published in the appendix to the Goal Computation TSD, Georgia's target for the 2020 calendar year would be 966 lbs CO2/MWh and the 10

- year average interim goal is 891 lbs CO2/MWh (from the Goal Computation TSD). The commenters stated that although EPA states that there is flexibility to fall behind at the start of147 the period and make it up later, this would be very difficult to do in light of the cumulative averaging nature of the goal. The commenters explained that the further a state is into the interim period, the harder it is to improve the average. The commenters stated that EPA has targeted a reduction in emissions performance from 1598 lbs CO2/MWh in 2012 (fossil sources) to 966 lbs CO2/MWh in 2020 through implementation of all BSER except incremental RE and EE. The commenters stated that this reduction amounts to 73% of the overall reduction in Georgia's emissions rate reduction from 2012 to 2030. The commenters stated that they see no reaso n to require the significantly steep reductions in the first few years of a 15 year plan.

The commenters stated that EPA's proposal therefore requires Georgia, and many other states, to make significant CO2 emission reductions prior to 2020. The commenter s stated that Georgia must implement the following changes to its energy sector prior to 2020 in order to have a chance of meeting EPA's interim goal:

• Design, fund, permit, and construct the projects necessary to implement the heat rate efficiency improvem ents targeted by the proposal at the 15 coal

- fired EGUs that will still be operating in 2020;

• Utilities must renegotiate a number of contracts to reduce the amount of coal burned while increasing the natural gas dispatch to 70%;

• Build the natural gas infra structure necessary to achieve 70% natural gas dispatch (annual percentage) at all NGCC units;

• Complete the construction, testing, and startup of two new nuclear plants;

• Pass laws (potentially), promulgate rules, and design management systems to establish and track renewable energy and energy efficiency programs; and

• Increase energy efficiency savings by 0.2% per year (percentage of retail sales) beginning in 2017.

The commenters noted that state plans are due to EPA by June 30, 2016 and (according to 40 CF R 60.5715) EPA will have until June 30, 2017 to approve or disapprove the state plan. The commenters noted, assuming that these two steps happen on schedule, that only 2.5 years will remain until the proposed start (January 1, 2020) of the interim complian ce period. The commenters stated, as EPA will be tasked with reviewing 49 state plans simultaneously, that it is likely that there will be delays in the approval process. (The commenters noted that Washington DC and Vermont are not required to submit state plans because they have no coal

- fired EGUs.) The commenters stated that there is simply not enough time to implement the actions listed above between plan approval and January 1, 2020. The commenters stated that the interim goal should be replaced with a state developed glide path . However if an interim goal is retained, the commenters stated that EPA should move the start of the interim period to 5 ye ars after EPA's approval of the state plan , and retain the starting emissions performance target and inter im period average as set in the final rule. According to the commenters, this should allow time to implement the plan and achieve interim emission rates, while retaining an advance progress

tracking period of adequate length.148 Commenter s stated that the aggressive targets of the proposed interim compliance period suggest that they may need to construct new NGCC plants by the early 2020s to displace coal generation that is retired to meet the standard. The commenters stated that new combined cycle generati on planning and construction typically requires 5 years from initial development to commencement of operation . The commenters stated that this typical capital development cycle requires that a decision to construct a new NGCC plant would need to take place in 2015, well before a state plan is even submitted to EPA for review. The commenters noted that uncertainty (e.g., including uncertainty with the proposed aggressive timeline) may lead to delays in planning and ultimately in their ability to meet the emi ssion reductions required during the interim compliance period. The commenters stated that a minimum of 5 years is needed between the date that EPA a pproves a state plan and the start of the first compliance period

.

Commenter s stated that EPA's propose d interim compliance period (2020

- 2029) is unworkable because it requires most reductions to be achieved prior to or immediately after 2020 in order to achieve the target emission rate for the 10

- year average compliance period ending in 2029. The
commenter s noted that the interim reduction goal for Michigan is a 10

- year average of 1,227 lb/MWh, which is a 27.4 percent decrease from the 2012 average Michigan rate of 1,690 lb/MWh. The commented noted that the 2030 goal for Michigan is 1,161 lb/MWh which
const itutes a 31.3 percent decrease from the 2012 average emission rate, but only 4 percent beyond the large 27.4 percent reduction required during the interim compliance period. Despite a seemingly long

- term goal for making these emission reductions, the comme nted stated that the bulk of the reductions, including upfront planning, would need to be accomplished in the next 5 years. Further, the commenters noted that their company is a fully regulated utility, and that Michigan's plan will not likely be approved by the EPA until 2018 because Michigan will likely ask for the additional year for submittal (June, 2017) and EPA approval can take a full year with many of the state plans being submitted at the same time. The commenters noted that this will reduce the 5 years to roughly 2 years. The commenters stated that 5 years is not a realistic timeframe for planning the scale of the electric generation transformation that this rule is requiring, let alone 2 years.

The commenters' 2012 baseline emission rate for their company is approximately 2,100 lb/MWh, which is already 26 percent higher than the 2012 state average for Michigan. The commenters noted that if the Michigan rate reduction targets are applied directly to the facility, the interim and final reduction stan dards would require emission rate reductions of greater than 40 percent below 2012 levels for the company. In order to meet these targets, the commenters stated that most of the changes to their generation mix would need to be accomplished prior to 2020 or in the 2020

- 2025 time period even with some relaxation of the interim standard timing. The commenters stated that the company will need to take aggressive measures in the next 10 years (2015

- 2025) to achieve a 40 percent emission rate reduction target, including:

• Retirement of over half of coal generation capacity

• Additions of significant combined cycle and simple cycle (peak load) capacity

• Nearly doubling of current renewable capacity149 The commenters noted that many have referred to the proposed decrease in emissions as a glide path to the final goal in 2030; however, the commenters provided a graph titled "Potential CO2 reduction requirements for DTE (lbs/MWH)" that indicates the glide path is more like a cliff at the start of the compliance period

.

Comment 19 : Comment requesting that the proposed interim goals beginning in 2020 be eliminated, or at the very least, start no earlier than the year 2025 with less stringency.

Response 19 : The EPA agrees with the commenters concerns for timing and flexibil ity and for several reasons, including timing and planning, reliability studies, infrastructure development, and legislation concerns such as the commenters mention, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The EPA disagrees with the commenters’ assertion that 2025 is the earliest timeframe where an interim assessment of progress could be made. In this fin al rule we require state plan submission by the year 2018, and 4 interim periods beginning January 1, 2022, and retaining the final goal of 2030. A discussion of this is included in section s VIII. B , VIII.D

, and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s recommended extending 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 areas. At a mini mum, the
commenters requested that the proposed interim goals beginning in 2020 be extended at least 5
years . According to the commenters, extending the schedule for compliance will help states develop plans that are achievable and acceptable to the EPA, r educe risks of reliability impacts and violations of reliability standards, and increase the possibility that states will be able to take a regional approach that reflects market realities and how transmission is planned and paid for.

Commenter s assert ed that the rulemaking and implementation schedule is unrealistic with the interim goal target date of 2020. The commenters noted that after rulemaking by the EPA, plan writing by the State, plan review by EPA, and final implementation by affected units, t here will be optimistically 2 years remaining to achieve the interim goals in 2020. The commenters recommended the interim goal should be at a minimum delayed until 2025 or eliminated altogether and just use the final rule in 2030. The commenters stated th at many of the infrastructure improvements needed to come into compliance will require more time than the EPA is allowing in the 111(d) draft rules. The commenters noted that this concern has also been expressed to the EPA by the Iowa Association of Munici pal Utilities, the Iowa Utilities Board, the Iowa Department of Natural Resources and the Midcontinent Independent System Operator in their comments. The commenters suggested that the EPA fully consider the impacts of this rule and its timeline on the reli ability of the electric system and the economic impacts of the entire country.

Similarly, b ased on consultation with utilities in Indiana

, commenter s expressed concern that EGUs will not be able to implement changes to their units in a reliable fashion by 2020 . The commenters requested that the EPA remove the interim compliance requirement to provide150 facilities with the ability to safely comply with the rule. If the EPA needs the interim goal to demonstrate continuing compliance efforts are under way, th e commenters requested that EPA revise the rule to require interim goals be met by 2025 at the earliest , to allow facilities making large scale and expensive changes to do so in a safe, reliable, and cost effective manner. The commenters stated that requir ing facilities to make complicated and expensive changes within 3 years of the publishing of the rule puts the nation's electric grid reliability at risk.

Commenter s contended that EPA's assumptions regarding building blocks one, two, and four

a ppear to be overly optimistic, and there may be problems for some smaller utilities with building block three . According to the commenters, the need to construct electric transmission lines and natural gas pipelines associated with building blocks two and three wi ll require years to plan, permit, and construct . The commenters stated they were not asking EPA to recalculate Iowa's baseline or final goal, but were instead asking EPA to recognize that the baseline calculations and goal computations that EPA ass umed usi ng these building blocks do not appear to be feasible within the proposed timeframe , which the commenters said supported their earlier request that the interim goal should be eliminated, or at the very least, start no earlier than the year 2025 wit h signif icantly less stringency compared to the final goal

.

Commenters suggested that the nearest term compliance date for the rule should be 2025.

According to the commenters, the proposed rule provides relatively stringent emission rate limits and mainly foc uses on the compliance date of 2030, but, because the rule also includes an interim limit that must be met as an average for the years 2020 through 2029, and this interim limit is almost as stringent as the 2030 limit, the proposed rule essentially require s compliance with the standards by 2020, not 2030 . The commenters contended that the actions put forth in the four building blocks that are the basis for the rule cannot be put in place by 2020.

Comment 20 : C omment stat ing that a reasonable extension of the deadlines is necessary for several reasons: the legal vulnerability of the rule; the certainty that it will be reviewed by the courts; the fa r

- reaching impacts of the proposed rule; and the extreme burden that the development and implementation of such a plan would cause to the states, the impacted facilities, and the general public.

Response 20 : The EPA agrees with the commenters that RTO’s and ISO’s, along with other entities involved at key positions, will need additional time to organize their plans , conduct reviews and adjust practices as necessary, and formulate revisions to business models as necessary to move toward meeting the first interim goal of 2022, and other goals beyond. A discussion of this is included in s ection s VIII.B and VIII.E of the final rule preamble of the CPP

. While we recognize the complexities necessary to form and enact plans, we are not moving the final goal deadline of 2030. The final rule does include additional time to formulate plans and meet the initial interim go al due to reasons the commenters mention, among others.

The following are summaries of the specific public comments under this comment:

Commenter s argued that an extended initial implementation period is justified

.151 According to the commenter s , prudence requires that the development and implementation deadlines in any version of the rule promulgated set forth implementation deadlines extended beyond those contained in the proposed rule. The commenter s stated that a reasonable extension of these deadlines is necessary for several reasons: the legal vulnerability of the rule; the certainty that it will be reviewed by t he courts; the far

- reaching impacts of the proposed rule; and the extreme burden that the development and implementation of such a plan would cause to the states, the impacted facilities, and the general public . The commenter s said an extension is all the more reasonable considering the manner in which carbon emissions react in the atmosphere and the relatively insignificant impact that any emi ssions occurring during an extended implementation period will have on global CO2 levels and the environment.

The commenter s noted that EPA currently proposes that states must begin meeting interim goals by 2020. In order to achieve these goals, the commen ter s indicated that states and industry would have to begin preparation for implementing state plans prior to the finalization of EPA's proposed rule. According to the commenter s , states may have to work with neighboring states and RTOs/ISOs, due to the in terconnected nature of the electrical grid. The commenter s also indicated that multiple intrastate agencies will be required to coordinate in order to develop and implement a state plan. The commenter s said states will be heavily burdened to coordinate wit h other states, develop the necessary state plan, and if necessary, promulgate state regulations and enact state statutes to begin meeting interim goals by 2020. Meanwhile, the commenter s noted, industry will be attempting to develop business models and st rategies to meet the emission goals. In order to achieve compliance with previous EPA rules, the commenter s noted that industry has already dedicated large amounts of resources in order to keep existing sources operating in compliance. To meet the proposed interim goals by 2020, the commenter s said some of these same sources may well find it necessary to significantly scale back the operation of these units and/or may potentially find it necessary to retire these existing units earlier than intended. Furthe rmore, in order to assist with re

- dispatching energy, the commenter s indicated industry will be required to expend a vast amount of additional resources in updating transmission lines, as well as securing new sources of natural gas if they choose to fuel s witch. The commenter s argued that this will heavily impact industry, as it will be required to expend substantial resources within a short timeframe, which in turn may transfer the financial burden to the rate payers and the general public. The commenter s also noted that industry will have only a short time to identify, apply for, and obtain the appropriate authorizations, such as permits, from the various appropriate state agencies. Finally, the commenter s argued that general public, rate payers, and taxpa yers will be burdened because of the vast amount of resources spent in preparing, developing, and implementing state plans by the deadlines set forth in the proposed rule.

The commenter s also stated that lengthy litigation over the validity of the proposed rule will undoubtedly occur. The commenter s said there have already been several legal challenges made to the proposed rule, and it is almost certain that there will be additional challenges filed if the rule is finalized. According to the commenter s , an extended development and implementation period would allow the courts to issue an ultimate decision on the legality of the rule. Absent such an extended development and implementation period, the states, the commenter s said the federal government, and indu stry will have to dedicate large amounts of limited resources to comply with the extremely complex requirements of this rule (which may or may not be upheld in a form that resembles the final version ultimately issued by EPA). The commenter s indicated152 that a deadline that contains an additional five years (i.e., until 2025 ) for the development and implementation of a plan would help avoid a great deal of uncertainty regarding the ultimate requirements of the rule and would likely have a diminutive overall i mpact on the purported goal of the proposed rule related to atmospheric CO2 levels. In fact, the commenter s said the environment may actually suffer if the vast amount of state and industry resources necessary to develop and implement a plan consistent wit h the proposed rule are focused on this effort and the rule is ultimately stricken by the courts. According to the commenter s , resources are limited, and redirecting those resources to comply with an approach that may likely be determined to be inconsisten t with the Clean Air Act will divert those resources from other necessary environmental protection efforts.

Comment 21 : Comment suggesting that the EPA either eliminate the interim goals or move its 2020 interim goal to 2022 in order to allow for a realistic timeline to develop a 111(d) state plan, without the need to request a time extension.

Response 21 : The EPA generally agrees with the commenter s and in this final rule we are extending the time allowed for states and regional planning groups to f inalize their plans and has moved the start of the interim period from 2020 to 2022 . The commenter s raise concerns about the legislative processes required for states and regional groups to enact in order to support their finali zed plans and we are swayed by this, and other complex ramifications of such an effort. A discussion of this is included in section VIII.E of the final rule preamble of the CPP

. While we recognize the complexities necessary to form and enact plans and s ome States needing additional time to plan for, and meet, the first interim goal we are standing fast to the final goal deadline of 2030.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA must either eliminate the interim goals or move its 2020 interim goal to 2022 in order to allow for a realistic timeline to develop a 11 1(d) state plan, without the need to request a time extension . The commenter s noted that Idaho's negotiated rulemaking process can take a significant amount of time, and all rules must be presented to the Idaho Legislature before becoming final. Given the time involved, the commenter s indicated the Idaho Legislature would not be ab le to consider the State's rules for implementation until the 2018 Legislative Session. The commenter s said this leaves Idaho with barely a year and a half before the 2020 interim goal must be met. While the commenter s understands that the proposed rule al lows for certain time extensions, requesting a time extension is burdensome and would require Idaho to prematurely anticipate its needs.

Comment 22 : Comment suggesting that the EPA should include reasonable phase

- in periods for heat rate improvements and re

- dispatch from coal to NGCC plants, and that the stringency of the interim goal could be adjusted to reflect the state

- specific schedule for implementation of the control measures within the state.153 Response 22 : The EPA agrees with the commenters and for several reasons, including timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The EPA notes that a state is not required to achieve the same level of emission reductions with respect to any one building block as assumed in the EPA’s BSER analysis. A state may use any combination of measures, including thos e not specifically factored into the BSER by the EPA. A description of multiple emission reduction methods is provided in section s VIII. C and VIII. I of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA should include reasonable phase

- in periods for heat rate improvements and re

- dispatch from coal to NGCC plants . The commenter s noted that in the determination of the final and interim CO2 goals, EPA assumes that there are increasing RE and EE levels between 2020 and 2029 to reflect the gradual implementation of these measures to meet the targets. On the other hand, the commenter s noted that the coal plant efficiency improvement and re

- dispatch of coal to NGCC remain unchanged from 2020 to 2029. The
commenter s stated that this front loading of CO2 reductions results in sudden drops in the goal trajectory for virtually all states in 2020. The commenter s stated that the consequence of EPA's approach is that the i nterim goal imposes a compliance cliff requiring many states to achieve very steep CO2 emissions reductions immediately at the start of the section 111(d) program. The
commenter s provided for example, in the state of Utah, about 84 percent of the State's i nterim goal would need to be met by 2020, with the remaining reductions divided over the next 10 years. The commenter s stated that Utah is not the only state that faces the task of achieving all of its CO2 emission reductions under Building Blocks 1 and 2 by the start of the program in 2020. The commenter s noted that this front

- loading of the CO2 reduction requirements has the effect of requiring states to achieve, on average, 75 percent of their total annual reduction target in 2020.

The commenter s assert ed that the EPA's proposed implementation schedule leaves states with insufficient time to meet their CO2 emissions reduction obligations imposed under Building Blocks 1 and 2. The commenter s noted that at most, states will only have 2 to 3 years to comple te all of the measures (including major improvements to generation and transmission infrastructure as well as increases to natural gas pipeline capacity) that would be necessary to achieve these ambitious reduction levels. The commenter s noted for example, increasing NGCC capacity to 70 percent per EPA's assumption will likely require additional pipeline and transmission capacity; it is questionable whether the process for obtaining federal and state regulatory approvals to meet the interim goal would be ac hievable.

For these reasons, the commenter s recommended that EPA build in reasonable phase

- in periods for heat rate improvements and re

- dispatch from coal to NGCC to account for regulatory, reliability and capacity issues that will need to be addressed bef ore these Building Blocks 1 and 2 can be fully implemented. The commenter s stated for example in the implementation of Building Block 2, EPA could assign each state a specific annual ramp rate tha t is calculated based on the difference between 70 percent a nd the state's actual average historic NGCC capacity factor

. In so doing, the commenter s noted that the EPA would be adjusting the stringency of the states' interim goals to account for the barriers and delays that states may face in implementing154 Building Blocks 1 and 2. According to the commenter s , under this approach, the state would still achieve the 2030 final goal established by EPA based on the four Building Blocks, but the stringency of the interim goal could be adjusted to reflect the state

- specific schedule for implementation of the control measures within the state . The commenter s noted that this would enable each state to develop a workable and reasonably achievable plan based on its ability to install the control measures, the cost of compliance, impacts on reliability, and other relevant
state

- specific factors. Furthermore, the commenter s noted that the state plan would include federally enforceable milestones, for implementation of the emission reductions necessary to meet the final goal.

Comme nt 23 : Comment expressing concern regarding the feasibility of implementation of HRIs, specifically with respect to timing and grid reliability concerns, and arguing that heat rate improvements would likely require longer time periods, and suggesting that the EPA not finalize any interim goal and should allow states to determine and set their own reasonable schedules for implementing heat rate improvement projects, including on a unit

- specific basis.

Response 23 : The EPA agrees with the commenters and for s everal reasons, including timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has moved the start of the interim p eriod from 2020 to 2022 . Many aspects of the 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 that is tailored to each state’s energy resources and policies. The EPA notes that a state is not required to achieve the same level of emission reductions with respect to any one building block as assumed in the EPA’s BSER analysis. A state may use any combination of measures, including those not specifically factored into the BSER by the EPA. BSER Building Block 1 is discussed in section V.C of the final rule preamble of the CPP

. A description of multiple emissi on reduction methods available to state and regional planners is provided in section VIII. I of the final rule preamble

. The following are summaries of the specific public comments under this comment:

Commenter s expressed concern regarding the feasibilit y of implementation of HRIs, specifically with respect to timing . The commenter s stated that if the EPA finalizes this overly ambitious schedule and they meet the June 2016 deadline for plan submittal without the need for an extension, firm and legally binding heat rate goals would not be in place until June of 2017 (allowing the EPA' s 1

- year approval process). The commenter s contended that the goal for the Ohio is overly ambitious, and that in order to meet this goal (both interim and final), many improvements would have to be in place by 2020. The commenter s stated that if this timin g holds, the utilities would have 2.5 years (30 months) to complete the necessary HRI projects in order to realize reductions in time for 2020. The commenter s stated that, if Ohio must request an extension, this would be reduced to 1.5 years (20 months). W hether 20 or 30 months, the
commenter s stated that it is unrealistic to assume that sufficient numbers of HRI projects across Ohio's large coal

- fired fleet with meaningful impact on achieving the EPA's goal for Ohio could155 be completed in this time frame wi thout significantly impacting grid reliability, reserve capacity, and costs to consumers. The commenter s stated that these impacts will occur, not only in Ohio, but regionally and nationally when all states prepare to meet their goals at the same time.

Ba sed on the commenter s ' stakeholder outreach, the commenter s received several cradle

- to

- grave timelines of recent efficiency improvement projects at several Ohio EGUs. The commenter s urged the EPA to consider the following issues regarding the timing of maj or improvement projects at a typical coal

- fired boiler. The commenter s presented the timing considerations that must be accounted for when scheduling an outage via the RTO in Ohio, PJM Interconnection. The commenter s noted that larger projects that involve boiler and/or turbine repair, replacement of major components, and the installation of new equipment are performed during major outages, and these outages are typically budgeted for 3 to 5 years in advance. The commenter s stated that for the purposes of g rid reliability, these outages must first be scheduled with PJM, and such outages typically last 6 to 10 weeks. The commenter s stated that to help ensure grid reliability, these outages are carefully scheduled on regular and well

- established maintenance cy cles based on previous maintenance activities. The commenter s stated that outages for boilers are typically scheduled every 3 to 5 years, and turbine outages approximately every 6 years. The commenter s stated that to avoid outages during periods of high de mand, most outages are scheduled during the Spring and Fall months when demand is typically lower, and PJM reserves the right to cancel all scheduled outages up to the day before the unit is scheduled to be offline. The commenter s found it unreasonable tha t a large proportion of its coal

- fired EGUs will be expected to schedule and complete major improvement projects, in just the spring and fall months over the course of 20 to 30 months without impacting grid reliability. The commenter s stated that utilities in the PJM region are already competing for limited down time for making improvements and limited labor and supply resources.

The commenter s stated that even more concerning is that Ohio is anticipated to lose approximately 27% of its coal

- fired generatin g capacity between 2015 and 2016, and Ohio EPA is concerned that it will become increasingly difficult for units to schedule lengthy outages. As discussed elsewhere, the commenter s stated that the remaining coal fleet in Ohio will be well maintained, highl y efficient and well controlled. The commenter s stated that Ohio anticipates any remaining HRIs that can occur will be more substantial major upgrade projects. The
commenter s reiterated that the proposed rule raises substantial grid reliability concerns an d urged the EPA to re

- examine the proposed rule in this light.

In addition to timing considerations with respect to maintaining grid reliability, the commenter s stated that the types of major upgrades that the EPA specifies as part of the overly

- ambitious target of 6% HRI set by the EPA require lengthy planning, engineering, construction, and testing processes that go well beyond the 20 to 30 months of the proposed rule's timetable. The
commenter s urged the EPA to consider the following timetable for such p rojects, provided by

Ohio stakeholders:

• Initial planning: 6 to 8 months

• A/E firm contracting: 3

- 6 months156 • Create engineering/spec package: 3 to 7 months

• Solicit proposals/contracting for construction: 3 to 5 months

• Design/fabrication/delivery: 3 months fo r "off the shelf" products, 18

- 24 months for unique components

• Installation: 2 to 4 months

Using the lower estimates for each phase of a project, the commenter s noted that approximately 20 months would be necessary for a facility to complete a major upgrad e. The commenter s expressed concern that major upgrades at even a small number of units, let alone the fleet

- wide improvements envisioned by the EPA, could not be completed in time to have meaningful impact on the glide path to achieve the state

- wide emiss ion intensity goal. Furthermore, the
commenter s stated that an additional 18

- 24 months would be required if a particular project were to trigger NSR/PSD permitting. The commenter s stated that clearly, the timetable of the proposed rule is unrealistic, pres ents significant reliability concerns, and was created without regard for any of the above considerations

. A second project timeline, supplied to the commenter s via stakeholder outreach, details the upgrade of the low pressure turbines at a coal

- fired powe r plant in Ohio. The commenter s stated that the objective of the upgrade was to increase the efficiency of the low

- pressure side of generating system. The commenter s stated that the actual historical timeline is presented below:

• May 2007: Requested OEM Feasibility Study for this LP Upgrade.

• September 2007: OEM presented results of Feasibility Study.

• December 2007: Preliminary economics evaluated, required cash flows, and recommendations for going out for competitive bid.

• January 2008: Requested Long Rang e (5

- year) Budgeting approved for 2012 cash flow
commencement.

• January 2011: RFP's issued for competitive bids.

• April 2011: Proposals received and evaluated.

• October 2011: Capital project and funding approved and Contract Issued to Seller.

• November 2011: R eleased for detail engineering.

• December 2011: Long lead time materials (16

- 24 months) ordered for expedited delivery to assembly shops.

• June 2012: Commenced detail planning of outage including duration development.157 • April 2013: First materials received at shops for assembly (6 months for assembly prior to shipment to plant).

• September 2013: Commenced outage for LP Upgrade.

• December 2013: LP Upgrade completed, unit returned to service and testing initiated.

The commenters stated that this project also neces sitated an alteration to the normal outage period scheduled with the RTO, but this alteration only impacted the schedule by approximately 90 days. The commenters stated that it is typically the preference of EGU operators to schedule upgrades such as the o ne described above to coincide with the regular and well

- established generator and boiler inspection and repair outage schedule, but such a scheduled outage was not possible in this particular instance. The commenters stated that this does not diminish the fact that the turbine upgrade required almost 7 years to complete and the unit return to normal operation. Again, as with previous example, the commenters stated that the EPA clearly did not explore and/or consider appropriate time periods in the proposed rule. The commenters believe d that it is impossible for those states that generate significant quantities of electricity from coal

fired EGUs to have sufficient numbers of generators upgraded to meet the EPA's strict goals in time to have a meaningful imp act on the glide path to achieve the state

- wide emission intensity goal

.

Commenter s argued that heat rate improvements would likely require longer time periods . The commenters noted that EPA, in setting interim goals, assumed that heat rate improvement projects could be implemented by 2020. However, the commenters indicated it is unlikely that that a state's utilities would begin to implement heat rate improveme nt projects prior to EPA's approval of their state's plan. Given that a state plan may not be approved until 2018, and a multi

- state plan may not be approved until 2019, the commenters indicated it is unlikely that heat rate improvement projects could be p lanned and completed by 2020.

The commenters contended that longer time periods for compliance would provide more flexibility in project management and cost control. The commenters noted that the projects that offer the greatest potential to improve heat rate are often long lead

- time projects. The commenters further noted that the logistics of many coal units implementing similar projects in the same, short time period may lead to cost increases and scheduling issues due to supply chain bottlenecks in obta ining equipment. According to the commenters, a recent project at the Boswell Energy Center Unit 4, of which WPPI is a part owner, illustrates the time required to implement a significant heat rate improvement project. The commenters noted that, at this un it, a steam turbine retrofit project, initiated in 2007, required approximately three years for design, procurement, permitting and scheduling of a lengthy plant outage for installation, and was completed in 2010.

Commenters stated that future technologica l advances may make additional heat rate improvement possible and the EPA should consider this while developing interim state carbon intensity targets and not assume that all HRIs will be implemented within the next few years

. To address these issues, the commenters suggested that EPA not finalize any interim goal and should allow states to determine and set their own reasonable schedules for implementing heat1 58 rate improvement projects . In the event that EPA includes a mandatory interim goal, then at t he very least, the commenters suggested that EPA assume a ramp

- up period for the implementation of these projects (as suggested in the NODA) similar to what EPA has proposed for renewables and energy efficiency.

Multiple commenters suggested that the EPA a llow for a gradual implementation of the achievable HRI that is determined on a unit

- specific basis.

Commenter s stated that building block 1 (heat rate improvement) must be phased in over the compliance timef rame . The commenters stated that EPA's presu mption that building block 1 HRI actions can be accomplished by 2020 is unrealistic . The commenters stated that unless significant adjustments to EPA's building block 1 approach are undertaken based on the actual HRI feasibility of individual units, EGUs w ill be forced to implement significant improvements, many of which take years to plan and implement and generally require approval by the PSCW. The commenters stated that a full turbine upgrade can take up to 7 y ears to get planned, approved, and installed . According to the commenters, since EPA is not expected to approve state plans prior to 2019, this means that such an upgrade should not be presumed to occur prior to 2026.

The commenters stated that even if EPA adjusts building block 1 to align with the real technical potential for HRI in each state, EPA must consider that the most effective long

- term solution in some cases may be actions (such as plant retirement or fuel switching) that are beyond BSER, but which may make more sense for utility systems in the long

- term. The commenters stated that EPA needs to allow sufficient time beyond 2019 to accommodate these potential alternatives. Finally, the commenters stated that EGU outages for equipment installations have to be coordinated by the independent s ystem operator (ISO). The commenters stated that this planning and approval process, along with any necessary permitting, also cannot occur by 2020.

In recognition of these realities, the commenters stated that their preferred approach is for EPA
to elimin ate the interim goal and allow states to determine a schedule for implementation based on feasibility and cost . However, the commenters stated that if EPA chooses to retain the interim goals and allow states to phase in building block 1 over the entire com pliance period, a phase

- in schedule should consider the time required to integrate any transmission enhancements needed to address impacts to reliability, as indicated by MISO and the North American Electric Reliability Corporation (NAERC).

Comment 24 : Al low for a gradual implementation of the achievable HRI that is determined on a unit

- specific basis

Response 24 : See sections V.C, VIII.B, and VIII.E of the final rule preamble of the CPP for EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the NODA also requests comment on whether EPA should phase in Block 1 heat rate improvements for coal

- fired units. The c ommenters stated that this approach159 does not address the issue that heat rate improvements are best addressed on a unit

- by

- unit basis, thereby making any assumed approach by EPA to phase

- in these reductions arbitrary and generic. The c ommenters stated that rather, to appropriately phase

- in heat rate improvemen t projects EPA should allow for state plans to develop this schedule by conducting case

- specific analyses. The c ommenters provided Appendix D including supporting information related to these technical issues including work practices conducted by Al liant Energy and summaries describing the potential impacts of load, cycling and degradation.

Commenter s stated that the proposed HRI for EGUs under BSER Building Block 1 are assumed to be in place in 2019 in order to meet interim state goals starting in 2020. Commenters stated EPA's expectation is unreasonable given the proposed timetable for submittal and approval of state plans; the timeframes needed to plan, design, and install the systems and equipment needed for HRI; and the very nature of HRI pro jects

.

The c ommenters stated that at the latest, states must submit complete plans, including HRI proposals, to EPA no later than June 30, 2016 for single

- state plans or June 30, 2017 for multi

state plans. The c ommenters stated that timeframes for review of these state plans by EPA, which could be as late as June 30, 2018 under the Proposed Rule, further contract the time available for design and installation. The c ommenters stated that as an example, the typica l timeframes for utility industry planning, design, and installation of control equipment and systems associated with Best Available Retrofit Technology (BART) exceeded 30 months for even the most minor of modifications such as the installation of low

- NOx burners. [ Response to Comments Received on BART Applications, PacifiCorp Energy letter to WDEQ dated September 16, 2009. ] The c ommenters stated that the time needed for full implementation of HRI projects would be similar.

The c ommenters stated that addi tionally, HRI projects by nature are most effective immediately after installation and degrade in effectiveness with time. The c ommenters stated that as a result, maintaining target HRI over a long

- term period will be an ongoing process likely involving m ore frequent replacement of ancillary equipment. The c ommenters stated that this, along with the unrealistic timeframes for design and installation by 2019, creates an unachievable goal for HRI. The c ommenters stated that EPA should reconsider the timing associated with HRI implementation and revise the Proposed Rule to allow for a gradual implementation of the achievable HRI that is determined on a unit

- specific basis.

Comment 25 : Multiple comments discussing timing required for heat rate improve ments and redispatch in relation to the glide path, expressing concern that the CPP does not allow adequate time for meeting the 2020 interim goal, and requesting a longer glide patch to 2030.

Response 25 : The EPA agrees with the commenters and is providin g additional flexibility to states to accommodate such requirements and programs through a “state measures” plan. We are also finalizing this rule to include consideration for emissions reductions made as early as 2012, and to allow “banking” of achieved emissions reductions to help meet interim and final goals. We are also moving back the beginning of interim goal tracking to 2022 and are retaining the final goal of 2030. A discussion of these issues is included in section VIII.C of the final rule160 preamble of the CPP

. Regarding remaining useful life, see section VIII.G.1 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Multiple commenters discussed timing required for heat rate im provements and redispatch in relation to the glide path.

Commenter s stated that efficiency improvement measures require significant time and investment to implement, including planning, contracting with vendors to perform this work, and scheduling outag es in which it can be performed whereas, under the Proposed Guidelines, every coal

- fired EGU that is not retired would be expected to implement these measures by 2020. The

c ommenter s stated that this would place an enormous strain on the energy grid as num erous units go down for outages at once in order to implement these measures by 2020, and units would be reluctant to begin this work before a final state plan is approved, which in many states may not occur before mid

- 2018 (and in states with multi

- state agreements may not occur before mid

2019). The c ommenter s pointed to NERC who just issued a report that emphasizes that EPA's Proposed Guidelines pose a serious obstacle to the reliable supply of electricity in this nation.

Commenter s stated that EPA sh ould apply an incremental approach to factoring the carbon reductions associated with building blocks #1 and #2 into the interim target rate for each state, as it does with building blocks #3 and #4, rather than EPA's primary draft rule proposal of having all carbon emission rate reductions associated with building blocks #1 and #2 occur in 2020. The commenters stated that EPA provides little justification in the draft rule to ground its assumptions that it is feasible for states to implement a 6% carbon em ission rate improvement at affected EGUs and increase natural gas combined cycle power plant capacity factors to 70% by 2020. The commenters stated that since the draft rule has been proposed, power plant operators, electric utilities, state energy offices , and other knowledgeable stakeholders have been nearly uniform in their concern that states and power plant operators would not be able to implement building blocks #1 and #2 before 2020, or at one time. The commenters stated that given the overall size o f the electricity sector, and the tremendous amounts of capital needed to make even small shifts in power plant efficiency or hours of generation, such an abrupt shift in electricity generation operations is economically and operationally infeasible, and m ay not even be technically possible.

The c ommenter s stated that instead of factoring all the carbon emission rate reductions associated with affected EGU efficiency improvements and coal

- to

- natural gas fuel switching into the pre

- 2020 time period, EPA shou ld follow a similar schedule to what it implemented for building blocks #3 and #4. The c ommenter s stated that under such a format, affected EGU efficiency improvements and coal

- to

- natural gas fuel switching is assumed to increase at a set rate between 2017 and 2029, ultimately achieving the intended carbon emission rate reductions in 2029 rather than 2020. The c ommenter s stated that notably, this approach leaves EPA's final carbon emission rate targets for each state unchanged while easing state interim tar gets in order to allow states more time to implement cost

- effective operational changes and upgrades at coal and natural gas power plants. The c ommenter s stated that this also provides greater leeway for some fossil fuel burning power plants to live out th eir useful lives before retirement.161 The c ommenter s stated that as is noted in the October NODA, providing a more gradual process for substituting coal generation with natural gas is especially important given the scale of carbon emission reductions associa ted with building block #2 in many states. The c ommenter s stated that if states with significant redistributions of coal to natural gas generation are not able to completely achieve the shift forecast in the draft rule by EPA for 2020, they have very limit ed alternate options for achieving a similar scale of carbon emission rate reductions. The

c ommenter s stated that switching large amounts of coal

- fired electricity generation to natural gas could adversely affect grid reliability, ancillary services, and b alancing authority's abilities to meet peak loads if implemented too quickly. The c ommenter s stated that additionally, long

- term contracts from affected EGUs could be compromised with a 2020 deadline for fuel switching. The c ommenter s stated that a longer glide path through 2029 would at least mitigate some of the adverse impacts from building block #2.

The c ommenter s stated that alternatively, EPA could split the carbon emission reductions associated with building blocks #1 and #2 in half, implementing half the 6% carbon emission rate improvement at affected coal EGUs and half the coal

- to

- natural gas generation shift assumed for each state in 2020 while the second half could be implemented in 2025 or another year. The c ommenter s stated that setting the interim year carbon emission rate targets in this manner would achieve the same goal as the State of Montana's primary recommendation, providing greater leeway for states to find cost

- effective means of reducing their carbon emission
rate s while leaving the final 2030 carbon emission rate targets for each state unaffected.

Commenter s stated that FMEA supports the proposal to phase in the emission reduction goals for BB #1 and BB #2. The commenters stated that this phase

- in would help moderate the draconian CO2 reductions required in 2020 known as "The Cliff" by many utilities. The commenters believed that the phase

- in should consider the amount of utilization NGCC generation that is both economically and physically feasible by 2020 as well as the time it would take to economically and physically fully utilize NGCC resources. The commenters stated that EPA should not only consider the "book life" of original fossil fuel

- fired generating assets and the major upgrades to generating units b ut also the treatment of the units in the utility integrated resource plans. The c ommenter s stated that often continued utilization of base load units beyond their "book life" is a major factor in moderating consumer electric rates.

Commenter s stated t hat as noted above, PNM is concerned regarding the stringency of the interim goals, which are the result of EPA's assumption that states will be able to fully implement building blocks 1 and 2 before the beginning of the interim compliance period in 2020. The c ommenter s stated that however, EPA's October 2014 NODA requests comment on whether the interim goals should allow building block 1 assumptions to be phased in over the interim compliance period. The c ommenter s stated that PNM supports that approach be cause it will provide additional flexibility and allow for affected EGUs to attempt several efficiency improvement strategies in sequence, rather than simultaneously, as would otherwise be required under the short deadlines originally proposed. The c omment er s stated that by allowing owners and operators of EGUs to schedule efficiency improvements sequentially, EPA will be allowing them to choose the most cost

- effective projects first, and only implement less cost

- effective strategies later if additional red uctions are still needed. The c ommenter s stated that without that flexibility, owners and operators of EGUs would be forced to implement all possible strategies at once, even ones that are largely duplicative and less cost

- effective, in the attempt to achi eve162 EPA's aggressive six percent efficiency improvement requirement within the short compliance window. The c ommenter s stated that thus, PNM asks EPA to allow affected EGUs to gradually phase

- in efficiency improvements over the entire interim compliance pe riod, similar to EPA's approach for evaluating building blocks 3 and 4.

Commenter s stated that the ability to gain the emission reductions predicted by EPA from Block 1, is severely limited, if not impossible. The c ommenter s stated that specifically, La ramie River Station has undertaken all the efficiencies it can identify, and, even if there were any additional improvements to the heat rate that could be done, the glide path does not give sufficient time to meet 2020 interim goals. The c ommenter s stated that assuming a state plan is completed by 2016 and approved by the EPA in that same year, utilities and regulators are left with less than 4 years for significant planning, budgeting, permitting and financing of major enhancements to improve the heat rat e before 2020. The c ommenter s stated that the NODA asks for input on whether allowing a phase

- in of block 1 improvements will adequately address timing concerns. The

c ommenter s stated that planning improvements requires engineers to analyze the types of i mprovements, understand the impacts, and plan the plant outages for the installation of any heat rate improvements, and time for regulators to review and approve such plans. The c ommenter s stated that individual state air regulators understand these limita tions which face the fleet in their state because they have been regulating them for the life of the plant. The c ommenter s stated that while allowing a phase

- in for block 1 might benefit units that have available efficiencies yet to achieve, it is unlikely to have a significant impact on the overall workability of block 1. The

c ommenter s stated that in sum, it is very unlikel y that LRS or any other affected EGU would be able to get any heat rate improvement (whether by 2020 or phased

- in), leaving the states and the utilities to rely instead on Blocks 2, 3, and 4 to achieve the significant emission reductions required by the gl ide path in this short time frame.

Commenter s stated that in its October 30, 2014 NODA the EPA requests comment on the idea of a phasing

- in of the Building Block 1 heat rate improvement. The c ommenter s stated that the problem with that idea is that no a mount of time will allow for an average 6 percent improvement in the heat rate of coal

- fired EGUs because that level of heat rate improvement is simply not achievable.

Commenter s stated that in the Notice of Data Availability (NODA) related to the propo sed Clean Power Plan, EPA has requested comment on the glide path, whether a phase

- in of BB 1 and BB2 would be appropriate. The c ommenter s stated that for states like North Carolina that have already achieved high heat rate improvements (HRI), there exists little to no room for further HRI in the next few years. The c ommenter s stated that NCDENR does not support the concept of a glide path, and believes that a state should not be denied the right to meet the final goal through infrastructure changes such as extending the life of a nuclear plant or conversion from coal to gas late in the 2020

- 2029 performance period (were those mechanisms found to be legally authorized).

Commenter s recommended introducing greater flexibility in the application of Building B locks 1 and 2 by eliminating the requirement that the full magnitude of emission reductions from these building blocks be achieved by 2020. The c ommenter s stated that under the current proposal, the methodology for establishing the interim emission rate go al requires that emission reductions occur by 2020 that are equal to the BSER assumptions for heat rate improvements and increased163 utilization of natural gas. The c ommenter s stated that in states with significant coal and/or natural gas resources, this res ults in a substantial step change in emission reductions required by 2020. The c ommenter s stated that thereafter, emission reductions are assumed to occur through 2030 based on the BSER assumptions for further increased renewables and energy efficiency. Th e c ommenter s stated that accordingly, though there is a "glide path" available for compliance from 2020 to 2029, in many cases this is preceded by steep emission reduction required by 2020.

The c ommenter s stated that such a sudden and steep transition fro m coal

- to natural gas

- fueled resources has the potential to result in the costly and unnecessary stranding of assets and does not fully account for the remaining useful life of existing coal

- fired resources. The c ommenter s stated that Section 111(d) clea rly provides the EPA administrator to develop regulations that allow states to consider, among other factors, the remaining useful life of the existing source to which the standard applies. The c ommenter s stated that while, arguably, EPA will allow the
sta tes to take remaining useful life of assets into consideration in their state plans, S tates should be explicitly provided the option in the final rule. The c ommenter s suggested that EPA specifically add to proposed section 60.5740(11), supporting material, a fifth subsection for "materials demonstrating the state's analysis of the remaining useful life of the existing source to which such standard applies" to address s ituations where affected EGUs have made recent emission control retrofits or have significant remaining book life. The c ommenter s stated that f urthermore, this change in resource mix may create transmission system stability and reliability issues. The c omm enter s stated that fixing these issues may require building and/or expanding high voltage transmission lines and substations, which requires lengthy regulatory approval
processes.

The c ommenter s stated that allowing states to phase in these components of B SER over the entire 10

- year interim period provides an appropriate response to the concerns identified above and establishes parity for the timing of requirements among the four building blocks. The

c ommenter s stated that such an approach could provide rel ief to states with significant reduction requirements by 2020, as currently proposed, without jeopardizing the ability of states to meet the final emission rate goals. The c ommenter s stated that this approach would also allow states to take into account th eir unique circumstances, such as the timing of coal retirements, when proposing how they will meet the final goal.

Commenter s stated that EPA seeks comment on whether a phase

- in of Building Block 1 is appropriate. The c ommenter s stated that in the pro posed rule, Building Block 1 is implemented in total in 2020, contributing to the "compliance cliff." The c ommenter s stated that Ameren Missouri has already implemented heat rate improvements across its fleet and further gains are expected to be relatively nominal, thus, the phasing in of this building block would do little to offset the impact of the compliance cliff associated with the interim goals. The c ommenter s stated that Ameren agrees that EPA should allow states to do an assessment of their coal fl eets to determine which units could implement additional heat rate improvement projects and at what cost. The c ommenter s stated that phasing

- in an unachievable building block does not provide states with a meaningful compliance alternative as final complia nce would require additional reductions of the other building blocks

.

Commenter s stated that EPA should allow states to utilize a longer glide path up to 2030 for implementation of Building Blocks 1 and 2 to avoid adversely impacting reliability and ele ctric164 rates to the consumer. The c ommenter s stated that electric utilities would need up to 10 years or more to achieve maximum heat rate improvements. The c ommenter s stated that utilities typically complete maintenance outages every three years, and these are scheduled during low energy periods such as the spring and fall here in the Midwest. The c ommenter s stated that outages are carefully coordinated with other regi onal utilities to ensure that rates and reliability are not significantly impacted and to ensure that the necessary, highly

- skilled contract labor is available to complete the work. The c ommenter s stated that if utilities are required to achieve their maxi mum heat rate reduction within two to three years, multiple units would need to be shut down concurrently for outage work, resulting in significantly adverse impacts to costs because more expensive natural gas capacity would have to be dispatched. The c omm enter s stated that this could also result in potentially significantly adverse impacts to reliability if insufficient gas capacity is available. The c ommenter s stated that capacity and energy gaps in regional coal systems could adversely impact the reliabi lity of the transmission system because the transmission system has not been analyzed for the contingency loss of multiple coal units in a region.

Commenter s stated that even if the necessary number of unit outages could be accomplished without adverse impacts to rates and reliability, the number of highly

- skilled contract labor workers is not currently available to achieve the work, and there is insufficient time to develop a larger work force. The c ommenter s stated that a labor shortage exists today an d qualified labor is already in dire shortage both regionally and nationally. The c ommenter s stated that for example, in 1988 the number of welders in the U.S. was 570,000; in 2012 that number had shrunk to less than 360,000. (And, in 2012, the average age of a welder in the U.S. was 54 years old.) The

c ommenter s stated that in 2008 there was an estimated shortage of 250,000 welders. The

c ommenter s stated that the American Welding Society estimates that shortage will grow to 290,000 by 2020, in other words, the demand for welders in the next several years will grow to twice the actual numbers of qualified welders.

Commenter s stated that a 10

- year glide path for heat rate improvements would allow each unit to complete at least three outage cycles mitigatin g potentially significant adverse impacts to rates, reliability or the available workforce.

Commenter s stated that providing states with a longer glide path would allow them to factor in the remaining useful life of power plants and avoid adverse cost i mpacts to consumers. The

c ommenter s stated that forcing expensive heat rate improvements on a coal

- fired unit that operates infrequently and is scheduled for shut down between 2020 and 2030 is not cost

effective for the rate payers. The c ommenter s stated t hat utilities would have the opportunity to shut down the unit in lieu of completing heat rate improvements but potentially at the expense to rate payers through stranded cost recovery. The c ommenter s stated that a longer implementation glide path would al low states and utilities to mitigate rate impacts by factoring in the longer term plans for existing units.

Commenter s stated that EPA is seeking comment on the appropriateness of the phase

- in of Building Block 1. The c ommenter s stated that the phase in of heat rate improvements at existing coal

- fired units is not only appropriate, but necessary. The c ommenter s stated that if there are available equipment upgrades and changes in operation that will result in increased efficiency, these changes are likely to trigger permitting requirements. The c ommenter s stated that as EPA165 is aware, the permitting timelines for PSD and NSR are long and require the issuance of a permit prior to commencement of construction of any upgrades or implem entation of any changes in operation. The c ommenter s stated that as a result, upgrades and changes are unlikely to be completed by 2020 and therefore, it is appropriate to phase

- in Building Block 1. The c ommenter s stated that EPA should leave it up to the states to establish a logical phase

- in for obtaining a reasonable and achievable final goal and EPA may consider the reasonableness of a state 's proposed phase

- in as part of its review of the state plan. According to the commenters, t his entire issue could be avoided by EPA abandoning the infeasible requirement for a fixed percentage reduction from Building Block 1. The commenters explained that it would be much more appropriate for EPA to establish a work practice or operational standard under section 111( h) of the CAA which reflects the best technological system of continuous emission reduction ( BTSCER ) . In the case of coal

- fired EGUs, the commenters stated that the BTSCER would be a requirement that sources must employ best practices of operation and main tenance to minimize heat rate variability and to periodically review available equipment upgrades to determine whether such upgrades would cost effectively improve heat rate and boiler efficiency.

Commenter s stated that the timing and feasibility assoc iated with building block 1 heat rate improvement (HRI) actions should be considered for any adjustments to the interim goal. The

c ommenter s stated that with regard to the 2020

- 2029 glide path, EPA is seeking comment on a suggestion from stakeholders that a phase

- in of building block 1 would be appropriate. The

c ommenter s stated that EPA's alternative proposal appropriately recognizes that the building block 1 HRI actions, as originally proposed, cannot be accomplished by 2020 when, among other
reasons, app roved plans are not expected prior to 2019. The c ommenter s stated that as noted in Wisconsin's Clean Power Plan Comments regarding this issue, EPA should eliminate the interim goal and allow each state to determine a schedule for compliance based on feasib ility and cost.

Commenter s stated that in the EPA's NODA, the agency requests comment on whether consistent with the BSER, the overall framework proposed includes sufficient flexibility with respect to adequate time for the implementation of emissions reduction strategies and the consideration of cost. The c ommenter s stated that a relevant concern with EPA's BSER approa ch is the interaction of Block 1 with Blocks 2 and 3. The c ommenter s stated that shifting generation from existing coal

- fired generation assets and requiring these units to operate at lower capacities or as load

- following units is counter

- intuitive to achi eving and sustaining heat rate improvements. The c ommenter s stated that while EPA has provided flexibility in the compliance measures allowed, these options may not be sufficient or cost

- effective compared to greater achievement of heat rate improvements at existing coal

- fired units when operated as designed to
pr ovide for base load power at higher capacity factors. The c ommenter s stated that furthermore, the interim goals present challenges in the pace of this possible shift in generation resources potentially making it difficult to obtain regulatory approvals for heat rate improvements at existing coal

- fired EGUs post

- 2020.

The c ommenter s stated that to that end, as proposed by EPA in the NODA, it would be reasonable to address these concerns by allowing state agencies to take into account the book life of the or iginal coal

- fired assets, as well as the book life of any major upgrades to the asset, such as major pollution control retrofits. The c ommenter s stated that alternatively, EPA could allow states to consider other measures, such as the depreciation schedule in lieu of the book life. The

c ommenter s stated that Alliant Energy believes that state plans should be provided the flexibility166 and option to use the book life (or some other reasonable measure such as depreciation schedule) as the basis for the developm ent of an alternative emissions glide path that would phase

- out these assets in a manner that maximizes emissions reductions while reducing impacts to reliability or affordability. The c ommenter s stated that at a minimum, EPA's final rules must allow for s tates to consider the remaining useful life in demonstrating a request for a retirement off

- ramp on an EGU

- specific basis that could either revise the required emissions reductions or compliance deadline in the 111(d) plan.

Commenter s agreed that if imp lemented as proposed, the proposal will be costly to consumers, and stranded assets will contribute to those costs in many markets. The c ommenter s stated that EPA's suggested fix does not address the core problems in the proposal. The c ommenter s stated tha t coal plants, which EPA's proposal would sideline, provide much

- needed reliable generation in response to demand and external events. The c ommenter s stated that those assets should not be scuttled, as EPA proposes. The c ommenter s stated that that needed g eneration will exist in 2030, just as it exists now and will exist in 2020. The c ommenter s stated that the problem the NODA is trying to address is a problem of EPA's own making, and simply extending the compliance deadlines for specific assets will not fi x it.

The c ommenter s stated that EPA's request for comment about how to properly consider the remaining useful life of coal plants as part of a phased

- in approach is equally misguided. The

c ommenter s stated that the CAA explicitly instructs states to accou nt for remaining useful life in setting the standard, not EPA. The c ommenter s stated that EPA's proposal must permit states to do this, yet EPA's proposal here does not. The c ommenter s stated that as discussed earlier, EPA's prohibition against states adop ting a less stringent "emissions performance goal" or longer compliance time than in EPA's guideline document is contrary to the regulations and the statute. The c ommenter s stated that instead of EPA accounting for remaining useful life, EPA should recogni ze that states have the authority to vary from the emission rate established in the "guideline" as the statute requires. The c ommenter s stated that as currently proposed, EPA's guidelines do not.

Commenter s question ed the ability of generators to achieve the 2020 targets as EPA has front loaded the reductions goal. The c ommenter s stated that Alstom expects that generators will not move to make such heat rate improvements until the rule is finalized and the State Implem entation plans are finalized. The c ommenter s stated that this would be expected to be mid 2017 or 2018 according to EPA's timeline. The c ommenter s stated that given the need to review and prepare plans, order materials, do required engineering, and install the plant improvements, Alstom believes that the early reductions sought by Building Block 1 likely cannot be achieved. The c ommenter s suggest ed a glide path to reductions that allows for time under all the Building Blocks to achieve the targeted reductio ns. The c ommenter s stated that given the time to finalize regulations and plans, implementation should be accorded a reasonable approach for compliance since ultimately the objective is the 2030 target not the interim targets.

Commenter s stated that cap ital improvements to improve unit efficiency, such as steam turbine upgrades, require several years to plan, design, procure, and install and that delivery time for major equipment, such as turbine rotors, is currently approximately 24 months. The c ommente r s expect time for delivery will increase significantly if the rule results in a spike in orders due to manufacturing facilities becoming backlogged and many upgrades require lengthy outages that167 must be coordinated with outages on other units to ensure su fficient generating capacity is always available to meet demand. The c ommenter s further stated that utility steam turbine overhauls are significant investments and are now only typically done every 8 to 12 years, and upgrading a recently overhauled turbine truncates the benefit of the overhaul stranding that investment. The c ommenter s stated that EPA should eliminate the initial compliance period and begin compliance in 2030 in order to provide adequate time for capital improvements to improve unit efficien cy.

Comment 26 : Comment supporting additional flexibilities around the "glide path" and early reductions, provided overall stringency of the CPP is maintained.

Response 26 : The EPA agrees with the commenters concerns about the need for added flexibilities supporting the “glide path” and we are finalizing this rule with additional flexibility
to accommodate such requirements and programs through a “state measures” plan. We are also finalizing this rule to include consi deration for emissions reductions made as early as 2012. A discussion of these issues is included in section s VIII.C and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Comment er s indicated that the RGGI states support additional flexibilities around the "glide path" and early reductions, provided overall stringency of the CPP is maintained . The
commenter s noted that the RGGI states support the inclusion of flexibility throug hout the CPP, including the potential for additional flexibility outlined in the NODA with respect to the timing of measures relied on as part of state compliance demonstrations. The commenter s stated that if the EPA were to recognize actions taken during the period from January 1, 2014 through the beginning of the proposed 2020 compliance period, greater recognition would be given to the substantial progress already achieved by early action states to reduce GHG emissions; such a provision could also provid e incentives for additional early action. The commenter s stated that at the same time, the RGGI states urge the EPA to ensure that any recognition of action undertaken prior to the compliance period does not reduce the overall stringency of the rule on a national level. The commenter s stated that in the event t hat the EPA chooses to provide states with greater interim flexibility in a way that diminishes the emission reductions that would have otherwise been achieved in the interim period, the EPA should implement other changes such as those identified by the RG GI states that would achieve additional cost

- effective reductions, such that the overall level of national stringency is maintained or increased.

Comment 27 : Comment stating that the interim goal is unrealistic, does not allow for delays in timing due to right

- of

- way obtainment or construction of new pipelines, transmission or generation facilities

, and may ultimately result in stranded assets.

Response 27 : The EPA shares the commenters’ goal of avoiding stranded assets. Although nothing in section 111(d) explicitly bars a guideline that results in some facilities becoming uneconomic before the end of their useful lives, the EPA nonetheless has striven to design the168 guidelines so as to give states flexibility to develop plans that allow power companies to recover their investments in generation units. The EPA generally agrees with the commenters that state and regional planning groups require additional time to review their current status, analyze, plan for, and finalize a plan and associated glide path to meet the interim goal, and subsequent goals. Discussion of these topics is included in sections VIII.C, VIII.D, VIII.E, VIII.F

, and VIII. I of the final rule preamble of the CPP

. The following are summaries of the specific public comments under th is comment:

Commenters referred to EPA's statement at 79 FR 34837 that the EPA "recognizes that, with many measures, states can achieve emission reductions in the short

- term, though the full effects of implementation of other measures, such as demand

- side energy efficiency (EE) programs and the addition of renewable energy (RE) gener ating capacity, can take longer. Thus, the EPA is proposing interim goals that states must meet beginning in 2020. The proposed interim goals would apply over a 2020

- 2029 phase

- in period." The commenters stated that in reality the interim goal is unrealist ic. The commenters stated that if individual state plan approval is anticipated in June 2017, or perhaps even June 2018 if the state receives an extension, it will be very difficult for states to begin meeting the interim goal in 2020, even if the proposed rule anticipates the interim goal being averaged over 10 years.

The commenters referred to the EPA's statement, "Of the four building blocks considered by the EPA in developing state goals, only the first block, heat rate improvements, involves capital i nvestments at the affected EGUs which, if mandated in a state rule, might give rise to remaining useful life considerations at a particular facility. The other building blocks

- re

- dispatch among affected sources, addition of new generating capacity, and i mprovement in end

- use energy efficiency

- do not generally involve capital investments by the owner/operator at the affected EGU ". The commenters stated that to meet the EPA goals, a state must take into consideration the time needed to finance, permit, co nstruct or commission new generation. The commenters noted that the interim goal does not allow for delays in timing due to right

- of

- way obtainment or construction of new pipelines, transmission or generation facilities.

The commenters referred to the EPA 's note that timing flexibility, such as that provided with the interim goals, allows states to develop plans that will help states achieve a number of goals including addressing concerns about stranded assets. Yet, according to the commenters, in order
to effectively meet a state's goals under the proposed timeline, it will be necessary to re

- dispatch affected sources or add new generating capacity. The commenters stated that accelerated construction to meet aggressive goals may ultimately result in uninte nded stranded resources

.

Comment 28 : Comment stating that the EPA's compliance timeline does not align with resource planning and build cycle timelines and recommending that the EPA allow states to retain flexibility for, and the establishment of, their own target emission reductions timelines (i.e. a compliance target glide

- path) in order to meet each state's unique resource planning processes that also take into account actual permitting and construction timelines for the optimal solution.169 Response 28 : The EPA agrees with the commenters and for this and several reasons, including infrastructure needs, as well as timing and planning concerns such as the commenters mention, the EPA has extended the time allowed for States to finalize their plans and has moved the start of the interim period from 2020 to 2022 . The final rule also includes additional flexibility for state and regional planning groups to include RE and EE planning, as well as Emissions Reductions plans, and to include ability to count emissions reductions starting at the 2012 baseline year, and bank early reductions to help meet later glide path requirements. We are finalizing this rule requiring submission of state or regional plans by 2018, and beginning the first interim goal on January 1, 2022. A discussion of these topics is included in s ections VIII.B and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA's compliance timeline does not align with resource planning and build cycle t imelines . The commenters noted that the EPA begins the glide path in 2020 with an interim goal and establishes a final goal by 2030. The commenters stated that based on South Dakota's affected units (one coal fired plant, Big Stone Power Plant or BSP, and one NGCC Plant, Deer Creek Station or DCS), the key building block that EPA identifies will meet the target emissions rate in 2020 is Building Block 2. The commenters stated that this building block is the re

- dispatch of energy generated from affected coal units to affected existing natural gas units. While at first blush the re

- dispatch of energy may seem relatively easy to accomplish, the commenters stated that the actual complexity of doing such requires appropriate time to adequately plan for re

- dispatc h to gas, plan for additional generating facilities, and build additional generating facilities or transmission lines.

The commenters stated that re

- dispatching DCS to a 70 percent capacity factor would require BSP to operate at a 23 percent capacity fact or, but the owners of BSP identified that operating the plant at such a low capacity factor may cause the unit to become uneconomical to run and, ultimately, force the plant to shutdown. The commenters noted that should BSP be forced to shut down, addition al generating resources or transmission upgrades would need to be determined through a resource planning process and then constructed in order to make up the capacity and energy lost due to the closure of BSP. The commenters stated that the utilities would then need to look at permitting and constructing the optimal plan in order to ensure electricity supply adequately meets demand. The commenters stated that the timeline for permitting and constructing projects varies depending upon the project, however it is their experience that planning, permitting, and constructing NGCC plants may take as long as 5 years, with transmission projects taking even longer. Given this, the commenters stated that the EPA's assumption that re

- dispatch of generating resources ca n occur by 2020 is flawed. The commenters stated that the EPA's final rule must be flexible enough to allow for adequate resource planning, permitting, and construction. The commenters recommended that the EPA allow states to retain flexibility for, and th e establishment of, their own target emission reductions timelines (i.e. a compliance target glide

- path) in order to meet each state's unique resource planning processes that also take into account actual permitting and construction timelines for the optim al solution.170 Comment 29: Comment asking why the EPA “front loaded” the compliance schedule, and questioned the ability of generators to achieve the 2020 front

- loaded the reductions goal even if some level of HRI at a given unit is possible

. Response 29 : In estimating the amount of improvement achievable through each building block e.g., improvement in heat rate or amount of generation shift to lower

- emitting EGUs), the EPA relies on estimating the average achievable level rather than attempting to estimat e the level achievable by each and every affected EGU. Thus, the fact that an individual facility may be unable, for example, to achieve the average level of heat rate improvement assumed in goal

setting is consistent with the EPA’s analysis, and does not undermine the EPA’s determination of state goals. Regarding concerns such as the commenters mention about timing, the EPA has extended the time allowed for states and regional planning groups to finalize their plans and has

move d the start of the interim period from 2020 to 2022 . The final rule includes this additional time due to reasons the commenters mention, among others. A discussion of these issues is included in sections VIII.B

, VIII.E, VIII.F

, and VIII. I of the final ru le preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that EPA directs the states to achieve rather dramatic reductions (in lb/MWh) in the first 3 years of operation after the SIP th at would be approved in 2017 (i.e., the interim goal must be reached by 2020). The commenter s noted that, as the proposed rule is written, Colorado regulators are directed to ensure an interim reduction of 32.4 percent, but then the EPA allows 10 years to make the final reduction goal of 35.4 percent called for in the rule. The
commenter s questioned why EPA frontloads compliance in such a manner.

Commenter s also questioned the ability of generators to achieve the 2020 front

- loaded the reductions goal even if some level of HRI at a given unit is possible.

Comment 30 : Comment stating that states with large amounts of excess NGCC capacity are required to make significant CO2 reductions early in the compliance period in order to meet their interim goals, defeating the intended purpose of providing stat es flexibility.

Response 30 : The EPA is finalizing this rule to include options that permit states to use a rate or mass CO2 e mission goal, and each of these pathways allow states multiple plan design choices. The final rule also allows states more time to assess and finalize their plans and assemble these options into a workable glide path to the 2030 goal. Where the commenter s note that flexibility seemed limited at proposal they should now find sufficient latitude to assemble their plan(s).

The following are summaries of the specific public comments under this comment:

Referring to the NODA, commenter s noted EPA's statemen t that stakeholders have expressed that states with large amounts of excess NGCC capacity are required to make significant CO2 reductions early in the compliance period in order to meet their interim goals, defeating the intended purpose of providing state s flexibility. Given that the interim goals reduce high

- NGCC

-171 capacity states' options for meeting compliance, the commenter s questioned whether EPA considered altering or removing the interim goals or phasing in Building Block 2 in order to provide states with implementation flexibility

Comment 31 : Comment contending that the 2020 implementation date also would be inconsistent with EPA's goal of maintaining an affordable and reliable energy mix

. Response 31 : The EPA agrees with the commenters and we are fi nalizing this rule with a 2022 implementation date for the first interim goal.

The following are summaries of the specific public comments under this comment:

Commenter s disagreed with the EPA's suggestion that regardless of its impact on flexibility, the 2020 implementation date may be required as an element of the BSER determination. The commenters stated that Section 111(a)(1) defines the "standard of performance" to be imposed under section 111(d) as, the degree of emission limitation achievable thr ough the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately d emonstrated. The commenters stated that strict application of building block 2 to Arizona by 2020 would not constitute BSER under this definition for four reasons. First, the commenters stated that requiring the retirement of Arizona's entire coal fleet by 2020, which would be the effect of imposing building block 2 as a stand

alone requirement, would impose unreasonable costs in the form of stranded investments. Second, the commenters stated that the EPA modeling of the nationwide cost impacts of re

dispat ch pursuant to building block 2 appears to be flawed. Third, the commenters stated that the assumption of a 2020 implementation date for building block 2 fails to account adequately for the need to develop the infrastructure required for re

- dispatch. Final ly, the commenters stated that full imposition of building block 2 by 2020 or even 2030 could jeopardize the reliability of Arizona's grid and would be inconsistent with EPA's obligation to consider "energy requirements." For these reasons, the commenters contended that the 2020 implementation date also would be inconsistent with EPA's goal of maintaining an affordable and reliable energy mix.

Comment 32 : Comment suggesting that states should receive credit toward their interim and final goals for early energy efficiency projects and other actions that they take from 2012 to 2019 in a manner that allows states to apply those credits towards interim compliance

. Response 32 : The EPA agrees with the commenters and recognizes the value of such early actions, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both mass

- based and rate

- based plans. Section VIII.B of the final rule preamble of the CPP includes a disc ussion of this topic.

The following are summaries of the specific public comments under this comment:172 Commenter s suggested that states should receive credit toward their interim and final goals for early action that they take from 2012 to 2019 in a mann er that allows states to apply those credits towards interim compliance . The commenters stated that crediting of early reductions provides states greater flexibility, provides an incentive to implement measures to meet targets sooner rather than later, and gives credits to those states that acted even prior to proposal of the CPP. While the commenters appreciated USEPA's recognition of programs implemented prior to the interim period

, the commenters stated that it is more important that early reductions are put on an equal footing as interim period reductions by giving them equal credit. The commenters also stated that if the EPA maintains an interim goal averaged from 2020

- 2029 as proposed, deferring credits earned from 2012 to 2019 and applying them toward interim compliance might allow for a smoothing of the actual year over year emission rates, helping states to stay within the 10 percent buffer

, which might alleviate some of the onerous reporting burden being put upon states by preventing unnecessary mid course corrections from having to be made.

Commenter s noted that the fourth building block establishes national targets for the deployment of energy efficiency programs that are based on an evaluation of energy efficiency programs in the best performing states. The commenters noted, as proposed, any energy efficiency projects implemented after the date of the proposed rule (June 2014) can be credited for compliance purposes if they avoid generation during the compliance period, which starts in 2020. The commenters noted that the proposal solicits comments about whether the start date should be before or after June 2014. The commenters stated that it is reasonable that demand

- side energy efficiency measures implemented after 2012 should be credited if the projects avoid generation during the compliance period because the baseline year in the proposed rule is 2012. The commenters stated that the start date for crediting energy efficiency projects should not be any later than June 2014, as this could delay th e deployment of energy efficiency measures until they can receive credit under the rule. The commenters supported crediting energy efficiency projects implemented starting in January 2013. If January 2013 is not selected, the commenters suggested a startin g date of June 2014 would be the next best option.

Commenters stated that the EPA should allow for recent efficiency projects at coal plants to be used for compliance.

Comment 33 : Comment stated that EPA proposed to set interim goals by assuming that building blocks 1 and 2 could be implemented by 2020, however, Puerto Rico will not be able to benefit from these building blocks

. Response 33 : The EPA agrees with the commenters we are finalizing this rule to include flexibility to allow state and regiona l planning groups the ability to revise the goal setting formula and the state goals themselves as well as providing for an explicit phase

- in schedule for meeting the revised interim goals, while also allowing a state the option of choosing its own emissio ns improvement trajectory. A more detailed discussion of these options is included in section s VIII.G and VIII. I of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:173 Commenters stated that EPA proposed to set interim goals by assuming that building blocks 1 and 2 could be implemented by 2020 . The commenters stated that Puerto Rico will not be able to benefit from these building blocks . The commenters stated that the interim goals compli ance period requires Puerto Rico to achieve very aggressive emission reductions in a relatively short period of 4 years, considering that the final rule will be issued in 2015 and the state plan is completed and approved by EPA in 2016. The commenter s stat ed, considering that the only alternate option that Puerto Rico may have to achieve emission reductions under building block 2 is the replacement or conversion to use natural gas of the existing EGUs affected by this rule, the interim goals compliance peri od needs to be shifted to allow for the implementation of these measures. The commenter s stated that there are several constraints to the implementation of this alternate option by the 2020 period, mainly: the long process for obtaining the necessary state and federal permit authorizations, securing the financing and contractors, phasing the required activities during available outage schedules, development and construction of the necessary infrastructure to supply natural gas to these EGUs, among others.

T he commenter s supported the Large Public Power Council's (LPPC's) position that "to provide additional timing flexibility for the implementation of these stringent reduction obligations, EPA should build in reasonable phase

- in periods for achieving the req uired emission reductions", and that "this can be best achieved by giving each state the authority (subject to EPA approval) to set its interim CO2 emission rate goal based on an implementation that is feasible." This way, the commenters stated that Puerto Rico could still achieve the final goal, but the interim goal compliance period would be adjusted to reflect the state

- specific schedule before the final goal compliance date

.

6.1.4 Duration of performance periods for final and interim goals

This section addresses the timeframe allowed in the proposal for the interim and final goals. Many commenters request ed that the EPA not finalize interim goals and instead allow the states establish their own interim milestones and glide path t o meeting the 2030 targe t.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are also provided for these topics.

Comment 1: Comment supporting the flexibility provided by allowing the interim goal to be met through a 10

- year rolling average during the period from 2020 to 2029 and encouraged EPA to allow states to set forth their own interim milestones and glide path while meeting the

e nforceable interim target (on a 10

- year average, as proposed) and the 2030 emission target

. Comment stating that the interim standard is amply achievable and more rigorous emission reductions are achievable in 2025, and stating that

, consistent with the st atutory requirements to periodically modernize BSER, the EPA must establ ish a legally enforceable mechanism that requires a BSER determination in 2025 to secure additional deeper reductions beginning no later than 2030 . Comment arguing that the EPA should remain firm with its 2020 interim compliance target date, make it clear that states are allowed to revise or update their compliance plans174 through the 2030 compliance period to adjust for changes in technologies and unforeseen circumstances, and that they do not support any change to the glide path or any delay in achieving the emission reductions specified in the draft rule

. Response 1: The EPA thanks the commenters for their support of the CPP and our goal of providing a flexible approach to reducing GHG emissions by 2030. The EPA has determined that the BSER includes implementation of reduction measures over the period of 2022 through 2029, with final compliance in 2030. Therefore the final rule requires that interim CO2 emission performance rates or sta te CO2 emission goals be met for the interim period of 2022

- 2029, and for the three interim step periods (2022

- 2024, 2025

- 2027, 2028

- 2029). The final rule allows states that choose to meet a state CO2 emission goal the flexibility to define an alternate trajectory of emission performance between 2022 and 2029 to the steps specified in the rule. States have the option of meeting goals of the state’s choosing for the interim step periods instead of meeting the interim ste p goals provided in the emission guidelines, as long as meeting the state

- determined interim step goals will still result in the interim state CO2 emission goal being met on an 8

- year average or cumulative basis and the 2030 state CO2 emission goal is achi eved. Additional discussion to this point can be found in section s VIII.B and VIII.E of the final rule preamble of the CPP

. We are not finalizing any position with respect to the implications of the 8

- year review of the NSPS with respect to possible future revision of this guideline; it is unnecessary to address this issue at this point in time. Therefore, these comments are generally moot.

The EPA thanks the commenters for their support of the interim standard and for the establishment of a final goal attainable in the year 2030. For a number of reasons described in section VIII

. B of the final rule preamble of the CPP , the EPA is providing additional flexibility to states and regional planning groups including additional time to develop and finalize a plan, and the start of interim compliance goals in 2022, while retaining 2030 as the final compliance date.

The following are summaries of the specific public comments under this comment:

Commenter s supported the flexibility provided by allowing the interim goal to be met through a 10

- year rolling average during the period from 2020 to 2029 and noted that this is an effective way to allow states to develop their own "glide path" to meet the level of emission performance required by the fi nal goal in 2030. The commenter s stated that, given that CO2 remains in the atmosphere for a century or more, strong interim targets are important to the proposed rule's environmental protectiveness. The commenter s noted that states are already experiencin g the harms of climate change, and therefore stated that cost

- effective steps to reduce carbon pollution should be taken as soon as possible.

The commenter s stated that interim targets are also important in that they enable timely, comprehensive planning to reduce a broad range of air pollutant emissions in an integrated and
cost

- effective way. The commenter s stated that inclusion of interim targets beginning in 2020 combined with a 10

- year averaging period provides states with both a clear signal of the

s ignificant CO2 reductions required in the near term and the flexibility to meet those reductions while taking into account obligations to reduce other pollutants. The commenter s stated that this175 allows states to holistically address not only CO2 emissions under the Clean Power Plan but also mercury and air toxics emissions under the MATS, cross

- border air pollution under the Cross

State Air Pollution Rule, ozone precursors contributing to nonattainment areas under the upcoming revision to the ambient air qu ality standard for ozone, and haze

- creating pollutants under the Regional Haze Program. The commenter s stated that comprehensive planning is more
cost

- effective, ensuring that investments made in pollution controls are not stranded if high

emitting power p lants become less economical to run under the broader framework of clean air standards. The commenter s stated that providing interim targets combined with a flexible 10

- year averaging period leading to a final 2030 goal will provide states and power compan ies with the regulatory certainty to make these cost

- effective investment decisions.

The commenter s noted that EPA recognizes in the Notice of Data Availability (NODA) that some stakeholders have indicated that the flexibility provided by the 10

- year avera ging period for interim goals is constrained by the stringency of some states' interim goals. The commenters strongly supported the inclusion of interim targets, but also encouraged EPA to provide states additional flexibility for meeting these interim tar gets. For example, the commenters encouraged EPA to allow states to credit certain reductions achieved between the proposal of the rule and 2020; and also encouraged EPA to allow states the option to begin the interim compliance period before 2020 and ther efore have a longer averaging period. The commenters noted that EPA took comment on both of these mechanisms in the proposal and the NODA. The commenters strongly encouraged EPA to allow states to set forth their own interim milestones and glide path while meeting the enforceable interim target (on a 10

- year average, as proposed) and the 2030 emission target

. The commenters encouraged EPA, in the event that EPA chooses to provide states with greater interim flexibility in a way that reduces the emissions reductions that would have otherwise been achieved in the interim period, to consider other changes identified in this letter that would reflect additional cost effective opportunities for reductions, including implementing a reasonable minimum floor for a shift to natural gas.

Commenters stated that the interim standard is amply achievable and, as EPA itself finds, more rigorous emission reductions are achievable in 2025 . The commenters stated that, consistent with the statutory requirements to period ically modernize BSER, EPA must establish a legally enforceable mechanism that requires a BSER determination in 2025 to secure additional deeper reductions beginning no later than 2030

. The commenters argued that the interim standard that takes effect beg inning in 2020 is amply achievable. According to the commenters, the extensive analysis of the building blocks, addresses important and cost

- effective ways the building blocks can be strengthened by achieving deeper emissions reductions and securing the em issions reductions more swiftly than assumed, including, for example, the availability of deeper reductions at the source through cost

effective co

- firing and repowering with lower emitting fuels that is being widely deployed at coal plants today, the demo nstrated potential to deploy more extensive and cost

- effective renewable energy resources, and the rapid mobilization of demand side energy efficiency including a broader array of efficiency solutions than considered by EPA. Further, the commenters stated that there is extensive flexibility integrated into the compliance design of the interim standards.176 In sum, the commenters argued there is a strong

- more than amply achievable

- basis for meeting the proposed interim standard.

Moreover, the commenter s sta ted that the EPA expressly recognized that a more rigorous standard could be achieved by 2025, finding that it is achievable for power sector emissions to be 29 percent below 2005 levels in 2025 based on the changes reflected in the four building blocks. T he commenter s stated that EPA's finding that a deeper reduction in 2025 is achievable based on solutions adequately demonstrated meets the pertinent statutory criteria for determining the best system of emission reduction and thereby requires EPA to establ ish such a standard in 2025 that "reflects the degree of emission limitation achievable." As such, the commenter s stated that the EPA must establish a 5

- year compliance requirement beginning in 2025 and continuing through 2029 that is far more rigorous tha n the 2020

- 2029 10

- year average interim standard.

Finally, the commenter s noted that EPA requests public comment on whether to require maintenance of the 2030 standard beyond that date or, alternatively, to review and revise its BSER determination post 203 0. The commenter s stated that as EPA recognizes, Congress has woven an updating mechanism into the fabric of section 111 that commands the Agency to refresh the BSER analysis for new sources "at least every eight years" and is inextricably connected with u pdating the existing source standards through the expansive statutory definition of the term "new source," the terms of section 111(d), and the long

- standing EPA regulations implementing section 111(d) in parallel with section 111(b).

According to the comm enter s , the availability of clean low carbon solutions is advancing at a rapidly accelerating pace as clean technologies are being drive to scale and meeting our nation's power needs at briskly diminishing costs. The commenter s stated that there is every indication that like other modern clean air solutions for the power sector, including scrubbers and SCR, as well as for other major source sectors, that emissions reductions in the near future will be achievable more swiftly, more deeply and at a fraction of the costs currently expected.

The commenter s stated that EPA must hew to the facts in determining BSER and carry out its legal responsibility to commit to determine in 2025 through a legally enforceable mechanism the BSER that applies over time

- and that is not stagnant in maintaining in 2030 the standard of performance established a decade earlier. Rather, the commenter s stated that the BSER analysis must be, as Congress intended, a vibrant, rigorous, and dynamic tool in securing for our nation's pub lic health, environmental quality, and prosperity

- no later than the 2030 timeframe

- the additional far deeper "degree of emission reductions achievable."

Commenters supported the 2020 interim target date.

Commenters argued that EPA should remain firm with its 2020 interim compliance target date as reasonable to ensure states remain on track in reaching their respective goals. The commenters said the rule should also make it clear that states are allowed to revise or update their compliance plans through the 2030 compliance period to adjust for changes in technologies and other circumstances unforeseen during the coming period of initial compliance plan development.

Commenters noted that, in its October 28, 2014, Notice of Data Availability (NOD A), the EPA requested comment on a potential change in the "glide path" for emissions reductions that would177 make the 2020 interim state goals less stringent but keep the 2030 goals the same. In light of the many cost

- effective, quickly

- deployed options to cut emissions (including renewable energy and energy efficiency), the significant flexibility already provided to states in the timing for reaching their interim goals, and the urgent need to make deep cuts in our global warming emissions, the
commenter s d id not support any change to the glide path or any delay in achieving the emission reductions specified in the draft rule . The commenters stated that further delays in achieving emissions reductions are contrary to the overall goals of the CPP to make a si gnificant contribution to reduce US global warming emissions in a timely way and could also result in more stranded assets with utilities making investments to meet near

- term targets that may be unsuitable for meeting the longer term targets. Nevertheless, if the EPA were to decide to make any change in the glide path, the commenters said it should only be done in conjunction with strengthening the state emissions reduction goals required by CPP.

Commenter s noted that EPA requested comment on the appropr iate time period(s) and final year for the EPA's calculation of state goals that reflect application of the BSER. The commenter s stated that a 10 year compliance period is an adequate amount of time for states to reach the CO2 emission reductions goals.

C ommenter s noted that many of the stakeholders that they have met with are concerned about the reliability of the electric system if the Building Blocks are utilized for compliance. The
commenter s said electric reliability is always a concern for all stakeh olders. The commenter s contended that there is no reason to think that the reduction schedule that EPA has proposed will pose a threat to system reliability. According to the commenter s , integration of renewable resources, increased dispatch of natural gas , and managing demand

- side energy efficiency resources are long

- standing functions of grid operators in Wisconsin, throughout the Midwest, and around the country. The commenter s argued that the long compliance horizon in the CPP provides all stakeholders w ith sufficient time to take thoughtful, informed, and deliberate actions to manage any reliability concerns. The commenter s contended that the currently envisioned ten year compliance period between 2020 and 2029 provides states with a sufficient amount of time to anticipate any adverse impacts that the CPP may have on electric reliability and subsequently address them in coordination with regional grid operators and other states.

The commenter s stated that EPA is also affording states tremendous flexib ility in giving states a timeline with two compliance dates, one of 2030 which is 15 years from now and 12 years after EPA is likely to approve state plans, and an interim goal with an average over 10 years (from 2020 to 2030). The commenter s stated that s tates need to show progress towards the average reduction (they can't wait until the last minutes) but this is still very flexible. The commenter s stated that this gives states ample time to enact any necessary legislation and undergo the long

term plannin g necessary to ultimately implement compliance plans in an informed, deliberative, and comprehensive way.

Commenter s stated that the proposed guidelines, by providing goals over a 15

- year period for carbon reduction, provide policy certainty for investors and businesses.178 Comment 2: Multiple comments calling for elimination of the interim emission rate goal. Comment stating that the interim targets assume all of Building Blocks #1 and #2 will be completed by 2020, which does not allow the tim e to accomplish these goals, and recommending that the EPA eliminate the interim target and only set a final target in 2030.

Response 2: We disagree with commenters ’ assertions that interim goals should be discarded

, as we see great value in the interim approach in that states and reg ional planning groups have a stepped approach with checkpoints that provide for assurance that the glide path is on target with the goals that have been set.

Based on this and other comments we have received, the EPA has adjusted the start date for the i nterim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake neces sary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performanc e rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

In this final rule, a state plan submittal must demonstra te that the emission performance of affected EGUs will meet the interim step CO2 emission performance rates or state CO2 emission interim step goals on average over the 2022

- 2024, 2025

- 2027, and 2028

- 2029 periods and the final CO2 emission performance rate s or state CO2 emission goal no later than 2030.

This relatively long planning and implementation period provides states with substantial flexibility regarding methods and timing of achieving emission reductions while ensuring that states remain on track to meet their goals

.

We are finalizing this rule with a great deal of added flexibility both in terms of program options and in regard to the timing of interim and final goal milestones. A full discussion of state plan timing and flexibility of available programs can be found in section s VIII.E and VIII. G of the final rule preamble of the CPP

. The following are summaries of the specific pub lic comments under this comment:

Commenters called for elimination of the interim emission rate goals

.

Commenters stated that the proposed average emission rate for the period 2020 through 2029 is unnecessary and creates needless administrative difficulties. The commenters noted additions and removals of generation assets will be required to achieve the 2030 emission goals, particularly for Platt River Power Authority which does not operate any natural gas combined cycle generation. The commenters noted that changes in the makeup of a resource portfolio take a long period of time to plan and implement and are by their nature lumpy. The commissioning or decommissioning of resources cerates significant issues associated with rate impacts and179 reliability. To the extent that the significant portfolio changes needs to be made subsequent to 2020, it may not be possible to mee t the average emission rates set forth in the proposed rule. The commenters stated that utilities may reasonably require a glide path longer than the time allowed between the finalization of this rule and 2020 to modify their portfolios. The
commenters sta ted that if left unchanged the rule will unavoidably penalize utilities that are undertaking prudent efforts to comply through modification of their resource portfolios that necessarily extend beyond 2020. The commenters suggested that the EPA set a reason able emissions goal for 2030 and trust the states to develop reasonable compliance plans to achieve reductions rather than specifyin g fixed interim requirements , the effect of which may complicate compliance.

Commenters suggested that the interim emiss ion goals that are to take effect in 2020 should be eliminated . Given the difficulty states will face in developing plans in the timeframes EPA has provided and the fact that a failure to meet an interim goal in early years will require significant

over co mpliance in later years to meet the 10

- year interim average emission reduction rate, the interim goals are simply unachievable. Commenters stated i n the event EPA chooses not to eliminate the interim goals, the interim goals should be recalculated under t he revised assumption that the emission reductions from building block 2 are achievable on a phased

- in basis between 2020 and 2029, rather than being achievable in 2020.

Commenter s stated that if the final emission guidelines contain interim goals, wh ich UARG does not support, then they should be flexible and allow states to comply using a reasonable "glide path." According to the commenters, e ach state should have the authority to define its own glide path using criteria such as costs, energy impacts, and remaining useful life. Commenters stated

a llowing the interim goals to be met using a glide path would be a logical outgrowth of the Propose d Guidelines. Commenters said s tates should be allowed to determine the timing and to have a gradual phase

- in of Building Blocks 1 and 2.

Commenters stated that the emission goals EPA has set are too stringent and require such draconian actions to ens ure compliance that many states will have no choice but to take significant action by 2020. The commenters noted for example, the State of Arkansas has concluded that the infrastructure that will be required to implement the Proposed Guidelines makes plan implementation "as early as 2017 to meet an interim goal in 2020... far too soon and too abrupt to allow Arkansas utilities to meet the challenges of the proposed rule in a manner that is cost

- effective for their ratepayers ." The commenters noted for that reason, Arkansas has requested that EPA eliminate the interim goal to allow for a less burdensome glide

- path to compliance. The commenters stated that indeed, it is nearly inconceivable that states could develop renewable energy, build out infrastructu re, or even develop more traditional sources of generation to replace the sources that the Proposed Guidelines will force into retirement in time to meet the interim goals.

Commenters noted that the Congressional Research Service (CRS) has even found that EPA's targets are "front loaded," "with a disproportionate percentage of emission rate reductions required in the early years of the program (2020

- 2024 )." The commenters noted that the CRS finds, for example, that "90% of Arizona's total emission rate reductions occur between its 2012180 baseline and its 2020 emission rate." The commenters stated that the Proposed Guidelines improperly tie states' hands and will wreak havoc on electricity markets in the near

- term

- EPA's assertions to the contrary notwith standing. The commenters stated that in the event that EPA decides to proceed with the Proposed Guidelines despite the myriad legal, technical, practical, and political issues that they present, EPA should, at the very least, eliminate the interim goals. T he commenters stated that EPA seems to suggest that it is at least considering this option in the NODA issued on October 30, 2014.

Commenter s expressed concern that the interim emission reduction targets are unrealistically "front loaded," requiring most of the reductions by 2020

- 2022. The commenter s stated that the extensive nature of the changes that will be required by the proposed rule means that utilities will reasonably require a glide path longer than that allowed in the proposal

- which front

- ends many of the required reductions and establishes an average emission rate during the 2020

- 2029 period that fails to account for the time required and lumpy nature of major portfolio modifications. The
commenter s suggested that many of the implementatio n problems created by the establishment of a 2020 interim goal can be avoided by simply creating a more reasonable 2030 goal and vesting the states with the discretion to develop compliance plans capable of achieving the reduction goal.

Commenters sta ted that imposition of interim emission rate goals starting in 2020 imposes unnecessary burdens on the states and affected entities. The commenters stated that for some states, virtually all of the reductions that would be required to meet the 2030 goal wo uld need to be achieved as of 2020. The commenters noted the EPA's assumptions supporting goal development and the Agency's subsequent Integrated Planning Model (IPM) modeling supports this conclusion. The commenters noted that in addition, obtaining the p ermits and the infrastructure necessary to comply with the rule in 2020 will be impossible in many states. As discussed in the CICS paper entitled " Recommendation for Proposed Alternative to The Clean Power Proposal Interim Targets Structure, " the commente rs suggested that EPA give the states greater discretion to submit plans that achieve their own glide paths toward achievement of the 2030 goals to minimize the economic upheaval caused by the Proposed Rule.

Commenters stated that as a result of EPA's assumptions regarding the implementation of Blocks 1 and 2, the interim goals for many states are so stringent almost all of the required emission rate reductions required by the Proposed Rule must be achieved in the first year in the 10

- year interim goal compliance period. The commenters stated that for example, for 11 states, EPA assumes that over 75 percent of the total reductions required by 2030 would be achieved by 2020. The commenters provided Table 1, which calculates percentage of total (2030) redu ction predicted in 2020.

Commenters explained that States with emission levels that are above their interim goals in the first part of the compliance period will not be able to achieve reductions sufficient to offset those emissions later in the compli ance period. The commenters stated that this is evident from the calculations presented in EPA's technical support documents, which project that many states would make dramatic changes in generation resource dispatch to achieve near or full compliance with the interim goals in 2020. The commenters stated that the resulting emission rate reduction trajectory resembles a cliff

- emissions decrease sharply early in the compliance period and then181 remain largely unchanged through 2030. The commenters provided Ta ble 2, which shows graphs for 4 states reflecting each state's predicted annual rates of emissions reductions. The commenters stated that EPA's proposed schedule for implementing the rule leaves states with little or no flexibility to determine a different compliance path and avoid the compliance cliff. The commenters stated that EPA intends to finalize the Proposed Rule in 2015, which means that the earliest state implementation plans would be approved by EPA is 2017 or 2018. The commenters stated that at most, this schedule leaves 3 years for electric generating companies to achieve aggressive emission reductions and states to make sweeping changes to their existing electric generating, transmission, and distribution systems. The commenters stated that giv en the stringency of the interim goals, the proposed implementation schedule will force states to adhere to EPA's prescribed redispatch and coal

- unit closures to achieve compliance with the goals.

Commenters stated that EPA should eliminate the interim goals and allow states to set graduated, state appropriate, compliance paths that achieve EPA's emission rate goals in 2030 . The commenters stated that allowing states to set tailored compliance paths would avoid the compliance cliff created by the interi m goals. In most states, the commenters stated the resulting compliance trajectory would likely look like a series of steps

- rather than a cliff

- as states move toward compliance with their final goals. The commenters explained that states have a strong economic incentive to gradually implement emission rate reductions so as to avoid abrupt changes in their electric generating, transmissions, and distribution systems. The commenters contended that a graduated compliance path would be far less burdensome t o state and local economies and still achieve all of the 2030 emission rate reductions targeted by the Proposed Rule. The commenters stated that this approach also would be more consistent with the text of Section 111(d), which places the responsibility fo r implementing and achieving reductions on the states' taking into consideration the cost of achieving reductions, non

- air quality health and environmental impacts, energy requirements, and the remaining useful life of existing units. Further, the commente rs noted that section 111(d) instructs EPA to establish a procedure for states to submit plans similar to the procedure in Section 110, which instructs states to establish schedules and timetables for compliance. The commenters stated that eliminating the interim goals would provide states with flexibility to set a compliance path that could include a mix of new construction, additional zero emission generation, redispatch to NGCCs, and retirement of existing sources.

Commenters stated that the current rule is based upon a hurried administrative process and flawed interpretations of statute. The commenters asserted that the CPP will maximize costs, suppress economic growth, and undermine reliability because of its expansive design, crafted wi thout regard to costs, and its unrealistic assumptions about the workings of the U.S. electricity sector. The commenters asked that the Agency withdraw the CPP . In the absence of withdrawal, the commenters asked that EPA remove the draconian 2020 interim d eadlines for compliance that the commenters asserted will inflict serious harm on States and the American people in the short

- term.

Commenters stated that the EPA should also allow states to establish their own path to achieving the 2030 goal, and shou ld allow states flexibility in establishing and reporting on milestones along this path.182 Commenters stated that more time is needed after SIP submittal to address reliability risks. The
commenter s stated that t he implementation schedule the EPA has prop osed, beginning in 2020, does not leave an adequate amount of time after states submit their implementation plans to develop a compliance strategy and identify and address any reliability issues that may result from the strategy. The commenters recommended that the EPA eliminate the initial compliance period and allow the states to determine how to achie ve an ultimate goal . The commenters stated that failure to allow adequate time between a state's SIP submittal and the beginning of implementation to addres s any reliability issues could force the implementation of a less than optimal compliance strategy because the optimal strategy could not be implemented in the time provided due to related reliability problems.

Commenters stated that EPA must abandon t he interim targets it has proposed, as it will be impossible for states to meet those requirements. The commenters noted that the interim targets assume all of Building Blocks #1 and #2 will be completed by 2020, and this does not allow the time to accompl ish these goals.

Commenters noted that the EPA seeks comment on the approach to phase

- in Building Block 2 to achieve a more gradual glide path, but the EPA does not provide any specific information on how it would determine an appropriate phase

- in sche dule for Building Block 2. The commenters stated that it is not realistic to assume that the EPA will be able to establish a phase

- in for Building Block 2 to accommodate all of the concerns surrounding the permitting, technical, engineering, and infrastruc ture limitations associated with Building Block 2. The commenters stated that the flexibility that the EPA advertises with this proposed rule would be more credible if the interim goals were eliminated

The commenters stated that in its current form, the in terim goal glide path is very specifically tailored to an exact combination of building blocks implemented by a precise schedule set by the EPA. The commenters noted that if a state were to vary from this combination of building blocks or schedule in even the slightest way, there is a high likelihood that the interim goals or final goals would not be able to be met. The commenters stated that elimination of the interim goals would promote the flexibility to implement building blocks, at a state or regional level, on a schedule that is appropriate given the individual factors contributing to that state or region's ability to reduce carbon emissions. The commenters argued that states or regions should be able to determine this schedule in their implementation plans and not be mandated to meet interim goals as long as the timeline proposed in the SIP (and approved by the EPA) includes appropriate measures taken to ensure compliance with the 2030 goals.

Another commenters stated that the EPA should extend the interim 2020 target to 2030. The commenters stated that the median GHG emission reduction target in 2020 is 66 percent and Arizona has the highest reduction requirement at 90 percent. The commenters that these severe reductions in such a short time frame are not a "glide

- path," but a cliff. The commenters noted that reports by the North American Electric Reliability Corporation (NERC), MISO, PJM, and ERCOT all confirm that the interim 2020 target poses significant concerns to reliability and unnecessary hi gh costs that industrial consumers would preferentially pay. The commenters recommended that the EPA eliminate the interim target and only set a final target in 2030.183 The commenters noted that electric generation, transmission, and natural gas pipelines ar e capital

- intensive and there are lengthy permitting, planning, and construction time frames necessary to get the facilities in place in a timely fashion. The commenters stated that giving states more time to comply would have the impact of lowering total costs of compliance while still achieving the GHG reductions.

In addition, commenters also stated that eliminating the interim compliance period and allowing states to set an emissions reduction glide path to 2030 provides a workable approach for meeti ng the environmental objectives of the proposed rule and further minimizes the probability of successful legal challenges regarding the apparent Clean Air Act provisions specifying states' roles in developing the standards. The commenters noted that states and their stakeholders will evaluate cost

- effective measures and timing of those measures that work best for the state and minimize impacts to energy costs and reliability. The commenters suggested that states should be allowed to include the following in their compliance plan submitted to EPA for approval:

• A state specific emissions reduction trajectory that meets the 2030 target.

• A plan for reporting on progress toward the final 2030 target.

The commenters argued that states should also be provided the m aximum flexibility to make changes to the compliance plan that are due to unforeseen circumstances and that impede a state's progress towards achieving the 2030 goal. The commenters explained that this approach preserves the ultimate goal of reducing CO2 e missions from affected sources by 2030, while providing the states with the authority and flexibility needed to set their own glide path taking into consideration local issues and constraints such as natural gas infrastructure, synchronization with state e nergy policies, avoidance of stranded assets avoidance, and other state specific

concerns.

Commenters requested that the interim goal be eliminated or delayed. At a minimum, the
commenters requested that EPA extend the timeline for submittal of state pl ans and for initial compliance with the rule.

The commenters contended that the timeline provided to develop, implement and comply with the proposed rule is woefully inadequate. According to the commenters, the complexities inherent to reduce carbon dioxi de emissions by the amounts required will take monumental efforts and cooperation between the many stakeholders in Kansas and, perhaps, regionally. In addition, the commenters argued that the interim goals proposed are too harsh and occur too quickly. The commenters said Kansas needs to achieve the vast majority of total required emission reductions by 2020. The commenters noted that this is only two or three years after approval of a state plan. The commenters further noted that nearly 90 percent of requir ed reductions must be achieved by 2025.

Commenters stated that EPA should eliminate the interim deadlines.

The commenter s noted that many state regulators and most of the regulated industry agree that the timelines expressed in the proposed rule are extremely aggressive, particularly when considering the unique and precedent

- setting nature of the proposal. Even if state agen cies are184 able to re

- allocate necessary resources away from other environmental and energy programs, the
commenter s said it may be impossible to meet U.S. EPA's proposed deadlines. In recognition of this fact, the commenter s argued that EPA should eliminate the interim deadlines.

Given the unprecedented scope of the proposed rules, and the huge uncertainty as to the effect of the required changes on the nation's electric grid, commenter s stated that eliminating the interim limits makes good common sense. The commenter s noted that it will take many years to thoughtfully plan for and implement the massive changes required under the CPP while ensuring that reliable electricity can continue to be provided in all areas of the country. Rather than rush these ch anges by requiring states to make the majority of reductions commencing in 2020, the
commenter s said EPA should acknowledge both the enormity of the challenge and the uncertainty that lies ahead, by providing states and companies a longer lead time to deve lop and implement strategies.

Comment 3: Comment recommending eliminating the interim compliance period and interim target, and that the EPA re

- evaluate the compliance timeframes while considering the remaining useful life of the affected EGUs that have recent or soon

- to

- be installed air pollut ion controls.

Response 3: The EPA shares the commenters’ goal of avoiding stranded assets. Although nothing in section 111(d) explicitly bars a guideline that results in some facilities becoming uneconomic before the end of their useful lives, the EPA non etheless has striven to design the guidelines so as to give states flexibility to develop plans that allow power companies to recover their investments in generation units. These guidelines permit states to use a rate or mass CO2 emission goal, and that e ach of these pathways allow states multiple design choices. Under either pathway

, states can take into consideration remaining useful life and seek to avoid stranded
assets

. Discussion of these topics is included in section s VIII.C and VIII.G .1 of the fin al rule preamble of the CPP , and in section 5.11 of this document.

The following are summaries of the specific public comments under this comment:

Commenter s noted that EPA states that the period of 2020

- 2029 will help states minimize stranded assets, taking into account the age of the coal fleet. The commenters stated the period of 2020

- 2029 is not adequate to prevent stranded assets in the case of plants ret rofitted to meet the compliance requirements of the MATS rule. The commenters stated that several utility stakeholders have stated that the interim period forces an impending "compliance cliff" beginning in 2020 that does not consider potential stranded as sets and does not afford them the requisite time to prepare for compliance by properly going through their integrated planning process. The commenters noted that with the flexibility provided for Section 111(d) compliance, it should be the state's role to determine how it complies with the ultimate 2030 standard. Therefore, the commenters strongly recommended eliminating the interim compliance period and interim target.
The commenters stated that Kentucky ratepayers will be burdened with a $4.5 billion pri ce tag for compliance with the MATS rule if these retrofitted plants are not allowed to operate. The185 commenters noted that these plants are assumed to have a remaining useful life of 20

- 30 years after modification. The commenters noted for example, the PSC recently approved a request for a Kentucky facility, which would have been shuttered in 2015 under the recently finalized MATS rule, to spend an estimated $1.26 billion on new technologies to become compliant. The commenters noted that the work is under c onstruction today, and as a result of this investment, the facility will have an additional useful life of at least 30 years, through 2045. The commenters stated that stranding this asset and others would place an unfair cost on Kentucky ratepayers while c ompromising reliability. The commenters stated that this is particularly significant since these compliance costs are accruing as a direct result of previous EPA actions. Therefore, the commenters strongly recommended that EPA re

- evaluate the compliance ti meframes while considering the remaining useful life of the affected EGUs that have recent or soon

- to

- be installed air pollution controls.

Comment 4: Comment s urging the EPA to abandon the interim target approach in favor of a mid

- course review process w ith the states. Comment s stating EPA should give states discretion to develop individualized plans for the 2020

- 2029 time period that establish programs and measures that set a state on a compliance path that will achieve compliance with their 2030 emissio n standards and would avoid the compliance cliff created by the proposed interim standards. Comment suggesting that EPA give states the time necessary to achieve the significant realignment in electric utility regulation that the Plan requires. Comment sug gesting leaving the states to determine if interim goals should be included in a state's implementation plan. Comment recommending that EPA remove the cumulative averaging requirement. Comment stating that certain zero

- emitting projects, which otherwise co uld become significant components of a state's compliance plan, may not be able to come online in time to assure a uniform rate of progress during the interim period. Comment stating that the CPP should account for the considerable planning that will be re quire to implement and enforce the rule by allowing additional time for states to develop State Implementation Plans and by removing the interim goal deadline of 2020

. Comment stating that the EPA's suggestion that interim goals could become more flexible bas ed on infrastructure expansion requirements or book life of affected EGUs does not acknowledge that 2030 is the earliest that a compliance obligation can go into effect . C omment asking the EPA to reconsider the compliance schedule that it has proposed a nd recognize that the tremendous effort needed to reach the goals will take more time than the EPA has assumed, and asking the EPA to reconsider whether its interim goals are necessary at all, given the long

- term nature of the EPA's climate change goals, a nd instead consider allowing states to establish their own interim targets.

Response 4: The EPA agrees with the commenters that states and regional planning groups require additional time to formulate and enact their plans, and that additional time prior t o meeting a goal is beneficial toward the success of the overall rule

. H owever , we disagree with the commenters’ assertion that interim targets should be abandoned, or that non

- binding interim goals would provide the structure necessary to ensure the success of this rule. To that end, the final rule requires that interim CO2 emissio n performance rates or state CO2 emission goals be met for the interim period of 2022

- 2029, and for the three interim step periods (2022

- 2024, 2025

- 2027, 2028

- 2029). The final rule allows states that choose to meet a state CO2 emission goal the flexibility to define an alternate trajectory of emission performance between 2022 and186 2029 to the interim step level s specified in the rule. States have the option of meeting goals of the state’s choosing for the three interim step periods instead of meeting the int erim step goals provided in the emission guidelines, as long as meeting the state

- determined interim step goals will still result in the interim state CO2 emission goal being met on an 8

- year average or cumulative basis and the 2030 state CO2 emission goal is achieved. Add itional discussion on these topics can be found in s ection s VIII.B

, VIII.E

, and VIII. F of the final rule preamble of the CPP

. The EPA shares the commenters’ concerns regarding the workability of the proposed interim goals and we are add ressing comments by making changes to state goals and goal

- setting methodology. Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner that address es the revised timing of the interim period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance ra tes because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

The final guidelines also contain changes to avoid certain inconsistencies between the goal

setting methodology and accounting o f reductions under state plans that could have made state goals less achievable for some states. When assembled together, these changes help to ensure that the state goals established in the final guidelines are achievable considering cost, and that
state s can consider the range of available emission reduction methods that the final guidelines allow and choose the best way to achieve their state goals. A discussion of state plan timing and flexibility of available programs can be found in sections VIII.E and VIII. G of the final rule preamble of the CPP

. The EPA agrees with the commenters that states and regional planning groups need flexibility in formulating their plans and in this package the EPA is finalizing the state measures plan type as

one option t o accommodate state choices and allow states to rely upon a variety of measures in a way that meets the statutory requirements of CAA section 111(d). See Section VIII.C.3 of the final rule preamble of the CPP.
The EPA does not agree with the commenters who called for elimination of the interim goal

. The EPA believes that interim goals are appropriate to ensure that state 111(d) plans require the

em ission reductions that are achievable, as required by the statute. Also, tracking emission performance against the interim steps and interim goal will enable states and EPA to assess on an ongoing basis whether plans are performing satisfactorily and, if not, to take remedial actions promptly (with the type of remedial action depending on plan type)

.

.187 Clarification regarding the interim goal periods and the 2030 final goal has been provided in another comment in this section. Regarding the commenters ’ concerns about the BSER and front

- loading of the state and regional plans, the final rule includes added flexibility for states and regional planners, including such things as credit for early action and allowing the use of

mass

- based reductions that are designed to alleviate these concerns and allow states and regional planners more options when assembling their plans.

We disagree with commenters that the interim goals are likely to negatively affect reliability. The EPA has considered potential reliability concerns in developing the final guidelines and has built in methods to protect reliability. See Section VIII.G.2 of the final rule preamble of the CPP. Regarding remaining useful life, see section VIII.G.1 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters argued that the interim target and mathematical averaging process for measuring compliance that EPA propos es for 2020

- 2030 are unworkable, and lead to severe energy market dislocations and job losses in the early years of the program. The commenters respectfully urged EPA to abandon the interim target approach in favor of a mid

- course review process with the

s tates, similar to the mid

- course review incorporated in the Regional Haze Rule (64 FR 35714, July 1, 1999) and related guidance on reasonable progress goals. The commenters stated that the mid

- term 2018 review process that EPA and NHTSA established in the Light

- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards (77 FR 62624, October 15, 2012) provides another relevant precedent. In the alternative, the commenters noted the EPA could allow states to set non

- binding interim goa ls.

The commenters stated that experience with the acid rain program, the regional haze program, and similar multi

- year emission reduction programs demonstrates that emissions tend to be reduced on a linear glide path consistent with the availability of e ngineering, financing, and labor resources. The commenters asserted that the abrupt and painful job and coal market dislocations that EPA projects for 2020 could be mitigated by eliminating the interim target in favor of a mid

course review process or simi lar mechanism.

Commenters asserted that the EPA should allow states the discretion to develop individualized plans that establish state

- specific criteria and state

- specific compliance paths. The commenters explained that the EPA has proposed interim emi ssions standards that are so stringent that many states will be required to achieve most of their CO2 emissions reductions by 2020. The commenters noted that, given EPA's proposed timetable for the approval of state plans, this would leave states with, at most, approximately 2.5 years to implement required CO2 reduction measures; a task that will be extremely difficult or impossible to achieve without severe economic disruption and reliability concerns in many regions. The commenters stated that rather than mandating enforceable interim standards, the EPA should give states discretion to develop individualized plans for the 2020

- 2029 time period that establish programs and measures that set a state on a compliance path that will achieve compliance with their 2030 emission standards. In particular, the commenters stated that the EPA must allow each state to make its own determination as to which measures can be implemented on a time table that is manageable for the state, but leads to achievement of the 2030 s tandards. In evaluating such interim state plans, the commenters stated that the EPA should consider certain procedural and substantive criteria.188 The procedural criteria would ensure that the plans are credible and enforceable, and the substantive criteria would ensure that the plans consider factors important to controlling CO2 emissions from the power sector. The criteria should serve as the basis for an inquiry into whether a state plan adequately demonstrates that it will lead to compliance, but should not be considered required elements for every state plan due to each state's different circumstances and the individualized nature of each state's final CO2 standards.

Commenter s requested removing the interim goals and giving states time to achieve th e necessary realignment in electric utility regulation.

The commenters noted that, in calculating its state rate

- based CO2 emission performance goals, EPA assumed that BSER building blocks 1 and 2

-- reducing CO2 emissions from coal

- fired steam EGUs by 6% t hrough heat rate improvements, and redispatching to achieve a 70% average capacity factor at existing and under

- construction NGCC units

-- would be achievable by 2020. In contrast, the commenters noted that EPA also assumed that building blocks 3 and 4 would require a "ramp

- up" to achieve "full effects."

The commenters further noted that EPA assumed that the amount of renewable energy (RE) in each state would grow each year by a regional RE growth factor, which it calculated as the constant growth necessary to bridge the gap between regional RE generation in 2012 and the regional average renewable portfolio standard (RPS) requirements for the year 2020. According to the commenters, EPA also assumed that energy efficiency (EE) savings in each state would increase by 0.2% each year until they reached an incre mental annual EE savings rate of 1.5%. Because of the need to ramp up RE and EE efforts over time, the commenters noted that EPA proposed interim goals that each state would need to achieve "on average over the 10

- year period from 2020

- 2029..." The commen ters noted that each state would then need to achieve its final goal from 2030 onward.

Even if EPA's assumptions were correct, the commenters argued that EPA has misgauged the amount of time that states will require to achieve the emission reductions assu med under building blocks 1 and 2. The commenters noted that EPA's timeline assumes that it will approve or disapprove state plans by June 30, 2017, giving states only 2+ years before the beginning of the interim performance period. However, the commenters stated that planning, designing, engineering, permitting, fabricating, and constructing new natural gas pipeline infrastructure and other infrastructure enhancements would require longer lead times, and the competition among NGCCs across the nation simult aneously seeking the necessary consultants, contractors, and materials will undoubtedly cause further delays. The commenters indicated the same competition for labor and materials will, no doubt, delay many coal

- fired EGUs' efforts to accomplish
necessary heat rate improvements, and coal unit retirements and the increased NGCC capacity factors needed to meet the CO2 goals beginning in 2020 also raise significant electricity transmission and reliability concerns. In order to avoid recklessly endangering the reliability of the electric system through an abrupt shift from coal

- to gas

- fired generation, the commenters contended that EPA needs to provide the states and the owners and operators of critical infrastructure with much longer time frames to make a tran sition of this magnitude and complexity.189 The commenters also argued that EPA's state interim goals are largely unnecessary. The commenters referred to EPA's statement that states and affected EGUs are already undertaking many or most of the measures that m ake up EPA's proposed BSER:

• EPA finds that "[a]verage deployment of RPS supported renewable capacity from 2007

- 2012 has exceeded 6 GW per year."

• EPA reports that "[i]n 2012, RE accounted for more than 56% of all new electrical capacity installations in th e U.S."

• EPA also reports that, according to a study by the Lawrence Berkeley National Laboratory, "efficiency programs are 'poised for dramatic growth over the course of the next 10 to 15 years[.] "

According to the commenters, if these studies and proje ctions are correct, states are moving towards increased RE and demand

- side EE even without the proposed command

- and control interim plan goals. For all of these reasons, the commenters suggested that EPA should remove the interim state goals from the Clean Power Plan, and give states the time necessary to achieve the significant realignment in electric utility regulation that the Plan requires.

Commenters suggested that the interim targets be eliminated from the proposed rule, leaving the states to dete rmine if interim goals should be included in a state's implementation plan.

Commenters noted that the proposed rule requires state

- specific emissions goals for reducing carbon dioxide (CO2) emissions from the power sector. The commenters further noted that EPA is proposing two alternatives, each of which has a two

- part goal structure

-- a sta te must meet the "interim goal" on an average calculated over the interim goal period and a "final goal" must be met at the end of that period and thereafter. The commenters argued that the proposed rule's stringent interim compliance goal for both alterna tives is too aggressive. In order to meet the requirements of the Alternative 1 interim compliance goal average, the commenters indicated states would have to implement modifications to affected generating units early in the compliance period. In the case of Nebraska, the actual 2012 fossil fuel state emissions value of 2,162 lbs/net MWh would have to be reduced to 1,596 lbs/net MWh, or a 26.2% reduction. The commenters estimated this equates to approximately 83% of the overall rate reduction being

necessar y in the very early years of the compliance period. The commenters contended that the final rule should recognize the need to phase in emissions reduction requirements at an appropriate rate over the 10 year interim period. The commenters cited comments fr om the American Public Power Association (APPA), which stated:

• One of the most onerous elements of the Proposal is the interim reduction requirement that states must meet starting in 2020. This reduction is required a mere two years after state submittal, and EPA approval, of a state's compliance plan. For most states, this requirement is not simply a pro

- rata based step towards the state's 2030 final reduction requirement. Often referred to as a "cliff", the interim requirement is, rather, a drastic reduct ion constituting a significant percentage of the final 2030 requirement ... If not eliminated, the interim requirement will result in huge stranded costs for utilities that will be borne ultimately by consumers.190 Commenters recommended that EPA remove t he cumulative averaging requirement and forgo the concept of an interim goal.

The commenters said this 10

- year averaging approach actually requires states to follow a specific pathway (glide path) to achieve the required rate reduction through 2030. The c ommenters said it does not allow states to choose an option that is more difficult and time

- consuming to implement and would significantly reduce CO2 rates, but not until later in the interim period. The commenters noted such an example would be building n on

- emitting generation sources. The commenters indicated that a state must implement some measures during the early years of the interim period or face non

- compliance. The commenters believe d the interim goal concept is not flexible and is prohibitive to states that want to take early action or delayed action but still meet the goal.

Commenters stated that EPA should eliminate the interim reduction goal and allow states to determine their own glide path. The commenters stated that one of the most onerou s elements of the Proposal is the interim reduction goal that states must begin meeting in 2020. The commenters noted that in a significant departure from prior Section 111 rules, EPA mandates a highly prescriptive implementation framework, requiring state s to meet aggressive near

- term CO2 goals and demonstrate compliance with those goals over a 10

- year averaging period (2020

- 29) prior to the final compliance goals in 2030. The commenters stated that while EPA stresses flexibility as a key element of the P roposal, the Agency has proposed to make mandatory the minimum pace of implementation. The commenters stated that Congress created a framework of cooperative federalism throughout the CAA. The commenters suggested that this careful federal

state balance is central to the Act and EPA should respect that balance with regard to compliance trajectories.

The commenters stated that the obligations to begin meeting the interim goal start a mere 2 years after state submittal, and EPA approval, of a state's complia nce plan (and even sooner if a state obtains an extension). The commenters stated that while it may seem as if this is not an onerous step because the interim goal must be met on "average" over a 10

- year period, the reality is that unless draconian reducti ons are made by January 1, 2020, the interim goals cannot be achieved in most states. The commenters stated that the interim goal is not simply a pro

- rata based step towards the state's 2030 final reduction requirement. The commenters stated that often ref erred to as a "cliff," the interim goal requirement is, rather, a drastic reduction constituting a significant percentage of the final 2030 requirement.

The commenters referred to Table 18 which shows the percentage CO2 reduction by st ate interim versus total. The commenters stated that the drop from the 2012 fossil fuel generation CO2 emissions rate to the interim goal is a significant percentage of the final goal, and because it must be done so soon after a state plan is finalized, co nstitutes an almost impossible burden to meet at all, let alone in a cost

- effective or efficient manner. The commenters stated that if not eliminated, or significantly adjusted, "these front

- end

- loaded" interim goals will result in huge stranded costs for utilities that will be borne ultimately by consumers.191 The commenters stated that the 10

- year averaging period put forth in EPA's Proposal between the interim and final goals does little to relieve the situation. The commenters provided for example, if Min nesota were to delay emissions reductions even a single year, it would need to maintain an emissions rate below the final requirements for the remaining 9 years of the compliance period. The commenters stated that in the NODA EPA proposed letting states ad just their timelines and interim requirements to avoid the serious implications from mandatory large scale fuel switching on system reliability, resiliency, infrastructure, and electricity cost. The commenters agreed that this flexibility is necessary to a void many of the serious possible consequences of this Proposal including addressing the minimal relief provided by allowing states to meet their targets on average over the 10 year period.

The commenters stated that a federally

- imposed interim goal is not necessary. The commenters noted that in its public statements, EPA continuously stresses that the goal of the Proposal is to reduce overall CO2 emissions 30 percent by 2030. The commenters stated that in addition to eliminating the interim goal, the Agenc y should allow the states to set their own "glide path" for compliance with the 2030 final goal. The commenters argued that states must be able to determine the enforceable emission reduction trajectory to reach that goal for several reasons. The commenter s stated that many states have already adopted measures that EPA has included in its BSER determination (e.g., RPS and demand

- side management programs). The commenters stated that these programs have both rate and reliability implications that must be take n into account in determining the timing for a state's implementation of EPA's final performance standard. The commenters noted that the states are uniquely positioned to address these considerations and craft an appropriately gradual trajectory.

The comme nters noted that states are also best positioned to determine resource adequacy implications of implementation timing. For example, The commenters noted that states and regional planning entities are best able to assess existing natural gas transportation infrastructure (including interstate and distribution pipeline and storage capacity), as well as natural gas supply and market conditions to determine whether they would be adequate to support the 70 percent
state

- average capacity factor ceiling for existi ng NGCC capacity targeted by EPA.

According to the commenters, states can better: 1) examine existing electric transmission infrastructure to determine whether it would be adequate to support the broad regional or inter

regional dispatched

- based substitut ion of NGCC generation and increased renewable generation contemplated by the Proposal; 2) assess potential limitations on a state's ability to influence economic dispatch of generation to implement their plan; 3) determine and apply the remaining useful l ife of existing coal

- fired (and other) generation resources, particularly where affected sources have made significant investments in such resources to comply with other environmental regulations (e.g., MATS, Cross State Air Pollution Rule (CSAPR)); 4) pla n for any legislation that may be required; and 5) determine state

- specific economic impacts of the interim path and timing.

Therefore, the commenters stated that EPA should allow states to set their own appropriate pace for implementation prior to the fin al 2030 performance goals. The commenters suggested that while states may need to adopt some interim standard to ensure they are on track to meet the 2030 goals, states should be permitted to adjust the glide path to 2030, taking into account further analy sis of appropriate factors. The commenters asserted that States are best suited for192 this role because they have a unique ability to evaluate reduction opportunities and expected timelines.

Commenters argued that EPA has proposed interim emissions standards that are so stringent that many states will be required to achieve most of their CO2 emissions reductions by 2020. Given EPA's proposed timetable for the approval of state plans, the commenters said this would leave states with, at most, approximately two

- and

- a

- half years to implement required CO2 reduction measures, a task that will be extremely difficult or impossible to achieve without severe economic disruption and reliability concerns in many reg ions

-- including those in which the commenters’ company operates. Rather than mandating enforceable interim standards, the commenters recommended that EPA should give states discretion to develop individualized plans for the 2020

- 2029 time period that estab lish programs and measures that set a state on a compliance path that will achieve compliance with their 2030 emission standards. In particular, the commenters said EPA must allow each state to make its own determination as to which measures can be impleme nted on a time table that is manageable for the state, but leads to achievement of the 2030 standards. Under this approach, the commenters said states would determine moderated compliance paths that achieve state

- appropriate final emission rate goals by 20 30 to be approved by EPA as required by the statute.

The commenters contended that allowing states to set tailored compliance paths would avoid the compliance cliff created by EPA's proposed interim standards. The commenters said that in most states, the resulting compliance trajectory would look like a series of steps

-- rather than a cliff

-- as states move toward compliance with their final standards. The commenters argued that states have a strong economic incentive to implement emission rate reductions so as to avoid abrupt changes in their electric generating, transmission, and distribution systems. The commenters indicated that a smoother compliance path would be far less burdensome to state and local economies and still achieve the majority of the emiss ion rate reductions targeted by the proposed rule.

The commenters said this approach also would be more consistent with the text of section 111(d), which places the responsibility for identifying and achieving reductions on the states

-- taking into consider ation the cost of achieving reductions, non

- air quality health and environmental impacts, energy requirements, and the remaining useful life of existing units. The commenters further noted that section 111(d) instructs EPA to establish a procedure for stat es to submit implementation plans similar to the procedure in section 110, which instructs states to establish schedules and timetables for compliance. The commenters included the following potential objective criteria that EPA could use to evaluate state glide

- path plans:

• The procedural criteria would ensure that the plans are credible and enforceable, and the substantive criteria would ensure that the plans consider factors important to controlling CO2 emissions from the power sector. The criteria should serve as the basis for an inquiry into whether a state plan adequately demonstrates that it will lead to compliance, but should not be considered required elements for every state plan due to each state's different circumstances and the individualized natu re of each state's final CO2 standards.

Commenter s stated that the proposed Clean Power Plan raises a number of significant timing issues due to the deadlines that EPA has set for compliance with the interim and final goals in193 each state. The commenter s w ere concerned that EPA has not allowed enough time for affected entities to comply. In particular, the commenter s said EPA's proposed interim goals are likely unachievable, given the limited amount of time allowed for compliance. The commenter s asked EPA to reconsider the deadlines in its proposal to ensure sufficient time is available for states and utilities to comply with EPA's section 111(d) program. In particular, the commenter s recommended that EPA eliminate the unnecessarily stringent int erim goals and allow states to design their own interim targets in light of state

- specific circumstances.

Commenters requested that states be given greater flexibility in the glide paths to meet their interim and final goals.

The commenters noted that EPA identified a process in the proposed emission guidelines by which a state can demonstrate progress toward meeting its final emission rate goal prior to the final compliance year. The commenters said this involves a demonstration that progress along a glide path is being made within a certain percentage of the yearly progress milestone, beginning in 2020. The commenters believe d that this process is flawed because certain zero

- emitting projects, which otherwise could become significant components of a state's compliance plan, may not be able to come online in time to assure a uniform rate of progress during the interim period. The commenters noted that any major commercial energy project would likely affect a state's specific rate of progress during thi s period. Therefore, the commenter s asked that the final rule provide greater flexibility in the glide paths that states must demonstrate to meet their interim and final goal.

Commenter s said that the EPA should defer to the states to establish the Clea n Power Plant (CPP) glide path achieving the CPP 2030 target, and that interim targets should be removed.

Commenter s stated that the time needed to plan and deploy the infrastructure necessary to support CPP compliance warrants the elimination of the interim target period it stipulated for 2020 through 2029, and instead the EPA should defer to the states to establish measures needed to achieve the EPA's CPP 2030 target. Commenter s said the EPA's current glide path is "front loaded" by requiring mos t states to provide the Blocks 1, 2 and 3 compliance by 2020 and enabling gradual deployment of efficiency measures through 2030. Commenter s said this approach fails to recognize the time necessary to build out utility infrastructure necessary to achie ve compliance with the CPP, and ignores the ongoing integrated resource planning underway in Minnesota that has provided for early deployment and ongoing measures for Minnesota electric utility greenhouse gas emission reductions.

Commenter s argued that the current interim target date of 2020 does not actually act as an interim date and in reality serves to effectively require the shutdown of coal facilities by 2020. The commenters noted that the proposed rule sets state

- specific CO2 emission rate goals that EPA based on an assessment of the amount of emissions that can be reduced at existing fossil fuel

- fired EGUs through the application of BSER required under section 111(d). The commenters further noted that EPA proposed that the state

- specific goals be achieved no later than the year 2030. However, the commenters said EPA also proposed interim goals that states must meet beginning in 2020 and be phased in over the 2020

- 2029 phase

- in period. This time period is unrealistic and unachievable for several re asons. While EPA has provided the final goal for achievement of state

- specific rate goals in 2030, the commenters said that, in practice, the194 proposed rule's interim goal phase

- in period of 2020

- 2029 actually requires implementation of BSER Building Block 2 (BB2) and compliance with emission limitations far sooner. The commenters contended that the proposed rule's timeline is unreasonable and unrealistic based on the time it will take states to submit approvable state plans and implement adequate infrastruc ture improvements. The commenters said the interim goal should be abolished and EPA should instead provide states with actual flexibility to establish appropriate increments of progress and emission reduction improvement.

Commenters recommended that EP A eliminate the aggressive interim goals and allow each state to determine its own interim reductions and glide path toward achieving the 2030 goal and maintaining that final goal thereafter.

The commenters stated that, as currently proposed, the 2030 fin al goal established by EPA will be challenging for states to meet. The commenters noted that each state faces its own unique challenges with respect to generation mix, transmission infrastructure needs, natural gas supply constraints, market demands and li mitations, and legal and political roadblocks, all of which hinder development and implementation of a state plan and achievement of the final goal. The commenters contended that EPA proposed an aggressive interim goal, which for Kansas is a
rate

- based sta ndard of 1578 lbs CO2/MWh averaged over the years 2020

- 2029. The commenters argued that compliance with the interim goal is almost as stringent as compliance with the final 2030 goal, which for Kansas is nominally 1499 lbs CO2/MWh. According to EPA's proj ections, the commenters indicated Kansas would need to achieve over half of the required emissions reductions by 2020, a mere two to three years after approval of a state plan, and almost 90 percent of the required reductions by 2025.

Commenter s contended that EPA should eliminate the interim goals and allow state plans to determine the ramp

- up schedule to 2030 full compliance, to allow flexibility and consideration of circumstances and timing issues unique to each state.

Commenters suggested that EP A eliminate the interim goal and let states establish a glide path to final compliance.

The commenters contended that the proposed rule's emission reduction goals are front

- loaded, potentially resulting in unintended consequences that could impact their u tilities' ability to provide affordable and reliable energy to their customers. While noting that states would have until 2030 to comply with the rule's final emission goals, the commenters indicated that Wisconsin's interim goal would require the state to be over 87 percent of the way toward this final goal during the decade beginning in 2020. While compliance with the interim goal would be measured on a 10

- year average basis between 2020 and 2029, the commenters noted that any delay in reducing emissions in the early years of this period would have to be compensated for by reducing emissions below the final goal in the later years.

Since the state's plan may not be approved by EPA until as late as the middle of 2019, the
commenter s contended that requirin g such a significant emission reduction beginning only a half year later is not realistic. Therefore, the commenter s recommended that the EPA's final guidelines should eliminate the interim goal (2020

- 2029) and allow states to establish a glide path to the 2030 final goal. At a minimum, the commenter s recommended that EPA's Clean195 Power Plan should not require reductions any sooner than five years from EPA's final approval of a state plan (or regional plan).

Commenter s stated that the implementation of the four blocks making up BSER do not fit neatly into the limited time frame of implementation and compliance. The commenters also stated that the proposed rule gives the states no authority to alter the glide path if the state encounters such obstacles as a lack of natural gas capacity, lawsuits over renewable resource or transmission construction, or lack of customer investment into energy efficient equipment in their homes or businesses. The commenters said these are is sues that must be solved in order for the plan to move ahead at all, and they are issues that are beyond the control of the states or the utilities. The commenters contended that states must retain the authority and control to set milestones or compliance periods that meet what is actually achievable given the make

- up of the states' electric energy use profiles, generation and transmission capacity, and the ability for the state and state utilities to transition with the least amount of negative impact on c ustomer rates and reliability. According to the commenters, the problems created when the proposed rule allows only one year for the development of a state plan (or two years for a multi

- state plan) are only compounded when states run into the rigid and un realistic 2020

- 2029 glide path. For states to fully develop and adopt a practical, well

- modeled, and reliable plan, the commenters said they must be empowered to control the interim targets within the interim 2020

- 2029 period.

The commenters also contended that it is only by granting states control of the glide path that EPA can honor its pledge to allow states to consider the remain ing useful life of existing power plants in their plan s. The commenters noted that section 111(d) (1)(B) of the CAA requires the Administrator to take into account remaining useful lives. According to the commenters, EPA provided no mechanism in the Clean Power Plan to do so, and the rigid timelines and specific mandatory goals associated with them tak e away from the states any potential way to tailor their rules to the specific units in their state. The commenters argued that EPA must give states the authority to develop specific and meaningful plans to ramp up compliance during the 2020

- 2029 glide pat h to meet the final goal established in 2030.

Commenters argued that EPA's interim goals do not actually act as interim achievement goals and the "flexible implementation" claimed by EPA is largely illusory; therefore, the commenters contended that E PA's interim goal must be abolished . The commenters noted that EPA's proposal requires that states achieve its CO2 emission performance levels on average over the ten

- year period from 2020

- 2029. In practice, the commenters said this requires that states me et the performance levels as soon as 2020 in order to avoid having to make drastic reductions in later years to comply with the average. The commenters noted that EPA acknowledged this necessity by stating, "states with currently existing programs and poli cies, and states that put in place new programs and policies early, will be better positioned to achieve the goals." Therefore, in order to meet these interim goals, the commenters indicated states will be required to implement extremely aggressive emissio n reduction efforts starting in 2020; according to the commenters, any shortfalls in reductions starting in 2020 will otherwise have to be made up by later

- year emission reductions that will have to be substantially below EPA's projected average emission

r ates, resulting in significant over

- compliance.

The commenters argued that EPA's BB2 is another example of the illusory nature of EPA's proposed "flexible" implementation schedule between 2020

- 2029. The commenters noted that,196 under BB2, EPA proposed re

- di spatch from steam generators using coal, oil, or natural gas to existing NGCC units operating at up to a target 70% utilization effective in January 1, 2020. For some states, such as Arizona, the commenters noted that this re

- dispatch accounts for the most significant emissions reductions from the four possible Building Blocks. The commenter s noted that EPA calculated the state emission reduction goals assuming that both BB1 and BB2 will be fully implemented by 2030. In practice, the commenter s said this as sumption requires states to implement the relevant infrastructure to comply with Building Block 2 by 2020, or soon after, because delaying complete implementation of BB2 will significantly increase state emission rates between 2020

- 2029, further forcing st ates to achieve more aggressive and drastic emission reductions in the latter years of the 2020

- 2029 timeframe. The commenter s said this result could even force states to exceed emission reductions required under the Final emission targets for 2030 and bey ond.

The commenter s argued that this fast approaching aggressive interim deadline is clearly unattainable for states, especially Arizona, and must be removed from the Final Rule. The
commenter s noted that ADEQ has already put EPA on notice that it will fac e significant challenges in attempting to comply with the stringent interim and final goal timeline. The
commenter s further noted that ADEQ has extensively documented that EPA's interim goal will remove any flexibility for Arizona to comply with EPA's guid elines. According to the
commenter s , Arizona faces unique challenges in making the necessary changes to comply with the goals. The commenter s said Arizona's proposed emission reduction of almost 52% is one of the most stringent under EPA's proposed rule. According to the commenter s , EPA compounded the difficultly of this emission reduction by requiring over 95% of these reductions by the interim compliance goal of 2020. The commenter s said this requirement leaves Arizona utilities with no option but to shu t down coal

- fired capacity and re

- dispatch to natural gas (BB2) in 2020 because the implementation or utilization of Building Blocks No. 3 or No. 4 will likely occur too late to aid compliance with the 2020 interim goal.

Instead of reliance on an interi m goal, the commenters said EPA should remove the interim goal and allow states the flexibility to actually determine reasonable progress goals. By maintaining the final goal of 2030, EPA can still ensure states will reach necessary emission reductions but the added flexibility will allow states to create state plans and implement infrastructure improvements that will not threaten the economic viability or reliability of the state's electric power system, the utilities affected by this rule and the associat ed fossil fuel

- fired unit improvements, and the customers relying on affordable and reliable power supply.

Commenters argued that the glide path approach is too confining and should be eliminated . The commenters contended that states should have flexibility to establish appropriate interim reduction schedules aligned with state characteristics . The commenters said the interim compliance period may be well intended, but its design

-- particularly the interim 10

- year average goal

-- actually serves to l imit state flexibility. In order to satisfy the 10

- year average goal

. The commenters noted that a significant number of states need to achieve reductions before the start of the interim compliance period in 2020. The commenters further noted that many sta tes must achieve over 50 percent or more of their 2030 emission goals by 2020. The commenters indicated that, as stated in the goal, Colorado would have to achieve 78 percent of its final goal by 2020, South Dakota would have to achieve 82 percent, and Wyo ming 51 percent. The commenters concluded that, contrary to EPA's stated intent of providing states flexibility in197 setting 2030 emission goals, the interim compliance average goal creates more compliance challenges than it solves.

According to the comm enters, eliminating the interim compliance goal and allowing states to determine their own reduction glide paths and milestones to achieve the 2030 goals

-- subject to EP A approval and annual compliance reporting

-- would provide states with real flexibility i n designing state plans while reducing emission rates. The commenters said this approach would allow states to determine not only which actions and measures to pursue to reduce emission rates, but also to choose a reasonable schedule for implementing those measures consistent with providing safe, reliable, affordable and environmentally responsible power to customers. Importantly, the commenters said this would provide states and utilities sufficient time to complete needed infrastructure development (inclu ding expansions and upgrades of both electric and natural gas transmission systems) to accomplish changes in dispatch between coal

- based and natural gas

- based units and increase deployment of renewable generation. The commenters indicated it also would pro vide states, electric utilities and other regulators time to assess the significant changes to the interconnected power system that will be required to achieve the 2030 goals, while respecting system requirements necessary to maintain reliability. The comm enters noted that states would also be able to better manage the impact of the program on customer rates. Finally, the commenters noted that real flexibility helps states achieve reductions while ensuring the continued provision of affordable and reliable electric power.

Commenter s stated that the 2020

- 2029 interim performance requirements in the proposed rule should be eliminated to allow adequate time to reliably achieve compliance. The commenters stated that application of the 2020

- 2029 interim emi ssions performance period and the associated interim emissions performance levels established in the proposed rule (the "interim performance requirements") will negatively impact reliability and resource adequacy in the Midcontinent Independent System Oper ator (MISO) region starting in 2020. The commenters stated that the interim performance requirements create an untenable and infeasible timeline for reliable compliance, and would cause states and MISO member companies to make decisions on a severely trunc ated timeline. The commenters suggested that EPA eliminate the interim performance requirements when the final rule is issued, and instead, allow states to submit plans for EPA's approval that specify interim compliance objectives to best fit their circums tances.

The commenters explained that sufficient time is required to engage in rational planning, construction and integration of cost

- effective resource and infrastructure solutions that maintain reliable and efficient delivery of electricity. Commenter s stated that a s an example, the MISO Multi

- Value Transmission Projects (MVPs) approved in 2011 resulted from 5 years of stakeholder work to develop cost

- effective solutions to meet state

- driven public policy requirements, such as renewable energy standar ds. The commenters stated that many of the resulting transmission projects are still in the development, regulatory approval and construction phases, but once complete, the MVPs will provide value to consumers for many years to come.

The commenters’ initia l analysis of the proposed rule shows that nearly 80 percent of the total emission reductions must be met by 2020. The commenters stated that the earliest a state plan could be approved is 2017, but in the likely event that states request additional time, it is possible that many states will not have approved plans until 2019. The commenters stated that since action will be needed by 2020 to achieve the interim emissions performance levels, there will not198 be nearly enough time to plan for long

- term cost

- eff ective replacement capacity, transmission upgrades, and natural gas delivery infrastructure that will be needed to maintain reliability and resource adequacy.

The commenters argued that the interim performance requirements are likely to have a negative im pact on electric system reliability which encompasses several components. First, the commenters stated that there must be enough energy (measured in megawatt

- hours), available to meet demand, on a regional and local level. Second

, the commenters stated tha t local transmission ancillary services, such as voltage support (VARs) and frequency support (Hz), are needed to maintain a reliable transmission system and move energy on the electric system. The commenters noted that these ancillary services can be prov ided by electric generating units or components of the transmission system. Third, the commenters stated that resource adequacy must be ensured, which means that there must be enough generation capacity (in megawatts) to serve peak demand plus with capacit y in reserve to account for unexpected circumstances such as generation and transmission outages (the planning reserve margin). Finally

, the commenters stated that reliability requires that the operation of generating units and the transmission system

are flexible enough to be able to call on generating units and move energy, with ancillary services, where it is needed at a moment's notice.

The commenters stated that the MISO region already faces identified reliability challenges associated with EPA's Merc ury and Air Toxics Standards (MATS). The commenters stated t he MISO region relies on coal

- fired generation as the predominant electricity resource. MISO has been conducting quarterly surveys with our generation owners for three

- and

- a

- half years to

assess potential impacts of the MATS rule. The commenters stated t he survey results show that between 10 and 12 gigawatts of coal

- fired generation capacity will retire by 2016 to meet the MATS requirements. As a result, commenters added

, resources available to the MISO region will be at, or potentially below, the planning reserve margin starting in the summer of 2016. Commenters stated MISO expects that resource availability will remain close to the planning reserve margin for the foreseea ble future.

The commenters’ initial analysis indicates that up to 25 percent of the remaining coal capacity in MISO (14 gigawatts in addition to the 10 to 12 gigawatts of retirements expected due to MATS) could potentially retire in order to comply with t he proposed rule. The commenters stated that retiring capacity will need to be replaced at the time it comes offline to avoid reliability and resource adequacy issues. Yet to comply with the interim performance requirements, the commenters stated that a si gnificant amount of retirements (approximately 11 gigawatts) would need to occur in the 2020 timeframe which is well before sufficient replacement capacity can be placed into service.

The commenters stated that new combined cycle natural gas generation is the most probable option to replace retiring coal

- fired plants and comply with the proposed rule. The commenters has observed that the process to get this type of unit into operation typically takes at least 5 years from a developer's decision to proceed. The commenters stated that the current natural gas delivery and storage system in much of the MISO region was not developed to support use of natural gas electric plants as base load generation so new natural gas infrastructure is very likely to be necess ary. Likewise, the commenters stated that additional electric transmission infrastructure will be needed to reliably interconnect the new generation to the electric grid,199 further increasing the time needed to construct new generation. The commenters’ exper ience with electric transmission expansion planning demonstrates that 6 to 10 years are needed to develop comprehensive plans that account for future uses of the system to optimize transmission expansion.

The commenters stated that time is also needed to g ain regulatory approvals. The commenters stated that the sizable investments required for new generation and transmission infrastructure require a high level of certainty in order to obtain financing and regulatory approvals. The commenters noted that if s tate plans are not finalized until 2017 at the earliest and in 2018 or 2019 for many, then regulatory certainty will not exist soon enough to reliably achieve the interim performance requirements.

The commenters stated that using 2018 as a starting point f or finalization of state plans, and a 6 year timeline for new infrastructure, new generation capacity would not be available until 2024 under the best circumstances. Without those capacity additions, the commenters stated that the MISO region will face ser ious resource adequacy issues, which translate into reliability issues. The commenters stated that the North American Electric Reliability Corporation has identified potential reliability concerns surrounding the proposed rule, including concerns that the proposal will result in problems related to load and resource balance, voltage support and frequency support, and the commenters’ preliminary studies validate these concerns starting in the 2020 timeframe. The commenters stated that the interim performance requirements create an unrealistic timeframe for action.

The commenters stated that EPA appears to recognize this concern, with the October 28, 2014 Notice of Data Availability. The commenters stated that EPA proposes to address concerns by providing cred it for actions taken before 2020, and phasing in Building Block 2 (natural gas unit

re

- dispatching) over time. According to the commenters, these proposals indicate a directional improvement, but do not fully address the concerns with the interim performan ce requirements. The commenters stated that these approaches may introduce additional complexity by creating more variables that will not be finalized until state plans are approved in the 2017

- 19 period. The commenters stated that a better approach would be to eliminate the interim performance requirements. The commenters stated that EPA can achieve visibility as to how states will make incremental progress toward meeting the final performance level through review and approval of state plans.

The commenter s stated that, at best, the interim performance requirements will force state regulators and generation owners to make hasty and perhaps uncoordinated decisions, which will erode the value of MISO's transmission planning process and reduce the overall valu e of economic dispatch of the system, thereby unnecessarily increasing electric costs to consumers. At worst, the commenter s stated that this timeline will force decisions that pit environmental compliance against electric reliability. The commenter s state d that additional time to develop and implement compliance strategies will allow for better planning, including the ability for MISO to work with Federal Energy Regulatory Commission (FERC), stakeholders and regulators on the development of plans and to im plement process changes and market rules to preserve the benefits of economic dispatch while maintaining reliability.200 The commenters requested that EPA eliminate the interim performance requirements in the final rule. Consistent with the language in the p roposed rule that allows states to propose "other periods that ensure regular progress," the commenters recommend that EPA allow states to submit plans for EPA's approval that specify the interim compliance objectives that best fit their circumstances. The commenters requested that this approach will provide EPA with reasonable assurance that states are on a path to achieving compliance with their final performance levels.

The commenter s requested that EPA also consider a reliability safety valve (RSV) to address reliability concerns that may arise during implementation of the final rule. The commenter s stated that they support the RSV concept in the ISO/RTO Council's comments on the prop osed rule.

Commenter s stated that their company operates its fleet of electric generating facilities to meet customer load based on economic dispatch as required by the South Carolina Public Service Commission. The commenters stated that prudency of ope ration requires utilities to operate its lowest cost generators using real variable costs. The commenters stated that even purchased power must meet an avoided cost criteria with an accepted cost basis. The commenters stated that the variable costs that ap ply are primarily driven by the market cost of fuel. To that end, the commenters stated that they have built their base

- load electric generating capacity to be equally balanced between coal, gas and nuclear once the new nuclear units are completed. The

com menters stated that they expect the nuclear units would be operated at full capacity, due to their lower bus bar costs, which would generate roughly 60% of the load; while the remaining base

- load generation would typically be dispatched using coal or gas d epending on their relative fuel costs. The commenters stated that the proposed rule would not only preclude the economic benefits of dispatching generation in this manner but the load demands themselves would make tracking compliance with a carbon intensit y rate extremely difficult

. Therefore, the commenters suggested that the Clean Power Plan should account for the considerable planning that will be required to implement and enforce the rule by allowing additional time for states to develop State Implemen tation Plans and by removing the interim goal deadline of 2020

.

Commenter s supported eliminating the interim goals.

The commenters cited the comments that MISO filed with EPA on November 25, 2014, which noted that "Application of the 2020

- 2029 interim emissions performance period and the associated interim emissions performance levels established in the proposed rule (the 'interim performance requirements') will negatively impact reliability and resource adequacy in the MISO region starting in 2020. Th e interim performance requirements create an untenable and infeasible timeline for reliable compliance." The commenters supported elimination of interim goals, stating they are a cliff and not a glide path. Assuming that state compliance plans can be submi tted and approved in 2016 (which is impossible), the commenters noted utilities and cooperatives would have only three years to come into compliance in order to meet interim goals. The commenters contended that state compliance plans are much more likely t o be approved in 2018 and beyond, which the commenters said will force immediate compliance. The commenters said compliance would become even more difficult in states with lower emissions201 rate goals. According to the commenters, EPA's suggestion that inter im goals could become more flexible based on infrastructure expansion requirements or book life of affected EGUs does not acknowledge that 2030 is the earliest that a compliance obligation can go into effect. The commenters said flexibility in the complian ce schedule for interim goals does not change this fact.

Commenter s argued that states and the electric utility industry need more time to comply.

The commenter s noted that adjusting the deadlines for submission and approval of state implementation pla ns without adjusting the deadlines for compliance would not make sense because the rule could then require compliance with a plan that has not yet been approved or even submitted. Therefore, the commenter s asked EPA to extend the deadlines for compliance b y at least an amount commensurate to any extension of the deadline for development of the plan. However, regardless of whether EPA extends the deadline for the submission of state plans, the commenter s argued states and the electric utility industry will s till need more time between approval of the state plan and the compliance deadline than EPA's proposal would currently allow.

Although EPA's message to the public focused more heavily on the final compliance date of 2030, the commenter s contended that it is the interim goal for 2020

- 2029 that will present the most significant challenge for states and the electric utility industry. The commenter s noted that in New Mexico, EPA's proposed interim goal would require the state to reduce its c urrent average emission rate of 1,798 lb/MWh down to 1,197 1b/MWh by 2020, so that the state will be in position to meet the interim goal of 1,107 lb/MWh averaged over the 2020

- 2029 period and the final goal of 1,048lb/MWh by 2030. The commenter s said the effect of these goals will be to require New Mexico to cut its emission rate by a third and thus achieve 80 percent of the required reductions by the year 2020.

The commenter s noted that EPA's proposal explains that the interim goal is merely an average of years 2020 through 2029, and thus does not necessarily require immediate compliance in 2020. However, the commenter s also noted that, with the aggressive assumptions in EPA's proposed interim goals, any failure to meet the emission rate that EPA expects i n 2020 will likely render compliance with the average interim goal nearly impossible, since there will not be enough time to make up the difference. As such, the commenter s contended that the year 2020 does, in effect, mark the first point of compliance th at states must consider in developing a plan for complying with the entire program. The commenter s noted that the 2020 compliance requirement will begin a mere two and a half years after submission of final state plans, and only one and a half years after the submission of any final multi

- state plans, and argued that those timeframes do not allow for the time that EPA will need to formally approve (or disapprove and revise) those plans. Given all that EPA expects to happen in that short compliance window, t he commenter s said additional time is warranted.

The commenter s also noted that the interim goals themselves are quite stringent. Based on the assumptions EPA used to develop its interim goals, the commenter s noted that states must fully complete two of th e four building blocks by 2020, that is, states must achieve a six percent heat rate improvement at existing coal

- fired generators and "re

- dispatch" NGCC units to a seventy percent capacity factor (displacing coal), or find some other means to achieve the equivalent202 level of emission reductions. However, the commenter s contended that EPA provided little basis for its belief that these significant efforts can be fully completed in the short period of time between adoption of the final state plans and the yea r 2020, and noted that EPA admitted that the other building blocks will take even longer to implement. The commenter s also contended that EPA's analysis does not appear to recognize that the first two building blocks are inconsistent, i.e., decreased dispa tch of coal

- fired units will actually cause the heat rate of those units to rise, making it much more difficult to achieve the six percent improvement that EPA expects, particularly in the short compliance window allowed.

The commenters w ere concerned that EPA's expectation that states can fully implement the first two building blocks by 2020 is overly aggressive. The commenters did not expect San Juan (the state's primary source of coal

- fired generation) to be capable of achieving a 6 percent heat rate imp rovement at all, which would require the state to make even greater efforts re

- dispatch its NGCC units. The commenters also indicated that accomplishing EPA's 70 percent assumption by 2020 will be difficult, as it would potentially require the construction of new gas transmission infrastructure. According to the commenters, planning, permitting, and constructing new gas pipelines is a lengthy process that can often take between two and ten years, depending on the location, potential environmental impacts, a nd public opposition.

The commenters specifically noted that a pipeline project typically involves several time

consuming steps, including obtaining right

- of

- way easements, preparing environmental studies, accommodating public involvement, and construction of the pipeline itself. The commenters said the complexity of the process will also depend heavily on land ownership. The commenters noted that, in New Mexico, nearly 56 percent of the land area is public land, with the majority owned by the Bureau of Lan d Management, the U.S. Forest Service, and the Department of Defense. The commenters also noted that Indian Country comprises nearly 10 percent of the area. As a result, the commenters said the likelihood that any new supply gas pipelines needed to impleme nt EPA's Clean Power Plan will cross Federal or Indian Country is very high, thus requiring a "Federal action" that triggers various administrative requirements under the National Environmental Protection Act (NEPA), National Historic Preservation Act, the Clean Water Act, and the Endangered Species Act. According to the commenters, even projects that only cross private lands must still comply with Clean Water Act permitting requirements and the requirements of the Endangered Species Act, which can involve considerable time and effort.

To the extent any new pipeline project is deemed to have the potential for adverse impacts on the environment under these laws, the commenters contended that potential measures to mitigate adverse environmental effects must be considered, including measures to avoid, minimize, rectify, reduce, or compensate for the impact. The commenters pointed out that those requirements can add to the complexity, length, and cost of the project. At each step along the way, the commenters sai d the public must be allowed an opportunity to review, comments, and express opposition to the project, which can delay progress even further. The commenters contended that for EPA to expect that the new gas pipeline capacity needed to re

- dispatch New Mexi co's NGCC units to a 70 percent capacity factor can be completed within a few short years ignores these significant, time

- consuming hurdles that will likely preclude completion of any new infrastructure projects prior to 2020.203 Even if New Mexico is able to achieve the necessary reductions expected by EPA's initial interim compliance goal for 2020 using building blocks 1 and 2, the commenters was also concerned that EPA's proposed "glide

- path" from 2020 to 2030 for New Mexico will be difficult to maintain, g iven the aggressive assumptions EPA has made for building blocks 3 and 4. As

an example, the commenters noted that, just like additional time will be needed to construct gas pipelines needed to implement building block 2, additional time may be needed to c onstruct electricity transmission infrastructure needed to implement building block 3 to integrate new renewable resources. The commenters noted that construction of new transmission lines will involve many of the same concerns expressed above with regard to new natural gas pipelines. Without those improvements, the commenters said new renewable energy generation may not be able to reach demand centers, and other resources may not be able to provide sufficient support for the new renewable generation when i t varies in availability.

Based on these concerns, the commenter s asked EPA to reconsider the compliance schedule that it has proposed and recognize that the tremendous effort needed to reach EPA's goals will take more time than EPA has assumed

. Alternativ ely, the commenter s asked EPA to reconsider whether its interim goals are necessary at all, given the long

- term nature of EPA's climate change goals, and instead consider allowing states to establish their own interim targets.

Comment 5: Comment suggestin g that the EPA should eliminate the interim compliance period and allow States to focus their plans solely on identifying efficient and cost effective approaches to achieving the final compliance targets by 2030.

Response 5: The EPA shares the commenters’ concerns regarding the workability of the proposed interim goals

. Based on this and other comments we have received, the EPA has adjusted the start date for the i nterim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake neces sary planning exercises and for the implementation of measures towards achieving the performance
rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performanc e rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

The final guidelines also contain changes to avoid certai n inconsistencies between the goal

setting methodology and accounting of reductions under state plans that could have made state goals less achievable for some states. When assembled together, these changes help to ensure that the state goals established in the final guidelines are achievable considering cost, and that states can consider the range of available emission reduction methods that the final guidelines allow and choose the best way to achieve their state goals. A discussion of state plan timing and flexibility of available programs can be found in section s VIII.E and VIII. G of the final rule preamble of the CPP

.204 The following are summaries of the specific public comments under this comment:

Commenters stated that EPA must eliminate its interi m compliance targets. The commenters stated that EPA significantly underestimates the time that States will need to implement the emission reduction programs contemplated by the proposed rule. Due to a combination of legislative, regulatory, and infrastruc ture challenges, the commenters stated that it will be infeasible for States to achieve the interim compliance targets set by EPA, particularly in the earlier years of the interim compliance period. The commenters stated that, in light of the steep emissio n reductions that EPA projects beginning in 2020, States that cannot meet those initial targets will be forced to undertake much more extensive and costly emission reductions in the later part of the interim compliance period in order to meet EPA's overall emission reduction target. The commenters stated that in order to make up for higher emissions at the beginning of the interim period, States may have to impose emissions limits that are even more stringent than the final 2030 targets set by EPA at the en d of the interim period in order to meet EPA's average interim target. The commenters stated that rather than requiring States to mandate expensive emission reductions that will likely be more stringent than the final 2030 compliance targets, EPA should el iminate the interim compliance period and allow States to focus their plans solely on identifying efficient and cost effective approaches to achieving the final compliance targets.

First, the commenters stated that EPA's proposed timeline for the submissi on of State implementation plans is unreasonable. Even under the best circumstances, States will need far more than 2 years to complete all of the legislative and regulatory actions necessary to develop comprehensive implementation plans for the entire ele ctricity sector. The commenters stated that policy differences within legislatures and regulatory agencies could further delay the development of implementation plans in many States. Finally, the commenters noted that EPA's review of those plans will add f urther delay. The commenters stated that EPA routinely takes more than a year to approve SIPs under Section 110, and frequently takes more than 2 years to do so. Because the content of a State's implementation plan will remain uncertain until after EPA
app roval, the commenters stated that this lengthy review process will further delay investments in the projects and infrastructure necessary to comply with EPA's emission reduction targets. The commenters stated that such investments will be delayed even furt her in the event that EPA disapproves a State plan and must then develop a federal implementation plan in its place.

Second, the commenters stated that even after an implementation plan is approved, it will take States and regulated entities several years to develop the infrastructure necessary to reduce overall CO2 emissions from the electricity sector. The commenters stated that the new natural gas pipelines that will be needed to ensure a sufficient supply of gas to run NGCC facilities at a 70% capacity factor can be expected to take several years to construct. As an example, the recently announced Atlantic Coast Pipeline

- which will run 550 miles from West Virginia to North Carolina

- is expected to take a minimum of 4 years to complete construction, as suming that there are no problems during the permitting process. Likewise, the commenters stated that new transmission lines needed to connect existing NGCC facilities and new renewable energy facilities to demand centers currently served by coal

- fired EG Us will take many years to complete. For example, the commenters stated that Texas' CREZ project, which involved installation of new transmission lines needed to transmit 18.5 MW of wind power from west Texas and the Texas panhandle to key population cente rs, took more than 6 years to construct after legislative approval. Likewise, "[i]n the SPP region, as much as eight and a half years to205 study, plan for and construct new transmission facilities has been required." The commenters stated that these projects

- and the time needed to complete them

- are not unusual and represent the types of infrastructure investments that will be needed to achieve the aggressive emission reduction goals proposed by EPA. The commenters stated that under the circumstances, it i s highly unlikely that a State could enact new legislation, develop an implementation plan, obtain EPA approval, and complete massive infrastructure projects in less than a decade. Thus, the commenters stated that even if EPA completes the rulemaking on sc hedule, States would not be prepared to implement significant portions of their plans until 2025, or halfway through the interim compliance period.

The commenters stated that EPA cannot dismiss the challenges this will pose for achieving the interim emission reduction targets by simply asserting that States can require more aggressive emission reductions at the end of the interim compliance period. The commenters stated that the emission reductions required by EPA are far from gradual because EPA assu mes that Building Blocks 1 and 2 will be fully implemented at the beginning of the interim compliance period in 2020. The commenters stated that EPA assumes, on average, 63% of the final emission reductions will be achieved by 2020. The commenters stated t hat EPA may be technically correct that, because the interim compliance period evaluates average emissions over a 10

- year period, a State that is unable to meet these aggressive emission reductions in the early years of the interim compliance period can ma ke up for that shortfall by imposing more stringent emission reductions in the latter years. However, the commenters stated that this may not be possible in practice, as it will force States to "over comply" in the latter years of the interim period by ach ieving emission reductions that are well below EPA's projections for those years. The commenters stated that not only will such over

- compliance result in a significant increase in compliance costs, it will likely force States to impose emission reductions at the end of the interim compliance period that will exceed the final emission reduction targets that would be applicable to the States beginning in 2030. According to the commenters, it makes little sense to require a State to exceed the final emission r eduction targets for a year or more simply because it was infeasible to achieve EPA's proposed emission reduction targets for the earlier years of the interim compliance period.

Recognizing that infrastructure challenges will make the interim compliance de adlines infeasible in many circumstances, the commenters noted that EPA suggests in the October 30, 2014 Notice of Data Availability

, "a phase

- in schedule could be developed for Building Block 2 on the basis of whether, and to what extent, any additional i nfrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) are needed to support more use of existing natural gas

- fired generation." However, the commenters stated that the approach proposed in the NODA is inadequate to address the significant obstacles with the proposed compliance schedule. Given the economic, technological, and legal complexities of large

- scale infrastructure projects, the commenters stated that it would be unreasonable for EPA to force States to commit to a specific schedule for these projects at this initial stage of the Section 111(d) process. The commenters stated that, under such a phase

- in approach, any legal challenge or unforeseen complication during the construction process could threaten a Stat es' ability to comply with a phase

- in interim target. The commenters stated that the NODA does not provide significant flexibility beyond natural gas infrastructure issues (e.g. the time needed for legislative and regulatory action to prepare implementatio n plans) to enable the necessary time to achieve the interim compliance goals. The commenters suggested that EPA withdraw the interim compliance206 goals and allow States to focus exclusively on developing a pathway to achieve the final emission reduction tar gets by 2030.

Comment 6 : Comment agreeing with the EPA that allowing States to use multi

- year compliance periods will allow States to address short

- term challenges (e.g., facility shut

- downs that could cause temporary emissions increases through changes in electricity dispatching). However, the comment states that the proposed timeline for compliance is unreasonable and recommends eliminating the interim compliance entirely and extend ing the deadline for States to submit implementation plans for the 2030 compliance period. Comment objecting to the proposed rule's targets and ti melines in light of the magnitude of the reductions requ ired, the new infrastructure contemplated, and the regulatory approvals needed throughout the compliance process.

Comment supp orting the EPA's proposal to measure compliance with emissions targets with multi

- year compliance periods, however, if the EPA elects to retain the interim compliance period, the comment supports the EPA's proposal to have a single compliance period coveri ng the entire interim period and asserts that under no circumstances should the EPA adopt an incremental period that is shorter than 5 years

. Response 6 : The EPA thanks the commenters for their support of the use of multi

- year compliance periods, and agree s with the commenters that states and regional planning groups should be provided a great deal of flexibility to formulate their plans and develop workable glide paths toward the 2030 goal. The EPA does not agree that an incremental period shorter than 5
y ears is useful, however, and we are finalizing this rule with three interim steps during the 8

- year interim period as stepping stones to the final 2030 compliance , and averaging over 2

- year final reporting periods

. W e are finalizing this rule with a grea t deal of added flexibility both in terms of program options and in regard to the timing of interim and final goal milestones. We disagree with the commenters’ assertion that the interim compliance period should be set aside entirely. A full discussion of state plan timing and flexibility of available programs can be found in section s VIII.B, VIII.E

, and VIII. F of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in section VIII.B of the final rule preamble

. Discussion surrounding time needed to include new infrastructure in state plans can be found in sections VIII. B and VIII.E of the final rule preamble

. The EPA disagrees with the comment that multi

- state plans may r equire Congressional approval unde r the Interstate Compact Clause for the reasons stated in the Legal Memorandum accompanying the final rule.

R egarding the comment that the EPA must allow any State a 2

- year extension for the deadline to submit a State impl ementation plan, regardless of whether the state intends to pursue a single

- or multi

- state plan, we are allowing states to request a 2

- year extension of the Sept. 6, 2016, submittal deadline even if they develop single

- state plans. See Section VIII.E.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:207 Commenters agreed with EPA that allowing States to use multi

- year compliance periods will allow States to address short

- term challenges such as facility shut

- downs that could cause temporary emissions increases through changes in electricity dispatching.

However, co mmenters stated that EPA's proposed timeline for compliance is unreasonable. The commenters supported EPA's proposal to extend the deadline for states to submit implementation plans. The commenters noted that to meet the proposed emissions reduction ta rgets, States will necessarily have to look beyond the fence line when preparing implementation plans and will likely require at least 2 years to prepare such complicated plans. According to the commenters, even the extensions will likely prove too short f or many States. The commenters noted that 2 years will not provide sufficient time to pass legislation and then complete a rulemaking process to prepare such a complicated State plan for states requiring legislative fixes to implement certain parts of the proposed standard. The commenters noted that in some States it may not be clear which agency should be responsible for preparing the implementation plan, and resolving these issues will also add time to the process. The commenters indicated that these prob lems are magnified for States with part time legislatures. The commenters provided for example, Texas' next legislative session is scheduled to end on June 1, 2015, the same day EPA was directed to finalize this rule. According to the commenters, unless Te xas were to call an emergency session, it would not be able to enact any legislative fixes until 2017

- a mere 6 months before state plans are due. The commenters stated that without legislative action, the state could not show satisfactory progress toward developing a state plan by the 2016 compliance deadline or sign an MOA to participate in a multi

- state plan.

The commenters stated that multi

- state plans may require Congressional approval under the Interstate Compact Clause.

The commenters stated that a ny delays will create challenges to meeting the interim guidelines. According to the commenters, without a timely state plan in place, it is unlikely that regulated entities will have sufficient time to meet the earliest compliance targets for 2020 and sim ilar years. Thus, the commenters stated that costly and inefficient over

- compliance would be necessary in later years to meet the average emissions rate. According to the commenters, even if this were possible, it would dramatically increase the compliance costs and other impacts of the rule.

To avoid these implementation challenges, the commenters suggested that EPA should eliminate the interim compliance entirely and extend the deadline for States to submit implementation plans for the 2030 compliance per iod. Further to provide equal treatment for all States, the commenters argued that the EPA must allow any State a 2

- year extension for the deadline to submit a State implementation plan, regardless of whether the state intends to pursue a single

- or multi

- state plan.

In principle, com menter s can support the concept of a phased

- in compliance target and multi

year compliance effort. However, the commenters objected to the proposed rule's targets and timelines in light of the magnitude of the reductions re quired, the new infrastructure contemplated, and the regulatory approvals needed throughout the compliance process.208 Commenters supported EPA's proposal to measure compliance with emissions targets with multi

- year compliance periods . If EPA decides to p roceed with State

- wide emission reduction targets, the commenters urged EPA to incorporate sufficient flexibility to ensure that any short

term, unforeseen challenges will not prevent the States from achieving their emission reduction targets. First, the c ommenters agreed with EPA that compliance with the final emission reduction goals should use a three

- year rolling average. The commenters stated that EGU efficiency and emissions rates can vary over time, with relatively predictable patterns over the cours e of a year. The commenters stated that, at a minimum, the compliance period must be measured in years. However, in a State

- wide plan, the commenters stated that EPA must also account for potential deviations from expected electricity demand

- such as the un usually cold winter in 2014

- that can alter projected electricity use and dispatching and, therefore, overall emissions rates. Likewise, the commenters stated that EPA must account for the potential for longer

- term outages at individual facilities due to ro utine maintenance or unexpected malfunctions that can also alter projected electricity dispatching over long periods of time. The commenters stated that adopting a multi

- year compliance option will reduce the noise in yearly emissions data and help ensure that States do not fail to comply with the State

- wide emission reduction targets due to unforeseen events outside of their control.

For the same reasons, if EPA elects to retain the interim compliance period, the commenters supported EPA's proposal to hav e a single compliance period covering the entire interim period

. Id. (proposed 40 CFR 60.5775(c)(2)). In addition to the year

- to

- year challenges described above, the commenters noted that State

- wide emissions during the interim period will be even more
unp redictable, as States, affected EGUs, and potentially voluntary third

- party participants will all be undertaking efforts to reduce emissions each year during the interim period. The commenters stated that no matter how carefully a State may plan its trajec tory toward compliance with the final standards, it is unreasonable to expect that States will be able to strictly adhere to targets set by EPA or by he States in their implementation plans. The commenters stated that EPA's proposed 2

- year incremental comp liance periods are too short to account for the inevitable deviations that will occur during implementation. See I d. (proposed 40 CFR 60.5775(c)(1)). While the commenters disagreed that incremental compliance periods are needed at all, the commenters asserted that under no circumstances should EPA adopt an incremental period that is shorter than 5 years . The commenter s stated that anything shorter will add unnecessary regulatory complexity for States with sound implementation plans that nevertheless experience short

- term challenges.

Comment 7 : Comments supporting extending the time periods for achieving interim and fi nal goals and suggesting to move back the interim goals (e.g., to 2021

- 2031), and from 2030 to 2031 for the final goal. Comment suggesting that the EPA allow states that require new infrastructure investments a minimum of 10 years to reach the interim goal , or eliminate the interim goal

. Commenters stating that the EP A cannot expect changes (i.e., HRIs, EE/RE) of this magnitude to be accomplished in a 10

- year timeframe

. Comment stating that 18 months from final state plan approval (not accounting for the in evitable legal challenges) to implementation is far too short, expressing concern about the interim goal209 "cliff," and concluding that allowing more flexibility to the states to allow for plants that are otherwise environmentally compliant to run for their remaining useful lives beyond 2030 or extending the final goal date would set in motion meaningful CO2 reductions while protecting consumers from the costs of unnecessary deadlines

. Comments suggesting that the EPA provide the states until 2035 to achieve compliance with any emission reduction targets, and that the EPA

s hould abandon the interim targets it has proposed

. Comment stating that the EPA's proposed timelines for compliance with the clean power plan are not possible, and that new generation resources and other required infrastructure cannot be designed, construc ted, and integrated in 10 to 15 years

.

C omment recommending: 1) that interim goals be eliminated and states be given the flexibility to establish their own interim targets; and 2) tha t states be afforded the flexibility to extend the 2030 target date as necessary to allow the orderly retirement of existing coal plants.

Response 7 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary pl anning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginn ing in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

The initial compliance date of 2022, coupled with the fact that the 2030 standard is phased in over the subsequent eight years, affords affected EGUs the benefit of having an extended planning period before they need to incur any significant obligations. We are finalizing that,

w here needed, states may take the period through September 2018 to develop their final plans ; affected EGUs will be able to work with the states during that period to develop compliance approaches. States will also have the flexibility to select their own emissions trajectories in such a way that certain emission reduction measures could be implemented later in the interim period (again, provided that their affected EGUs still meet the interim performance rates or interim goal over the interim period as a whole). As a result, if the affected EGUs in those states need to incur any expenses before the adoption of the final state plans, those expenses need not be more than minimal. Some states that already have established programs for limiting CO 2 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. Other states that may decide to submit plans by September 6, 2016, may be expected to work with t heir affected EGUs to determine a reasonable compliance approach, in light of the fact that compliance is not required to begin until 2022. It is also possible that some states will submit neither final state plans nor initial submittals by September 6, 20 16, and that the EPA will promulgate federal plans. Sources in those states will have more than five years to meet their 2022 compliance obligations, a lengthy period that will afford them the opportunity to210 plan before incurring significant expenditures. These periods of time are consistent with current industry practice in changing generation or adding new generation.

Further d iscussion surrounding time needed to include new infrastructure in state plans can be found in section VIII. G of the final rule pr eamble

. Additional d iscussion surrounding the establishment of interim goals , the length of the interim period, and the length of interim steps, can be found in section s VIII.B and VIII.F of the final rule preamble

. Commenters ’ concerns regarding generation shifts and lead times for generation are addressed in section V.D of the final rule preamble of the CPP

. See Sections V.A.6 and VIII.K regarding new nuclear generation. See Section VIII. G.1 regarding remaining useful life.

The following are summaries of the specific public comments under this comment:

Commenters supported extending the time periods for achieving interim and final goals, in order to provide Indiana with better opportunity and greater flexibility to establi sh measures consistent with preserving the reliable and reasonably priced energy needed to support economic growth in the state.

Commenters suggested that the compliance dates for the interim goal and final goal should be moved back at least one year, f rom 2020

- 2029 to 2021

- 2030 for the interim goal (if the commenters’ suggestions to change the interim goal are not adopted), and from 2030 to 2031 for the final goal.

Commenters suggested that EPA allow states that require new infrastructure investments a minimum of 10 years to reach the interim goal, or eliminate the interim goal . The commenters noted that 84 percent of Minnesota's total carbon reduction would occur by 2020 under the EPA's proposal. The commenters expected that both additional infrastru cture and unit retirements with replacements would be a part of Minnesota's compliance plan. The commenters stated that Minnesota must have the flexibility to meet timelines while maintaining reliability and assessing prudent investment. The commenters sta ted that they share MISO's concerns that the need to take action by 2020 may impede states' ability to implement least

- cost compliance strategies and may degrade reliability.

The commenters stated that the Proposed Rule's interim goal should be more flexible given Minnesota's recent experience with the time requirements of Xcel Energy's Metropolitan Emission Reduction Program (MERP) initiative for coal

- to

- gas replacement and th e CapX2020 transmission initiative

- each of which took years to plan, develop, permit, construct and bring into operation. The commenters stated that Xcel Energy's MERP initiative began in 2001 and was completed in 2009. The commenters noted that Minnesot a's portion of the CapX2020 initiative began with the planning phase in 2004, and the construction of those lines is still ongoing.

Commenters stated that the EPA acknowledges a state's circumstances and choice of emission reduction strategies may affec t the timing and that certain emission reduction measures and programs (e.g., HRIs) are generally easier to implement in the near term, while others (EE/RE) may require several years to implement because of the time necessary to establish the proper infras tructure if a state does not already have such programs in place. The commenters stated that the 10

- year performance period is intended to " allow states flexibility for timing of program211 implementation as the state ramps up its programs to achieve the fina l performance level. " The commenters noted that states are heading into unchartered territory if this proposal is implemented as structured, that measures and programs necessitated under this proposal will likely take significant time to implement (if they even can be implemented), and that there must be mechanisms to afford states more time if needed.

The commenters stated that attempting to force fit the Section 111(d) rules is inappropriate and cannot be achieved in the timeframe suggested by the EPA, a s evident in the Southwest Power Pool's October 9, 2014 comments on this proposal requesting at least a 5

- year extension on the interim goals in order to reduce their modeled reliability impacts and violations of reliability standards. The commenters state d that the EPA cannot expect change s of this magnitude be accomplished in a 10

- year timeframe

.

Commenter s noted that the proposed CPP regulations call for submittal of each state plan as late as June 2017, with the allowable 1 year extension, and June 2018 as part of a multi

- state agreement, after which the EPA would have up to 1 year to approve the plan. The commenters noted that a final single state plan could be approved as late as June 2018. Regardless of the timing of EPA approval of the state plan, th e commenters noted that the CPP requires compliance to begin January 1, 2020, as the ramp down begins. The commenters stated that 18 months from final state plan approval (not accounting for the inevitable legal challenges) to implementation is far too sho rt . The commenters stated that considering that nuclear generation's reliable, base

- load, carbon free energy must be an important part of the plan, even the 10 or so years from final plan approval to implementation of the 2030 standards is too short. The

c ommenters stated that the planning cycle for nuclear, from site selection and permitting through construction still exceeds 10 years . The commenters stated that it is unrealistic to expect that utilities will take action and spend their customers' money wi thout absolute clarity as to what the final approved state plan will require. The commenters noted that investing significant time and resources for a regulation that is still being revised and has yet to withstand a serious legal challenge is not a pruden t use of our customers' money. As a municipal utility, the commenters stated that it is their obligation to meet the electric needs of our community by the lowest

- cost, environmentally responsible means available. As a not

- for

- profit utility, the commenter s stated that the most reasonable way to keep costs down for our customers is to use our existing resources to their maximum potential, not by abandoning plants before the end of their useful life. The commenters stated that their coal units, on average, h ave expected useful lives extending 15

- 20 years beyond the initial proposed compliance date of 2020.

The commenters included a graph of the CO2 emission rates in lbs per MWh over time period 2012

- 2030 titled: "Interim and Final Goals

- Stringency/Timelines ." The commenters expressed concern about the interim goal "cliff." The commenters stated that meeting the numeric goals and the proposed dates for the interim and final goals will be difficult and unnecessarily costly. The commenters noted that the EPA has proposed an average state of Florida interim goal of 794 lbs/MWh for 2020

- 2029 and 740 lbs/MWh in 2030. The commenters explained that if the state were required to meet these targets, 1800 MW of their existing solid fuel capacity that would not ordinar ily have been retired by 2020 will be threatened. The commenters noted that, while the State is required to meet the goal as a whole, one way they might contribute to meeting the state goal is with significant re

- dispatch or retirement of all of its solid fuel capacity and with purchase212 of replacement power. The commenters noted that there is currently insufficient transmission infrastructure to accommodate such an import into their service territory.

The commenters asserted that that Clean Power Plan as p roposed is not prudently attainable in Florida . The commenters stated that the speed at which the plan is proposed to be implemented and the great reduction in CO2 emissions required makes the Clean Power Plan interim goal as proposed exorbitantly costly t o attempt to attain between 2020 and 2029. The commenters stated that if this plan is finalized and enforced as proposed, it will shift electric utilities away from reliable, base load solid fuel units to base load natural gas fired combined cycle units wi th simple cycle combustion turbine units filling the intermediate load gap and cycling to manage the electric system. The commenters stated that this sudden shift would cause a market rise in the demand for, cost of, and delivery time for the construction of the required new units. The commenters stated that at 2014 market demand levels for these units, a minimum lead time of 30 months, 36 months and 10 years could be expected for combustion turbine, NGCC and nuclear units, respectively . The commenters stat ed that to have gas fired units in place in the quantity needed to meet the 2020

- 2029 average, the utility would need a plan of action underway and need rate payer funds before a final rule would be in place. The commenters stated that at best, a new nucle ar decision and build could be facilitated to help meet the 2030 target. However, the commenters stated that the CPP only counts increased generation from existing NGCC and the five nuclear units currently under construction (none in Florida) in its formul a for meeting the state goals, such that generation from "new" NGCC and "new" nuclear would not be given credit toward meeting the goal.

The commenters concluded that allowing more flexibility to the states to allow for plants that are otherwise environmen tally compliant to run for their remaining useful lives beyond 2030 or extending the final goal date would set in motion meaningful CO2 reductions while protecting consumers from the costs of unnecessary deadlines . The commenter s stated that each state sho uld define the glide path within its state plan for that state to meet the final goal

Given the extensive legal, regulatory, and physical changes that must occur first, commenters suggested that EPA provide the states until 2035 to achieve compliance with any emission reduction targets, and EPA should abandon the interim targets it has proposed , as they will be unachievable for states to meet. Commenters also requested that EPA allow the states to adopt compliance deadlines based on the remaining state

- determined useful lives of each of the designated existing facilities

.

Commenters requested that the final compliance deadline be extended to at least 2035.

The commenter s noted that, under the emission guidelines as proposed, states will be required to take unprecedented steps to regulate the generation, transmission, and use of electricity not just within their borders but, in many cases, beyond them as well. The comment ers indicated these efforts will most likely require the passage of new state legislation authorizing such actions, the development of state rules to implement those statutory authorities and detailed assessments on a utility

- by

- utility, source

- by

- source b asis of what reductions can be obtained, while still ensuring a reliable and affordable electric supply for the states' citizens. The commenters further noted that any efforts to negotiate and implement interstate plans are likely to be even more complicat ed and time

- consuming. According to the commenters, the generation and the213 transmission of electricity through RTOs is not confined to state boundaries. Given the amount of work to be done, the commenter s urged EPA to extend the final compliance deadline b y five years, from 2030 to at least 2035, to account for the more realistic timeframes.

Commenters stated that the EPA's proposed timelines for compliance with the C lean P ower P lan are not possible. The commenters stated that the EPA's Clean Power Plan requires compliance within 10 to 15 years but this deadline is not achievable. The commenters stated that once the EPA issues its final rules in June of 2015, Kansas will need at least 2 years to conclude a stakeholder proce ss to determine the following:

• Jurisdictional utilities and the SPP must individually and jointly run re

- dispatch models to determine the lowest

- cost option(s) and the most viable option(s) for compliance. These

re

- dispatch model runs will be highly compl ex and will most likely involve hundreds of discrete scenarios and will take and estimated six months to a year to run.

• The commenter s must then review and analyze the re

- dispatch scenario results and conduct stakeholder meetings and hearings in order to determine the best course(s) of action.

• Once the Commission has issued an Order approving the new generation mix for its jurisdictional utilities, the utilities can work with KDHE to develop a compliance plan or plans.

The commenter s stated that because of the complexities involved and the fact that generation mix is jurisdictional; they cannot be rushed into a quick decision on these issues by an excessively aggressive schedule set by the EPA.

The commenter s stated that the EPA has demonstrated a seriou s lack of understanding of the electrical system which is outside its area of expertise. The commenter s noted for example, the EPA discusses its proposed changes to the generation mix in broad simplistic language such as

"All of these measures are compone nts of a 'system of emission reduction' for the affected EGUs because they either improve the carbon intensity of the affected EGUs in generating electricity or, because of the integrated nature of the electricity grid and the fungibility of electricity an d electricity services, they displace or avoid the need for generation from those sources and thereby reduce the emissions from those sources."

The commenters stated that the EPA is under the mistaken belief that the mix of electric generation can simply be modified over a 10 to 15 year period because electricity is "fungible." The commenters stated that the EPA does not recognize the fact that the current electric grid has developed over the past 100 plus years and the modern grid has expanded over the pa st 40 plus
years.
The commenters stated that generation resources are located very specifically to accommodate load requirements and balance the system. The commenters stated that closing coal plants or significantly reducing their output will require tho rough engineering studies to determine what214 type of new generation

- nuclear, NGCC, or renewable

- should be selected, the location of the new generation, availability of fuel, and transmission constraints. The commenters stated that new generation resourc es and other required infrastructure cannot be designed, constructed, and integrated in 10 to 15 years

.

Commenter s argued that EPA should eliminate the interim goals and give states the flexibility to set their own interim targets.

Although the rule w as published in June of 2014 and the interim goals begin in 2020, the commenters noted that states have only two to four years to comply (following the current EPA timeline). The commenters further noted that for some states the interim goals in 2020 will be more difficult to meet than the more strict 2030 goals due to the limited amount of time for utilities to respond to a finalized state plan. As an example, the commenters cited the following statement in the proposed rule, "Building Block 3 is based on shifting generation from affected fossil units to new RE generating capacity, which is added over time, and new or preserved nuclear capacity, all of which is expected to be in place by 2020." The commenters said this will give states that choose the multi

- state approach potentially only 2 years to comply with a 2020 interim target that may include the construction of new RE or new natural gas combined cycles. The commenters contended that this is not enough time to implement such compliance efforts.

Thoug h the commenters believe a multi

- state plan is necessary for reliable and cost effective implementation, if individual state plans are maintained, the commenters said states should be given much more flexibility to implement their own compliance plans. The commenter s recommended that interim goals be eliminated and states be given the flexibility to establish their own interim targets

. The commenter s also recommended that states be afforded the flexibility to extend the 2030 target date as necessary to a llow the orderly retirement of existing coal plants (if deemed appropriate for compliance) consistent with their remaining useful lives so as to avoid reliability and resource adequacy concerns as well as customer cost impacts. According to the commenters, forcing a rigid interim and final goal timeline(s) will result in costly short term fixes rather than the long

- term solutions EPA is seeking.

Comment 8 : Comment stating that giving states more flexibility and longer time frames to phase in the reductions will enable states to put in place stronger plans while at the same time meeting the EPA's overall reduction goals by 2030.

Response 8 : The EPA thanks the commenters for their support of the Building Block approach as proposed. We also thank the commente rs in support of added flexibility and time allowed for state and regional plan formulation in the final rule. Details of the added flexibility can be found in section VIII. C and VIII. E of the final rule preamble of the CPP

. T he EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for s tates to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address215 the revised timing of the in terim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP

. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

We disagree with the commenters that emissions from new NGCC units covered under 111(b) should be approvable as CO2 reduction measures under the final emission guidelines. New, modified, and reconstructed EGUs covered under the CAA section 111(b) final Standards of Performance for Greenh ouse Gas Emissions from New Stationary Sources: Electric Utility Generating Units rule are not approvable sources of electric generation for adjusting the CO 2 emission rate of an affected EGU under a rate

- based state plan. As discussed in section VII.D of this preamble, a key concern under this rule is leakage to new units that are not covered by the emission guidelines. Emissions leakage, or increased CO 2 emissions due to increased utilization of unaffected sources, is contradictory to objectives of this r ule and should, therefore, be minimized. Allowing affected EGUs to adjust their emission rates as a result of lower

- emitting new NGCC units not covered under this section 111(d) rule would not mitigate leakage concerns, and could even exacerbate the situat ion. Consequently, new EGUs covered under the CAA section 111(b) rule are not allowable measures in state plans because the EPA believes it would result in increased emission leakage. See Section VIII.K.1.b of the final rule preamble of the CPP.

The follow ing are summaries of the specific public comments under this comment:

Commenters noted that the EPA's Clean Power Plan aims to reduce the majority of Texas's current carbon emission rate by the year 2020 with approximately 39% over the 2012

- 2020 time period and the remaining 5% by 2030. The commenters believe d that giving states more flexibility and longer time frames to phase in the reductions will enable states to put in place stronger plans while at the same time meeting the EPA's overall reduction goals by 2030.

The commenters agreed with the flexibility that the proposed rule provides to states to also allow for carbon reducing strategies that are not explicitly identified in the Building Blocks. Specifically, the commenters supported the use of new NGCC units as a compliance measure. The commenters indicated that new NGCC units are part of their company's long term generation plan and provide carbon reducing benefit and should be counted towards compliance. In addition, the commenters indicated t hat repowering a coal unit into an NGCC unit should also be counted towards compliance. According to the commenters, both new NGCC units and repowering older coal units into NGCC provide meaningful measureable reductions in carbon intensity and should be o ptions available to utilities. As an example, the commenters pointed out that if their company repowers the Deely coal

- fired unit after retirement in 2018, the unit should be able to remain in the section 111(d) program without regard to when the repowerin g begins so that it can earn credit for the reductions achieved through the repowering.216 Comment 9 : Comment suggesting that the EPA should give strong consideration to eliminating the interim target goals for the states, or alternatively give allow for: th e gradual phase

- in of heat rate improvements under Building Block 1; credit for early CO2 emission reductions; and phase in Building Block 2 over time rather than assuming the achievement of full re

- dispatch by 2020.

Response 9 : The EPA agrees with this and other commenters ’ positions that states and regional planning groups need additional flexibility in formulating their plans

. I n this package the EPA is finalizing a variety of measures to accommodate state choices in meet ing the statutory requirements of CAA section 111(d). The commenters ’ concerns about treatment of early actions are further addressed by changes from proposal to the BSER assumptions and the methodology used by the EPA to establish the CO2 emission performance levels and rate

- based
sta te CO2 goals in the emission guidelines.

Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determ ined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rate s for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction pot ential identified for the BSER increases over time, as explained in section V.

The EPA recognizes the value of such early actions, and in this final rule is providing states with discretion to credit reductions from the activities, implemented from 2013 onward, in the context of both mass

- based and rate

- based plans. The EPA believes that the broad categories of measures listed in the final rule address the wide range of actions that are available to reduce CO2 emissions from affected EGUs under a rate

- ba sed state plan. We also believe that the addition of a mass

- based state plan option provides a great deal of added flexibility to help states and regional planning groups manage such concerns and develop a glide path to 2030 that works best for their plan(s). Additional information on these topics can be found in section VIII.G.2 of
t he final rule preamble of the CPP

. The EPA shares the commenters’ concerns regarding the workability of the proposed interim goals and we are addressing comments by making changes to state goals and goal

- setting methodology. The final guidelines also conta in changes to avoid certain inconsistencies between the goal

- setting methodology and accounting of reductions under state plans that could have made state goals less achievable for some states. When assembled together, these changes help to ensure that th e state goals established in the final guidelines are achievable considering cost, and that states can consider the range of available emission reduction methods that the final guidelines allow and choose the best way to achieve their state goals. A discu ssion of state plan timing and flexibility of available programs can be found in sections VIII.E and VIII. G of the final rule preamble of the CPP

.217 Regarding the commenters ’ concerns about the BSER and front

- loading of the state and regional plans, the fina l rule includes added flexibility for states and regional planners, including such things as credit for early action and allowing the use of mass

- based reductions that are designed to alleviate these concerns and allow states and regional planners more opt ions when assembling their plans.

The EPA does not agree with the commenters who called for elimination of the interim goal

. The EPA believes that interim goals are appropriate to ensure that state 111(d) plans require the emission reductions that are a chievable, as required by the statute. Also, tracking emission performance against the interim steps and interim goal will enable states and EPA to assess on an ongoing basis whether plans are performing satisfactorily and, if not, to take remedial action s promptly (with the type of remedial action depending on plan type).
The following are summaries of the specific public comments under this comment:

Commenters argued that EPA should give strong consideration to eliminating the interim target goals for the states.

If EPA does not abandon the interim goals, the commenters suggested that the following changes outlined in the NODA, which were designed to reduce the negative consequences of requiring an interim goal within the context of Building Block 2, should both b e adopted in the final guidelines: (i) allow credit for early CO2 emission reductions; and (ii) phase in Building Block 2 over time rather than assuming the achievement of full re

- dispatch by 2020. The commenters contended that full credit for early action s that result in reduced CO2 emissions before the compliance period begins in 2020 should be allowed. The commenters indicated that would not alone significantly alleviate the negative consequences of the proposed interim goals, however. The commenters not ed that the timeline between final state plan approval (which, for many states, may not occur until mid

- 2018 or later) and 2020 is far too short for states to implement significant action that would encourage implementation of early emission

- reducing measu res to address the interim goal. Therefore, the commenters said EPA should also allow re

- dispatch under Building Block 2 to be phased in, rather than requiring full implementation by 2020. The commenters said EPA should also allow for the gradual phase

- in of heat rate improvements under Building Block 1. According to the commenters, the types of efficiency improvement measures that might be required by the final rule will take a significant amount to time to implement, given the need for proper planning, de sign, contracting and scheduling of outages for affected units. The commenters noted that, under the proposal, every coal

- fired EGU not retired is expected to implement these measures by 2020. Given the extremely tight schedule this presents, after account ing for the necessary approval of state plans, the commenters indicated the 2020 deadline could present problems for system reliability.

The commenters contended that EPA should allow the states to determine how quickly Building Block 2 may be phased in. T he commenters said each state should have the authority to define its own glide path using criteria such as costs, energy impacts, and the remaining useful life of affected sources (the statutory mandate under the CAA). The commenters noted that EPA
sugges ted that an appropriate phase

- in schedule could be based on "whether, and to what extent, any additional infrastructure improvements (e.g., natural gas pipeline expansion or transmission improvements) are needed to support more use of existing natural gas

- fired generation," or on218 avoiding stranded investments considering the "book life" of generating assets. The commenters disagreed, arguing that, practically speaking, states are in a much better position than EPA to assess such factors and determine an app ropriate phase

- in schedule. The commenters said the book life of an asset is not an appropriate means of implementing the statutory mandate. The commenters argued that book life is an accounting concept that addresses depreciation, and is not an appropriat e metric for measuring or for addressing within the context of CAA section 111(d) the remaining useful life of an asset; the commenters said that must be determined by the states

on a case

- by

- case basis.

For the above stated reasons, commenters believe d EPA's proposed schedule is unrealistic. Therefore, the commenters strongly urged EPA to extend the schedule for states to meet their final goals to no earlier than 2035, while eliminating the interim goals and allowing states to determine the emission red uction trajectories that work best in meeting their final goals in the most equitable, cost effective and efficient manner possible. The commenters said EPA could still require states to make certain showings as a means of assuring that states are making

s atisfactory progress and putting in place the necessary legislation, regulations or other mechanisms needed to make the required reductions.

Comment 10 : Comment recommending allowing the states to set their own glide paths to meet the rule's compliance objectives with a directive that continued generation by public power entities be fostered.

Response 10 : The EPA agrees with the commenters that state and regional planners need added flexibility and to this end the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. Because of the additional time provided before the beginning of the interim plan performance period, the EPA has dete rmined that additional assurance that states are making progress in implementing the plan between the time of the state plan submittal and the beginning of the interim period is appropriate. This application of the BSER over the 2022

- 2029 interim period pr ovides the state with substantial latitude in selecting its own emission reduction glide path over that period, as discussed in detail in sections V.C, V.D, V.E, VIII.D, and VIII.E of the final rule preamble of the CPP

. To the commenters’ directive that co ntinued generation by public power entities be fostered, the EPA cannot provide such a directive in the final rule as it may take away flexibility from other state and regional plans.

The following are summaries of the specific public comments under this c omment:

Commenters stated that the proposed rule is likely to have a profound effect on the energy sector and especially on municipal utilities. The commenters adopted the comments of the APPA and MMEA and supported the comments of the State of Michigan and specifically supported and recommended allowing the states to set their own glide paths to meet the rule's compliance objectives with a directive that continued generation by public power entities be fostered. The commenters stated that methods for fo stering the continuation of generation by public power may include exempting small EGUs, providing more flexible emission budgets or emission rates for municipal units, or allowing additional credits to municipal entities for their existing units,219 renewabl e energy sources or energy efficiency projects. The commenters said that states are best positioned to design a plan that promotes public power.

Comment 11 : Comm ent stating that the EPA should allow additional time for implementation of state plans so that states can overcome barriers with infrastructure changes, NSR permitting, and multi

- state plans. Also, the comment recommends that the EPA should allow states the discretion to develop individualized plans for the 2020

- 2029 timeframe.

Response 11 : The EPA agrees with the commenters ’ concerns regarding additional time needed for infrastructure, permitting, legislation and multi

- state plan development. Based on this and other comments we have received, the EPA has adjusted the start date for the int erim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessa ry planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (b eginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

See section s VIII.B and VIII.E of the final rule preamble o f the CPP for additional response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters suggested that the EPA should allow additional time for implementation of state plans. The commenters stated that as proposed, the rule would not provide sufficient time for implementation. The commenters noted that if EPA acts on state plans within 12 mo nths of their submittal, states would receive approval by June 30, 2017, giving states at most only 2.5 year to implement their plans before the performance period begins in 2020. The commenters noted that if EPA takes longer to act on state plan submissio ns, states would have even less time. The commenters expressed concern about this outcome, in light of EPA's record on approval of SIPs under Section 110 of the CAA. The commenters noted that the EPA has taken years to take final action on some SIPs (e.g., in 2011, EPA had failed to act on 69 Section 110 SIPs within 12 months).

The commenters asserted that states need additional time to implement the emissions reduction measures that must be included in state plans to achieve the significant reductions req uired by 2020. The commenters noted that implementation will require states to overcome multiple barriers, including, but not limited to, the following:220 Infrastructure changes : The commenter s noted that states will need time to invest in infrastructure to account for changes in dispatch, such as new natural gas pipelines and new electrical distribution and transmission systems. For states requiring new generation to comply with Building Block Two, the commenter s noted that time will be needed for the siting , planning, design, permitting, and construction of new generation resources and supporting infrastructure.

New Source Review permitting : The commenter s stated that heat rate improvement projects at coal

- fired EGUs like those anticipated under Building Blo ck One may trigger permitting requirements, including NSR permitting. Assuming that NSR permitting does not deter heat rate improvement projects entirely, the commenter s stated that the permitting process may significantly delay implementation of such proj ects. The commenter s stated that re

- dispatch to NGCCs, as anticipated under Building Block Two, also may implicate NSR permitting. The commenter s stated that some existing NGCC units currently have permit limitations on their generation, which were taken t o avoid NSR permitting requirements. The commenter s stated that these units would not be available to support re

- dispatch unless their permits are revised, which could trigger NSR requirements, including the installation of BACT, or technology to meet the LAER and emissions offsets. The commenter s stated that this process is unlikely to be completed by 2020. The commenter s stated that it typically takes more than a year to obtain a NSR permit, and a permit application could not even be submitted until after all necessary analyses have been completed, including air quality analyses and control technology evaluations.

Multi

- state plans . The commenter s explained that states that choose to coordinate in developing a multi

- state plan would have even less time to implement their plans than states developing individual plans. The commenter s stated that EPA is not proposing additional time for implementation of multi

- state plans, even though the Agency proposes to allow an additional year for development of multi

- sta te plans. Since the performance period starts in 2020 for all states, states developing a multi

- state plan would have even less time for implementation. This discourages states from coordinating with other states. The commenter s stated that the shorter tim eframe also would impact the types of multi

- state programs that coordinating states could implement (e.g., a multi

- state cap

- and

- trade program would require significant time for implementation). The commenter s noted that states would need to negotiate allo wance and revenue allocations. The commenter s stated that additional time would be needed to allocate the allowances and for companies to determine how to comply with the program (e.g., adjusting operations to comply with their allocation, or to identify

s ellers of allowances), which is a time

- consuming process. The commenter s noted for example, California signed a cap

- and

- trade program into law in 2006, but the program did not take effect until 2012, and even then, regulated entities' compliance obligation s were delayed by one year to 2013.

The commenters stated that the EPA's proposed implementation period does not allow sufficient time for states to address these issues, especially since EPA's proposed goal

- setting methodology sets such stringent interim goals that states will nee d to achieve the majority of their required CO2 emission reductions by 2020. The commenters agreed with other commenters that this defeats EPA's intended goal of providing states flexibility in how they may achieve the required

em ission reductions. The commenters stated that rather than providing states flexibility, EPA is221 constraining states' choices. The commenters noted that in setting the interim goals, EPA assumed that the emission reductions from Building Blocks One and Two w ould be achieved at the beginning of the 10

- year interim period. As a result, the commenters noted that almost all of the emission rate reductions would be required to be achieved in the first year of the 10

- year interim period. The commenters noted that i n 11 states, EPA assumed that over 75 percent of the total reductions required by 2030 would be achieved by 2020. The commenters explained that states whose emission levels exceeded their interim goals in the first part of the compliance period simply woul d be unable to achieve reductions sufficient to offset those emissions later in the compliance period.

The commenters recommended that rather than mandating enforceable interim goals, EPA should allow states the discretion to develop individualized plans f or the 2020

- 2029 time period that establish state

- specific criteria and state

- specific "glide paths" that would lead to complian ce with their 2030 emission goals . The commenters suggested that the EPA should allow each state to make its own determination a s to which measures can be implemented, on a schedule that is manageable for the state, but still achieves the final state goal in 2030 . The commenters suggested that the EPA should adopt a compliance mechanism under which states could count
pre

- 2020 avoid ed CO2 from existing RE and EE measures towards interim performance goals

. According to the commenters, this in addition to delaying the start of the compliance period or allowing states to set their own compliance glide paths, would alleviate the burdens associated with implementing state plans by 2020. Alternatively, the commenters urged the EPA to extend the time period for implementation of state plans prior to the start of the compliance period to allow states sufficient time to implement their emissio n reduction programs.

Comment 12 : Comment suggesting that the EPA allow the states to develop rate of progress compliance plans, abandon the interim state goal requirement, and allow a flexible and reasonable glide path toward the state goal that considers affordability and reliability

. Response 12 : The EPA disagrees with the concept of abandoning interim goals, but does agree with allowing states to develop flexible and workable glide paths that suit individual state plan needs or multi

- state planning needs. Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides suffici ent time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised ti min g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V

.
See section VIII.E of the final rule preamble of the CPP for additional response to this comment.222 The following are summaries of the specific public comments under this comment:

Commenters described numerous considerations for development of l egislation and regulations in Illinois and Missouri to implement the CPP, and considerations related to developing the state plan. The commenters concluded that EPA has not considered the time and resources needed for these actions, and that the interim go al should be abandoned in favor of a flexible glide path.

Commenters noted that in the proposal, states must already require "affected EGUs" to monitor, measure, report, and keep records of CO2 emissions. Proposed 40 CFR 60.5805; 79 FR 34954. The commenters noted that subject to any limitations within state law, the state may develop additional regulations that would limit CO2 emissions from its affected EGUs. The commenter s stated that presumably, no new legislative authority would be required for a state to adopt such regulations.

The commenter s noted that in Missouri, regulations are developed by the Missouri DNR and adopted by the Missouri Air Commission while in Illinois, regulations are developed by Illinois EPA and adopted by the Pollution Co ntrol Board. The commenter s noted that these agencies could establish emissions limitations and/or technology requirements and identify the emission sources to which they apply. Presumably, the commenter s stated that the regulations could consider classifi cations of EGUs as well as the "useful life" of any affected EGU, as provided for in Section 111 of the CAA. The commenter s suggested that these regulations should also include emissions monitoring, recordkeeping, and reporting requirements. The commenter s noted that regulations probably would also include some state permitting requirements and would identify the state's authority to enforce them. The commenter s stated that these rules would likely be subject to notice, hearing, and public comment.

The comm enter s noted that determining what reductions from affected EGUs are required to meet the state goal will require investigations, planning and coordination at the state level which may not be authorized by state laws. The commenter s listed numerous issues that may require state legislative direction and development of regulations in both Illinois and Missouri.

The commenter s noted that the state plan must include a glide path, known as a rate of progress demonstration in other CAA programs, that demonstrate s when and what reductions are expected by implementation of the plan. The commenter s stated that this element of the plan would demonstrate how the various actions to be taken in the state will result in achievement of the state goals in an incremental fa shion along the so

- called "glide path." The commenter s stated that because this will be a state

- led, state

- developed program, the useful life of existing resources will be considered, and the impact of retirements, changes in dispatch, and newly constructe d units, as directed by the CAA.

The commenter s noted that the state must provide for a ministerial process to collect and process the data necessary to demonstrate compliance. For a program as far

- reaching as the CPP, the commenters stated that familiarit y with large amounts of data and the ability to quantitatively show how each action is expected to reduce emissions or the rate of emissions will be required. The commenters stated that this entity must then collect and analyze the data to track progress, suggest corrective measures, and eventually demonstrate compliance to EPA.223 In summary, the commenters noted that the EPA has provided the broad outline of a state plan in the proposed rule, but has not considered the time and massive state resources necess ary to comply with the CPP. The commenters noted that in order to align EPA goals and state policies and laws, the EPA must allow the states to develop rate of progress compliance plans, and EPA must abandon the interim state goal requirement. The commente r s stated that the CPP must allow a flexible and reasonable glide path toward the state goal that considers affordability and reliability

.

Comment 13 : Comment stating that the EPA should eliminate the proposal's interim goals and defer to the state the task of setting interim goals because the state is better equipped to evaluate how quickly efforts under each building block can be implemented in accordance with EPA's proposed BSER. Comment suggesting allowing states to set reasonable rates of progress, in which case interim goals would be unnecessary and suggesting that the EPA provide for more flexible time frames for implementation when finalizing the proposed rule, with specific recommendations for changes.

Response 13 : The EPA disagrees with the commenters ’ request to set aside interim goals, but does agree that state plans should have additional time and flexibility for development. Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2 022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exer cises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less s tringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

See section s VIII. B

, VIII.C

, VIII.D, VIII. E

, and VIII.G of the final rule preamble of the CPP for additional discussion of these topics

. We agree with the commenters that states should have the opportunity to modify state plans, subject to EPA approval and so long as those plans continue to satisfy the require ments of section 111(d) and EPA's emission guidelines. See Section VIII.E.7 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenter s argued that the interim compliance goal should be eliminated and states should have the authority to set the emissions "glide path."224 Despite the warnings from the expert authorities on grid reliability, the commenters noted EPA's claims in its proposal that there will be sufficient time to achieve th e interim and final emission rate goals. However, the commenters indicated most of the reduction in emissions for many states appears to take place by 2020, the date by which EPA expects states to complete the "re

dispatch" from coal

- fired units to natural gas units. The commenters noted that by the time that the state plans are submitted and approved, there will be only two or three years left before those significant reductions are expected in 2020. In light of this short compliance window, the
commenters questioned whether EPA has allowed adequate time to address the natural gas transmission and distribution infrastructure challenges associated with such significant increases in the dispatch of existing NGCC units.

According to the commenters, section 11 1(d) clearly allocates to the states the authority to provide for the implementation and enforcement of the standards of performance for any existing source in a state plan adopted under EPA's emission guidelines. In spite of that clear separation of autho rity, the commenters said EPA's proposal seeks to impose specific interim goals that define a particular rate of progress in reaching the final emission guideline established by EPA for 2030. In doing so, the commenters said EPA has severely limited state flexibility in implementing EPA's proposal. In fact, the commenters indicated many states would have to achieve the majority of the required emission reductions by 2020, even though the final goal would still be a decade away. The commenters contended that EPA should eliminate the proposal's interim goals and defer to the sta te the task of setting interim goals because the state is better equipped to evaluate how quickly efforts under each building block can be implemented in accordance with EPA's proposed BSER.

According to the commenters, eliminating the interim compliance goal and allowing states to determine their own reduction glide paths and milestones to achieve the 2030 goals would enable states to choose a reasonable schedule for implementing the e mission reduction measures consistent with providing safe, reliable, affordable, and environmentally responsible power to customers. The commenters contended that states and utilities would then have more time for the completion of any needed infrastructur e developments (including expansions and upgrades of both electric and natural gas transmission systems) to facilitate the significant changes in energy resources expected by EPA. According to the commenters, allowing states the opportunity to set their ow n milestones along the glide path would also would provide states, electric utilities, and other regulators time to assess the significant changes to the interconnected power system that will be required to achieve the 2030 goals. In addition, the commente rs said the final guidelines should clarify that states will have the opportunity to modify their plans as needed to account for unexpected circumstances, subject to EPA approval and so long as those plans continue to satisfy the requirements of section 11 1(d) and EPA's emission guidelines.

Commenters suggested allowing states to set reasonable rates of progress, in which case interim goals would be unnecessary.

The commenters noted that EPA's rules specify that states may set forth their compliance schedules for designated facilities. The commenters further noted that the state can choose to adopt EPA's "guidelines" for implementation or can choose to adopt its o wn. According to the commenters, courts have recognized that the state is in charge of setting its compliance timetable.225 Because Congress did not establish compliance deadlines for section 111(d), as it did with section 111(b), but did require EPA to cons ider remaining useful life, energy and cost considerations, the commenters said one would expect the deadlines to be more realistic, yet EPA allows a 30

- year averaging time frame for new coal

- fired power plants to meet the stringent new standard, while ins tituting the "carbon cliff" in the CPP. Given EPA's oft

- stated rationale for the CPP that each state has different resources and policy implementation, the commenters said one would also expect the rule would allow the states themselves to establish a real istic rate of progress given the unique nature of each state's legislative and regulatory environment and the makeup of the generation units located within the state. The commenters stated that EPA should modify the rule to require states to set reasonable rates of progress, thereby eliminating the need for interim goals.

According to the commenters, the federalist approach of the CAA recognizes that states are the front

- line implementers for emission sources within their jurisdictions. The commenters speci fically noted that when enacting this law, Congress found that "air pollution prevention... and air pollution control at its source is the primary responsibility of states and local governments" and that federal financial assistance and leadership is essen tial for the development of cooperative federal, state, regional, and local programs to prevent and control air pollution."

Unless EPA finds that the states are not properly demonstrating reasonable progress toward attainment of the goal, the commenters sa id there is no need for strict interim deadlines, and if EPA does make such a finding, then it has the authority to require an additional showing that the state's plan will achieve the goal and/or to impose a Federal Implementation Plan. The
commenters con tended that EPA has conflated these distinct steps and in so doing runs roughshod over the division of responsibilities created by Congress in the CAA.

Commenter s stated that the proposed timeline to implement the existing source performance standard in 2020 should be revised.

To illustrate, the commenters noted that RGGI states began a stakeholder

- based analytical process in September 2010 which led the development of a revised model rule in February 2013. According to the commenters, each of the RGGI states then adopted the model rule through their own administrative processes so that the revision program rules could go into effect on January 1, 2014. The commenters noted that the overall process required 3+ years. According to the commenters, further complicating this process is the need for additional electric and gas transmission and/or renewable generation resources in order for the RGGI states to meet system reliability requirements while maintaining emissions under the revised cap. The commenters alluded to a recent analysis by the North American Electric Reliability Corporation, which states "The EPA and states, along with industry, should consider the time required to integrate potential transmission enhancements and additions necessary to addres s impacts to reliability from the proposed Clean Power Plan," and the commenters stated that the experience of their members underscores this assessment. The commenters noted that industry estimates for construction sequences suggest that both gas and elec tric transmission lines can take from four to ten years to site, permit, and construct, and even large scale renewable projects (such as wind farms) can take several years to permit and to construct. The commenters noted that retiring less efficient,226 highe r

- emitting plants will likely also be part of states' compliance strategies, and these changes can take years to effect as well.

The commenter s suggested that the EPA provide for more flexible time frames for implementation when finalizing the proposed rul e. Inasmuch as 2030 is the ultimate target for reductions, the commenters suggested that the final rule could require that states meet the 2030 goal but reduce the reporting and recordkeeping requirement for the 2020 to 2030 "glide path" by requiring state s to report progress toward their 2030 goal beginni ng two years after the final approval of their respective plans. The commenters indicated each such report could include a demonstration of "reasonable forward progress" and an assessment of the viability of the plan towards the 2030 goal. The commenter s also suggested that EPA eliminate the requirement to demonstrate compliance with the 2020 interim target

-- and particularly the requirement that such compliance should be calculated as an average of the five years from 2020 to 2025. While intended to provide flexibility to states in their implementation timeline, the commenters said the requirement to average the five years actually increases the burden on states which are transitioning away from higher

- emitt ing resources in early years by requiring them to "make up" for all of those emissions in later years. According to the commenters, such a flexible approach would allow for a variety of compliance approaches among the various states and would help to minim ize the possibility that EPA would need to implement a Federal Implementation Plan in the event that a particular state could not meet the 2020 deadline.

Comment 14 : Comment suggesting that the EPA grant states authority to build their own interim target pathway; however, if the EPA does instead establish a federally enforceable glide path (e.g. by ramping in Blocks 1 and 2 as sugge sted in the NODA) it is critically important for EPA to design this glide path to address the reliability concerns identified in these comments and by NERC and RTOs.

Comment stating that the EPA's final guidelines should provide states sufficient time to conduct reliability assessment and resource adequacy studies and to implement changes in order to support proper planning and s ystem transition with the least disruption.

Comment stating that the interim goals seek to do too much too soon and fail to provide the necessary time to integrate safety, reliability, environmental protection, and affordability into an achievable action p lan, and the interim goals s hould be eliminated.

Response 14 : The EPA agrees that states and regional planners must develop credib le and workable plans, including demonstrable glide path expectations and attainable interim goals.

Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an ad aptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect227 the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See secti on V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained i n section V.

Discussion surrounding time needed to include new infrastructure and protection of system reliability can be found in section VIII. G , while discussion surrounding the BSER and Building Blocks 1 and 2 can be found in preamble section s V.C and V.D of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s suggested that EPA grant states the authority to build a credible interim target pathway. The commenters noted that under the Coalition for Innovative Climate Solutions (CICS) proposal, states would build a credible, workable, enforceable glide path to their final target based on existing or new state policies, programs, and procedures covering the power sector. The commenters noted that the state would propose this glide path to EPA as part of their state compliance plan. The commenters noted that states would rely on existing policies such as integrated resource plannin g, renewable portfolio standards, efficiency programs, plant retirement plans, nuclear uprate programs, and any other credible programs that reduce emissions and are state

- enforceable.

The commenters stated that the EPA would have the ability to accept or reject the plans based on the credibility of the proposal, but would not have the authority to mandate specific interim target levels, as long as the final target level is reached. The commenters referred to the comments of the CICS for more de tails.

The commenters stated that the EPA would secure many benefits to U.S. electricity consumers by deferring to the states and allowing greater interim target flexibility . The commenters noted that reliability of the U.S. power sector would be maintaine d, as states would not be scrambling to meet an arbitrary and too

- short deadline. The commenters stated that costs would be much better managed under this approach, as states could account for stranded costs better, and utilities would be able to optimize the timing of their emissions reductions which may allow, for instance, more time to invest in new RE rather than a potentially more expensive gas re

- dispatch compliance pathway. The commenters noted that if states had greater discretion over their states' interim glide paths, they may be better positioned to contemplate regional cooperation in their state compliance plans.

Moreover, the commenters noted that states and utilities often exceed the goals of environmental regulations, so greater interim target flexibility should not be assumed to carry with it a loss of environmental benefits . The commenters provided as one example, Xcel Energy is now far beyond its renewable standard requirements in several states because those state renewable standards allowe d flexibility to buy RE when the time is right.

The commenters appreciated EPA's acknowledgement in the October 30 NODA (79 FR 64543) of the challenges created by the stringent interim targets, and efforts towards creating a smoother228 and less disruptive " glide path" and stated that this is moving in the right direction. While the
commenter s urged EPA to consider the CICS proposal of allowing states to create an enforceable glide path, the commenters stated that if EPA does instead establish a federally enforceable glide path (e.g. by ramping in Blocks 1 and 2 as suggested in the NODA) it is critically important for EPA to design this glide path to address the reliability concerns identified in these comments and by NERC and RTOs.

Commenters stated that the EPA's final guidelines should provide states sufficient time to conduct reliability assessment and resource adequacy studies and to implement changes in order to support proper planning and system transition with the least disruption . The commenters contended that eliminating the interim goals and allowing states to establish their own sp ecific glide path to the 2030 final goal could provide the time needed for these steps . At a minimum, the commenters said EPA must recognize the need for case

- specific extensions where reliability critical units are needed for "must

- run" situations

.

Commen ters argued that the amount of time that EPA provided for achieving its proposed (and unlawful) redesign of the electricity sector is unreasonable and imprudent . The commenters stated that EPA's interim performance goals that begin in 2020, in particula r, requiring significant reductions in CO2 emissions in just a few short years, are a substantial threat to electricity reliability and do not permit the type of prudent decision

- making and planning that
must occur

. According to the commenters, the electr ic generation sector has long recognized four key principles: safety, reliability, environmental protection, and the economics of providing affordable electricity to the public. The commenters said it is in no one's best interest to operate a
company, or e ven a single EGU, in a manner that would neglect these key tenets. Indeed, in contemplating any operational or structural change at the unit or system level, the commenters noted that owners, operators, and policymakers must carefully plan such actions to ensure that the proper focus remains on all four key principles. The commenters believe d that all stakeholders, including regulators such as EPA, the Texas Commission on Environmental Quality (TCEQ), PUCT, among others, must strike a balance among these p rinciples. Notwithstanding their concerns about the numerous legal and technical problems with the proposal, the commenter s asked that EPA eliminate the interim goals that begin in 2020 . The commenters argued that the interim goals seek to do too much too soon and fail to provide the necessary time to integrate safety, reliability, environmental protection, and affordability into an achievable action plan

.

Comment 15 : Comment suggesting the EPA allow a "safety valve" for electric reliability and undue econ omic impacts, and that the EPA replace the 2020 compliance cliff with a system for reasonable progress toward 2030 emission goals.

Response 15 : The EPA agrees with the commenter that system reliability and economic impact are concerns to be addressed in formulating state and regional plans for compliance with the CPP.229 Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has d etermined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manne r similar to proposal, with an adaptation to address the revised timing of the interim compliance period (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim pe riod (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER in creases over time, as explained in section V.

We agree with commenters that the final rule should contain a reliability “safety valve.” A discussion of system reliability including the “safety valve” concept can be found in section VIII. G of the final rule preamble.

The following are summaries of the specific public comments under this comment:

Commenter s stated that EPA should eliminate the 2020 compliance cliff, and provide a reasonable and workable time for the establishment of state pl ans and for compliance by regulated electric generators. The commenters suggested EPA allow a "safety valve" for electric reliability and undue economic impacts. The commenters suggested EPA replace the 2020 compliance cliff with a system for reasonable pr ogress toward 2030 emission goals.

Comment 16 : Comment that t he front

- loaded glide path proposed in the rule fails to provide sufficient time to implement Blocks 2, 3 and 4 such that reductions could be made in a timely fashion to meet the interim and the final reduction mandates, and arguing that states should be given full control over setting the interim goals for 2020

- 2029

. Response 16 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022 , and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercis es and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 ra ther than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stri ngent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

The commenters ’ concerns about a front

- loaded glide path and B uilding B locks 2, 3, and 4 are further addressed in sections V.D and V.E of the final rule preamble of the CPP

. S ection230 VIII. G.2 of the final rule preamble contains the EPA’s response to th e commenters ’ concern regarding the flexibility of state plans. W e disagree with commenters that the emission guidelines encroach on state sovereignty in violation of the Tenth Amendment ; s ee section VIII. G .5 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s argued that, by setting an initial interim goal in 2020 which requires, on average, approximately 80% of the full reduction to be achieved in that year, EPA denied to states any flexibility to craft a rule that will be able to take into account its unique situation, let alone the specific issues facing individual EGUs (such as remaining useful life), utilities, or ratepayers

. The commenters said the front

- loaded glide path proposed in the rule fails to provide sufficient time to implement Blocks 2, 3 and 4 such that reductions could be made in a timely fashion to meet the interim and the final reduction mandates . The commenters noted that this vi ewpoint is widely held throughout the industry, including not only utilities, but also Regional Transmission Organizations/Independent System Operators/Regional Coordinating Entities (collectively referred to as RTOs) and states. The commenters noted that both MISO and SPP have also called for an extension of the 2020 date for initial compliance and the associated glide path. Likewise, the commenters noted that the State of Iowa has also advocated that the interim goal be eliminated, or at the very least, s tart no earlier than 2025. Instead, the commenters argued that states should be given full control over setting the interim goals for 2020

- 2029

. Finally, the
commenter s argued that EPA encroached on state sovereignty in violation of the Tenth Amendment when it devised a s cheme that took away from states the traditional authority reserved to them to regulate such matters within their own borders.

Comment 17 : Comment supporting the EPA's proposal to allow credit for early action, generally, and encouraging the EPA to allow states to develop their own interim targets that represent a more reasonable glide

- path towards EPA's ultimate emission reduction goal.

Response 17 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. While we int end that the rule provides a great deal of flexibility, EPA retains the right of approval for all state and regional plans with the intent that state and regional plans may utilize varied and creative approaches to setting and meeting their goals but that these plans must be demonstrably workable and the goals achievable with the outlined practice(s). An outline of EPA plan approval process is found in section VIII. E of the final rule preamble of the CPP

. The EPA thanks the commenters for their support of crediting of early action. For the final emissions guidelines’ approach to early action, see section VIII.B of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:231 Commenter s supported EPA's Notice of Data Availability (NODA), published October 30, 2014, which proposed to allow states some relief from the interim goals. As noted by the commenters, EPA's NODA cites several comments received from stakeholders that explain how "states in which b uilding block 2 results in large amounts of the overall required CO2 reductions relative to other building blocks" may have difficulty meeting the interim goals, since EPA has assumed that building block two will be completely implemented by 2020. The comm enters noted that New Mexico is one of those states

-- over one third of the emissions rate reduction required by EPA's goal calculation is expected to come from building block 2 alone. To implement building block two, the commenters said New Mexico's natura l gas combined cycle units must double their capacity factor, which will be difficult in the relatively short compliance window allowed.

As noted by the commenters, EPA's NODA discusses two options for resolving the concern associated with the interim goa ls

-- (1) allow early credit for some actions and (2) allow a more gradual implementation of building block 2 consistent with the approach to phasing in the implementation of building blocks 3 and 4. The commenters supported EPA's proposal to allow credit fo r early action generally

-- states should receive credit for actions that reduce emissions, regardless of when they are taken, and states that have taken early action should not be placed at a disadvantage as compared to states that have not made similar eff orts. However, the commenters stated that EPA's NODA does not provide sufficient detail to explain how encouraging states to act even earlier will help resolve the concerns over the interim deadlines that are already too tight. The commenters stated that E PA's proposal to allow a more gradual implementation, on the other hand, would directly address the concern that some states may find compliance with the interim goals difficult in light of the short window of compliance between adoption of state plans and in the beginning of the interim compliance period in 2020. The commenters included a graph titled: "New Mexico's CO2 Emissions Rate and Section 111 (d) Compliance Gap," to illustrate the impact that the interim goals have on the stringency of EPA's proposal for New Mexico. The commenters said that the graph shows how the sharp drop

- off associated with the interim goals could place New Mexico in noncompliance in 2020, despite significant early reductions made by the state prior to that year. With a mo re gradual glide

- path to EPA's ultimate goal in 2030, the commenters said New Mexico would have until 2026 to implement new actions and measures before its projected "base case" emission rate would be higher than the proposed interim goal.

The commenter s e ncouraged EPA to allow states to develop their own interim targets that represent a more reasonable glide

- path towards EPA's ultimate emission reduction goal. The
commenter s also encouraged EPA to avoid placing unnecessary restrictions on that glide

- path, despite the discussion in the NODA that suggests the glide

- path should specifically take into account the speed with which specific transmission projects can be completed or the "book value" of the generation assets and any recently installed pollution con trol equipment. The
commenter s recommended that EPA maximize the flexibility allowed states in the development of their plans and avoid any attempt to restrict the means by which states achieve EPA's ultimate emission reduction goals.232 Comment 18 : C omment suggesting that, on ce a state implementation plan has been approved, the environmental reviews and related infrastructure permitting procedures needed to implement the plans should be combined and accelerated, and urging the EPA to be flexible in setting i nterim deadlines on the 'glide path' to compliance.

Response 18 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emiss ions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performanc e rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

A discussion surrounding time needed to include new infrastructure in state plans can be found in section VIII. E of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in section s VIII. B and VIII.E of the final rule preamble. Revisions to infrastructure permitting processes are outside the scope of this rulemaking. However, the EPA expects that issues such as these will be part of the dialogue amon g state and federal agencies as the CPP is implemented. In addition, the agency observes that recommendations of the Quadrennial Energy Review (available at http://energy.gov/epsa/quadrenni al

- energy

- review

qer ) are designed to help address infrastructure needs associated with the ongoing evolution of the nation’s electricity system.

The following are summaries of the specific public comments under this comment:

Commenters requested th at the EPA utilize its relationships within the Administration and with independent agencies to seek to rationalize and streamline project review under the National Environmental Policy Act of 1969 which, when duplicative, can consume significant amounts o f time and expense. The commenters suggested that, once a state implementation plan has been approved, the environmental reviews and related infrastructure permitting procedures needed to implement the plans should be combined and accelerated. The commente rs recognized that the President's Council on Environmental Quality has the ability to encourage such changes, which seem to be appropriate in pursuit of CO2 reductions. Given their Members' experience in planning and constructing transmission, including r egional lines to facilitate public policy such as renewable portfolio standards, the commenters urged the EPA to reevaluate whether the CPP allots time in its compliance processes sufficient for development of the large

- scale transmission that Building Blo cks 2 and 3 necessitates. The commenters provided for example, the "Multi

Value Projects" in MISO were approved for inclusion in the RTO's regional transmission expansion plan in 2010 and 2011. The commenters noted that while some of the smaller projects233 have been constructed and are in service, the larger projects are either still making their way through state regulatory processes or are being constructed, with some not expected to be in service until 2019. Furthermore, the commenters noted that the tran smission planning process is an iterative one that is based upon several successive and therefore incremental additions to the integrated generation and transmission systems. The commenters stated that it is very unlikely that a single 10

- year plan can eve r be executed upon to serve what is now only a sequence of imagined generation solutions.

The commenters noted that, under the proposed CPP, states will be required to meet interim emission rate goals between 2020 and 2029 and final goals by 2030. The com menters noted that compliance plans must be submitted to the EPA between 2016 and 2018, depending on the proposal. Recognizing that there is no time to waste if CO2 reductions are to meet the EPA's target by 2030, the commenters nevertheless u rged the EPA to be flexible in setting interim deadlines on the 'glide path' to compliance, particularly when transmission developme nt is critical to the state plan's accomplishment . The commenters stated that the time and upfront expense it will take transmission owne rs and developers to adequately develop and vet the projects in local and regional planning processes, obtain the necessary state and federal permits, and construct the needed transmission facilities can often exceed that of any other energy infrastructure . The commenters stated that planning, obtaining necessary stakeholder feedback, gaining regulatory approval, constructing, and placing into service the necessary transmission facilities is a long lead

- time process. The commenters noted that this problem i s exacerbated by the multiplicity of state and federal regulatory agencies that are invariably involved in deciding whether a project is in the public interest in terms of its engineering, aesthetic impacts, effect on protected resources, the financial cap abilities of its sponsor, its benefits compared to those of competitors, ability to provide reliability, economic, or public policy benefits, and the extent to which it impacts federal lands or more than one state

- a common phenomenon for this interstate network. The commenters stated that transmission owners and providers that ultimately aim to provide transmission facilities under a state or regional plan should be consulted about the obstacles standing in the way of transmission additions that will inte rconnect the shifting generation fleet with loads, the efficiencies they can produce, and the other benefits a stronger grid will provide.

Comment 19 : Comments recommending that the EPA divide the ten

- year period into two five

year compliance periods.

Response 19 : The EPA disagrees with the commenter s that five

- year averaging periods are sufficient for development and meeting interim goals

. We have revised the proposed 10

- year interim period to 8 years, and are finalizing a requirement of three averaging periods during the 8 years and averaging every two years during the final period. See Section VIII.F of the final rule preamble of the CPP. Additional d iscussion of state plan flexibility is included in sections VIII.C

, VIII.F

, and VIII.G of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in sections VIII.B and VIII.E of the final ru le preamble

.234 The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimate d emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amoun t of emission reduction potential identified for the BSER increases over time, as explained in section V.

Discussion surrounding the establishment of interim goals in state plans can be found in section s VIII.B and VIII.E of the final rule preamble of the CPP

. We are not finalizing any position wit h respect to the implications of the 8

- year review of the NSPS with respect to possible future revision of this guideline; it is unnecessary to address this issue at this point in time. Therefore, these comments are generally moot.

The following are summa ries of the specific public comments under this comment:

Commenter s noted that EPA has proposed a ten

- year averaging period between 2020 and 2029 for states to achieve the interim emission rate target. The commenter s said strong interim targets are essential in order to deliver near

- term reductions in carbon pollution and begin to transition the power sector away from high

- emitting infrastructure and towards lower polluting resources, and deploying investments in rene wable energy and energy efficiency. In order to ensure that states are making appropriate progress towards the interim target, the commenters recommended that EPA divide the ten

- year period into two five

- year compliance periods.

Commenters stated that states do not need more than a few years to fully deploy emission reduction programs. The commenters urged EPA to break its interim compliance period, which is currently proposed as 2020

- 2029, into two 5

- year periods to provide greater clarity as to the ti ming of emission reductions. In addition, the commenters recommended that EPA reevaluate its BSER determination at least every 8 years, starting when states submit compliance plans in 2016 and continuing indefinitely beyond the proposed final compliance pe riod. The commenters stated that this standard is consistent with the requirement in Section 111(b) and, given EPA's current rulemaking schedule, would require the Agency to finalize a reevaluation of the BSER no later than 2024. The commenters stated that the Agency should indicate that states may be required to submit updated compliance plans to meet modified targets based on the revised BSER, and state updates in 2025 would meet this obligation for the first review.

With advanced energy technologies fas t improving and their costs falling, commenters stated that it is difficult for EPA in 2014 to accurately predict their emission reduction potential in 2030. The commenters also noted that the long initial compliance period (2020 to 2029) may
create so me uncertainty about the timing of implementation, which could hinder investment. Commenter supported the idea that EPA break the initial compliance period into two 5

- year periods, and conduct periodic reviews of the standard to reflect the increasing capabilities of emission

- reducing advanced energy technologies. Under this approach, the commenters indicated that goals for 2026 and 2030 would be established in the final rule but could be changed based on the periodic review that would be completed in 2024.235 Commenters stated that immediate carbon emission reductions are needed to address the impacts of climate change. The comm enters noted that EPA has proposed a 10

- year averaging period between 2020 and 2029 for states to achieve the interim emission rate target. However, to ensure that states are making appropriate progress towards the interim target, the commenters

reco mmende d that EPA instead provide two 5

- year interim compliance periods . The commenters stated that strong interim targets are essential to deliver near

- term reductions in carbon pollution and to transition the power sector towards lower

- polluting infrastructure, deploying investments in renewable energy and energy efficiency that will create jobs and increase economic activity. The commenters stated that EPA itself noted that "certain emission reduction measures and programs "are generally easier to implement in the near term." The commenters stated that these two 5

- year periods will improve transparency by creating verifiable and enforceable short

- term targets, while encouraging states and power companies to focus on those efficiency, renewable energy, and other clean

- energy advancements which are immediately achievable.

The commenters stated that EPA should commit to reevaluate the "best system of emission reduction" (BSER) over time, and the interim 5

- year compliance period would provide an ideal point for reev aluation . The commenters stated that reexamining the BSER at the mid

- way point of the compliance period would ensure that it continues to reflect the system that can maximize reductions in carbon pollution considering cost, energy requirements, and impacts on other health and environmental outcomes, as required by the Clean Air Act.

The commenters stated that EPA should commit to the first reevaluation of state targets by June 2020, (a) to review the targets for 2025 and 2030 and revising them as appropriat e to reflect up

to

- date data on the technological and economic reduce power sector CO2 emissions, and (b) to set appropriate targets for the 5

- year period beginning in 2035. By June 2025, the commenters stated that EPA should complete a second review and r evision cycle, reviewing the targets for 2030 and 3035 and setting targets for 2040, and so forth.

Comment 20 : Comment stating that the EPA should allow states flexibility to develop their glide path, and determine compliance during the interim performan ce period based on a 3 or 5

- year running average comparison of actual to projected performance.

Response 20 : The EPA disagrees with the commenter s that five

- year averaging periods are sufficient for development and meeting interim goals but agrees that three

- year averaging periods are sufficient during the beginning of the interim period . We have revised the proposed 10

- year interim period to 8 years, and are finalizing a requirement of three averaging periods during the 8 years and averaging every two years during the final period. Se e Section VIII.F of the final rule preamble of the CPP. Additional d iscussion of state plan flexibility is included in sections VIII.C

, VIII.F

, and VIII.G of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in sections VIII.B and VIII.E of the final rule preamble

. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each236 year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than th e final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

Discussion surrounding the establishment of interim goals in state plans can be found in se ction s VIII.B and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments u nder this comment:

Commenter s stated that the EPA should allow states flexibility to develop their glide path, and determine compliance during the interim performance period based on a 3 or 5

- year running average comparison of actual to projected performance. Th e commenter s stated that the proposal allows state s flexibility to define the trajectory of emission performance between 2020 and 2029, as long as the interim emission performance level is met on a 10

- year average or cumulative basis and the 2030 emission performance level is achieved. The commenters note d that the trajectory of emission performance is critical because in the proposal it will be compared to actual cumulative performance each year for the prior two years starting in 2022. The
commenter s noted, according to EPA's proposal, if the actual emis sions performance rate for the state is higher than the projected emission rate by 10 percent (or 8 percent if corrective measures are not adopted as part of the state plan), this triggers additional reporting requirements, development or implementation of corrective measures, and possible plan modification and resubmission for re

- approval. The commenters stated that this is a significant workload when states face a situation that will likely be corrected by the following year, simply due to the variability of year to year electricity demand. The commenter s stated that if annual reporting during the interim performance period is part of the final rule, it should use a 3 or 5 year averaging period for comparing actual to projected emission performance. The co mmenter s stated that Washington's hydropower dominated generation system experiences significant year to year variability which results in equally variable fossil generation. The commenter s stated that using a 3 or 5 year averaging period to determine comp liance during the interim performance period would be a more representative reflection of state perfo rmance and would smooth out the year to year variability. The commenter s noted that a 3

- year average is used for determining compliance after the interim p erformance period and is also used when calculating design values and determining compliance with NAAQS.

Comment 21 : Comment stating that the compliance deadline of the first phase should not begin until 3 years following the January 1st after the EPA ap proves a given state or multi

- state plan, and supporting maintaining a long

- term (e.g., 10

- year) interim goal period, with Phase II (final goals) commencing not sooner than 10 years after the first phase begins.

Response 21 : Based on this and other comment s we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning237 exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an ad aptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See secti on V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases over time, as explained i n section V.

The EPA disagrees with the commenter s that the interim period should be 10 years or that interim period performance should be averaged over 10 years . We have revised the proposed 10

- year interim period to 8 years, and are finalizing a requir ement of three averaging periods during the 8 years and averaging every two years during the final period. See Section VIII.F of the final rule preamble of the CPP. Additional d iscussion of state plan flexibility is included in sections VIII.C

, VIII.F

, and VIII.G of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in sections VIII.B and VIII.E of the final rule preamble

.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the Proposed Rule has established a very ambitious program for decreasing CO2 emissions from the electric power sector, and for the approval and implementation of enforceable measures on all entities regulated under a state's plan. The
commenter s stated that the EPA needs to provide regulated entities with sufficient time to implement the con trol measures which will be required under the state plans.

The commenters stated that under the CAA, the EPA and states have considerable discretion in setting appropriate compliance deadlines for meeting the CO2 performance standards that states must establish. The commenters stated that neither the statute nor EPA's implementing regulations prescribe any specific deadline for compliance with applicable performance standards. The commenters referred to 40 CFR 60.22(c), "[T]he emission guidelines and compliance times ... will be proposed for comment upon publication of the draft guideline document, and after consideration of comments will be promulgated ... with such modifications as may be appropriate." As a result, the commenters stated that the EPA has broad discretion to
spec ify the compliance schedules for any particular source category in the federal emission guidelines, including different timetables for different types of facilities where appropriate. Accordingly, the commenters stated that the compliance deadline of the f irst phase should not begin until 3 years following the January 1st after EPA approves a given state or multi

- state plan. The commenter s supported maintaining a long

- term (e.g., 10

- year) interim goal period, with Phase II (final goa ls) commencing not soone r than 10 years after the first phase begins.238 Comment 22 : Comment asking for clarification of whether EPA means for state plans to identify a yearly, or a rolling 2

- year average performance level, and sugges ting that annual (or rolling 2

- year) performance levels must be considered estimates for planning purposes only

. Response 22 : The agency is finalizing discrete 2

- year periods for the final goal performance periods to reflect the following considerations. Commenters suggested that rolling performance periods, which were proposed to allow for annual emission performance checks, be replaced by discrete periods to reduce the workload of administering the program for states. The agency has accepted that suggestion. Discrete periods of two years allow for checking plan performance every two years; discrete periods of three years would allow checking plan performance only every third year. The agency believes that 3

- year periods are appropriate for interim step 1 and step 2 while states are initiating or ramping up their programs. For final goal performance periods, the agency believes that requiring checks and reporting on plan performance every two years, rather than every three years, better assures that emission performance consistent with the final EGU emission rates or state goal is being maintained through providing more frequent assessment of whether corrective measures or the backstop are needed. The two

- year periods will help to smooth out year

- to

- year variability in emission performance.

A discussion of interim periods and associated goals can be found in section s VIII.B

, VII I.C

, and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenters noted that section 60.5740(a)(3)(iii) of the proposed rule language indicates that for the interim plan performance period, state plans must identify the emission performance levels anticipated under the plan during "each year 2020 through 2029." The commenter s note d that section 60.5775(c)(1) indicates that the state plan must include increments of emissions performance within the interim performance period for "every 2

- rolling calendar years." The commenters asked for clarification of whether EPA means for state pl ans to identify a yearly, or a rolling 2

- year average performance level

. The commenters did not necessarily object to the inclusion of annual or rolling 2

- year average performance levels in the state plans, and noted that the identification of such levels can be a useful tool in planning, and can help states and EPA to better manage compliance timelines when dealing with the long implementation deadline of the Clean Power Plan proposal. However, the commenters stated that the long implementation period mak es it difficult to produce precise and accurate annual performance projections

- particularly when compliance with Clean Air Act requirements must also align with the complexities of energy planning. The commenters suggested that annual (or rolling 2

- year) performance levels must be considered estimates for planning purposes only

.

Comment 23 : Comment arguing that the EPA's Plan should have multi

- year compliance periods. Co mment recommending that the rule use discrete three

- year periods for compliance

reco nciliation instead of the rolling

- average approach proposed.239 Response 23 : The agency is finalizing discrete 2

- year periods for the final goal performance periods to reflect the following co nsiderations. Commenters suggested that rolling performance periods, which were proposed to allow for annual emission performance checks, be replaced by discrete periods to reduce the workload of administering the program for states. The agency has accepte d that suggestion. Discrete periods of two years allow for checking plan performance every two years; discrete periods of three years would allow checking plan performance only every third year. The agency believes that 3

- year periods are appropriate for interim step 1 and step 2 while states are initiating or ramping up their programs. For final goal performance periods, the agency believes that requiring checks and reporting on plan performance every two years, rather than every three years, better ass ures that emission performance consistent with the final EGU emission rates or state goal is being maintained through providing more frequent assessment of whether corrective measures or the backstop are needed. The two

- year periods will help to smooth ou t year

- to

- year variability in emission performance.

A discussion surrounding the establishment of interim goals can be found in section s VIII.B and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments un der this comment:

Commenters argued that EPA's Plan should have multi

- year compliance periods. The
commenter s stated that the three year compliance period under the RGGI program is a good model, and similar mechanisms should be allowable under the EPA's Plan in order to provide flexibility in meeting the EPA's requirements.

Commenters noted that the RGGI state s currently use a three

- year control period to measure generators' compliance with the rule. The commenter s pointed out that this multi

- year approach allows generators to account for weather variations that may occur in a single year and mitigates price sp ikes in the CO, allowance market due to those natural changes. The commenter s recommended that the rule use discrete three

- year periods for compliance reconciliation instead of the rolling

- average approach proposed.

Comment 24 : Comment requesting that EPA add provisions to the final version of the rule to facilitate the use of RGGI as a CPP compliance mechanism.

Response 24 : The EPA agrees that RGGI and other similar programs may be applicable state and regional planning formats

. However, these types of em ission budget trading programs must be submitted as the state measure s plan type , rather than the emission standards plan type

. S ee

s ection s VIII.C.3 and VIII. J.2 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s requested that EPA add provisions to the final version of the rule to facilitate the use of RGGI as a CPP compliance mechanism, stating in this case that the CPP compliance period in RGGI states should be based on emissions over a three

- year period as is the case for RGGI compliance.240 Comment 25 : Comment suggesting that the final rule could require that states meet the 2030 goal but reduce the reporting and recordkeeping requirement for the 2020 to 2030 "glide path" by requiring states to report progress t oward their 2030 goal beginning 2 years after the final approval of their respective plans, that EPA could eliminate the requirement to demonstrate compliance with the 2020 Interim target, and expressing particular concern with the assumption that the full re

- dispatch of NGCC units according to Building Block 2 is feasible on "day one."

Response 25 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for stat es to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures t owards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflec t the averaging of estimated emission performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performa nce rates because the amount of emission reduction potential identified for the BSER increases over time, as explained in section V.

The EPA disagrees with the commenter that simple reporting of “reasonab le progress forward” is sufficient to demonstrate that plans are workable and on track with a glide path toward 2030. Discussion surrounding the establishment of interim goals can be found in section VIII.B of the final rule preamble of the CPP . Di scussion surrounding time needed to develop state and regional plans can be found in section VIII. E of the final rule preamble

. We are finalizing a state plan submittal deadline of Sept. 6, 2016 , and allowing states to request a 2

- year extension deadline if they provide an initial submittal and 2017 update, along with other requirements. See Section VIII.E.3 of the final rule preamble of the CPP.

The final emission guidelines co ntain a variety of measures to protect electric reliability . See section VIII. G of the final rule preamble of the CPP. The final guidelines also contain measures besides implementing a federal plan to help states with approved state plans meet their CO2 emission performance rates or state CO2 emission goals if they get off

- track during the interim period . See Section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenter s noted that if EPA issues the final rule in June 2015, state plans must be submitted by June 2016 or by June 2017 or 2018 for multi

- state plans. The commenter s stated that it may not be possible to complete all of the required procedural steps in time to make the appropriate filings.241 During a recent reset process, the commenter s stated that the RGGI states began a stakeholder

based analytical process in September 2010 which led the development of a revised model rule in February 2013. According to the commenters, each of the RGGI states then adopted the model rule through their o wn administrative processes so that the revision program rules could go into effect on January 1, 2014. The commenters stated that this overall process required 3.5 years.

The commenter s stated that further complicating this process is the need for additio nal electric and gas transmission and/or renewable generation resources in order for the RGGI states to meet system reliability requirements while maintaining emissions under the revised cap. The
commenter s noted that a recent analysis by the North America n Electric Reliability Corporation
states " The 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 Clean Power P lan" and the commenters’ experience underscores this assessment. The commenters noted that industry estimates for construction sequences suggest that both gas and electric transmission lines can take from 4 to 10 years to site, permit, and construct, and e ven large scale renewable projects (such as wind farms) can take several years to permit and to construct. The commenters stated that retiring less efficient, higher

- emitting plants will likely also be part of states' compliance strategies, and these chang es can take years to effect as well.

The commenters suggested the EPA provide for more flexible time frames for implementation when finalizing the proposed rule. The commenters suggested that as 2030 is the ultimate target for reductions, the final rule co uld require that states meet the 2030 goal but reduce the reporting and recordkeeping requirement for the 2020 to 2030 "glide path" by requiring states to report progress toward their 2030 goal beginning 2 years after the final approval of their respective plans . The commenters stated that each such report could include a demonstration of "reasonable forward progress" and an assessment of the viability of the plan towards the 2030 goal. The commenters argued that EPA should eliminate the requirement to demo nstrate compliance with the 2020 Interim target

- and particularly the requirement that such compliance should be calculated as an average of the 5 years from 2020 to 2025. While intended to provide flexibility to states in their implementation timeline, t he commenters stated that the requirement to average the 5 years actually increases the burden on states that are transitioning away from higher

emitting resources in early years by requiring them to "make up" for all of those emissions in later years. Acc ording to the commenters, such a flexible approach would allow for a variety of compliance approaches among the various states and would help to minimize the possibility that EPA would need to implement a Federal Implementation Plan in the event that a par ticular state could not meet the 2020 deadline. The commenters expressed particular concern with the assumption that the full re

- dispatch of NGCC units according to Building Block 2 is feasible on "day one," and agreed with the suggestion put forth in the October 28th supplemental notice to phase these targets in over time

.

Comment 26 : Comment stating that while the interim goals would be demonstrated on a 10

- year average from 2020 to 2029, Texas would still be required to make the majority of CO2 reductions by 2020 in order to comply with the interim goal, that the EPA has not provided any242 quantifiable basis in terms of actual climate effects to justify the interim goals and the rule as a whole, and urging the EPA to remove the interim goals from the rule.

Response 26 : The EPA disagrees with this comment that the interim goals should be removed from the rule. The EPA has modified the interim goals in response to comments and our further consideration. The interim period covers the years 2022

- 2029 and includes illustrative interim steps for the periods of 2022

- 2024, 2025

- 2027, and 2028

- 202 9. States have the flexibility to use different steps than those included in the final rule if the state demonstrates in its state plan that the values chosen for the 3, 3, and 2 year increments are equivalent to the interim goal included in the final rule for the 2022

- 2029 period. See section VII of the final rule preamble of the CPP for discussion of the statewide goals. For more information regarding glide paths and the interim dates see section I.A. of the final rule preamble. We are including a d iscussion surrounding the establishment of interim goals in section s VIII.B and VIII.E of the final rule preamble

. S ection II.B of the final rule preamble discusses climate impacts from GHG emissions and s ections VII.A and VII.B of the final rule preamble provide additional information on state CO2 performance goals.

For a response to the comment concerning early action, please see section VIII.B of the final rule preamble of the CPP.

The following are summaries of the specific pu blic comments under this comment:

Commenter s stated that while the interim goals would be demonstrated 10

- year average f rom 2020 to 2029, Texas would still be required to make the majority of CO2 reductions by 2020 in order to comply with the interim go al . The commenters stated that EPA's IPM runs support this conclusion. The commenters stated that using the EPA's IPM projection of base case versus policy case for Option 1 (the proposed state goals) and the state

- by

- state approach, approximately 77% of t he necessary CO2 reductions are expected to occur by 2020. The
commenters st ated that this is largely due to the EPA's assu mption that the re

- dispatching under Block 2 can be implemented by 2020. The commenters stated that this is an incorrect assumption b y the EPA. The commenters stated that in the October 30 NODA on the proposed rule, the EPA notes stakeholders ’ concerns with the interim goals. The commenters noted that the EPA states that it was their intent that the interim goals would provide "a reasonable glide path" to compliance with the final goals

. The commenters stated that the interim goals do no t repre sent "a reasonable glide path" and would instead result a near

- term extreme drop

- off in the states' emission rates. The commenters asserted that the EPA has failed to consider the proximity of the interim goals to the final goals. The commenters sta ted tha t using the EPA's assumptions, and including Texas' renewable energy, Texas is starting at 1,284 lb/MWh. Texas' interim goal of 853 lb/MWh is only 62 lb/MWh higher than the final goal of 791 lb/MWh. The commenters stated that the interim goal repres ents ap proximately 87% of the reduction from 1284 lb/MWh to 791 lb/MWh. The commenter s stated that because Texas' interim goal is so close to the final goal, if the state delays making reductions during the 2020

- 2029 period then the state will be forced to over

- control beyond the final goal in the later years of the interim period in orde r to meet the interim goal.24 3 The commenters stated that in the October 30 NODA, the EPA takes comment on ways to address concerns on the interim goals, such as using a phase

- in of Block 2. The commenters stated that while phasing

- in the assumed implementation of Block 2 might provide some flexibility and reduce the stringency of the interim goals, the EPA is not qualified to determine what implementation rate is feasible for any particular state. The commenters noted that the EPA also suggests that credit for early reductions might also be a means to decrease the reductions needed during the 2020

- 2029 interim period. However, the commenters stated that the EPA has not explained in the NODA how such credit would be applied toward compliance with the interim goals or what early measures would be deemed creditable. Therefore, the commenters asserted that states have no basis for evaluating whether the credit for early action the EPA is contemplating would be sufficient to address their concerns with the interim goal. Furthermore, the commenters argued that states would presumably have to make these early actions federally enforceable in order to receive such credit; however, the stat es would have no guarantee that the EPA will actually approve the early measures as creditable.

The commenters stated that EPA must give generators and regulators the time needed to properly assess, adjust and plan to account for continued reliability, saf e and economical operation while advancing environmental goals. The commenters suggested that the EPA should completely eliminate the interim goals that begin in 2020 and address significant concerns in a new proposal.

Comment 27 : Comment stating that the proposed timing of interim targets does not adequately allow for merchant units to increas e dispatch to levels assumed under the Clean Power Plan, that elimination of the interim targets will allow for some of these types of units to roll off of long

t erm agreements and more smoothly transition to an environmental dispatch scheme, and requesting that the EPA clarif y how units in this situation may be required to meet a specific emission limit and or capacity factor to help the state comply with its emis sions target

. Response 27 : The EPA is sensitive to situations where energy generated in one state is delivered to another state and has included flexibility in the final rule to provide states and regional planning groups a more straight forward approach to including such eventualit ies in their plans. S ection s VIII.B.2 and VIII.J of the final rule preamble of the CPP include a discussion on state plans and multi

- state planning options.

The following are summaries of the specific public comments under this comment:

Commenters st ated that the proposed timing of interim targets does not adequately allow for merchant units to increase dispatch to levels assumed under the Clean Power Plan. The
commenter s stated that f undamentally, Building Block 2 requires a shift in the dispatch of EGUs from an economic model to an environmental one. The commenters stated that they have ownership in four combined cycle natural gas units in New York, Texas, Illinois and Arizona which are unregulated and sell capacity and energy into the merchant marke t, and the commenters lack direct control over dispatch of its NGCC units. The commenters noted, as is common in the merchant market, these types of facilities are routinely under long

- term contract and under dispatch control from those utilities receivin g the power from these units. The244 commenters provided for example, their Yuma natural gas combined cycle facility is located in Arizona but under a long

- term contract with a r egulated utility in California. As such, the
commenters stated that they have no control over the dispatch of this unit and the state of Arizona cannot rely on this unit to run at the levels anticipated by the Clean Power Plan . In addition, the commenters noted that if Arizona desires to have in

- state control of the dispatch of this fa cility after the existing contract expires, they would be restricted to offering the facility to off

- takers only within the state and potentially not receive competitive offers from other buyers in the region, including those buyers out of state. The comme nters stated that this could place the facility at a competitive disadvantage against other similar units in the region and put the unit at additional risk of closure, making state compliance with this rule even more difficult. As a result of these limitat ions, the commenters stated that elimination of the interim targets will allow for some of these types of units to roll off of long

- term agreements and more smoothly transitio n to an environmental dispatch scheme . In addition, the commenters requested that the EPA clarify how units in this situation may be required to meet a specific emission limit and or capacity factor to help the state comply with its emissions target

.

Comment 28 : Comment opposing any glide path that allows a state plan to backload its reductions in the end of the compliance period

. Response 28 : The EPA is finalizing this rule with added flexibility provided to state and regional planning groups to help alleviate some complexities in formulating workable plans that include BSER building blocks and other approaches. We are also finalizing that states must include 3 interim steps in during the interim period of 2022

- 2029 that we are finalizing. The EPA is retaining the right to review and approve or reject all state and regional plans and expects states and regional groups to provid e plans that demonstrate workable approaches to meeting glide path expectations all along the way through the interim periods toward 2030. Review of these plans is intended to prevent over

- reliance on back load ed concepts or other ‘late

- wins’ such as thos e as the commenter s mention . A discussion surrounding the establishment of interim goals can be found in section s VIII.B and VIII.E of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA's original proposal and the NODA seek comment on the interim compliance period from 2020

- 2029. The commenter s noted that some stakeholders assert that in 2020 the sudden onset o f the heat rate improvements from Building Block 1 and the re

- dispatch to natural gas requirements from Building Block 2 create a "cliff" and the 10

- year averaging period in the proposal may not be sufficient for states to achieve compliance with interim g oals. The commenter s stated that in the NODA, EPA expresses two potential ways to address this: (1) phase in the requirements of Building Blocks 1 and 2 over the 10 year period; and/or (2) devise a scheme for issuance of early reduction credit for actions taken prior to 2020 that can be used to facilitate compliance with interim goals.

Commenters opposed any glide path that allows a state plan to backload its reductions in the end of the compliance period . The commenters expressed serious concerns that in such a circumstance, if the state is not achieving the emission reductions expected in the state plan, that245 the EPA would not be able to enforce a sufficient change to the state compliance plan to achieve the shortfall in emission reductions without com promising grid reliability.

Comment 29 : Comment requesting that the final emission guidelines provide procedures under which states that have demonstrated their efforts to attain the emission reduction targets but have not achieved those targets by that deadline can request and obtain extensions of time within which to meet those targets, and suggesting that the EPA grant extensions of up to five years to applying states that demonstrate that they have been making good faith efforts to implement the guide lines and are on glide paths to compliance.

Response 29 : The EPA is providing language in the final rule for contingent issues that arise from emergency and natural disaster, however we are not providing accommodation for States or regional planning groups to fall short of interim or final goals. The EPA will be available to review and discuss planning with states and regional groups and provide guidance, including outreach to other Federal groups to aid in resolution of difficult or complex planning conce rns. Discussion of state plan flexibility is included in section s VIII.F and VIII.G of the final rule preamble of the CPP

. The final guidelines also contain measures to help states with approved state plans meet their CO2 emission performanc e rates or state CO2 emission goals if they get off

- track during the interim period. See Section VIII.F.3 of the final rule preamble of the CPP. Discussion surrounding the establishment of interim goals can be found in section s VIII.B and VIII.E of the fin al rule preamble

. S ection VIII.H of the final rule preamble includes discussion of resources for states to consider during plan development.

The following are summaries of the specific public comments under this comment:

Commenter s argued that the proposed rule makes no provision for Iowa, if it is unable, despite its best efforts, to meet the final emission reduction goals by the final compliance year. The
commenter s requested that the final emission guidelines provide procedures u nder which states that have demonstrated their efforts to attain the emission reduction targets but have not achieved those targets by that deadline can request and obtain extensions of time within which to meet those targets. The commenter s suggested that EPA grant extensions of up to five years to applying states that demonstrate that they have been making good faith efforts to implement the guidelines and are on glide paths to compliance

.

Comment 30 : Comments discussing the negative consequence of overl y stringent early emission requirements, that driving large numbers of coal plants into sudden retirement creates very real risks of a resource adequacy crisis in some regions, that a true glide

- path trajectory will better allow states to nurture a much lo wer

- carbon mix of resources than the EPA's abrupt 2020 "compliance cliff," and that the 2020 "lock in" of gas replacements for coal that will result from the EPA's dramatic early compliance problems will not only lock out renewables, it will also not be we ll suited to supporting their integration.246 Response 30 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rat es. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emissio n performance rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emis sion reduction potential identified for the BSER increases over time, as explained in section V.

Regarding the commenters ’ concerns about stranded assets

, we have finalized in this rule a number of flexible measures that allow states and regional planning groups to consider renewable energy sources

. W e are also including additional timing allowances for state and regional planning groups to assemble and enact their plans, as well as more flexibility in allowing credits for early reductions and developing a workable glide path toward 2030 compliance. Discussion surrounding the establishment of interim goals can be found in section s VIII.B and VIII.E of the final rule preamble of the CPP

. Discussion of state plan flexibility are ad dressed in section VIII.F of the final rule preamble

. Discussion of how a state may demonstrate reductions through the use of an emissions rate plan that utilizes CCS can be located in section VIII.G.1 of the final rule preamble

. Discussion of resources f or states to consider in formulating plans is outlined in section VIII.H of the final rule preamble

. The following are summaries of the specific public comments under this comment:

Commenter s discussed the negative consequence of overly stringent early emission requirements . The commenters stated that significant emission reductions from existing power plants in coal states will come primarily from reduced generation from coal plants, and in turn, coal plants whose output falls dramatica lly are at high r isk for economic retire ment as the value of generation falls relative to fixed operating and maintenance costs. Thus, the commenters stated that significant early emission reduction requirements should be seen as leading to significant early coal retirement . The commenters stated that it is well understood that the emission reductions needed to effectively address climate change will require the elimination of most CO2 emitted by co al plants, but it does not follow that the sudden elimination of co al plants is an effective way to address climate change. The commenter s stated that driving large numbers of coal plants into sudden retirement creates v ery real risks of a resource adequacy crisis in some regions , which in turn is likely to result in the following cascading series of events:

• The rapid deployment of large amounts of new, long

- lived baseload natural gas assets;

• The prolonged delay of large scale deployment of renewable and other essential clean energy technologies; and247 • Excessive power sector dependency on a single (fossil) fuel and the lock

- in of excessive CO2 emissions for several decades.

Commenters stated that a true glide

- path trajectory will better allow states to nurture a much lower

- carbon mix of resources than the EPA's abrup t 2020 "compliance cliff." The commenters expressed concern about the rule's impact on reliability with rapid fossil fuel plant retirements and emphasized how EE and RE does not mitigate this impact. The commenters stated that slowing the rate o f coal reti rements is only a partial fix, and that it is equally important for EPA to anticipate and support a less carbon intensive set of solutions to the key BES constraints.

The commenters stated that one such set of solutions that is increasingly broadly anticip ated is to rely on renewable energy resources increasingly for energy production, while focusing on natural gas resources primarily as a source of reliability. The commenters explained that instead of directly replacing coal's energy production, new gas fa cilities would increasingly function as capacity resources, standing ready to ramp up when the wind stops blowing, ramp down when the sun comes up, and otherwise bridge the gap between clean base

- load resources

-- comprised of CCS, nuclear and hydro

-- and intermittent renewables, while also helping integrate controllable load and distributed clean energy resources, including storage. The commenters noted that there are several studies from the NREL that provide ample data and technical context for a renewa bles

- centric, reliable BES. The commenters noted that NREL's 2012 " Renewable Energy Futures Study " (http://www.nrel.gov/analysis/re_futures/) and 2013 " Western Wind and Solar Study Phase 2 " (http://www.nrel.gov/docs/fy13osti/55588.pdf) publications show fa st

start, simple

- cycle gas combustion turbines are highly effective resources for backing up significant penetrations of renewable energy. In addition, the commenter s noted that these studies show that high levels of wind and solar generation may significantly displace combined

cycle generators.

The commenters stated that this approach would dramatically reduce CO2 by substituting a portfolio of renewable energy produc tion

-- such as solar during the day, wind at night

-- for coal and gas energy production, while preserving reliability by relying on flexible gas capacity to meet load and provide other system reliability needs, such as voltage support, only when and as

n eeded. Importantly, the commenters noted that it takes a different kind of gas generating equipment (efficient combustion turbines or hybrid turbine combined

- cycle technologies sometimes called "CC

- fast" or CCF) to perform such reliability and integration services than it does to replace coal plants by running efficiently at 70% capacity factors (typically the largest, most fuel efficient, and least operationally flexible combined

- cycle units). Thus the commenters stated that the 2020 "lock in" of gas repla cements for coal that will result from the EPA's dramatic early compliance prob lems will not only lock out renewables, it will also not be well suited to supporting their integration

. The commenters stated that such a system is inherently flexible and forw ard

- looking. Because the CT and CCF equipment is designed for intermittent, as

- needed operation, the commenters stated that it can continue to provide the capacity needed for reliability, even as storage, controllable load and other innovations over time r educe the amount of energy it actually needs to produce. The commenters stated that such resources can anticipate a long life of ensuring reliability while supporting continuous emission reductions. By contrast, the commenters stated that combined

- cycle un its designed exclusively for high capacity factor base

- load power248 production would be stranded by additional emission reduction requirements, or else would require expensive revamping to provide primarily reliability services in a world where increasing

am ounts of energy come from intermittent renewable resources and non

- carbon emitting base

load technologies.

The commenters stated that such systems capable of ensuring the BES's reliability and operating constraints are met, while supporting its continued de

- carbonization, are the key to overcoming the inefficiency inherent in the Proposal. The commenters stated that such a system allows the lifetime or committed emissions from new gas units to be minimized, thus achieving the lowest possible overall power sector emissions.

The commenters stated that EPA's prediction of new combined

- cycle power plants could be expected to add 1.7 billion tons of CO2 to the atmosphere during their economic lifetime

-- more than even a conservatively high estimate of the 1.5 b illion tons the retiring coal plants might emit under the "glide path" alternative. The commenters stated that a smaller fleet of CT / CCF gas, coupled with far more renewables and clean distributed energy resources could support reliability and low cost p ower equally well, while producing far less committed carbon than 23 GW of new combined

- cycle.

The commenters provided for example, 11 GW of CT / CCF, running at an average annual capacity factor of 12% and emitting 1000 pounds of CO2 per MWH, would produc e only about 170 million tons of CO2 between 2020 and 2050

- only about 10% of the committed CO2 of the 23 GW EPA predicts, thus avoiding 1.5 billion ton less. The commenters noted that a variety of analyses show that CTs would be more useful than CCGT in integrating high levels of renewable resources, and that CTs in these circumstances would have relatively low capacity factors. The commenters provided figures that highlight how a high penetration of solar and wind generation resources can displace a sign ificant amount of combined

- cycle natural gas units, while gas CT generation increases slightly to provide supporting, dispatchable capacity.

The commenter s stated that, importantly, under the simple but reasonable assumptions used above, a state plan that achieves this low level of committed emissions under the glide path approach would completely offset the 1.5 billion tons of additional emissions from existing plants the glide path would allow by avoiding the precipitous retirement of coal plants due to the Proposal's 2020 compliance "cliff."

The commenters stated that the implications are significant: EPA can achieve comparable or greater emission reductions just from the directly affected units through implementing a true glide path as it can from the more precipitous, front loaded emission reduction trajectory in the Proposal . In addition, the commenters stated that this approach should result in far fewer power sector emissions over time as such gas

- renewable combinations are more broadly deployed

a cross the US power sector, along with other innovations such as the widespread adoption of post combustion CCS with enhanced oil recovery (EOR) at well

- suited coal plants. The commenters stated that forced retirement in 2020 or shortly thereafter could ser iously deplete the candidates for such CCS.249 Comment 31 : Comment stating that the EPA has strongly front loaded the first interim targets and that this is very likely to remove the need for additional renewable deployment since load requirements will be fu lly satisfied for years to come.

Response 31 : Based on this and other comments we have received, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory dur ing the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performanc e rates for each year in the i nterim period (i.e., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reducti on potential identified for the BSER increases over time, as explained in section V.

Regarding the commenters ’ concern about stranded assets resulting from this rule

, we have included additional flexibility in the final rule that allev iates some of the concerns raised by the commenters, depending on how a particular state or regional planning group structures their plan. Discussion of state plan flexibility are addressed in section s VIII. C., VIII.F

, and VIII.G of the final rule preamble of the CPP

.
The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA has strongly front loaded the first interim targets presumably to achieve reductions quickly in an effort to gain r eductions without regard for real impacts on states. The commenters noted that the interim target for many states are as high as 95% of the 2030 target and in excess of 84% for virtually all states. The commenters stated that this type of requirement will lead either to a failure to comply or states having to make short term decisions for which the state will incur long term negative impacts. The commenters stated that, while rapid deployment of natural gas combined cycles this will be a good short term sol ution, these investments will, if EPA and EIA's future power projections are correct concerning low growth in electricity consumption in future years, leave states with generators having an investment portfolio that will satisfy generation well into the de cade of the 2020s without need for additional generation since these new NGCCs are a solid 30 year investment expectation. The commenters stated that this in turn is very likely to remove the need for additional renewable deployment since load requirements will be fully satisfied for years to come.

Comment 32 : Comment stating that a single CPP compliance year should be avoided because it prevents the regulated community from applying practical flexibility mechanisms that allow compliance to bridge across u nusual or cyclic events like long term maintenance outages, economic cycles or unusual energy demand events.250 Response 32 : The EPA agrees with the commenters and we are finalizing this rule to include three year interim compliance periods followed by two year compliance periods to demonstrate plan effectiveness in meeting the 2030 goal, and beyond . Discussion surrounding the establishment of interim goals can be found in section VIII.B of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that a single CPP compliance year is should be avoided because it prevents the regulated community from applying practical flexibility mechanisms that allow compliance to bridge across unusual or cyclic events like long term maintenance outages, economic cycles or unusual energy deman d events. The commenter s recommended that EPA allow states to establish a series of consecutive years for determining future compliance with EPA's finalized CPP rule, allowing for averaged compliance over the period. States should have the discretion to
pr ovide for sufficient time to support achievement of overall CO2 emission reduction objectives while bridging past unusual events that can unnecessarily add to the cost for compliance or impede the del ivery of superior, long term greenhouse gas emission reduction measures.

Comment 33 : Comment suggesting that the EPA eliminate the interim compliance goal and focus on the 2030 goal, and that even without the interim average compliance goal, the EPA still will review and approve proposed state plans and emissi on reduction glide paths

. Response 33 : The EPA disagrees w ith the commenter’s assertion that the interim compliance goal(s) should be eliminated.

Based on this and other comments we have received, however, the EPA has adjusted the start date for the interim period to 2022, and is retaining the flexibility for states to establish their own emissions trajectory during the interim period. The EPA has determined that an interim period beginning in 2022 provides sufficient time for states to undertake necessary planning exercises and for the implementation of measures towards achieving the performance rates. The EPA determined the interim rates in a manner similar to proposal, with an adaptation to address the revised timin g of the interim compliance peri od (beginning in 2022 rather than in 2020 as proposed). They reflect the averaging of estimated emission performance rates for each year in the i nterim period (i.e ., 2022

- 2029). See section V.A.3.g of the final rule preamble of the CPP. The interim performance rates are less stringent than the final 2030 emission performance rates because the amount of emission reduction potential identified for the BSER increases o ver time, as explained in section V.

Based on commenter input and our final determination of the BSER, the EPA has adjusted the interim period to include 2022

- 2029, is establishing three interim performance periods creating a reasonable trajectory from 2 022 to 2030, and is also retaining the flexibility for states to establish their own emission reduction trajectory during the interim period. S ee section VIII.B of the final rule preamble of the CPP.

The following are summaries of the specific public comme nts under this comment:251 Commenters suggested that EPA eliminate the interim compliance goal and focus on the 2030 goal. The commenters stated that even without the interim average compliance goal, EPA still will review and approve proposed state plans a nd emission reduction glide paths. The commenters stated that the EPA can disapprove proposed plans and glide paths that do not meet the minimum requirements and that do not demonstrate satisfactorily how the 2030 goals will be achieved. The commenters not ed that allowing states to design emission reduction glide paths as part of their state plans does not deprive EPA of this authority and responsibility. Further, the
commenter s noted that other elements of EPA's proposed approach to state plans ensure that states make reasonable and verifiable progress toward the 2030 goal, report that progress to EPA, and take corrective measures if needed. Ultimately, the commenter s noted that if states do not show progress toward the 2030 goal, the EPA could call for a s tate to revise its compliance plan or implement its own federal plan.

The commenter s noted that the requirements for state plans are detailed and rigorous. First, the
commenter s noted that the proposed guidelines require that states demonstrate continuous progress towards the 2030 goal and verify their performance through annual reporting of emission performance to EPA. The commenter s noted that, starting in 2022, states would be required to submit annual reports detailing plan implementation and progress, including a comparison of actual plan performance against projected plan performance. In this way, the
commenter s noted that the EP A can monitor if states are making progress toward the 2030 goals and whether states are achieving reductions consistent with the proposed glide paths.

Second, the commenter s noted that the guidelines require that state plans must include periodic
programm atic milestones to show progress toward implementation, and these milestones are required to have specific dates for achievement which prevents states from delaying reductions.

The commenter s noted that state plans also must identify additional measures t hat they will adopt and enforce in the event that an annual emissions progress report shows that the state's emission performance is not within 10 percent of the emissions performance path projected in the state plan. See id. The commenter s stated that the se corrective measures would have to be implemented soon after a state report indicated that reductions were not being achieved consistent with the glide path, further ensuring that states could not delay reductions and that progress continues to be made t oward the 2030 goals.

Comment 34 : Comment stating that the EPA's attempts to rectify the many fatal flaws in its proposal by issuing a Notice of Data Availability ("NODA") is unsuccessful.

Response 34 : The agency places great value on the publ ic notice

- and

- comment process that it has used multiple times in developing the CPP

. The agency takes note of these commenters’ view on the length of the public comment periods, and will continue to consider such concerns in future rulemakings. However, t he agency received many detailed and useful public comments on the NODA

, the original CPP proposal notice and other CPP

- related notices. Based on these comments, t he agency has substantiall y revised the proposal . These revisions refine the agency’s
appro ach to defining the BSER and the approach used to calculate CO2 emission performance rates and state goals . They also improve the flexibility and workability of the state plan252 provisions of the emission guidelines. The final emission guidelines create a strong and workable framework for states to reduce CO2 emissions while maintain ing a strong, reliable, and economical electrical generation sector.

The following are summaries of th e specific public comments under this comment:

Commenter s stated that EPA's attempts to rectify the many fatal flaws in its proposal by issuing a Notice of Data Availability ("NODA") is unsuccessful. The commenter s stated that the NODA primarily considers three over

- arching topics: (1) the proposed glide path for emission reductions from 2020

- 2029; (2) the methodology used in the design of the building blocks; and (3) the application of the building blocks in calcul ating and implementing the goal

- setting equation. The
commenter s stated that despite the short timeframe EPA provides for commenters to consider the NODA, making meaningful comment essentially impossible, it is apparent that the NODA does nothing to make E PA's proposal more reasonable, and if anything, the NODA makes the proposed rule even less workable, as EPA even acknowledges that some of the changes on which it seeks comment "would yield more stringent state goals." The commenter s stated that EPA's issu ance of additional information on November 13, 2014, only serves to add to the multitude of issues in EPA's proposal.

Comment 35 : Comment stating that if the EPA feels meeting the glide path and interim targets is important, then the burden of proof is o n the Agency to show why.

Response 35 : The CPP is a rule implementing section 111(d) of the Clean Air Act. The agency’s determination o f the interim goal and the final goal reflect the levels of emission performance levels achievable through the best system of emission reduction , and therefore are required by the Act. As a result, the interim goal is not optional.

The agency strongly disagrees with the commenter on the significance of emission reductions from the EGU sector , including during the inte rim period. T he CPP is an important component of the U.S. climate strategy and is important to U.S. efforts to encourage other nations to reduce emissions as well. See the final CPP preamble for more on the significance of this rule.

The CPP provides flexibility states to investigate their options and develop reasonable plans that follow the state’s chosen emission reduction trajectory to meet the interim goal and the final goal starting in 2030 s. . The interim steps provide emission performance check points to allow for prompt action in the event that the state plan is off track. Recognizing that plan modifications may be needed to address unforeseen circumstances

, the CPP allow s for per iodic review

, assessment and adjustment(s) to promote meet ing the final goal on time. See Sections VIII.B and VIII.E of the final rule preamble of the CPP.

The following ar e summaries of the specific public comments under this comment:

Commenter s stated that if EPA feels meeting the glide path and interim targets is important, then the burden of proof is on the Agency to show why. The commenter s stated that this proposed rule aims to reduce by 30% the CO2 emissions from an economic sector that is itself responsible for only 30% of U.S. output. The commenter s stated that equates to a 9% reduction in US253 emissions and only 1.5% of global CO2 emissio ns. The commenter s stated that accordingly, each year along the 2020

- 29 glide path represents an increment less than 1% of U.S. or 0.15% of global emissions. The commenter s stated that to demonstrate why interim target levels are "important" EPA must show through cogent scientific means, the climate change benefit of achieving complete compliance in year "X" as opposed to year X+1, X+2, or X+10.

Comment 36 : Comment providing input related to EPA's request for comment on the requirement that state plans include a process and schedule for implementation of corrective measures, and a process for annual reporting.

Response 36 : The EPA disagrees that a five year averaging period provides sufficient assurance that state or mu lti

- state plans are meeting the final 2030 goal

. A five

- year performance period would allow for verification of plan performance, and remedial steps, only once every five years. Corrective measures and implementation of the backstop takes significant time once a plan performance deficiency is id entified. For this reason, and additional reasons explained in RTC chapter 6.1.5, t he agency is finaliz ing 3

- year plan performance period s for interim steps 1 and 2, and 2

- year plan performance period s for interim step 3 and the final goa l

. To the extent that extenuating emergent circumstance results in plan insufficiency, we are including a process to handle that in the final rule. Discussion surrounding time needed to include new infrastructure in state plans can be found in section VIII. G .2 of the final rule preamble of the CPP . Discussion surrounding the establishment of interim goals can be found in section VIII.B of the final ru le preamble

. Discussion of emergency action can be found in section VIII.G of the final rule preamble

. Additional respon se to comments on multi

- year performance periods is contained in section 6.1.5

. The following are summaries of the specific public comme nts under this comment:

Commenters provided input related to EPA's request for comment on the requirement that state plans include a process and schedule for implementation of corrective measures, and a process for annual reporting.

Commenters supported EPA's proposal to set compliance periods that are longer than 1 year because potential climate change impacts result from long

- term accumulations, not from emissions in any particular year. The commenters stated that EPA is therefore able to esta blish

without any significant adverse environmental detriment

- multi

- year periods for determining compliance with environmental standards. The commenters provided for example, a 10

- year compliance period that EPA has proposed for the first phase is based up on providing affected electric utilities significant flexibility to operate their facilities and to phase in control measures, without reducing the effectiveness of the overall emission reduction program, assuming, of course, that the state's interim emiss ions rate goal is not so stringent that it deprives the state of the intended flexibility.

With respect to the final state goals, the commenters urged the EPA to extend the averaging period for a state to demonstrate compliance with the final goal from 3 years to 5 years. The commenters stated that the additional time is needed to allow states to address short

- term spikes254 in CO2 emissions due to extended shutdown of nuclear generation (both planned and forced outages), as well as other exceptional events t hat may be beyond the control of the state. The commenters stated that the 10

- year interim compliance period should be implemented with a cumulative average after year 5, and states should have substantial flexibility in determining their benchmarks during the interim compliance period, allowing the state to determine a feasible path towards the final goal.

6.1.5 Program implementation milestones , tracking of emission performance, and corrective measures

This section discusses requirements for state plans to establish and track program implementation milestones, to track plan emission performance, and to provide for corrective measures or federally enforceable backstop requirements on EGUs to be implemented in the event that state plan performance is defici ent. Also included is discussion of related state reporting requirements ; other comments on state reporting requirements are discussed in section 6.3.10

. This section also discusses the concept of self

- correcting plans versus non

- self

- correcting plans. I n the proposal, EPA suggested that some types of plans are “self

- correcting” in that they inherently would assure interim performance and full achievement of the state plan’s required level of emission performance , assuming full compliance by affected EGUs

, through requirements that are enforceable against affected EGUs.

Note that the focus of this section is on state plan performance. Questions about EGU compliance with emission standards, associated EGU reporting requirements, and enforcement against EG Us or other parties subject to state plan requirements are addressed elsewhere in this document.

Commenters have raised a number of issues related to this subsection that are organized by topics (comments) below. Responses are provided for these topics.

C omment 1: General comments on means of oversight of state implementation and plan performance

Response 1: The EPA agrees with the commenters that the EPA should engage in interim reviews and milestones for state plans to ensure that they are on course and that state plans should contain milestone requirements for tracking actual plan performance. See Sections VIII.D.2.a and VIII.F.1 of the final rule preamble of the CPP.

We also agree that state plans that include measures besides federally enforceable requirements for affected EGUs must include periodic program implementation milestones and emission performance checks and a means of ensuring achievement of the emission standard. We are finalizing the option of a “state measures” plan type, which would i nclude state

- enforceable measures that may apply to entities besides affected EGUs. We are also finalizing requirements255 that all state plans include periodic emission performance checks and that state measures plans include program implementation milestone s with annual reports and a backstop to ensure full achievement of the emission standard if the state measures do not achieve it. See Sections VIII.D.2 and VIII.C.3 of the final rule preamble of the CPP.

We also agree that plans should include corrective m easures to be implemented if mid

- course corrections are necessary. In addition to the backstop requirement for plans that rely on state measures, we are finalizing corrective measures requirements for plans that rely only on measures on affected EGUs but w hose plan design does not mathematically assure achievement of the CO2 emission performance rates or CO2 emission goals, assuming full compliance by affected EGUs. See Section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of t he specific public comments under this comment:

Commenter s stated that the EPA should engage in interim reviews and milestones for state plans to ensure they are on course. The commenters supported EPA's proposed decision that a state plan should includ e a process for reporting on plan implementation, progress toward achieving carbon goals, and implementation of corrective actions, if necessary. The commenters stated that, in addition to demonstrating the projected plan performance will meet the interim goals, state plans should contain milestone requirements for tracking actual plan performance during implementation. For plans that do not include enforceable requirements for affected EGUs that ensure achievement of the full level of required emissions pe rformance and interim progress, the commenters suggested that the state plans should be required to include periodic program implementation milestones and emission performance checks, and include corrective measures to be implemented if mid

- course correcti ons are necessary.

Comment 2 : Comments stating that the CPP needs safeguards and binding milestones to keep states on track to achieve critical pollution reductions by 2030.

Response 2 : The final guidelines contain multiple features that help to ensure the accountability of each state for adopting and implementing a plan that is consistent with Clean Air Act section 111(d).

The guidelines set EGU performance rates and state goals to ensure that each state is required to adopt emission standards consisten t with the national requirements established by section 111(d), and also provide for monitoring of state plan implementation by the EPA. For state plans that rely only on measures on affected EGUs but whose plan design does not mathematically assure achievement of the CO2 emission performance rates or CO2 emission goals, assuming full compliance by affected EGUs , the guidelines establish requirements to monitor and correct implementation of the plan during the 2022

- 2029 interim performance period. Th ese requirements involve program implementation milestones, tracking of actual emission performance under the plan, reporting, and corrective action if triggered . The guidelines also establish the consequences in the event that an approved state plan is i mplemented yet fails to achieve EGU emissions performance that meets the state goal. See Section VIII.F of the final rule preamble of the CPP.256 The final guidelines clarify state goals for states and the public by providing both rate

- based and

mass

- based go als for each state, which avoids concerns about whether the goals would be interpreted as intended. For states that rely on the state measures approach, the guidelines require the plan to provide federally enforceable backstop requirements that apply only to affected EGUs

, which would be triggered if the state measures plan failed in practice to achieve a specified level of emission performance.

The following are summaries of the specific public comments under this comment:

The commenters stated that the C PP needs binding milestones to keep states on track for achieving critical pollution reductions by 2030. The commenters stated that the EPA must have a stronger oversight role to ensure that every state does its fair share to reduce carbon pollution. Th e commenters stated that even the best environmental standards can become largely meaningless if the public and EPA are not able to monitor compliance and enforce those standards.

Commenters expressed concern that the rule relies on states to interpret targets, invent their own programs and enforce them, including states that are dominated by the absurd politics of climate change denial. Thus, the commenters stated that the rule invites weak targets to be further watered down or simply ignored.

Comment 3 : Comment s that states should be given flexibility on how they track performance in relation to state goals

. Response 3 : The final guidelines provide states with flexibility to choose program implementation milestones appropriate to the type of plans that they are designing. At the same time, the guidelines provide certain emissions tracking requirements to enable states, the EPA and others to check whether (1 ) emission performance is improving as planned during the interim period, for specified plan types, and (2) to check at the end of each plan performance period, whether emission performance is consistent with the inter im or final state goal, for all state plans.

The following are summaries of the specific public comments under this comment:

Regarding goal performance tracking, commenter s suggested that states should be given the flexibility to determine how to track performance. Commenter s stated that the EPA should allow states flexibility in establishing and reporting on milestones along their path to the 2030 goal.

Comment 4 : Comment s suggesting that a simple annual report be submitted to EPA to track
progress in meeting emission reduction requirements

. Response 4 : The EPA agrees in part and disagrees in part with the commenter s. The agency agrees with the concept of periodic reports to track the progress of the state plan toward meeting the interim goal. The agency also agrees with the concept of allowing states flexibility on their257 desired emission improvement trajectory to meet the final goal. The agency agrees that the state plan need not achieve a specified emission target in each year.

However, the agenc y believes that the rule needs to provide more specificity than the comments suggest on the circumstances in which corrective measures, in the case of emission standards plans, or the federally enforceable backstop, in the case of state measures plans, wil l be triggered. The final rule continues to require the state to specify its intended emission performance trajectory in advance, and to periodically check actual plan performance against anticipated plan performance. In addition, for rate

- based plans, t he agency observes that simply looking at emission rates will not account for avoided emissions at affected EGUs (due, for example, to new renewable energy generation or energy efficiency measures), so a report assessing progress toward a rate

- based goal n eeds to reflect that information as well as actual emissions data.

In the final rule, the EPA has modified the proposed requirements for state plan emission performance checks and reporting to balance two competing considerations: (1) our desire to mini mize the administrative workload for states, and (2) t he need to promptly identify deficient performance and initiate measures to remedy any significant emissions performance shortfall, to maximize chances that the state can meet its interim goal on time. I n the final guidelines, the performance comparison and notification is required three times during the 8

- year interim period, and every two years during the final goal period, rather than annually as proposed

. The following are summaries of the specific public comments under this comment:

In March 2014 comments resubmitted following proposal, commenters stated that once a plan has been approved, EPA's role in monitoring the state's progress in meeting the emission reduction requirements of the program is simple: states should submit to EPA a simple annual report showing the jurisdictional units' current and expected emissions. The commenters suggested that report would also describe the state's emission trajectory to meet the compliance year mass emissi ons limit. The commenters suggested the state may submit further qualitative or quantitative analysis to demonstrate that it continues to meet its target. The commenters stated that the EPA would not need to require the state to achieve a specific emission limit by year as long as the emissions are reasonably following a trajectory that will result in the target being achieved in the compliance year(s).

Comment 5 : Comment s stating that the final guidelines must include clear language with respect to EPA's enforcement of the Clean Power Plan, including timetables and consequences for failure to meet compliance obligations , and suggesting that EPA apply enforcement discretion should the CPP become subject to protracted legal challenges

. Response 5 : As the commenters recommend, the final guidelines include clear language about requirements for state plans regarding enforce ability , milestones

, regular plan performance checks , and corrective measures or federally enforceable backstop measures in the eve nt that state plan performance is deficient

. See s ections VIII.D.2 and VIII.F of the final rule preamble of the CPP.258 Regarding the suggestion that the EPA excuse failure to address interim targets in case litigation delays implementation, the EPA declines to address this issue at this time. In general, rules remain in effect during litigation unless and until a court stays their implementation. A court can grant a stay of a rule only when certain criteria are met. In the past, when a court has delayed i mplementation of an EPA rule but the rule ultimately was upheld, EPA has been known to adjust rule deadlines to account for the stay.

As discussed in section VIII, after considering comments on the proposed portfolio approach, EPA is not finalizing that ap proach. Therefore, these comments are moot. Instead of the proposed portfolio approach, EPA is finalizing an option to submit a “state measures” plan type, under which a mass CO2 emission goal may be partially or entirely achieved through state measures th at impose requirements on entities other than affected EGUs and that are not included in the federally enforceable 111(d) state plan, provided the state submits standards of performance for CO2 emissions from affected EGUs in the form of a federally enforc eable “backstop” that would be triggered if the state measures fail to achieve the required CO2 emission performance level. See section VIII.
With respect to the comments that the EPA must ensure that only those entities who have full control over the reduction measures are held responsible: First, the EPA believes that the term “full control” is not sufficiently nuanced to accurately reflect the issues involved with the interconne cted electricity system. For example, the EPA has endeavored in these guidelines to facilitate state rate

- based and mass

- based emissions trading programs, which can be designed to create economic incentives for increasing renewable energy generation and e nd

- use energy efficiency. As has been well demonstrated through the acid rain sulfur dioxide trading program and subsequent trading programs to reduce interstate air pollution, these programs can create markets for emission

- reducing actions and can enable EGUs to purchase allowances or credits to demonstrate compliance. The commenters might or might not agree that these successful trading programs meet the “full control” test suggested by the commenters, but they have been well accepted by the power secto r, and such systems put EGUs in a position to achieve increased renewable energy and end

- use energy efficiency through purchase of allowances. Also, t he guidelines give states flexibility to adopt a wide range of program designs

. See s ections VIII.C and V.B.3.ii of the final rule preamble of the CPP

. Regarding the comment that the EPA must allow self

- correcting measures if the final guidelines include “ enforcement against any entity with a compliance obligation during the interim period if a milestone is missed ,” we note that i n the final rule, the EPA has refined its approach to self

correcting and non

- self

- correcting plans based on more specific consideration of different plan types and public comments. The agency does not use the ter m “self

- correcting” in the final preamble because many found it confusing . The term was intended to refer to those types of emissions standards plans that mathematically assure that the plan performance level will be achieved when all affected EGUs are in compliance with their federally enforceable emission standards, regardless of electricity production and electricity mix. The EPA has determined that periodic checks o f plan performance are warranted both for emission standard plans and for state

meas ures plans to ensure that there is a mechanism for identifying plan deficiencies and to ensure that the goals of the emission guidelines are in fact achieved259 E mission standards type plan s that that mathematically assure achievement of the CO2 emission performance rates or CO2 emission goals regardless of generation amount or generation mix

, assuming full compliance by affected EGUs

, are not required to include a requirement for corrective measures in their state plans. Relevant to the question of whether plan revisions might be needed to rectify shortcomings in such plan s , t he EPA intends that planned revisions to the part 60 implementing regulations will clarify (among other things) whether the EPA has authority to call for plan revisions under section 111(d) when a state’s plan is not complying with the requirements of this guideline, and if so, precisely what procedures should apply. The EPA is proposing these revisions to the section 111(d) implementing regulations in the notice of proposed rulemaking for the federal plan. The EPA is not taking final action now on this iss ue or the related change to the implementing regulations. See Section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the final guidelines must include clear language with respect to EPA's enforcement of the Clean Power Plan, including timetable s and consequences for failure to meet compliance obligations. The commenters stated that, in particular, the rule should be strengthened by the inclusion of additional interim milestones and compliance reviews, as well as steps that will be taken in the e vent of state failures to attain the goals in their approved plans.

The commenters recommended:

• Regular review of state plans should occur throughout the time horizon of the Clean Power Plan. The commenters urged EPA to review the states' implementation of their compliance plans every 5 years.

• Automatic provisions for corrective actions to address compliance failures should be specified in the Clean Power Plan as well as in each approved state compliance plan.

Commenter s stated that the EPA proposed the emission limit plan approach and the portfolio or state commitment plan approaches. The EPA must ensure that only those entities who have full control over the reduction measure(s) in a state’s compliance plan are held responsible for
meet ing that goal. For example, if a state chooses to utilize a specific level of RE generation in its compliance plan, the owner/operators of an affected fossil fuel

- fired EGU with no control over the RE resources should not be responsible for meeting the RE generation goal. The EPA must address the penalty structure for non

- compliance as it relates to the withholding of funding for EE programs. Utilities and other third parties should not be penalized for non

- compliance if the cause was inadequate funding from the state.

EPA must make it clear in the final rule that there would not be enforcement against any entity with a compliance obligation during the interim period if a milestone is missed. Commenters said, EPA must allow for self

- correcting measures if this were to occur.260 Commenter s suggested the EPA apply enforcement discretion with respect to compliance with interim targets should the CPP become subject to protracted legal challenges that delay implementation.

Comment 6 : Comment addressing be nchmarking progress during the interim compliance period (2020

- 2029)

. Response 6 : The EPA agrees with the commenters that the final guidelines should include evaluation of state progress toward the state goal during the interim period

. The EPA concluded that a single review at the mid

- point of the interim period would not be sufficient to ensure timely identification of plan deficiencies and a prompt remedy. The final guidelines require state plans to establish three interim step goals during the 8

- year interim period , to require reports of the plan’s emission performance after each of these periods, and to implement corrective measures or federally enforceable backstop measures under certain circumstances. For the full response to this comment, please s ee s ections VIII.D and VIII.F of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenter s addressed benchmarking progress during the interim compliance period (2020

- 2029). The comment ers advised the EPA to request a mid

- point review or evaluation of state progress towards meeting its goals and plan implementation. The commenters stated that this will allow states to more effectively plan and comply with the rule, and will also create c ertainty for stakeholders such as affected EGUs, state agencies, and other affected entities that may be impacted by state compliance plans. In addition, the commenters stated that this flexibility will give states and EPA an opportunity to take corrective measures as needed throughout the compliance period in a timely and cost

- effective manner.

Comment 7 : Comments suggesting that the EPA should require states to report the reasons for deficient performance, and that these should be made public.

Response 7: For plans subject to corrective measure requirements, the final guidelines require a state’s plan revision submission to explain how the corrective measures will remedy the problem that that caused the shortfall. The submission will be a public docume nt. See section VIII.F.3 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA has not justified its proposal that a state would only have to determine and report its reasons for deficient performance if it elects to wait until after it discovers the deficiency before incorporating the plan's corrective measures into its regulations. Id. The commenters stated that information about the cause of the shortcoming would have significant value. The commenters stated that publishing the reasons for deficient performance could provide early notice to other states and the public of problems that may surface in many261 plans, such as lower

- than

- expected benefits from certain energy efficiency incentive programs for particular kinds of equipment. The commenters stated that the benefits this information outweigh the modest analy tical and reporting burden that it may impose on states who have experienced a plan deficiency, and the EPA should require all states that report a deficiency to make public its cause.

Commenters recommended that states should report the reasons for def icient performance.

Comment 8 : Comment s noting that a state's failure to comply with the interim and final targets will ultimately not be realized until 2029 and 2030 respectively.

Response 8 : The EPA agrees with the commenters that the final guidelines should include evaluation of state progress toward the state goal during the interim period

. The final guidelines require state plans to establish three interim step goals during the 8

- year interim period , to require reports of the plan’s emission performa nce after each of these periods, and to implement corrective measures or federally enforceable backstop measures under certain circumstances. For the full response to this comment, please see s ections VIII.D and VIII.F of the final rule preamble of the CP P.

The following are summaries of the specific public comments under this comment:

Commenters noted that a state's failure to comply with the interim and final targets will ultimately not be realized until 2029 and 2030 respectively. The commenters aske d the EPA to consider and comment on how a state's compliance will be tracked and measured prior to the compliance target dates. Additionally, the commenters asked the EPA to explain how and when it might move against a state that is not on track to meet t he interim or final target and what such remedies might entail.

Comment 9: Comments stating that t he state reporting requirements identified in proposed section 60.5815 make the performance levels identified in state plans essentially binding, and that annual emission check requirements are unnecessarily onerous.

Response 9: The EPA disagrees with the commenters that state reporting requirements and emission checks would make a state’s anticipated state plan performance levels during the inter im period “essentially binding

. ” We observe that (1) the proposal allowed a state to miss its planned level by up to 10 percent before corrective measures were required, and (2) the provisions were designed to require prompt action to identify and remedy deficient performance to improve chances that the state could, despite the deficiency, achieve the interim goal. The
agency acknowledged in the proposal that it often may take a state some time to identify, adopt, and implement corrective measures that wo uld reduce emissions significantly.

In the final rule, the EPA has modified the proposed requirements for state plan emission performance checks and reporting to balance two competing considerations: (1) our desire to minimize the administrative workload for states, and (2) t he need to promptly identify deficient262 performance and initiate measures to remedy any significant emissions performance shortfall, to maximize chances that the state can meet its interim period goal on time. We are also finalizing th at, for states with corrective measures requirements (under the emission standards plan type) or backstop requirements (under the state measures plan type), the corrective measures and backstop are triggered if actual emission performance is deficient by 1 0 percent or more relative to the performance levels that the state has chosen to specify in its plan for the interim step 1 period (2022

- 2024) or the interim step 2 period (2025

- 2027) , versus any deficiency for the interim period overall. The final guidel ines thus give states some leeway to meet their interim step goals.

We agree with the commenters that annual emission checks are unnecessarily onerous. I n the final guidelines, the performance comparison and notification is required three times during the 8

- year interim period, and every two years during the final period, rather than annually as proposed

. State measures plans, which rely on measures on entities other than affected EGUs, are additionally required to report annually on the status of imple mentation of federally enforceable emission standards (if applicable) and state measures, and must include a report of the periodic programmatic milestones to show progress in program implementation. The EPA believes that annual state reporting of progress towa rd milestones ( not emissions performance) is appropriate for state measures approach due to the flexi bility inherent to the approach, including the potential use by the state of a wider variety of state measures, responsible parties, etc. This reporti ng frequency will also increase the degree of certainty on plan performance for states pursuing the state measures approach.

For further description of the relevant final guideline provisions and rationale, see sections VIII.C.3, VIII.D.2

, and VIII.F of t he final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenters noted that t he state reporting requirements identified in section 60.5815 make the performance levels identified in state plans essentially binding, because states whose emission performance is greater than 10 percent in excess of projected plan performance must speci fy/take corrective actions to be taken to ensure required interim plan performance. Commenters stated that such annual requirements are unnecessarily onerous and unrealistic, particularly when dealing with such long

- term implementation periods. Commenters stated that if EPA means to establish some binding mid

- course performance requirements (in addition to the interim targets it proposes), commenters stated that a more reasonable approach would be to require states to identify the average performance expect ed by, say 2025 (midway through the implementation period), and submit a mid

- course review evaluating the state's performance up to that point and requiring corrective actions if needed.

Comment 10 : Comments related to concept of self

- correcting plans v ersus non

- self

- correcting plans

Response 10: In the final rule, the EPA has refined its approach to self

- correcting and non

- self

correcting plans based on more specific consideration of different plan types and public263 comments. The agency does not use the term “self

- correcting” in the final preamble because many found it confusing . The term was intended to refer to those types of emissions standards plans that mathematically assure that the plan performance level will be achieved when all affected EGUs are in compliance with their federally enforceable emission standards, regardless of electricity production and electricity mix. The EPA has determined that peri odic checks o f plan performance are warranted for both emission standard plans and for state measures plans to ensure that there is a mechanism for identifying plan deficiencies and to ensure that the goals of the emission guidelines are in fact achieved

. The EPA also has streamlined some of the required information submittals in light of reporting burden comments raised in relation to related guideline requirements (see, e.g., Response to Comments section 6.3.10).

In response to commenters who said self

- correcting plans do not need to contain program milestones during interim period, the EPA agrees

. T he final rule does not require program milestones during the interim period for emission standards plans that mathematically assure that the plan performance level will be achieved when all affected EGUs are in compliance with their federally enforceable emission standards, such as a rate

- based emission standards plan that makes all affected EGU subject to the uniform EGU performance rates in the guideline (or more stringent emission rates), or a n emission standards plan consisting of a mass

- based budget trading program that has a budget equal to, or more stringent than, the state’s mass

- based goal

.

An e mission standards plan that applies rate

- based CO2 emission standards to individual affected EGUs, or to sub

- categories of affected EGUs, at a lb CO2/MWh rate higher than the CO2 emission performance rates or the state’s rate

- based CO2 goal in the emissio n guidelines , does
not mathematically assure that the plan performance level will be achieved when all affected EGUs are in compliance with their federally enforceable emission standards

. Such plans are subject to certain reporting requirements

. See Section VIII. D.2.b of the final rule preamble of the CPP.

For emissions standard type plans, t he EPA also considered consequences in the event emission performance fails to meet the performance criteria just described for state measures plans. The final g uidelines contain corrective measures requirements for certain emission standards plans

-- those that do not mathematically assure that the plan performance level will be achieved when all affected EGUs are in compliance with their emission standards, rega rdless of electricity production and electricity mix. Corrective measures requirements apply, for example, to emission standards plans that include standards on affected EGUs that differ from the emission performance rates in the guidelines and emission st andards plans that pair a rate

- based plan performance level with mass

- based standards on affected EGUs. See Section VIII.F.3 of the final rule preamble of the CPP.

The corrective measure requirements do not apply to other emission standards plans (i.e., s elf

correcting plans), which contain federally enforceable standards on affected EGUs that mathematically guarantee full plan performance if all EGUs comply. Sub

- par plan performance occurs only if EGUs are in non

- compliance. Relevant to the question of wh ether plan revisions might be needed to rectify shortcomings in this type of plan, the EPA intends that planned revisions to the part 60 implementing regulations will clarify (among other things) whether the EPA has authority to call for plan revisions und er section 111(d) when a state’s plan is not complying with the requirements of this guideline, and if so, precisely what procedures should264 apply. The EPA is proposing these revisions to the section 111(d) implementing regulations in the notice of proposed rulemaking for the federal plan. The EPA is not taking final action now on this issue or the related change to the implementing regulations.

In response to commenters who noted the importance of automatic consequences if a state plan using the “portfolio” or “state commitments” approach fails to achieve its goal, the EPA observes that the final guidelines do not finalize either approach. However, the EPA did finalize a “state measures” plan type. For the state measures plan type, the EPA has taken the ap proach suggested by the commenter s . State measures plans must require federally enforceable backstop requirements for affected EGUs to take effect if actual CO2 emission performance fails to meet the level of emission performance specified in the plan over the 8

- year interim performance period (2022

- 2029 ) , or for any 2

- year final goal performance period , or if the state fails to meet a programmatic milestone . The plan also must require the backstop to take effect if actual emission performance is deficient by 10 percent or more relative to the performance levels that the state has chosen to specify in its plan for the interim step 1 period (2022

- 2024) or the interim step 2 period (2025

- 2027).

In response to commenters who said the state, after missing a pro grammatic milestone, should be given the opportunity to report the cause and accelerate implementation, the EPA observes that the final rule calls for the state measures plan backstop to be triggered in the event a programmatic milestone in a state measures plan is missed. On the question of whether the state should be allowed, after missing a programmatic milestone, to accelerate implementation before the EPA would take any enforcement action, the potential consequence of missing a programmatic mil estone under a state measures plan is triggering the backstop, not enforcement action against a state. Under an emission standard plan, the consequence of a state plan not meeting the state goal is triggering of corrective measures. The corrective measures must compensate for the deficiency to ensure that the EGU performance rates or state goal will be
met. See Section VIII.F.3 of the final rule preamble of the CPP.

In response to comments that corrective measures for failure to meet interim milestones are unnecessary if the final goal is met in 2030, the EPA disagrees. The EPA observes that both the interim goal and the final goal reflect the BSER that is required u nder section 111(d). Therefore, the overall level of performance during the interim period as a whole is not optional, even though the guidelines provide states with flexibility to define their own glide paths for improving emission performance during tha t 8

- year period.

The following are summaries of the specific public comments under this comment:

Commenters supported the concept of "self

- correcting" state plans. For plans that are not self

correcting, the commenters also supported that if a milest one is missed during the interim period, the state would have the opportunity to identify any delay to EPA, explain the cause, and describe the steps the state will undertake to accelerate subsequent implementation to achieve the planned improvement in emi ssion performance before EPA would take any enforcement

measures.

Commenters stated that EPA proposes that some types of plans would be "self

- correcting" in that they would inherently assure interim performance and full achievement of the state plan's265 r equired level of emission performance through requirements that are enforceable against affected EGUs. The commenters agreed that self

- correcting plans do not need to contain interim milestones consisting of program implementation steps because these state plans would require both interim progress and achievement of the full level of required emission performance in a manner that is federally enforceable against affected EGUs.

For plans that are not self

- correcting, the commenters noted that EPA proposes t hat the state plan must identify periodic program implementation milestones (e.g., increase in portfolio percentage requirements under a renewable portfolio standard) that are appropriate to the programs and measures included in the plan. The commenters ag reed that if, during plan implementation, a state were to miss program implementation milestones in its plan, it should report the delay to EPA, explain the cause, and describe the steps the state will take to accelerate subsequent implementation to achiev e the planned improvements in emission performance.

Commenter s stated that in either the "portfolio approach" or the "state commitment approach," it will be important to ensure the state plan includes corrective measures that take effect automatically i f a state is unable to demonstrate the required emission reductions. The commenters stated that this self

- correcting component ensures that affected EGUs are not responsible for emission reductions if a state fails to implement measures that are designed t o reduce generation demand and are outside of the control of an EGU.

The commenters stated that it is also important that the final rule make clear that if a milestone is missed during the interim period, the state would have the opportunity to identify a ny delay to EPA, explain the cause, and describe the steps the state will undertake to accelerate subsequent implementation to achieve the planned improvement in emission performance before EPA would take any enforcement measures. The commenters stated how ever, that if a state failed to demonstrate that it met the interim goal at the end of the compliance period, it would be subject to enforcement.

Commenters questioned the EPA's proposal that non

- self

- correcting state plans are required to have program implementation milestones to ensure progress during the 2020

- 2030 interim period. The commenters noted that the EPA would require states to annually submit their performance data, and starting in 2022 to include a comparison of emission performance achieve d for the preceding 2 years. The commenters noted that the EPA also proposed to require that a report be submitted and corrective measures taken if an interim emission check indicates that actual emission performance of affected entities is not within 10 p ercent of the performance projected in the state plan.

The commenters stated that if the goal is met by 2030, the requirement to undertake corrective measures if interim milestones are not met is unnecessary. The commenters noted that establishing and enf orcing milestones with too short of a compliance period creates an unnecessary burden on the states. Rather than working towards the final 2030 emission goal, the commenters stated that the EPA is creating multiple goals set throughout the interim period, and imposing the consequence of corrective measures should the goals not be met.266 Comment 11 : Comments stating that state plans may not be able to be "self

- correcting" given so many variables beyond state control

, and that the EPA should allow states maximum flexibility to adjust their state plans to account for major changes in the assumptions underlying state plans or the costs or impacts of those plans

. Response 11 : The EPA agrees that states may find that future developments may prompt states to de cide to modify their state plans. The final rule preamble discusses “Modifications to an approved state plan” at section VIII.E. 7.a of the final rule preamble of the CPP

. In addition, the final guidelines require all emission standards plans to provide f or corrective measures in the event that plan performance is deficient during the interim period or any final period, or by 10 percent or more during interim step 1 or 2

. The guidelines also provide for a “reliability safety valve” t o address the possibili ty that an un

- anticipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability . The reliability safety valve will allow a state to modify the emission standards for such EGUs for a maximum of 90 days. See s ections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

Relevant to the question of whether plan revisions might be needed to rectify shortcomings in plans are self

- correcting, t he EPA intends that planned revisions to the part 60 implementing regulations will clarify (among other things) whether the EPA has authority to call for plan revisions under section 111(d) when a state’s plan is not complying with the requirements of this guideline, and if so, precisely what procedures should apply. The EPA is proposing these revisions to the section 111(d) implementing regulations in the notice of proposed ru lemaking for the federal plan. The EPA is not taking final action now on this issue or the related change to the implementing regulations.

The following are summaries of the specific public comments under this comment:

Commenters stated that state plans may not be able to be "self

- correcting" given so many variables beyond state control.

Given that the practical development and production of electricity is subject to so many variables beyond state control, the commenters argued that a state plan must ha ve the ability to adjust to actualities and unexpected and unintended consequences that are experienced "on the ground" some of which cannot be anticipated. The commenters stated that simply suggesting that state plans be "self

- correcting" does not provide the necessary mechanism to allow for changes to state plans.

Comment 12 : Comment s stating that to supplement federal enforceability, corrective measures are necessary to ensure that plan deficiencies are fixed swiftly and soon after they occur.

Response 12 : See section VIII.F of the final rule preamble of the CPP for EPA’s response to this
comment , particularly discussion of corrective measures and federally enforceable backstop requirements for EGUs

. Also, note that t he EPA intends that planned revisions to the part 60 implementing regulations will clarify (among other things) whether the EPA has authority to call267 for plan revisions under section 111(d) when a state’s plan is not complying with the requirements of this guideline, and if so, precisely what procedures should apply. The EPA is proposing these revisions to the section 111(d) implementing regulations in the notice of proposed rulemaking for the federal plan. The EPA is not taking final action now on this iss ue or the related change to the implementing regulations.

The following are summaries of the specific public comments under this comment:

To supplement to federal enforceability, commenters stated that corrective measures are necessary to ensure that plan deficiencies are fixed swiftly and soon after they occur. The commenters expressed concern, however, that EPA underestimates the full value of corrective measures. The commenters noted unde r the proposed rule, "self

- correcting" plans need not include corrective measures. The commenters noted that the EPA in the proposal describe d self

correcting plans as those which " would assure interim performance and full achievement of the state plan's required level of emission performance through requirements that are enforceable against affected EGUs. " 79 FR 34907. However, the commenters noted that just because an emission standard in a state plan may be enforceable against affected EGUs does not me an that violations of the standard will actually be enforced in a way that assures the state plan's emission performance goals are achieved (e.g., an enforcement action may result only in civil penalties and not in reductions in future emissions from an EG U). In that case, the commenters noted that the excess emissions from the violating EGU may throw the state off course from achieving a performance goal. The commenters stated that future year requirements for affected EGUs in the state plan may need to be adjusted to correct this deviation, and such adjustments are functionally no different than the corrective measures EPA has proposed for any plans that are not self

- correcting.

Comment 13: Some commenters indicated that section 111(d) does not author ize or require state plans to include corrective measures.

Response 13: We disagree with the commenters that because section 111(d) does not contain explicit provisions regarding corrective measures, the EPA is not authorized to require them. See section VIII.F. 3 .a of the final rule preamble of the CPP for EPA’s response to this comment.

We also disagree that EPA lacks authority to set the trigger at a particular percentage. As detailed in the legal memorandum, section 111(d) is silent on the issue of a t rigger and the percentage that should be used for it. There is therefore a gap in section 111(d) that EPA may reasonably fill. It is reasonable to set a trigger percentage at ten per cent that applies across all state plans, for several reasons. First, a s explained in the legal memorandum, the doctrine of administrative convenience allows EPA to set bright

- line rules. It would be difficult for EPA to administer state plans during the approval process if each state had freedom to set its own percentage, e specially in the absence of a standard by which evaluate a state’s particular percentage. We note that the commenters does not provide any standard, but just suggests that states have complete flexibility to choose. This is unworkable. It would lead to i nconsistent outcomes between EPA actions on state plans, which would be arbitrary and capricious. EPA must have some standard by which to judge whether a plan is satisfactory, and EPA is entitled to268 set a bright

- line test so long as the line that is drawn is reasonable. It is reasonable to use a percentage as a trigger, because an absolute value would in essence penalize states with more affected EGUs as compared with states with less affected EGUs.

The agency’s rationale for choosing the level of 10 perc ent for the trigger value for corrective measures and backstop requirements for interim step 1 and step 2 is described in section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this commen t:

Commenters noted that EPA requested comment on whether state plans should be considered "self

- correcting," which is described as a plan that includes measures or actions (e.g., emission limits that apply to affected EGUs and ensure full plan performa nce) that take effect automatically if the plan's required emission performance level is not met by a specified milestone. The commenters noted that EPA alternatively requested comment on whether states should be required to create legal authority and/or a dopt regulations providing for corrective measures in developing the state plan. The commenters stated that if BSER is properly applied, only "achievable" emissions reductions can be a part of it. Accordingly, the commenters argued that there should not be a need for the plan to include corrective measures that automatically take effect if a goal is not met. The commenters stated that failure of a source to meet BSER would be a violation and should be handled as an enforcement action. The commenters stated that there is no authorization in section 111(d) to deviate from the CAA's enforcement scheme by providing anticipatory corrective measures in a state plan. The commenters noted that existing state enforcement mechanisms that EPA has recognized to be suffi cient to support federal enforcement are already in place in most states to deal with non

- compliance issues.

Commenters noted that EPA proposes that state plans must be either "self

- correcting" or contain milestones, periodic checks, and corrective measures . The commenters stated the Proposed Guidelines do not provide in

- depth discussion of what EPA is considering, apart from the suggestion that corrective measures that are included in a state plan should be triggered by a 10 percent deviation from projected performance, and corrective measures that would be included in a plan amendment to be submitted after such a deviati on should be triggered by an eight percent deviation from projected performance. The commenters stated that EPA is free to make these policy suggestions to the states, but nothing in section 111(d) authorizes the Agency to micromanage these policy choices

.

Comment 14 : Regarding failure to meet an interim or final plan goal, commenters stated that EPA does not have the authority to specify requirements for contingency measures or consequences beyond those identified in Section 111(d)(2).

Response 14 : We disagree with the commenters that the EPA does not have the authority to specify requirements for contingency measures or consequences . EPA has the authority to specify requirements for contingency measures under section 111(d)(1). The commenters’ citati on to section 111(d)(2) is beside the point. Section 111(d)(2) specifies EPA’s authority in two circumstance s

– when a state fails to submit a satisfactory plan, and when a state fails to269 enforce the plan. Neither of these is the same circumstance as whe n a state submits a satisfactory plan, EPA approves it, and the state implements and enforces it, yet the plan, for reasons such as unpredicted changes in the distribution of power generation, fails to achieve the rates or goals. To take into account that possibility, EPA has the authority (as described in the preamble in section VIII.F. 3 .a and detailed in the legal memorandum) under 111(d)(1) to require corrective measures. Thus, the commenters’ citation to 111(d)(2) is not relevant.

In addition, we asked for comment on whether EPA should require corrective measures to be already adopted in the plan submittal and ready to take effect on triggering, or whether states should instead be given the opportunity to revise their plans to address the deficienc y that lead to the failure to achieve the rates or goal. Because deficiencies may result from a variety of problems, EPA has decided that the latter should be the case

– in other words, once corrective measures have been triggered, states should have a rea sonable amount of time to submit a plan revision that addresses the deficiency. However, if a state is able to promulgate a corrective measure that can in advance account for deficiencies and submit that corrective measure as part of the plan, EPA will co nsider that satisfactory as well. See Section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

The commenters noted that the EPA is seeking comment on what consequences, apparen tly in addition to contingency measures, should be imposed in the event of plan failure. The commenters noted that specifically, the EPA states they believe the emission guidelines should specify the consequences and requests comment on " how the consequenc es should vary depending on the reasons for a deficiency ." The commenters disagreed, questioning EPA's authority to specify requirements for contingency measures.

Comment 15 : Commenters opposed inclusion of a requirement " to achieve additional emission reductions to offset any emission performance deficiency that occurred during a performance period for the interim or final goal " as a consequence for failing to meet a state goal.

Response 15 : The EPA disagrees with the commenters that requiring corrective measures for certain plan types imposes emission reduction requirements that are more stringent than the application of BSER . Please first see our description in section VIII.F.3.a of the final rule preamble of the CPP for the legal b asis for the requirement that corrective measures make up the shortfall.

In addition, the commenters are mistaken in saying that requiring states to make up for the shortfall after their plan fails to achieve the rates or goals is

, in essence

, requiring better

- than

BSER performance . If there is a shortfall, then in fact the plan has failed to achieve BSER to that point. Requiring the shortfall to be made up restores plan performance to BSER levels. It is reasonable for EPA to require that, over the lon g run, the plan perform at BSER levels.

In addition, the consequences for failing to achieve the rates or goals are not a policy decision left up to the states. (In essence, this is a form of an argument made by commenters on EPA’s 1975 implementing regula tions

– that EPA has no authority to set any substantive standards270 under section 111(d)

– set in the context of failure to achieve the goal. EPA rejected those arguments.) EPA has the authority to promulgate emission guidelines under which states submit plans that establish standards of performance which achieve BSER. Thus, EPA has authority to ensure that the plans will in fact achieve BSER.

Regarding comments stating the difficulty of forecasting certain parameters, we have addressed any such conce rn by not requiring that corrective measures be adopted and ready to implement in advance of triggering. The state s ha ve flexibility to decide how to amend their plan s to address the deficiency and to make up the shortfall. In addition, states have the flexibility to modify their plans at other times.

The following are summaries of the specific public comments under this comment:

Commenters stated that attempting to impose emission reduction requirements more stringent than the application of BSER is inconsistent with the CAA. Commenters stated that the consequences of a failure to meet a state goal are policy decisions left to the states

.

Commenters stated that EPA does not have the authority to require reductions beyond BSER be implemented under any circumstance. The commenters stated that, on one hand, EPA stated that they desire to provide flexibility and allow states to develop th eir own glide path for reductions and then, on the other hand, EPA considered providing a strict regulatory framework for potentially requiring beyond

- BSER reductions and requiring them in a specified time frame.

Commenters stated that developing a plan under this proposal would require significant assumptions about parameters that are very difficult to forecast. The commenters noted that the parameters being contemplated by EPA under this proposal are ones that key organizations that have worked in grid reliability, electricity forecasting, and EE/RE development have had limited success implementing with any degree of accuracy, but EPA is now asking states to take the reign. The commenters contended that there must be flexibility to understand that in a plan such as this, adjustments may be necessary in the future and that states need flexibility in determining when and how those adjustments are made.

Comment 16: Commenters argued that EPA's proposed contingency measures are beyond the Agency's author ity under Section 111(d) and not even necessary.

Response 16: Regarding c ommenters’ general assertion (referencing partial and conditional approval), we generally disagree with comments that the EPA lacks authority to adopt mechanisms from section 110 into section 111(d) emission guidelines. Please see the discussion in section VIII.E. 9 of the final rule preamble of the CPP , and in the legal memorandum of the phrase “procedure similar to that under section 110 of the Act.” We also disagree that the EPA necessarily cannot adopt as a requirement for a state section 111(d) plan any substantive requirement that is similar to a substantive requirement elsewhere in the Act (in this particular case, corrective measures for section 111(d) state plans as compared to contingency measures in SIPs under part D of title I). As explained in section VIII.D.2.d.(1) of the final rule preamble of the CPP and in the legal memorandum, although a substantive requirement elsewhere in the Act does not provide direct legal auth ority to the EPA to create a similar requirement under section271 111(d)(1), if the substantive requirement makes sense in the context of a gap in section 111(d)(1) that EPA must fill, it may be reasonable for the EPA to fill that gap with a similar requireme nt.

We disagree that the EPA’s requirement for corrective measures is precisely the same as contingency measure requirements for SIPs under part D of title I. As explained in section VIII.E. 9 of the final rule preamble of the CPP and the legal memorandum, corrective measures are different in two respects: 1) unlike contingency measures, corrective measures do not need to be adopted as part of the plan at time of submittal; and 2) corrective measures are expected to achieve t he rates or goals, unlike part D contingency measures which are tied to reasonable further progress and are not expected to bring an area into attainment.

With respect to the time needed for adoption of corrective measures, we have selected a reasonable t imeframe that allows for state processes to take place. We did not state that it was necessarily the case that states would have to go through legislative or rulemaking processes to adopt corrective measures, although that is a possibility.

The commente r s are correct that previous section 111(d) emission guidelines and the 1975 implementing regulations have not required corrective measures. However, none of those actions addressed whether the EPA has authority to require corrective measures for the type s of state plans that we are allowing in these guidelines. Thus, the previous actions are irrelevant on this issue. The issue is whether the statute is ambiguous or silent on the topic, and if so whether the EPA’s interpretation is reasonable. As discussed in section VIII.F. 3 .a of the final rule preamble of the CPP , and in the legal memorandum, the phrase “provide for implementation and enforcement” is silent on this topic, and therefore there is a gap that EPA may reasonably fill. Thus, we disagree with th e comment that the EPA lacks authority to require corrective measures.

Regarding the commenters’ reference to section 111(d)(2), the EPA has the authority to specify requirements for contingency measures under section 111(d)(1). The commenters’ citation to section 111(d)(2) is beside the point. Section 111(d)(2) specifies the EPA’s authority in two circumstance s

– when a state fails to submit a satisfactory plan, and when a state fails to enforce the plan. Neither of these is the same circumstance as when a state submits a satisfactory plan, the EPA approves it, and the state implements and enforces it, yet the plan, for reasons such as unpredicted changes in the distribution of power generation, fails to achieve the rates or goals. To take into account that possibility, the EPA has the authority (as described in the preamble in section VIII.F. 3 .a and detailed i n the legal memorandum) under 111(d)(1) to require corrective measures. Thus, the commenters’ citation to 111(d)(2) is not relevant.

The following are summaries of the specific public comments under this comment:

The commenters noted that the EPA propos ed to require corrective measures be implemented as expeditiously as practical if a state is not within 10 percent of the performance projected during interim period performance checks . The commenters noted that the EPA is proposing to give states a choice regarding when to adopt into regulation the corrective measures that the state plan identifies for implementation in the event that state plan performance is deficient: either adopting prior to plan submittal in a manner that enables a state to implement the measures administratively without further legislation/rulemaking, or adopting after the deficiency is discovered. However, the commenters n oted that EPA proposes that if the latter is chosen, then272 contingency measures would be required when a state is not within 8% of the performance projected where the purpose "is to identify a gradually developing deficiency in plan performance earlier in t ime...legislative and/or regulatory action...will take significant time." The commenters argued that this proposed rule is very similar to the structure of Section 110 SIP requirements, which exceeds EPA's authority under Section 111(d) with respect to par tial and conditional approval.

First, the commenters stated that they were not under the impression that all requirements a state elects for their Section 111(d) plan would necessitate each element be implemented through legislation or rulemaking (e.g., t aking credit for certain EE or RE programs). Therefore, the commenters stated that it should not be necessary that any contingency measures require adoption into legislation or regulation as would be expected under a Section 110 SIP.

Second, the commenter s disagreed that contingency measures are even necessary. The commenters stated that no other Section 111(d) plan has yet to ever require contingency measures. The commenters argued that section 111(d) plans are not Section 110 SIPs and the EPA does not ha ve the authority to impose Section 110 SIP requirements on states under this rule. The commenters disagreed with EPA's statement that Section 111(d) is not specific on the point of consequences when actual emission performance under a plan is not met. The commenters noted that section 111(d)(2) specifies the EPA's authority in cases where a state fails to submit a satisfactory plan or to enforce the provisions of a plan. The commenters stated that it is evident the CAA did not contemplate contingency measur es would be necessitated under Section 111(d) as under Section 110

.

Comment 17: Comments related to whether state plans should contain mechanisms to correct automatically for shortfalls

. Response 17: We agree with the commenters that remedies are needed in the event that a state plan does not achieve the required level of emission performance. We disagree that state plans must necessarily be structured to correct automatically for shortfalls, although a state may submit such a plan. While the commenters’ recommendation may be one way to address shortfalls, we are taking a different approach. For the state measures plan type , we are requiring that the state either (1) design its federally enforceable backstop requirements for EGUs to adjust to eliminate any shortfall from a prior performance period, or (2) submit a plan revision to address th e shortfall. For the emission standards plan type, if the plan does not mathematically assure that the required level is met if EGUs fully comply with their federally enforceable standards, the plan must require corrective measures and making up the shortfall. As explained in the L egal M emorandum, where there is a gap in the statute to fill, and there are multiple possible solutions to filling the gap, EPA may pick a particular one so long as it is rea sonable. In this case, EPA’s solution is reasonable, as it addresses the issue of shortfall without requiring states to identify in advance all the possible reasons for a deficiency and address them through already adopted corrective measures.

The follow ing are summaries of the specific public comments under this comment:273 Commenters suggested that states should have some flexibility to achieve emissions reductions over a multi

- year period, but the schedule should ensure that emissions reductions are ac hieved as soon as possible and that state plans contain mechanisms to automatically correct for shortfalls.

Comment 18 : Comment s supporting an approach that includes plan revision requirements that are triggered if a state fails to achieve its interim goal (within a reasonable margin) and after a reasonable time for implementation.

Response 18 : We agree with the commenters’ general support for the approach of a plan revision as a corrective measure, and with the two reasons given for it: taking advantage of the latest technolo gical developments, and allowing states to take into account their current circumstances. We disagree with the commenters that emission reducing activities that are planned, imminent, or “in the works” should be taken into account in determining whether the obligation for corrective measures is triggered. Such a ctivities are presumably not yet accounted for in the state plan and have not been submitted to EPA for approval. Thus, even absent the trigger, the state has a pending obligation to provide a revised demonstration and/or revise other provisions in the st ate plan to reflect these planned activities. So, even in the circumstances described by the commenters, it is reasonable for EPA to require a plan revision regardless of planned emission reduction activities.

The following are summaries of the specific public comments under this comment:

Commenters noted that the EPA proposed that states could elect to wait to adopt into regulation corrective measures identified in the plan until after a plan performance deficiency is discovered. The commenters stated that utilizing a plan revision approach versus implementation of predetermined corrective measures would allow the states to take advantage of the latest technological developments and to take into account the current circumstances facing the individual s tate.

Instead of corrective measures that automatically take effect, commenter s supported an approach that includes plan revision requirements that are triggered if a state fails to achieve its interim goal (within a reasonable margin) and after a reasonable time for implementation . The commenters stated that any determination that a plan revision is necessary should include consideration of emission reducing activities or actions that are in the works or that are imminent so as to not require an un necessary revision or implementation of unnecessary corrective measures. The commenters stated that any such plan revision requirements should allow a reasonable amount of time for the development and implementation of the revision.

Comment 19: Comment s a ddressing the milestone approach and performance checks for the alternative 5

- year performance period.274 Response 19: The EPA did not finalize the alternative five

- year performance period referenced by the commenters. The o ther aspects of this comment are addressed later in this section ( 6.1.5 ) of this document.

The following are summaries of the specific public comments under this comment 6 :

Commenter s noted that the EPA requests comment on the milestone approach and emission performance checks outlined in the context of the alternative 5

- year performance period and the planning approach for alternative state goals. The commenters recommended that state s should be allowed the flexibility to propose milestone approaches and emission performance checks that are proportional and consistent with the compliance measures they adopt, including corrective action measures they propose to take in the event that pe rformance departs from expectations

. The commenters stated that significant energy elements such as transmission upgrades may take seven to 10 years to develop; corrective action that requires such elements must be triggered sufficiently far in advance to allow for their cost

- effective and orderly implementation.

Comment 20 : Comment s arguing that states should be allowed the flexibility to propose milestone approaches and emission performance checks that are proportional and consistent with the compliance measures they adopt.

Response 20 : We finalizing a requirement that emission standards plans include a requirement for the state to enact and/or implement corrective measures if triggered. We are allowing states the flexibility to include in their plans provisions that will automatically take corrective action if the plan does not achieve the rates or goals ; however

, we are not requiring that. States may choose not to include specific provisions in their plans , but in the absenc e of approved provisions that are capable of automatically addressing the deficiency

, the state will have to provide a plan revision to address the deficiency.

In addition, as described in section 6.1.4 above , we are giving states flexibility in identifying milestones for the interim step 1, 2 and 3 period s

. The following are summaries of the specific public comments under this comment 21 (20) :

Commenter s addressed EPA's request for comment on whether the process for implementing corrective measures should include the adoption of new plan measures and subsequent resubmission of the plan to the EPA for review and approval, or whether the process should
spec ify the implementation of measures that are already included in the approved plan in the event that the projected level of performance is not being achieved.

The commenters argued that states should be allowed the flexibility to propose milestone approach es and emission performance checks that are proportional and consistent with the compliance measures they adopt, including corrective action they propose to take in the event that performance departs from expectations. The commenters stated that resubmissi on of State Plans and additional EPA approvals should not be required absent material modifications of plans.275 Comment 21 : Projected greenhouse gas emission performance data should be used to trigger adoption of corrective actions, including contingent new plan measures. Corrective action triggers should be proportional to the shortfall, and the timing should occur sufficiently far in advance to allow cost

- effective implementation of measures needed to eliminate the shortfall and bring the plan into complian ce.
Response 21 : The agency believes that actual plan performance is a more reliable indicator than projected performance data for determining whether corrective measures are needed. The agency does not agree that the emission performance triggers used t o determine when to take corrective measures should necessarily be proportional to the shortfall because state plans are required to achieve the EGU performance rates or statewide goals; failure to achieve the required level triggers consequences as descri bed in Section VIII.F.3 of the final rule preamble of the CPP . However, the agency agrees that the size of the shortfall is relevant in determining how to remedy the shortfall.

On timing, in the final rule, the EPA has modified the proposed requirements f or state plan emission performance checks and reporting to balance two competing considerations: (1) our desire to minimize the administrative workload for states, and (2) t he need to promptly identify deficient performance and initiate measures to remedy any significant emissions performance shortfall, to maximize chances that the state can meet its interim goal on time. I n the final guidelines, the performance comparison and notification is required three times for the 8

- year interim period, and every t wo years during the final goal period, rather than annually as proposed

. The agency recognizes that some measures take longer than others to implement. The EPA has designed the rule with long time horizons that provide flexibility for different types of em issions reducing measures in state plans, and enable states to consider ways to create incentives for both short

- term and longer

- term actions that can reduce carbon dioxide emissions cost effectively. States also are granted flexibility to modify their pla ns so that strategies can be modified over time. If a plan performance deficiency develops, however, the rule calls for expeditious remedies and for making up the shortfall as expeditiously as practicable because of the importance of reducing carbon dioxi de emissions.

The following are summaries of the specific public comments under this comment:

Commenter s addressed EPA's request for comment on the point at which corrective measures would be triggered, such as at the end of a multi

- year plan performanc e period if emission performance is not met, or at specified interim stages within a multi

- year plan performance period. Commenters also noted that the EPA requested comment on whether states should be required to create legal authority and/or adopt regulations providing for corrective measures in developing the state plan.

The commenters stated that projected greenhouse gas emission performance data should be used to trigger adoption of corrective action, including contingent new plan measures. The

c ommenters stated that triggers and timing should be proportional to the degree of shortfall and the nature of the corrective actions incorporated in the State Plans. The commenters stated that, as significant energy elements such as transmission upgrades m ay take 7 to 10 years to develop,276 corrective actions that require such elements must be triggered sufficiently far in advance to allow for their implementation.

The commenters stated that energy systems require, and regularly deploy, long

- term planning for reliability needs based on projected demand and supply scenarios. The commenters stated that greenhouse gas emission scenarios can be projected in advance consistent with energy system planning, allowing for orderly planning of corrective action and suffi cient lead time for the most
cost

- effective and efficient solutions. The commenters stated that actual emission performance data may come too late to allow implementation of the most cost

- effective corrective action or to optimize new or modified energy sy stem elements that could reduce greenhouse gas emissions; in contrast, projected data used at the time that energy system elements are planned could allow the least

- cost, most effective responses.

Comment 22: Comment supporting the EPA's proposal that a r eport and corrective measures would be required if actual emissions (or emissions rates) fall short of planned levels by more than 10 percent starting in 2022. C ommenters supported different percentages in the actual emission performance that would need to exceed the level of emission performance specified in the statewide plan as the trigger for corrective actions or for submitting a revised plan

, while other commenters did not agree with any of the percentages and could not support requiring conting ency measures in a section 111(d) plan.

Response 22: The EPA is finalizing the proposed corrective measures trigger of 10 percent exceedance of the level of emission performance specified in the statewide plan during interim period step 1 and step 2 and t he proposal that the corrective measures must make up for the shortfall. See Section VIII.F.3 of the final rule preamble of the CPP.

We are not finalizing a requirement that corrective measures be specified as part of the state plan submittal because the ability to tailor measures to the specific issues that arise would be more effective than corrective measures designed in advance. Instead, the final guidelines allow states to specify corrective measures once they are triggered. See Section VIII.F.3 of th e final rule preamble of the CPP.

The EPA notes the variety of commenters ’ views as to the percentage that actual emission performance would need to exceed the level of emission performance specified in the statewide plan to trigger corrective measures, in cluding support for the proposed trigger of a 10 percent exceedance and both a lower and a higher trigger. We have decided to finalize the level of the trigger at 10 percent

. For the agency’s rationale, s ee Section VIII.F.3 of the final rule preamble of th e CPP.

The EPA disagrees that the trigger for corrective measures should be higher than 10 percent because nature or mechanical failure can lead to variations of more than 10 percent. To address the possibility that an un

- anticipatable system emergency co uld cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability,

w e are finalizing a reliability safety valve that will allow a state to modify the emission standards277 for such EGUs for a maximum of 90 days. See Sections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

With respect to comments on year

- to

- year fluctuations in generation, generation mix and emissions, the EPA notes that the final guidelines contain multi

- year performance periods. The agency also notes that states can take into account the potential for such fluctuations in designing their plans to ensure that emissions per formance will meet the EGU performance rates or state goals. As just noted, we also are finalizing a reliability safety valve that is available under certain circumstances.

In response to a commenters who said two

- year periods would be too short a sample period for determining whether corrective action is needed during the interim period, the EPA notes that this comment is addressed by the fact that the final rule calls for 3

- year emission checks for interim step 1 and interim step 2 , and for an 8

- year emi ssion check at the end of the interim period

. The EPA agrees with c ommenters that the ability to develop measures necessary to address specific issues that arise would be more effective than binding a state to corrective measures designed in advance. For this reason, the final guidelines do not require states to include specific corrective measures in their state plan submittals and instead allow states to specify corrective measures once triggered. See Section VIII.F.3 of the final rule preamble of th e CPP.

Regarding c ommenters’ suggestion that the final rule allow states to update their plan during the interim period, the final guidelines permit certain plan modifications. See Section VIII.E. 7 of the final rule preamble of the CPP.

The following ar e summaries of the specific public comments under this comment:

Many commenters expressed views on the appropriate trigger for requiring a state to implement corrective measures.

Commenters noted that EPA requested comment " for plans with corrective mea sures adopted into regulation prior to complete plan submittal... " " whether actual emission performance inferior to projected performance by ten percent...is the appropriate trigger for requiring a state to report the reasons for deficient performance and to implement corrective measures. We are also soliciting comment on the range of five to fifteen percent ."

Commenters supported the EPA's proposal that a report and corrective measures would be required if actual emissions (or emissions rates) fall sho rt of planned levels by more than 10 percent starting in 2022. The commenters supported requiring additional actions and a modified compliance plan to make up for the emissions performance deficiency if a state fails to meet its interim or final goals. Sim ilarly, the commenters supported the proposal that state implementation plans include contingencies if the enforceable emissions limits on EGUs do not achieve the required emissions performance level

.

Commenters supported the approach that has been app lied in the Acid Rain Program, and suggested that states be required to go above and beyond, to achieve additional emission reductions to offset any deficiency during a performance period.278 Some commenters recommended that the appropriate trigger level for a revised plan be 10 percent, w hile other commenters did not agree with any of the percentages and could not support requiring contingency measures in a section 111(d) plan.

Commenters recommended that states should be required to implement corrective measures if actual emission performance is inferior to the projected performance by eight percent or more, as proposed . According to the commenters, a lower percentage would allow even earlier identification of a trajectory that is falling short of targets. The commenters noted that State legislative and/or regulatory action to adopt corrective measures after a deficiency is discovered will take significant time; therefore, state processes to activate corrective measures should be triggered earli er if corrective measures are not adopted in regulation and ready to implement. The commenters stated that this allows for a faster and more efficient approach and ensures compliance by the target date. The commenters stated that a higher percent emission performance deviation trigger is appropriate when corrective measures are adopted into regulation prior to complete plan submittal

.

Commenters stated that the trigger for corrective measures must be set low enough to assure compliance . The commenters no ted that although the agency has proposed a 10 percent deficiency as the trigger for corrective measures, it has solicited comment on a range of values, suggesting that 5 to 15 percent may be appropriate for states with corrective measures adopted into the ir regulations and 5 to 10 percent for states without codified measures. According to the commenters, because many states are unlikely to adopt plans that over

- comply with EPA's goals, it is important to keep states as close as possible to the emissi on reduction trajectory laid out in their implementation plans. The commenters noted that even a five percent deficiency may prove impossible to overcome without additional plan measures to make up the deficit in subsequent
years

. Similarly, commenters stated that the EPA should set the trigger for requiring corrective measures by a state at higher than the proposed 10 percent limit for annual deficient performance. The commenters stated that Montana's output from affected utilities has varied by
more t han 20 percent in recent years because of a maintenance shutdown at one of the large coal

fired generating units in one year and a large hydro runoff event in another year. The commenters stated that nature (e.g. weather patterns) or mechanical failure can lead to natural variations greater than 10 percent from what was expected, and that such events should not trigger the implementation of corrective measures.

Likewise, the commenters argued that the proposed alternative of an 8 percent limit on a state's deficient performance is too low of a trigger point. The commenters suggested that the final 2030 goal should be the most important target ; how states reach that goal is less important. The commenters recognized that corrective action measures are importan t but requested the final rule provide for states to update their plan during the interim period as conditions and earlier assumptions change.

Commenters stated that corrective measures should not be required unless a state is more than 10 percent above its average emission goal in any year after year 5 of the interim 10

- year period

.279 If EPA chooses to keep the interim goal, commenters recommended that states show compliance with plan projections within a higher percentage, such as 30%, during the early years and narrowing to 10 percent closer to 2029.

Commenters stated that the EPA's 10 percent trigger seems arbitrarily low . The commenters stated that failing to meet a milestone within 10 percent seems highly likely, which according to the EPA, will require the state to take corrective measures. The commenters stated that, if a trigger is determined to be necessary, a twenty

- five percent trigger for corrective measures is more reasonable than the 10 percent trigger, and would allow for unforeseen considerations and fluctuations in emissions. The commenters stated that a trigger for corrective measures should only be required if it is highly likely that the final 2030 goal will not be met and that’s an emissions exceedance of 10 percent of the milestone is not indicative that a state will fail to achieve its 2030 goal.

However, in choosing to adopt this method, commenters noted that the EPA proposes that the trigger for corrective measures be based on actual emission performance that is "inferior to projected performance by eight percent." The commenters noted that the EPA provides that an eight percent trigger is justified to id entify a gradually developing deficiency earlier in time, and account for the lengthy period for states to adopt legislative and/or regulatory action. The commenters stated that a trigger based on actual emissions is preferred over the alternative; however , the commenters stated that an eight percent threshold is too low . The commenters stated that the ability to develop measures necessary to address specific issues that arise would be more effective than binding a state to corrective measures designed in a dvance and may not truly address the issue causing a state to not achieve its emission targets. Additionally, the commenters stated that even with the option to tailor corrective measures after an issue is identified , an eight percent trigger is not indica tive that a state will fail to meet its 2030 goal and warrant corrective actions

.

C ommenters noted that under proposed 40 CFR 60.5815(b), the EPA proposes a 10 percent trigger for corrective actions, based on the biennial reports. Commenters stated that th ese biennial reports would provide too small of a sample size and would not warrant the automatic triggering of corrective measures.

Comment 23: Comment s stating that the EPA should clarify that contractual requirements for Energy Savings Performance Cont ract (ESPC) projects to guarantee equipment performance could be satisfactory corrective measures

. Response 23: The final guidelines call for certain types of plans to provide for corrective measures in the event of a n emission performance deficiency over the interim period or during any final reporting period, or a performance deficiency of 10 percent or more during interim step 1 or 2 . The EPA expects that corrective measures could be designed to remedy a problem causing the performance deficiency and/or add additional measures to the plan to increase the emissions reductions the plan will achieve. Although the agency is making no de termination in this rulemaking about particular corrective measures, the final guidelines do make qualifying energy efficiency measures eligible to be included in state plans. In the event of a state plan280 deficiency leading to state submission of correcti ve measures, the EPA will make judgments about whether a state’s proposed corrective measures are sufficient and consistent with these guidelines.

The following are summaries of the specific public comments under this comment:

Commenter s stated that t he EPA should clarify that contractual requirements for Energy Savings Performance Contract (ESPC) projects to guarantee equipment performance

- such as are commonly included in ESPC projects

- could be satisfactory and appropriate corrective measures for CPP purposes.

Comment 24: Comment suggesting that the EPA should strive to avoid exercising its section 111(d) authority to enforce a federal plan , and that the EPA does not have the authority to require or enforce renewable energy standards, customer ene rgy efficiency programs or other clean
energy programs.
Response 24: The EPA has been encouraging states, and will continue to encourage states, to adopt and implement effective plans under section 111(d). The EPA views the federal plan as a backstop in th e event a state fails to fulfill its obligations under the law to submit a satisfactory plan. The contents, rationale, and basis of authority for a section 111(d) federal plan to implement the Clean Power Plan Emission Guidelines will be set out in that ru lemaking and are beyond the scope of the Emission Guidelines themselves.

For the purpose of responding to this comment EPA will assume the commenters, by using the word “enforce,” were referring to EPA’s authority to enforce an approved state plan under section 111(d)(2)(B), and by using the word “implement,” was referring to EPA’s authority to promulgate a federal plan under section 111(d)(2)(A). With respect to EPA’s authority to
prom ulgate a federal plan, we are not doing so in these emission guidelines. Thus, we do not need to respond to the comment about the scope of EPA’s authority to promulgate and implement a federal plan.

With respect to the c ommenters’ concern s that EPA is r equiring corrective measures for certain types of plans that EPA is offering as alternatives to adopting the uniform rates

, we note that
p lans may fail to achieve the rates or goals for reasons outside of a state’s control

. F or example, actual power g eneration may differ from what the state projected. This scenario is not the result of a state’s failure to enforce its plan and therefore is not the type of situation that would trigger EPA’s authority under section 111(d)(2) to enforce the state’s plan. The EPA agree s with the
commenter s that the final guidelines should allow for multi

- year averaging period s ; use an exceedance threshold as an early warning measure if states are off

- target; and work with states to revise plans with additional reduction measures to achieve the final target. See Section VIII.F.3 of the final rule preamble of the CPP.

The follow ing are summaries of the specific public comments under this comment:

In a March 2014 comment resubmitted following proposal, commenters suggested that the EPA should strive to avoid exercising its 111(d) authority to enforce a federal plan and work to281 encourage states to implement their approved plans effectively. The commenters suggested that EPA should allow for a multi

- year (e.g., 3 to 5

- year) compliance period; use an exceedance threshold as an early warning measure if states are off

- target; and wor k with states to revise plans with additional reduction measures to achieve the final target.

As authorized by Section 111(d), the commenters stated

, EPA may exercise its authority to implement a federal plan if a state refuses to enforce its approved pla n. However, the commenters stated that EPA must recognize the limits of its authority in implementing such a federal plan. The commenters stated that, most importantly, the EPA does not have the authority to require or enforce renewable energy standards, c ustomer energy efficiency programs or other clean energy programs; only states and their economic regulators are in a position to address such measures. The commenters stated that the EPA should do what it has clear authority to do: regulate power plants s ubject to Section 111(d).

Comment 25: Comment s recommending, for state plans that are not self

- correcting, that the EPA leverage its experience with contingency measures in state attainment plans under CAA

s ection 110 to develop and administer the correc tive measures of the CPP.

Response 25: The EPA considered requiring state plans to include pre

- adopted contingency measures, but did not select that approach. Because plan performance d eficiencies may result from a variety of problems , for emission standards plans that do not mathematically ensure that the required state plan performance level will be met if affected EGUs comply with their federally enforceable emission standards, regardless of the amount of generation or generation mix , EPA decided that once corrective measures have been triggered, states should have a reasonable amount of time to submit a plan revision that considers the reasons for the deficiency and the amount of emission reduction sh ortfall, and addresses the deficiency. Also, based on past experience, we anticipate that some states may find it difficult, in developing plans to meet their goals, to adopt simultaneously special contingency programs that would take effect only in the

ev ent the plan proves insufficient. However, states are given the option of including adopted corrective measures in their original plan submissions. See Section VIII.F.3 of the final rule preamble of the CPP.

We disagree with the commenters’ general charact erization of contingency measures as providing a means for a state to reach compliance. Under EPA’s interpretation of the general contingency measure provision in section 172(c)(9), states are not expected to adopt and submit measures that will fully brin g the area into attainment; however the measures are expected to be fully adopted and ready to implement when submitted as part of an attainment plan. As described in s ection VIII.F.3 of the final rule preamble of the CPP, corrective measures under these guidelines are not expected to be fully adopted and ready to implement when the plan is submitted, but they are expected to bring the state into compliance by fully addressing the deficiency in the state plan so that the rates or goals are achieved and the shortfall is made up. While the commenters ’ suggestion may be one approach that would be permissible under section 111(d), when there are multiple ways in which a gap in the statute can be filled, EPA is entitled to pick one so long as it is reasonable. EPA’s choice of corrective measures that are dissimilar to part D contingency measures is reasonable.282 The following are summaries of the specific public comments under this comment:

For state plans that are not self

- correcting, commenters recommended that EPA leverage its experience with contingency measures in state attainment plans under CAA Section 110 to develop and administer the corrective measures of the CPP. According to the commenters, contingency measures in attainment planning serve the same purpose as corrective measures in the CPP in that they provide a means for the state to reach compliance if the implemented required measures fail to achieve attainment or make reasonably further progress towards attainment by the applicable date. The com menters noted that EPA has approved a number of different approaches to contingency depending on the specific circumstances of a state. The commenters recommended that EPA allow for such flexibility in the final CPP corrective measures provisions, to the e xtent that flexibility does not interfere with timely goal achievement. The commenters indicated that corrective measure requirements should not be so loose as to allow a state that fails to meet its goal to continue business as usual for the affected

sour ces. The commenters stated that EPA's policies and practices for reasonable further progress and attainment demonstrations under subpart 2 of part D of Title I of the CAA (as they relate to ozone nonattainment areas) provide a practical approach to state c ompliance with the CPP goals.

Comment 26 : Comment s suggesting that the final guidelines adopt an expansive definition of corrective measures that includes methane reductions achieved by gas distribution companies.

Response 26 : The EPA disagrees with the commenters that out

- of

- sector offsets such as reductions in methane emissions from natural gas LDC facilities may be counted toward meeting a CO 2 emission performance level for affected EGUs or a state CO 2 goal, because ou t

- of

- sector offsets are not connected to the electrical grid and so cannot reliably address stack CO 2 emissions from affected EGUs. See Section s V.B.3.c and VIII. K.1 of the final rule preamble of the CPP. Any corrective measures would be adopted as part of the state plan and therefore must conform to the same limitations as the rest of the plan. See Section VIII.F.3 of the final rule preamble of the CPP.

We disagree with the commenters that there is a nexu s between natural gas LDC facilities and affected EGUs such that reductions in methane emissions from LDC facilities are not out

- of

sector. However, state plans (including potential corrective measures) may accommodate emission budget trading programs that may include out

- of

- sector GHG offsets, which we are finalizing as an option under the state measures plan type. See Section s VIII.C. 3 and VIII.J.2.d of the final rule preamble of the CPP.

The following are summaries of the specific public comments under t his comment:

Commenters suggested that the final guidelines adopt an expansive definition of corrective measures that includes methane reductions achieved by gas distribution companies. The commenters stated that the proposed guidelines provide that, un less a state compliance plan has "self

- correcting" measures, the plan must specify "corrective actions" (sometimes referred to in the guidelines as "corrective measures"). See proposed 40 C.F.R. Section 60.5815(b), 79 FR 34955. The commenters stated that u nder the guidelines, a state would be required to implement283 "corrective actions" during a compliance period if there was a discrepancy between the actual emissions performance of the state's affected EGUs and the projected performance under the plan. The c ommenters stated that if the plan specifies and authorizes the corrective actions up front

--- i.e., when the plan is submitted to EPA

--- then the corrective actions would have to be implemented if there was a discrepancy of 10 percent or more. The commenters noted that if the plan provides that the state will determine and adopt the corrective actions only after the discrepancy is identified, then the trigger would be 8 percent. See id.; see also 79 Fed. Reg. at 34,907. The commenters stated that the proposed guidelines do not otherwise define or prescribe what types of measures could constitute a "corrective action."

The commenters recommended that EPA allow states broad discretion to specify the types of abatement measures that can be "corrective actions." In particular, the commenters recommended that the Agency should allow such "corrective actions" to include quantifiable and verifiable reductions in methane emissions from natural gas LDC facilities. The commenters noted that methane is a recognized green house gas, and gas LDCs around the country are carrying out innovative emission reduction projects. The commenters stated, for example, the Natural Gas Downstream Initiative involves five power companies (Consolidated Edison Company of New York, National G rid, Pacific Gas & Electric, Public Service Electric and Gas Company and Xcel Energy) focusing on reducing methane leaks by encouraging programs that accelerate investments in infrastructure and promote outstanding operations, including modernizing their

s ystems and utilizing next generation technologies.

The commenters stated that the proposed guidelines likely would not allow states to include LDC methane reduction projects as part of the foundational "enforceable emission reduction measures" in their pla ns because such projects do not directly affect the emissions performance of affected EGUs. See 79 FR 34910. However, the commenters stated that EPA notes that emission limits for affected EGUs that are included in state plans could include provisions that provide the ability to use offsets for compliance. Id. The commenters stated that if EPA is willing to allow individual units to use offsets for compliance with emissions limits, it would be reasonable to provide states with similar flexibility by allowin g them the broad discretion to specify LDC methane reductions, or other similar measures, as "corrective actions."

The commenters stated that it is important to recognize that corrective actions play a limited and contingent role in the achieving the propo sed emission rate goals. The commenters stated that a state would implement a "corrective action" only if the state's EPA

- approved compliance plan was not performing as both the state (and EPA) projected

--- despite full implementation of that plan.

However, according to the commenters, if state plans are not performing as projected, it would, by definition, mean that the state would have to look beyond the electric

- sector measures that the state previously had included in its compliance plan because they wer e determined to be practical and cost

- effective. The commenters stated that limiting the state's "corrective actions" only to further power

- sector measures could mean forcing the state to adopt measures it had already rejected as too costly or as requiring other system changes that may take several years to implement. By contrast, the commenters noted that allowing already

- achieved reductions in LDC methane emissions to count as "corrective actions" would provide a cost safety valve and could produce reduct ions immediately.284 Furthermore, the commenters stated that it is important to recognize that in many states there is a nexus between LDC facilities and affected EGUs, where utilities are the common denominator. The commenters stated that the proposed guidel ines already contemplate a major role for utilities as the entities that will carry out state compliance plans. The commenters stated that many of these same utilities also own natural gas distribution facilities and therefore can implement methane reducti on projects. In other words, the commenters stated that allowing LDC methane reductions as "corrective actions" only implies broadening the scope of permissible measures to the entire utility sector; it does not imply opening the door to the entire univers e of potential offsets from forests, farms or other sectors of the economy.

For the foregoing reasons, the commenters argued that the final guidelines should find that an approvable state compliance plan could define "corrective measures" to include verifi able LDC methane reductions. The commenters stated that such a finding would not deprive EPA of its authority to review and approve any state plan that included methane reductions as a corrective measure. Further, the commenters noted that EPA would retain the authority to review compliance reports that indicated that methane reduction corrective measures had been triggered and used.

Comment 27 : The corrective measures provisions should be able to take into account extraordinary, uncontrollable natural events, extreme circumstances, or an energy emergency beyond the state’s control that could result in non

- compliance with the projected performance targets.

Response 27 : We agree with the commenters that the final emission guidelines should include a mecha nism for states to approach EPA with requests to obtain short

- term extensions or modifications due to extraordinary, uncontrollable events and guidance to the states on how they can account for such events. The EPA recognizes the possibility that certain c ircumstances beyond a state’s control or an un

- anticipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posin g an otherwise unmanageable risk to reliability.

Therefore, w e are finalizing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days. The reliability safety valve will allow such EGUs to o perate under the modified emission standards rather than the emission standards specified in the relevant state plan for that time period (including an exceedance that would otherwise trigger corrective measures), while still requiring the CO 2 emission
per formance rates or the state CO 2 emission goal to be met. While use of the reliability safety valve would preclude an applicable event from triggering corrective measures during the safety valve period, the state must still make up for any emission reductio ns that were lost during the safety valve period. See Sections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

The final guidelines also permit certain plan modifications. See Section VIII.E. 7 of the final rule preamble of the CPP.285 The follo wing are summaries of the specific public comments under this comment:

Commenter s stated that corrective measures and other compliance and reporting mechanisms should be robust but take into account extraordinary, uncontrollable natural events or extrem e circumstances.

Commenter s recommended specifying more clearly whether corrective measures will kick in if circumstances beyond the states control result in non

- compliance with the projected performance (e.g., extreme weather events, low emitting EGU equipment failures, and natural gas supply issues).

Commenter s stated, EPA should account for events beyond a state's control that could result in plan noncompliance. Commenter s said, such events could include natural disasters, weather disruptions affecting fossil fuel utilization, and human

- induced catastrophic events. Commenter said, the final rule should have provisions that exclude demonstrated emission increases resulting from exceptional events.

Commenter s stated, EPA acknowledges that ther e are scenarios under which an approved state plan might fail to achieve a level of emission performance by affected EGUs that meets the state goal. Commenter s said, EPA should account for events beyond a state's control, in the final rule, that could resu lt in plan noncompliance.

Commenter s stated, such events could include natural disasters, weather disruptions affecting fossil fuel utilization, and human

- induced catastrophic events. Commenter s said, the Cabinet urges EPA to include in the final rule p rovisions that emission increases resulting from exceptional events will be excluded from state compliance demonstrations. Commenter s said, an example of such a measure currently in use can be found when EPA allows a waiver on the use of summer blend fuels in non

- attainment areas due to unforeseen supply disruptions.

Commenters requested that EPA include a provision in the rule to allow states to suspend state plan requirements in the event of an energy emergency. The commenters stated entities subject to enforceable requirements under the state plan would still be subject to potential private citizen lawsuits for non

- compliance.

The commenters suggested that the compliance process include a mechanism for states to approach EPA with requests to obtain sh ort

- term extensions or modifications due to extraordinary, uncontrollable events. The commenters noted that such a mechanism could help EPA set and hold states accountable to tough targets rather than set less strict targets to accommodate extreme events. Moreover, the commenters recommended that EPA provide guidance to the states on how they can account for extraordinary and uncontrollable events that negatively impact compliance or a mechanism for a state to demonstrate emission rates above the
state stan dard were due to unforeseeable and uncontrollable natural events. For example, the commenters suggested that EPA could expand the threshold for triggering corrective measures to a 15 percent difference in actual to projected performance, based on the three or five year averaging period described above. Alternatively, the commenters suggested that EPA could give states more time to respond and develop additional requirements or make plan modifications.286 According to the commenters, for states like Washington that are dependent upon a hydroelectric system, droughts and the variance in seasonal snow runoff create dramatic annual shifts in the amount of hydropower available to the state. The commenters stated that in these situations the utility must ensure the r eliability of the grid by running more generation from carbon emitting resources. The commenters did not suggest a broad

- based escape path to avoid the reduction targets, but simply urged some flexibility in enforcement and time for corrective action as a complement to the setting of strict targets.

Commenters noted that the proposed rule requires that all state plans, including multi

- state plans, identify enforcement measures for affected entities, and the commenters requested that states be allowed to make adjustments to address unforeseen events. Although the proposal asserts that it provides states with flexibility, the commenters stated that it does not provide any flexibility for addressing unanticipated changes and events that might occur after pla n approval that will significantly impact the ability of the state to achieve its objectives under the plan. The commenters stated that such an occurrence should not automatically result in federal enforcement or subject an entity with a compliance obligat ion to citizen lawsuits

. The commenters stated that the plan must be modified to allow states to make adjustments to their enforcement plans when they demonstrate a justifiable reason to alter the level of performance required under the approved plan.

Com ment 28 : Comment s suggesting that the EPA should grant extensions of up to 5 years to applying states that demonstrate that they have been making good faith efforts to implement the guidelines and are on glide paths to compliance

. Response 28 : We disagree with the commenters that the final emission guidelines should provide procedures for states to obtain extensions of up to five years to meet the final state goals

. The EPA is providing numerous resources to help states develop state plans that will be able to achieve the EGU emissions performance rates or state goals by 2030, including a toolbox of decision support resources at: http://www2.epa.gov/ www2.epa.gov/cleanpowerplantoolbox. The state plan decision support section of the toolbox includ es information to help states evaluate different approaches and measures they might consider as they initiate plan development. See Section VIII. H of the final rule preamble of the CPP. In addition to finalizing the emission guidelines, t he EPA is proposin g a model rule that may be adapted to serve as a model rule for emission standards under a state plan. The final guidelines also allow states to modify a state plan that needs revision, and includes measures to help states with approved state plans meet th eir CO2 emission performance rates or state CO2 emission goals if they get off

- track. See

s ection s VIII.E.7 and VIII.F.3 of the final rule preamble of the CPP.

However, we recognize that an un

- anticipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability. W e are therefore finalizing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days, as described in the response to the previous comment and in sections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.287 The following are summaries of t he specific public comments under this comment:

Commenters stated that the proposed rule made no provision for states that are unable, despite best efforts, to meet the final emission reduction goals by the final compliance year. According to the commenters, the final emission guidelines should provide procedures under which states that have demonstrated their efforts to attain the emission reduction targets but have not achieved those targets by that deadline can request and obtain extensions of time within which to meet those targets. The commenters suggested th at EPA should grant extensions of up to 5 years to applying states that demonstrate that they have been making good faith efforts to implement the guidelines and are on glide paths to compliance.

Comment 29 : Comment s recommending that no corrective measur es be required so long as a State is reasonably close to its performance goal should the actual emissions only modestly exceed the performance goal without the influence of intervening unanticipated factors.

Response 29 : The EPA recognizes that an un

- antic ipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability. W e are therefore finalizing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days while still requiring the CO 2 emission performance rates or the state CO 2 emission goal to be met. See Sec tions VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

The EPA dis agree s with the commenter s that corrective measures should not be required if a
state plan fails to achieve the levels of performance required by the emission guidelines for th e 8

- year interim period or the two

- year final goal performance periods. These levels are the average or aggregate levels of emission performance that the EPA has determined reflect application of the BSER, and are not optional. Therefore, the EPA has deter mined that corrective measures

– or in the case of state measures plans, federally enforceable backstop requirements for affected EGUs

– should be required if a state plan fails to achieve those levels. States should adopt plans that are designed to ensure that the required emission performance levels will be fully achieved. The EPA notes that this position is consistent with the position that the agency proposed.

The EPA draws a distinction between the 8

- year interim period and final goal emission perform ance requirements, which are levels that the agency defines as reflecting application of BSER under section 111(d), and the interim step 1, 2 and 3 performance levels, which define the state’s chosen emission reduction trajectory to meet the 8

- year interim goal. The agency observes that the emission guidelines give states the ability to select their own emission reduction trajectory for the interim step 1 (2022

- 2024), step 2 (2025

- 2027) and step 3 (2028

- 2029) period. The guidelines contain emission levels for interim steps, presented both in terms of emission performance rates for the two subcategories of affected EGUs and in terms of state goals, expressed both as a rate and as a mass. A state may adopt emission standards for its sources that are identica l to these interim emission performance rates or, alternatively, adapt these steps to accommodate the timing of expected reductions, as long as the state’s interim goal is met over the eight

- year period.288 Accordingly, the EPA views the function of the step 1 and step 2 emission levels in the state plan as benchmarks that serve as check points to ascertain whether the state plan is on track to achieve the 8

- year interim goal, and if not, to remedy that situation through

– depending plan type

-- corrective mea sures or implementation of federally enforceable backstop requirements for affected EGU. For interim step 1 and step 2, the agency is requiring state plans to trigger corrective measures or backstop provisions if actual emission performance is deficient by 10 percent or more relative to the state plan’s specified level s of emission performance for the step 1 and step 2 periods

. The rationale for the 10 percent level is provided in s ection VIII.F.3 of the final rule preamble of the CPP.

The agency has determ ined that actual emissions performance that does not meet a state plan’s specified level for interim step 3 is not a basis for mandatory corrective measures or backstop requirements. The reasons for this decision is that if a state plan achieved better

- tha n

- planned emission performance during the interim step 1 and step 2 periods, actual emission performance during the step 3 period could fail to meet the step 3 level specified in the plan, yet the state plan could might still meet the EGU performance rates or state goal for the 8

- year interim period. The emissions check due on July 1, 2030, compares actual emission performance with plan

- specified emission performance levels for 2022

- 2029 and 2028

- 2029. As explained above, failure of the state plan to achiev e the level required by the emission guidelines for 2022

- 2029 triggers corrective measure or backstop requirements. The function of the 2028

- 2029 emissions check is to provide the state, the EPA and the public with information on how recent emissions perfo rmance compares with emissions performance during the step 1 and step 2 periods. This data will show whether emission performance is recently improving or not, and by how much.

The following are summaries of the specific public comments under this comm ent:

Commenters recommended that the State or individual utility performance goal (as applicable) be adjusted accordingly with no penalty attached where actual emissions exceed the performance goal due to unanticipated circumstances such as economic con ditions, severe weather, or necessary postponement of planned retirements. The commenters recommended that no corrective measures be required so long as a State is reasonably close to its performance goal should the actual emissions only modestly exceed th e performance goal without the influence of intervening unanticipated factors.

Comment 30 : Comment s suggesting that EPA should provide a means by which states can be excused for missing the goals identified in their approved state plans if those goals are missed due to "exceptional events

. ” For similar reasons, a 3

- year rolling average should apply for compliance prior to 2030 in the same way that it was proposed for compliance after 2030.

Response 30 : We recognize that an un

- anticipatable system emerg ency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability. W e are therefore finaliz ing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days as described in sections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.289 The final guidelines are responsive to th e suggestion that the final guidelines should use multi

year periods for purposes of determining whether state goals are met. For state measures plans, the final guidelines require states to identify interim steps (interim step goal 1 for 2022

- 2024; interi m step goal 2 for 2025

- 2027; interim step goal 3 for 2028

- 2029), and a final goal for two

year performance periods in 2030 and beyond

. See Section VIII.F.1 of the final rule preamble of the CPP.

The agency is finalizing discrete 2

- year periods for the fina l goal performance periods to reflect the following considerations. Commenters suggested that rolling performance periods, which were proposed to allow for annual emission performance checks, be replaced by discrete periods to reduce the workload of admini stering the program for states. The agency has accepted that suggestion. Discrete periods of two years allow for checking plan performance every two years; discrete periods of three years would allow checking plan performance only every third year. The a gency believes that 3

- year periods are appropriate for interim step 1 and step 2 while states are initiating or ramping up their programs. For final goal performance periods, the agency believes that requiring checks and reporting on plan performance ever y two years, rather than every three years, better assures that emission performance consistent with the final EGU emission rates or state goal is being maintained through providing more frequent assessment of whether corrective measures or the backstop ar e needed. The two

- year periods will help to smooth out year

- to

- year variability in emission performance.

States must demonstrate that affected EGUs achieved the final performance rates, or the state’s interim step goal or final goal, on average during eac h multi

- year reporting period. The multi

year performance periods for measuring actual plan performance against the performance rates or state goals allow states some flexibility in light of year

- to

- year variation in seasonal operation of affected EGUs, and inclusion of RE and demand

- side EE efforts. See Section VIII.F.2 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters suggested that E PA should provide a means by which states can be excused for missing the goals identified in their approved state plans if those goals are missed due to "exceptional events," including particularly unfavorable weather conditions that make compliance unduly difficult, threaten reliability, or result in unacceptable cost consequences for
customers.

The commenters stated that unusual weather can occur in any year and significantly alter the emissions profile of the electric sector in all regions of the countr y. The commenters stated that the vulnerability of the electricity system to the impacts of extreme weather events is especially pronounced in the Pacific Northwest, due to the hydropower system. The commenters stated that the EPA presumably understood the likelihood of weather variances resulting in unexpected emissions results, and accordingly proposed the 3

- year rolling average for compliance after 2030. The commenters recommended that a 3

- year rolling average should also apply prior to 2030

.

Commenters stated EPA should permit RGGI to keep its current 3

- year block compliance period rather than a 3

- year rolling compliance period, as long as the RGGI states can demonstrate that290 the program will achieve the required levels of stringency on the timeframe re quired in the final emission guideline.

In addition to this rolling average, the commenter s suggested that the EPA should provide an allowance for the impact on unusual or "exceptional" events that significantly interfere with a state's ability to ach ieve its emissions goals for reasons beyond the state's control. The commenters noted that current climate models predict, with significant confidence, changes in seasonal stream flow that would lower hydropower generation and increase fossil generation an d emissions. The commenters noted that while state plans might be expected to take expected changes in weather events into account, unexpected, exceptional events, by their nature cannot be predicted or planned for . As a result, the commenters stated that the EPA should develop a compliance approach that acknowledges the impact that extreme weather events, such as a drought in the Pacific Northwest, could have on the electric system and emissions.

Commenters stated that a catastrophic event could occur such as the failure at a base

- load generating plant. The commenters stated that in order to maintain grid reliability it could be necessary to increase fossil fuel electric generation to meet electricity demand. The commenters stated that such an occurrence does not lend itself well to contingency plans since by the time such measures would be implemented the catastrophic event may be corrected. The commenters noted that such an event occurred in 2003 in Michigan 's Upper Peninsula when a 345 MW coal

fired base

- load plant was flooded due to the failure of a dam and went out of service for a period of time. The commenters stated that the power loss was shored up by the import of very large diesel generators and runn ing other EGUs in the area as base

- load plants. The commenters noted that an event such as a major storm could also affect wind farms or other types of facilities and a similar situation could occur. It is for this reason that the commenters recommended th at EPA be flexible in defining a catastrophic event and be specific on how to address such possibilities within a state plan.

Comment 31 : Comment s suggested that EPA should not require states to implement corrective actions if they exceed projected emissions in a single year and arguing that if states are required to implement corrective actions immediately upon missing a single annual emission check, they may be forced to resort to more disruptive, short

- term, expensive corrective measures.

Response 31 : The EPA agrees that the test for whether state plan performance is off

- track should not rely on a single year of data, and is finalizing multi

- year plan performance periods. See Section VIII.F.3 of the final rule preamble of the CPP.

To address the possibility that an un

- anticipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanagea ble risk to reliability, w e are finalizing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days. See Sections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:291 Commenter s suggested that EPA should not require states to implement corrective actions if they exceed projected emissions in a single year. The commenters stated that like the Proposed Rule's assumptions that certain building blocks could be implemented all at once in 2020, EPA's proposed "corrective action" policy could also lead to severe implementation and reliability issues. The commenters stated that this requirement would severely limit utilities' and states' abilities to manage unexpected inter

- annual fluctuations in the supply and demand of electricity. The commenters noted for example, in some states, it is possible that the outage of a single nuclear facility for several months, or the occurrence of an unexpectedly long or hot summer could lead emissions or emission rates to rise by 10 percent or more over a 1

- or 2

- year period. Similarly, the commenters noted that greater

- than

- expected economic growth could lead a state to tempo rarily exceed its own emission projections over a 2

- year period. The commenters noted that states and utilities traditionally adjust to such events by engaging in long

- term planning and by making prudent investments in generation and transmission. However, because planning, permitting, and constructing new generation, transmission, or pipeline infrastructure can take years, the commenters noted that states and utilities may not be able to address these unexpected changes in supply or demand within the timef rame of an annual emission check. The commenters noted that NERC estimates that new pipeline capacity requires a 3

- 5 year planning horizon, while new transmission typically requires a 10

- 15 year outlook.

The commenters argued that if states are required to implement corrective actions immediately upon missing a single annual emission check, they may be forced to resort to more disruptive, short

- term, expensive corrective measures . The commenters explained that requiring states to implement such potentiall y severe corrective actions to address single

- year variations in emission performance could severely affect electric reliability and economic development in the state. According to the commenters, it would also conflict with EPA's sensible policy of granti ng states the flexibility to manage their emissions on a multi

- year basis. The commenters stated that by requiring corrective actions any time a state fails its annual emission check, the Proposed Rule will severely limit states' and utilities' abilities t o take responsible, long

- term steps to adapt to unexpected changes in electricity markets in ways that make sense from a reliability and economic sense. According to the commenters, such a requirement is not necessary to achieve EPA's long

- term emission re duction goals, and would introduce significant, unnecessary, and potentially costly constraints on states' and utilities' ability to manage the inevitable inter

- annual fluctuations in electricity markets and emissions.

Comment 32 : Comment s related to corr ective measures/contingency measures

– Timing and process issues.

Response 32 : The EPA agrees with commenters that giving states the choice either to include specific corrective measures in the state plan submittal or to wait until after a deficiency is discovered gives states flexibility to better target the corrective measure to directly address the cause of the deficiency. For this reason, the final guidelines do not require states to include specific corrective measures in their state plan submittals and instead allow states to specify corrective measures once triggered. See Section VIII.F.3 of the final rule preamble of the CPP.292 We agree with commenters that the final guidelines should not make the implementation of corrective measures that states have already identified in their plans unenforceable, and we are giving states the option to include specific corrective measures in their state plan submittals. However, we disagree with the commenters that to effectively serve their intended purpose, al l types of corrective measures must be actionable when a state submits its plan to EPA. We note that we are finalizing the option of a “state measures” plan type, which would include state

enforceable measures that may apply to affected EGUs and other ent ities . With a state measures approach, the plan must also include a specific backstop of federally enforceable standards on affected EGUs that fully meets the emission guidelines a nd that would be triggered if the plan failed to achieve on schedule the required emission reductions. See Section VIII.D.2.c of the final rule preamble of the CPP. For the “emissions standard” plan type, in which all measures are federally enforceable mea sures on affected EGUs, however, we disagree that the balance between automatic deployment of corrective measures and the opportunity for states to tailor corrective measures to the specific circumstances argues for requiring specific corrective
measures t o be included in the state plan submittal. Instead, the final emission guidelines provide states with a 24

- month period to submit a state plan revision containing corrective measures and

a 6

- month period to then implement the measures once approved by the EPA. See Section VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

A number of commenters expressed view on specific issues involving the timing of adoption of corrective action measures, the timing of implementation of corrective action measures, and the process for instituting corrective action measures.

Commenters supported EPA's proposal for corrective measures, which allows states a choice to either adopt corrective measures into the state plan or into regulations prior to submitting the plan, or wait until after a deficiency is discovered. The commenters noted the latter option gives states flexibility to better target the corrective measure to directly address the c ause of the deficiency.

Some commenters disagreed that corrective measures should be adopted prior to complete plan submittal. Commenters argued that this would be a time consuming and needless diversion of limited resources.

Commenters stated th at to effectively serve their intended purpose, corrective measures must be actionable when a state submits its plan to EPA. The commenters noted that the agency has proposed to leave to the states the decision whether to adopt corrective measures into the ir regulations prior to submittal, or whether to wait until after a deficiency is discovered before taking legislative or administrative action to codify the corrective measures in the plan. The commenters noted that the proposed rule offers that " it may b e challenging for states to fully adopt corrective measures in advance to address the possibility that their plan will not perform as projected ." 79 FR 34907. However, the commenters explained that even if states have difficulty identifying potential corre ctive measures, EPA has not identified what about the mere codification of those measures (in tandem with the adoption into state codes of other plan provisions) poses a special challenge. Furthermore, the commenters stated that the EPA recognizes that " [l ]egislative and/or regulatory action to adopt corrective measures after a293 deficiency is discovered will take significant time ." Id. The commenters stated that there is no reason to allow states to delay the adoption of corrective measures until after a def iciency occurs, or to make the implementation of corrective measures that states have already identified in their plans unenforceable. By analogy, the commenters noted that the Act requires SIPs for nonattainment areas to " provide for the implementation of specific measures to be undertaken " if the area fails to make timely progress toward attainment of standards, and further requires that such measures " shall be included in the plan revision as contingency measures to take effect in any such case without f urther action by the State or the Administrator ." 42 U.S.C. 7502(c)(9)(emphasis added). The commenters stated that the same sort of approach is warranted for the section 111(d) plans at issue here, if they are to ensure the "best system" of emission reduct ions.

Comment 33 : Comment stating that the EPA must establish a deadline for states to begin implementing corrective measures once their actual emissions or emission rate exceeds projections, and that the deadline for implementing corrective measures cou ld be included by each state in the state plan rather than defined by EPA to accommodate differences in states' legislative and rulemaking timelines and processes.

Response 33 : The EPA agrees that we must establish a deadline for states to begin implementing corrective measures once triggered, and we agree in part that this deadline could be included in each state’s plan. We are finalizing a requirement that a state that trigger s corrective measures must notify the EPA of this triggering in its state report (which each state must submit no later than July 1 of the year following the end of each interim period or final period), and that the state then must submit a plan revision c ontaining corrective measures to the EPA as expeditiously as practicable and within 24 months if the state plan does not already contain corrective measures to be enacted if triggered

. The 24

- month time period allows time to identify corrective measures an d make rule changes through state regulatory processes. The state must implement corrective measures within 6 months of the EPA’s approval of a plan revision adding them. States may choose to include corrective measures (to be implemented if triggered) in their final plan or to include a deadline for implementing corrective measures submitted as a plan revision within 6 months after EPA approval of the modified plan, but not later. Because the EPA will take 6 to 12 months to approve the state submittal, the 6

- month deadline for implementing corrective measures in practice gives states 12 to 18 months from the time of submittal. The agency believes that this time period is appropriate based on past experience with implementing a variety of programs.

The following are summaries of the specific public comments under this comment:

Commenter s stated that the EPA must establish a deadline for states to begin implementing corrective measures once their actual emissions or emission rate exceeds projections. A ccording to the commenters, although the agency has not proposed such a deadline in the rule proposal, see 79 FR 34952 (proposed 40 CFR 60.5740(a)(7)(ii), requiring only that state plans include "a process and schedule for implementing such corrective meas ures"), it suggests that 2 years after a state reports a deficiency in its annual performance update may be a suitable deadline. 79 FR 34912. The commenters noted that because states will likely have notice of the deficiency well in294 advance of the reportin g date, an additional 2 years for implementing corrective measures is unnecessary and irrational. The commenters stated that the Act requires immediate triggering of contingency measures where nonattainment areas fail to meet progress targets, and there is no reasoned basis for allowed a more delayed approach under section 111 plans. The commenters noted that only the incremental corrective measures would need to be implemented anew, not the entirety of the plan. The commenters stated that any delay longer than 6 months would therefore be excessive for undertaking corrective action.

Commenter s stated that the deadline for implementing corrective measures could be included by each state in the state plan rather than defined by EPA to accommodate differenc es in states' legislative and rulemaking timelines and processes.

Comment 34 : Comments related to the criteria or “trigger” for correction action and the exten t of corrective action.

Response 34 : The EPA has clarified requirements for corrective measures in the final guidelines, as suggested by commenters. For state plans subject to corrective measure or backstop requirements, EPA agrees with commenters that that a plan revision or backstop requirements
must both ensure meeting plan emission performance requirements in the future and make up the past shortfall in emission reductions. Emissions reductions to make up the past shortfall must be achieved as expeditiously as practicable. As with the measures i n original plan submissions, any revised or new emission reduction measures adopted through plan revisions must be quantifiable, verifiable, non

- duplicative, permanent, and enforceable , and are subject to monitoring and reporting requirements. See Secti on VIII.F.3 of the final rule preamble of the CPP.

Under the final guidelines, the remedies for plan performance deficiencies vary depending on the type of state plan. The EPA is finalizing the option of a “state measures” plan type, which would include s tate

- enforceable measures that may apply to affected EGUs and other entities . With a state measures approach, the plan must also include a specific backstop of federally enforceabl e standards on affected EGUs that fully meets the emission guidelines and that would be triggered if the plan failed to achieve on schedule the required emission reductions. Past shortfalls can be made up either through the design of the backstop EGU requi rements or through a plan revision. See Section VIII.D.2.c of the final rule preamble of the CPP. For the “emissions standard” plan type, in which all measures are federally enforceable measures on affected EGUs, however, the guidelines provid e states with 24 months to submit a state plan revision conta ining corrective measures and 6 months to then implement the measures once approved by the EPA. See Section VIII.F.3 of the final rule preamble of the CPP.

The agency disagree s with the commenters that the fi nal guidelines should require state plans to include fully adopted corrective measures, that the measures should be adequate to provide at least double the trigger deficiency, or that the plans should be required to include an additional menu of contingenc y measures that will be triggered progressively if the doubled trigger percentage is not sufficient to compensate for the full shortfall. The EPA has explained earlier in this RTC section (6.1.5) why it is not requiring state plans to include adopted conti ngency measures. The approach of requiring corrective measures to achieve at least double the corrective295 action trigger level would not work for all plan performance periods. The guidelines require state plans to fully achieve the 8

- year interim performan ce level and the final goal performance levels; there is no percentage trigger for corrective measures or backstop in the event those levels are not achieved. Therefore, consistent with the commenters’ general concern, the EPA is adopting an approach to m aking up shortfalls that does not depend on the corrective measure trigger percentage. The backstop requirements or plan revision must make up the full amount of the shortfall, and must do so as expeditiously as practicable. See Section VIII.F.3 of the f inal rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters noted that corrective measures must be available to remedy plan deficiencies, but that the EPA has not specified any minimum requirements. 79 FR 34952 (proposed 40 CFR 60.5740(a)(7)(ii)). The commenters noted that the agency also seeks comment on whether corrective measures must be sufficient to remediate deficiencies or merely to ensure the future achievement of the state's goals. See 79 FR 34908. The commenters stated, at a minimum, corrective measures must serve to fully remedy any shortfall in plan per formance as measured over the 2

- year period over which EPA will evaluate states' progress in meeting their goals. Therefore, the commenters stated that if EPA retains its proposed 10 percent deficiency as the trigger for corrective measures, states must de velop corrective measures that achieve improvements in excess of 10 percent of their annual targets. Otherwise, the commenters stated that the corrective measures would not fully correct the deficiency that triggered them. To ensure the availability of suf ficient corrective measures to avoid the need for a SIP call, the commenters suggested that the EPA should require state plans to include fully adopted corrective measures adequate to provide at least double the deficiency trigger percentage for each year of the plan, plus an additional menu of contingency measures that will be triggered progressively if the doubled trigger percentage is not sufficient to compensate for the full shortfall.

The commenters stated that the EPA must also clarify that the crite ria for corrective measures are as rigorous as those concerning plan measures that are not contingent on a deficiency (e.g., the effectiveness of the corrective measures selected for inclusion in the plan should be evaluated through the same process that s tates use for other plan projections: they must be quantifiable, verifiable, non

- duplicative, permanent, and enforceable). Additionally, the commenters stated that the monitoring, reporting, and recordkeeping requirements for corrective measures must be

su fficient to assure compliance.

Comment 35 : Comment ers support ed the EPA's proposal requiring a report, outlining corrective measures, be submitted to EPA should a state's emissions (under a mass

- based approach) or emissions rates fall short of projected levels by more than 10 percent starting in 2022, and recommending that the EPA require interim reporting during the CPP's 2020

- 2030 timeframe.

Response 35 : We agree with the commenters that the final emission guidelines should require states to report tri ggering of corrective measures (or, under the state measures plan type, the backstop) and interim reporting during the interim period. See section VIII.F.3 of the final rule296 preamble of the CPP. The interim reporting period will begin in 2022 and contain i nterim step periods from 2022

- 2024, 2025

- 2027, and 2028

- 2029 for the reasons outlined in section s V.A.3.g and VIII.B of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenter s supported EPA's proposal requiring a report, outlining corrective measures, be submitted to EPA should a state's emissions (under a mass

- based approach) or emissions rates fall short of projected levels by more than 10 percent starting in 2022. With regar d to the frequency of reporting, the commenters suggested that a 10

- year time period would be too long for compliance with interim goals and could lead states to forego near

- term action, and, thus,
create an over

- reliance on actions at the end of the 10

- ye ar period. According to the commenters, such a risky strategy would create the possibility that states could fail to achieve compliance if they were unable to "make up" savings at the end of the compliance period, which could occur for any number of reason s. Therefore, the commenters and the joint energy efficiency stakeholders in their separate comments related to EM&V issues recommended that EPA require interim reporting during the CPP's 2020

- 2030 timeframe so that states can demonstrate their progress to wards their stated energy efficiency goals and associated avoided emissions targets. The commenters recommended that such interim reporting be on a three

- year basis (e.g., starting in 2022, 2025, 2028 and 2030). The commenters noted that this reporting cyc le would be consistent with some state multi

- year program planning cycles, and would also allow states to align their program impact evaluation cycles with such reporting as practicable.

Comment 36 : Commenters stated that corrective measures can signif icantly reduce compliance problems, but only if EPA provides more detailed minimum requirements for such measures.

Response 36 : The final guidelines clarify requirements for corrective measures. See section VIII.F.3 of final rule preamble of the CPP, and responses to similar comments above in this RTC section (6.1.5), for EPA’s response to comments suggesting greater specificity on corrective measure requirements and greater transparency on causes of emission reduction shortfalls during a plan performance period. See Section 6.1.4 of this document for responses to similar comments on interim goals and glide path.

The following are summaries of the specific public comments under this comment:

The commenters stated that the EPA's proposal to have states build corrective measures into their plans is an essential strategy for reducing the risk of non

- compliance with the unusually long averaging times in the Clean Power Plan. The commenters stated that absent some mechanism for ensuring that states remain on trac k, the proposed 10

- year compliance period creates the potential for a pile

- up of violations in 2030, when a final determination of compliance with interim goals is made . The commenters stated that for EPA to wait until then to require the development of ad ditional plan measures would unnecessarily delay emission reductions, and the need for states to incorporate remedial measures into their plans would only add to this delay. The commenters noted that failure to achieve projected emission performance in the early years of a state plan may also indicate structural problems with the plan (e.g., inaccurate modeling297 results) that could render compliance with the state goals impossible. Moreover, the commenters stated that there is a risk that many state plans wi ll defer making the most significant cuts until the later years of the interim period because EPA proposes to allow states to define their own emission reduction trajectories between 2020 and 2029. The commenters stated that procrastination of this nature, together with any unaddressed failures to achieve the more modest early reductions, could lead to a critical shortage of available measures in the later years to ensure compliance with EPA's targets.

The commenters stated that additional requirements for corrective measures are crucial if they are to be effective compliance tools. The commenters stated that the EPA must expand corrective measures to all plans, set minimum thresholds and standards for the adoption, activation, and implementation of these measures, and provide greater transparency in exposing the causes of any deficiencies in state plan performance

.

6.1.6 Consequences if actual emission performance of a state plan does not meet state goal

Note: This section addresses comments on requirements for corrective measures in the event implementation of a state plan fails to achieve the state emission goal during any performance period. Note that the previous section includes comments on corrective measures in the event that the state pl an does not meet its planned emission improvement trajectory during the interim period, comments on uncontrollable events that prevent a state from meeting its goal, and comments on corrective measures in general.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Comments stating that the consequences of failing to attain performance goals are not well defined, and requesting that EPA clar ify the consequences and entities held liable under various state plan designs (i.e., fully enforceable plans, commitment plans, single state plans, full multi

- state plans) if certain plan elements are not met

. Response 1: The final guidelines clarify the consequences in the event different types of state plans do not meet emission performance goals. For detailed discussion of the consequences if actual emission performance of a state plan does not meet the state goal, see Section VIII.F.3 of the final rul e preamble of the CPP. This section discusses both emission standard plans and state measures plans , along with multi

- state plans

. In response to concerns about enforcement liability of affected entities, particularly if states are affected entities, the EPA notes that the final guidelines do not provide for portfolio approach plans or state commitment plan s, so questions concerning consequences and entities held liable under those types of plans are now moot.

Under a state measures plan, only the emissions standards for affected EGU would be required to be federally enforceable. Any state

- only enforceable r equirements for other entities, potentially298 including the state, would not be subject to enforcement action under the Clean Air Act by the EPA or citizens. The state measures plan type must include a backstop of federally

- enforceable measures on EGUs to be implemented if triggered. See Section VIII.C.3 of the final rule preamble of the CPP.

The final guidelines prohibit the EPA from applying sanctions to states whose emission performance does not meet the state goal. See s ection VIII. G .5 of the final rule p reamble of the CPP.

We agree with the commenters that an un

- anticipatable system emergency could cause a severe stress on the electricity system for a length of time such that the multi

- year requirements in a state plan may not be achievable by given EGUs without posing an otherwise unmanageable risk to reliability, so w e are finalizing a reliability safety valve that will allow a state to modify the emission standards for such EGUs for a maximum of 90 days. See s ections VIII.F.3 and VIII. G .2.e of the final rule preamble of the CPP.

Additional general discussion of enforcement considerations is included in section VIII.D of the final CPP preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the consequences of failing to attain performance goals are not well defined. The commenters noted for example, unexpected or unavoidable circumstance such as a severe weather year or necessary unscheduled maintenance could result in failure t o attain the goals. The commenters stated that whether these unavoidable circumstances lead to sanctions and/or a requirement to install additional generation or other infrastructure is unclear.

Commenters argued that EPA has been unclear about whom it would take enforcement action against if a state plan or multistate plan does not meet the emission standard. The commenters requested that EPA clarify the consequences and entities held liable under various state plan designs (i.e., fully enforceable plan s, commitment plans, single state plans, full multi

- state plans) if certain plan elements are not met

.

Commenters stated that uncertainties regarding enforcement permeate the proposal regarding enforcement measures for affected entities. The commenters asked i f a state fails to meet its targeted reduction through re

- dispatch of NGCC by 2020 because of a lack of transmission capacity, does EPA (or do the other states, in the case of a multi

- state plan) bring an enforcement action against the state? If EP A brings a federal enforcement action, would it be brought against all the participating states in the multi

- state plan? What if customers in a state fail to subscribe to sufficient energy efficiency? What are the penalties for non

- compliance? The commente rs stated that these questions are significant and need clear answers from EPA in order to assist states in their decisions on whether to join one or more states in developing a multi

- state plan.

C omment 2: Comment stating that where state goals are not achieved by 2030, individual natural gas

- and coal

- fired EGUs should be responsible for meeting the heat rate improvements relied on by EPA in setting state goals (e.g., 6%)

.299 Response 2: The EPA does not agree with the commenters that if the state failed to achieve its 2030 goal, the appropriate remedy would necessarily be to require EGUs to meet the heat rate portion of BSER on an individual facility basis. This approach would not achie ve the full
amount of reductions that reflect the BSER, and would mandate a particular emission reduction method, heat rate improvements , rather than enable the state to take advantage of the range of strategies available for achieving the level of reducti ons that reflects the BSER. The final guidelines define the consequences that the EPA believes are appropriate in the event an emission standards type plan or a state measures plan fails to achieve the EGU performance rates or state goal that applies in 20 30 and thereafter. See section VIII.F.3 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Where state goals are not achieved by 2030, commenters stated that individual natural gas

- and coal

- fired EGUs should be responsible for meeting the heat rate improvements relied on by EPA in setting state goals (e.g., 6%).

While, under the rule, states are free to distribute required emissions reductions among sources in any manner that will achie ve the targeted reductions by 2030, the commenters recommended that EPA ensure that these long range targets are enforceable. As such, the commenters suggested that the emissions reductions EPA has calculated are possible based on heat rate improvements sh ould be individually enforceable against coal

- and gas

- fired EGUs in the event that the state fails to achieve its 2030 goal . In effect, the commenters indicated this would mean that each individual EGU would be responsible for achieving a 6% improvement i n heat rate under EPA's proposed approach, or a 10.08% improvement in carbon emissions under the commenters’ proposed approach. Because compliance will be measured as a three

- year average, the commenters stated that EGUs experiencing an anomalous "bad year " at the end of the implementation period should still be able to meet this goal. To be effective, the commenters recommended that this standard include any simple cycle natural gas

- fired EGU operating above relevant thresholds, such as one third capacity factor. According to the commenters, failing to make such requirements enforceable by EPA could provide an opportunity to evade the rule and thereby increase GHG emissions.

Comment 3: Comments noting that if states do not comply, then EPA can enforce aga inst the state for missing the standards, but not for technical violations.

Response 3: The EPA has designed the guidelines to provide broad flexibility to states in the design of their state plans. The final guidelines combine flexibility on means of achieving emission reductions with accountability for results. The guidelines provide for monitoring states’ implementation progress and provide that the situation will be remedied if implementation is not occurring or the emission reductions required by section 111(d) do not occur. See Sections VIII.D.2 and VIII.F.3 of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:300 Commenters asserted that states must have flexibility to implement CO2 compliance plans without EPA micro

- managing implementation with countless federal requirements that cannot be enforced directly by EPA. According to the commenters, states should be able to commit to meet whatever performance standards are developed. The commenters stated that if states do not comply, then EPA can enforce against the state for missing the standards, but not for technical violations.

Comment 4 : Commenters supported strong enforcement measures for ensuring the carbon pollution targets are achieved.

Response 4: The final guidelines contain provisions to ensure that EGU performance rates or state goals will be achieved. Emission standards plans w ill provide federally enforceable requirements for EGUs and will be subject to corrective measure requirements . State measures plans must include requirements that are enforceable by the state and also contain a federally enforceable backstop with require ments applicable to EGUs that would be triggered if actual emissions performance was deficient under the state measures plan. Certain emission standards type plans

– those that do not mathematically assure that the national EGU performance rates or state g oal is met

-- are subject to requirements and deadlines for plan revisions to adopt corrective measures. The agency provides its rationale for not requiring automatic triggering of
pre

- adopted contingency measures for these plans in section VIII.F of the f inal rule preamble of the CPP and section 6.1.5 of this RTC document. Consistent with the comment, the guidelines provide for periodic EPA review of state plan performance.

The following are summaries of the specific public comments under this comment:

Com menters stated that state plans (especially in Pennsylvania) should include automatic provisions to correct any shortfall in emission targets that may occur, and severe penalties for failing to meet goals . The commenters suggested that a federal review of state programs should occur at least every 5 years.

Comment 5: Comment stating that the EPA should begin working immediately on a Federal Implementation Plan ("FIP") that would be ready to put in place upon a state's failure to achieve its goals on time.

Response 5 : We disagree with the commenters that the EPA should directly put a federal plan into place if a state does not achieve the state emission performance goals on time. The federal plan that the EPA is concurrently proposing is for states that do not submit approvable state plans. The final guidelines call for certain types of plans to provide for corrective measures or a backstop in the event of an emission performance deficiency over the interim period or during any final reporting period, or a performance deficiency of 10 percent or more during interim step 1 or 2. The consequence for a state depends on the type of state plan that the state has selected. We are finalizing the option of a “state measures” plan type, which would rely at least in part on state

- enforceable measures . With a state measures approach, the plan must also include a specific backstop of federally enforceable standards on affected EGUs that fully meets the emission301 guidelines and that would be triggered if the plan failed to achieve on schedule the required emission reductions. See Section s VIII.C.3 and VIII.D.2.c of the final rule preamble of the CPP. For the “emissions standard” plan type, in which all measures are federally enforceable measures on aff ected EGUs, an exceedance triggers a requirement for a state to amend its state plan to enact corrective measures that will both put the state back on track to achieve the level of emission performance specified in the original state plan and make up for t he shortfall. See Section VIII.F.3 of the final rule preamble of the CPP.

We agree that the final emission guidelines should include interim goals and compliance dates to ensure continuous progress toward the goals. However, we disagree that the EPA should determine the length of time given to states to implement corrective measures on a case

- by

- case basis and are providing a consistent timeframe for all states. See Section VIII.F of the final rule preamble of the CPP.

The following are summaries of the specific public comments under this comment:

Commenters stated that the EPA should begin working immediately on a Federal Implementation Plan ("FIP") that would be ready to put in place upon a state's failure to achieve its goals on tim e. The commenters stated that this plan should be straightforward, and place responsibility for meeting the state's goals on the EGUs, with a fairly short time period for compliance. The commenters noted that presumably, all parties would have been working to date on carbon reductions. Therefore, the commenters suggested that interim goals and compliance dates could be staggered in short segments to ensure continuous progress toward the goals. The commenters did not support an 18 month period for a state to comply once it has failed to meet its goals. The commenters stated that the EPA should have the discretion to give the state a reasonable period of time to meet the goals that is specific to the state 's circumstances or to put a FIP in place immediately t hat is directed at the EGUs.

Comment 6 : Comments suggesting that section 110(k)(5) is a “SIP call”

- like mechanism.

Response 6 : We are not finalizing a section 110(k)(5) “SIP call”

- like mechanism in this action. Please see the discussion in section VIII.F .3 of the final rule preamble of the CPP

. Also see section VIII.F.3 with regard to the c onsequences if actual emission performance does not meet the CO 2 emission performance rates or state CO 2 emission goal

. We generally disagree with comments that EPA lacks authority to adopt mechanisms from section 110 into section 111(d) emission guidelines. Please see the discussion in section VIII.E. 9 of the final rule preamble of the CPP , and in the legal memorandum of the phrase “procedure similar to that under s ection 110 of the Act.” We also disagree that EPA’s authority with respect to deficient plans is limited to that in section 111(d)(2). As explained in response 15, section 6.1.5, EPA also has authority under section 111(d)(1). Again, please see the disc ussion in section VIII.E. 9 of the final rule preamble of the CPP , and in the legal memorandum of the phrase “procedure similar to that under section 110 of the Act” in section 111(d)(1).

The following are summaries of the specific public comments under this comment:302 Commenters opposed EPA's suggestion of promulgating "a mechanism under CAA section 111(d) similar to the SIP call mechanism in CAA section 110" in order to address the failure of any state plan to achieve its emission goal.

Commenters stated that section 110 expressly authorizes EPA to initiate a SIP call when the Administrator finds that a SIP is "substantially inadequate." CAA section 110(k)(5). Commenters stated that there is no similar authority for section 111(d) plans.

Comm enters stated that EPA has the authority under section 111(d)(2) to only develop a plan where the state fails to submit an approvable plan or to enforce the state's plan where the state fails to do so. The commenters argued that EPA is once again attemp ting to turn the section 111(d) regulation into a section 110 SIP

- like plan in order to address the complexities of the proposal. The commenters stated that EPA lacks the basic authority to modify the section 111(d) program into a SIP program.

Comment 7 : Commenters supported a mechanism under section 111(d) similar to the SIP call mechanism in Section 110.

Response 7 : We are not finalizing a section 110(k)(5) “SIP call”

- like mechanism in this action. Please see the discussion in section VIII.F.3 of the final rule preamble of the CPP

. Also see section VIII.F.3 with regard to the c onsequences if actual emission performance does not meet the CO 2 emission performance rates or state CO 2 emission goal

. With respect to commenters ’ preference that a SIP

- call like mechanism be used in the event that a plan fails to achieve the rates or goals, we agree that a SIP

- call like mechanism would be a possible solution. However, as explained in the legal memorandum, where there is a gap in the statute to fill, and there are multiple possible solutions to filling the gap, EPA may pick a particular one so long as it is reasonable. In the case of corrective measures, it is reasonable to, instead of using a SIP

- call like mechanism to trigger th e state’s obligation to submit a plan revision, to simply require in this rule that the state give EPA a plan revision addressing the deficiency. If the state fails to submit a satisfactory plan revision, the EPA would have the authority to promulgate a f ederal plan, just the same as if a state failed to respond to a SIP

- call equivalent. This addresses the concerns of the commenters and reasonably fills the gap in the
statute.

The following are summaries of the specific public comments under this comment :

Commenters suggested that EPA promulgate a mechanism under 111(d) similar to the SIP call mechanism in Section 110, where after the agency makes a finding of the plan's failure to achieve the state goal during a performance period, EPA would requir e the state to cure the deficiency with a new plan within a specified time period (e.g., 18 months). The commenters noted that if the state still lacked an approved plan by the end of that time period, EPA would have the authority to promulgate a federal p lan under section 111(d)(2)(A).

Rather than imposing penalties on states, commenters stated that the EPA should follow a process similar to a "SIP Call" wherein, if a state fails to meet a milestone or goal as outlined in303 its state plan and corrective measures are not included in the plan, EPA will notify the state that it must revise the plan to make up for the deficiency and to meet the milestone or goal. If the state fails to do so, the commenters stated that the EPA would then issue a federal imple mentation plan. The commenters noted that these actions are corrective, while penalties are punitive. The commenters stated that corrective actions are more efficacious than punitive ones.

Commenters supported EPA's proposal to incorporate a mechanism s imilar to the SIP Call mechanism under Section 110 for State Implementation Plans. The commenters stated that the EPA must have an enforcement mechanism, particularly where the compliance schedule is aggressive and the necessary carbon reductions are so vi tal to the planet's health. As a result, the commenters did not support giving states a full 18 months to respond to a SIP call like mechanism.

Comment 8 : Comment regarding contingency measures in case of failure to meet state goal.

Response 8 : See section VIII.F of the final rule preamble of the CPP , and section 6.1.5 of this RTC document, for the EPA’s response to this comment.

The following are summaries of the specific public comments under this comment:

Commenters noted that the EPA has reque sted comment on whether consequences should include a requirement to trigger contingency measures. The commenters stated that a state plan should include contingency measures in the event the state goals are not met. The commenters stated that there is an anticipation that the state plan would be met for development of RE and implementation of EE programs; however, these plans would be projections of anticipated gains that would reduce CO2. The commenters stated that unforeseen events or obstacles to meetin g those commitments could occur and there should be contingency measures identified to reduce CO2 emissions and bring the state back on track to meet the required overall goals.

Comment 9 : Comment stating that the state plan should identify possible cor rective measures similar to a nonattainment SIP which could include new actions or ramping up measures already provided for in the state plan.

Response 9 : The final guidelines are responsi ve to the commenters’ concerns. State measures plans must contain a federally enforceable backstop consisting of requirements on affected EGUs that would be triggered if the required emission reductions did not occur. The backstop is essentially a type of cont ingency measure identified in the plan (along with the fulfillment of BSER for state measures plans) . Emission standard s plans consist only of federally

- enforceable requirements applicable to affected EGUs that could be also enforced by states, t he EPA or citizens. Certain emission standards type plans

– those that do not mathematically assure that the national EGU performance rates or state goal is met assuming full compliance by affected EGUs

-- are subject to requirements and deadlines for pla n revisions to adopt corrective measures. See section VIII.F.3 with regard to the c onsequences if actual emission performance does not meet the CO 2 emission performance rates or state CO 2 emission goal

. The agency provides its304 rationale for not requiring pre

- adopted contingency measures for these emissions standards plans in section VIII.F of the final rule preamble of the CPP and section 6.1.5 of this RTC document.

The EPA agrees that if a failure occurs close to the 2030 date, it may be difficult for a state to meet its goal. However, the agency disagrees that the averaging time of the goal should be altered in cases of impending failure. For plans subject to corrective measures or backstop requirement s, t he final guidelines provide for triggering th ose requirements

, and for making up the shortfall

, in the event a state measures plan does not produce the required emission reductions.

The following are summaries of the specific public comments under this comment:

Commenters noted that the EPA requested comment on a process and schedule for implementing corrective measures if reporting shows the goals are not being met. The commenters stated that the state plan should identify possible corrective measures similar to a nonattai nment SIP which could include new actions or ramping up measures already provided for in the state plan. The commenters stated that there should be a two

- step process in this plan where the state provides progress reports.

The commenters recommended that, when a state does not appear to be meeting the path at a reasonable time before 2030 (e.g., 3 or 5 years), the EPA should ask the state which measures will be implemented to be on track to meet the 2030 goal. The commenters stated that, if the failure to meet the goal is close to the 2030 date, the state should be allowed a 3

- year averaging period to make necessary changes in the implementation plan so the goal can be met at that date and in the future.

Comment 1 0 : Comments pertaining to state versus EGU responsibility in case of failure to meet the state goal.

Response 1 0 : In general, a state would be required to implement corrective measures or backstop requirements for affected EGUs, and to make up the shortfall, when an implemented plan fails to achieve the required emissions reductions. See section VIII.F.3 of the final rule preamble of the CPP. An affected EGU would be potentially subject to enforcement if it violated applicable requirements of a state rule.

Regarding the question of whether affected EGUs would be penalized in the event that a state plan depends on increased renewable energy generation , but less renewable generation is built than planned, the EPA observes that the guidelines leave states much flexibility on the design of their requirements. Under a state measures approach, t he final rule provides considerable discretion to the states i n setting emission standards and related plan requirements for its affected EGUs. Consistent with longstanding practice under the Clean Air Act, if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis, to determine the appropriate response and resolution. Ultimately, if a state measures plan does not produce the required emissions improvement despite affected EGUs complying with their state requirements under the plan, the guidelines would require the tri ggering of federally enforceable backstop requirements for affected EGUs to ensure that state goals are met. Based on the acid rain305 program and other experience, the EPA believes that such backstop requirements can be designed in ways that create effective markets that provide economic incentives for new renewable energy capacity and increases in end

- use energy efficiency, enabling affected EGUs to meet their emission obligations.

A similar question was raised about whether affected EGU s would be subject to enforcement liability under a mass

- based emission standards plan in the event that reductions in demand for fossil

- generated electricity through increased renewable energy generation and increased ene rgy efficiency do not materialize. The final rule provides considerable discretion to the states in setting emission standards and related plan requirements for its affected EGUs. As just noted, EPA believes that the acid rain program and others demonstra te that programs can be designed to create effective markets that provide economic incentives for new renewable energy capacity and increases in end

- use energy efficiency. If affected EGUs are in violation, c onsistent with long

standing practice under the Clean Air Act if a regulated entity does not meet a requirement, the EPA will address the matter on a case

- by

- case basis to determine the appropriate response and resolution.

Additional general discussion of enforcement considerations is included in sect ion VIII.D.1 of the final rule preamble of the CPP

. The following are summaries of the specific public comments under this comment:

Commenters asked for clarification from the EPA on who may be ultimately liable for a state's

non

- compliance of an EPA approved SIP. The commenters noted that as designed the EPA has set emissions reductions targets for electricity generation within each state as a whole; historically however, the Clean Air Act has granted the EPA the limited authority to regulate pollutants from the emissions source.

The commenters asked if the state will be penalized for not meeting the targets established in the SIP or will the i ndividual emissions sources be liable under EPA's proposal. The commenters expressed concern that a state's failure to meet compliance obligations as a whole will be met with penalizing certain types of generation sources within that state even where energ y efficiency improvement and emission reduction measures have been taken by these entities. For example, where a state's SIP relies heavily on the development and dispatch of renewable generation sources to meet its reduction targets, the commenters asked who is liable when the expected renewable sources are ultimately not developed or due to unfavorable economics are shut

- down and/or dispatched less often and as a result the state fails to meet its targets. The commenters stated that complications are furt her manifest where one state claims compliance from renewable energy generation built out of the state. The commenters asked how this would be tracked to avoid double counting. The commenters asked if the same rules would apply to carbon heavy EGUs built i n one state to supply demand in another state. Commenters asked that if states opt for mass

- based plans that put compliance responsibilities entirely on affected EGUs, but demand reductions from RE or EE measures are necessary to support the mass reduct ions, what happens if those reductions don't materialize. The commenters asked if the affected EGUs are liable and what sort of compliance options do they have in this situation.306 Comment 1 1 : EPA should provide guidance on when it would enforce a st ate plan or issue a federal plan.

Response 1 1 : For the consequences if actual emission performance does not meet the CO2 emission performance rates or state CO2 emission goal, see Section VIII.F.3 of the final rule preamble of the CPP. For discussion of Tenth Amendment legal considerations regarding this rulemaking, see Section VIII. G.5 of the final rule preamble.

The contents, rationale, and basis of authority for a section 111(d) federal plan to implement the Clean Power Plan Emission Guidelines will be set out in that rulemaking and are beyond the scope of the Emission Guidelines themselves.

The following are summaries of the specific public comments under this comment:

Commenters said the EPA must provide clear guidance on when the EPA would enforce a state plan or measures therein, or issue a federal plan. Commenters stated if a state is not on track to meet its interim state goal (per the progress checks every two years), the EPA must explain how it will handle such situations, such as whether it w ould issue a federal plan or whether it would require the state to amend its plan. Commenters said based on the EPA's regulations, it appears the EPA would issue a revision to the state plan, see 40 C.F.R. Section 60.29, which raises questions about how th e EPA could issue a federal plan that imposes obligations on sources outside the affected source category. Commenters stated the EPA does not have jurisdiction to directly implement renewable energy and energy efficiency measures. Commenters said thus, the EPA could not promulgate a federal plan that includes these measures without unlawfully commandeering state resources in violation of the Tenth Amendment.

6.1.7 Out

- year requirements

This section addresses issues concerning out

- year requirements includin g m aintaining or improving the level of emission performance required by the emission guidelines. Commenters agreed that the state emission performance improvements must be permanent beyond 2030. Commenters were divided regarding provisions that would requ ire increased reductions beyond 2030, as well as future revisions of the guideline or an 8

- year review of state goals similar to the NSPS review; however, EPA is not finalizing any position on these issues.

Commenters have raised a number of issues related to this subsection which are organized by topics (comments) below. Responses are provided for these topics.

Comment 1: Multiple comments supporting the concept of permanence, where a state must maintain the required level of performance after the 2030 go al is met.

Response 1: With respect to the first set of comments, that Congress intended for the emission performance improvements required under s ection 111(d) to be permanent, and that EPA has set307 other s ection 111(d) emission limits to be met permanently, we agree. We discuss this basis for our decision to require continued maintenance of the goals after 2030 in section VIII.F.4 of the final rule preamble of the CPP and the legal memorandum.

With respect to commenters , we agree that the BSER

- based performance rates or goals should be maintained after 2030. Commenters recommend that compliance with this be assessed through a 3

- year rolling average basis. We have not chosen this approach; our chosen approach accomplishes the same aim of maintaining performance and is reasonable.

With respect to backsliding, we have finalized the requirement that state plan revisions must continue to achieve the rates or goals. In other words, state plans will be req uired to maintain the performance rates or goals after 2030 even if they are revised. We agree, as explained in section VIII.F.4 of the final rule preamble of the CPP and legal memorandum, that section 111(d) state plans differ from attainment plans, in t hat title I contemplates potential relaxation of an attainment plan once an area has attained the NAAQS and is re

- designated. To clarify, though, under section 110(a)(1) all SIPs must provide for maintenance of the NAAQS; thus we do not completely agree wi th the commenters’ characterization.

The EPA disagrees that the permanence concept is not relevant to state measures. Comments on permanence of measures and permanence of plan performance are further addressed by sections VIII.D.2, VIII.F.4, VIII.I.2, V III.J.2, and VIII.K.2 of the final rule preamble of the CPP.

Finally, with respect to comments on permanence of requirements in relation to the portfolio approach

, the agency is not finalizing the proposed portfolio approach.

The following are summaries o f the specific public comments under this comment:

Commenters supported the concept of permanence, where a state must maintain the required level of performance after the 2030 goal is met. Commenters noted that Congress intended for the emission perform ance improvements required under Section 111(d) to be permanent, and EPA has set other Section 111(d) emission limits to be met permanently.

Regarding permanent reductions, commenters stated that EPA should establish BSER

- based state emission performance goals for affected EGUs that extend beyond the proposed planning period (e.g., beyond 2030) and that the level of emission performance for affected EGUs represented by the final goal should continu e to be maintained in the years after 2030. The commenters suggested that a state should be required to compare actual plan performance against the final goal on a rolling 3

- year average basis starting in 2030, and be allowed to implement corrective measur es if necessary.

Commenters agreed that the EPA should require state emission levels to be maintained after the compliance period has ended. Therefore, the commenters recommended that EPA require emissions reductions achieved by existing sources under s ection 111(d) to be permanent reductions that remain in place after 2030.

Noting EPA's request for comment on out

- year performance beyond 2030 of the state plan,
commenters assumed that, much like a Section 110 SIP, there would be a requirement to preve nt "back sliding" or a decrease in meeting the Section 111(d) commitments. The commenters stated308 that unlike the Section 110 SIPs there would not be a possible future attainment negating the need for maintenance. The commenters assumed that where Congress developed Section 111(d) the requirements would not end but would continue into the future, leading to the conclusion that the state plan would not sunset

.
While commenter s supported the concept of permanence, the commenters believe permanence can only be associated with direct emission limitations imposed at the affected EGU and cannot be extended to any other elements of a state's plan, such as RE, EE, nuclear preservation or redispatch. The commenters argued that states must have the ability to make adjustments to the plans as technology changes and unforeseeable events occur.

Comment 2: Multiple comments supporting further reductions in the state goals after 2030.

Response 2: We are not finalizing any provisions that would require increasing or inc reased emission reductions beyond 2030, with the exception that states may have to make up a shortfall in emission reductions from a previous plan period. We are also not finalizing any position on future revisions to this guideline or on the 8

- year review of the NSPS. Therefore, these comments are generally moot.

The following are summaries of the specific public comments under this comment:

Commenters supported further reductions in the state goals after 2030.

Commenters supported further reducti ons via future rulemaking beginning in 2025. The
commenters noted that EPA's proposal requires states to maintain the 2030 emission performance level beyond 2030. The commenters strongly supported an approach where EPA periodically reviews and strengthens the BSER/state goals after 2030. The commenters recommended that these reviews occur at regularly defined intervals to reflect advances in technology and improvements in our scientific understanding of the level of mitigation needed to avoid catastrophic c limate change impacts. The commenters suggested that EPA establish revised state goals that come into effect after 2030 in a future rulemaking started in the 2025 to 2030 time period. The commenters stated that stronger goals should include continuity of a ctions by states and affected entities to achieve the 2030 goal. The commenters stated that tighter goals after 2030 should again allow for a period of time to achieve them, but not result in any additional reporting burden on the states or other affected entities.

Commenter s supported further reductions through increased EE or RE. If the legal authority and resources exist to revisit state goals post 2030, the commenters recommended that EPA evaluate the nationwide deployment of RE and EE, and then determine the appropriateness of state goal setting methodologies based on RE and EE measures displacing existing fossil generation.

Commenter s supported further emissions reductions consistent with Oregon's adopted 2050 greenhouse gas reduction goal, which included ongoing complementary national actions to continue emissions reductions in all sectors beyond 2025 (for auto fuel economy standards) and 2030 (for power plant emissions reductions) in the interests of sending a sustained, predictable309 long

- te rm signal to US emissions sources

- and to innovators in the US business and academic
sectors

- that aggressive ongoing reduction successes will be rewarded.

Commenter s also supported further emission reductions, stating that the BSER of 2030 will likel y allow for much greater emission reductions than BSER today. Therefore, the commenters stated that the standards set forth in the final rule should be updated periodically to reflect BSER as it changes. As a policy matter, the commenters stated that there is no reason to let progress stall out based on the arbitrary choice of 2030 as the year for the final goal. The commenters stated that emission standards are an important tool in fighting climate change, and the need for emission reductions will not end in 2030. Further, the commenters stated that the EPA should commit to regularly review the best system of emission reduction to ensure that it continues to reflect the system that can maximize reductions in carbon pollution considering cost, energy require ments, and impacts on other health and environmental outcomes, as required by the Clean Air Act.

Commenters stated that the EPA should provide for periodic updates of the standard in order to reflect the progress that is already taking place in emissio n reducing technologies, and will only accelerate in response to the EPA rule.

Commenter s were optimistic that EPA would continue to build upon this rule and develop additional reduction requirements that continue in effect beyond 2030 . The commenters s tated that reducing carbon emissions will be an ongoing requirement, and it is not a problem that can or will be solved by 2030. The commenters noted that there are many sources of carbon emissions besides electric generating facilities, and the commenters hoped that this rule would lead to a larger effort to reduce carbon emissions from all sources.

Commenters stated that EPA must review and, if appropriate, revise BSER and the state targets at least every eight years.

Commenters stated, it is important that the standard be reviewed at least every eight years similar to the performance standard for new sources so that the reduction goals keep pace with the climate science, technological advancements

, state utility market regulations, health and environmental sensitivities, overall costs and costs of renewable energy, and actual emission reductions (particularly from RE and EE which are difficult to forecast)

. Some

c ommenters stated, the BSER's stringency should be increased over time. Some c ommenters expressed concern over uncertainty or requested clarification with regard to periodic rule review by EPA.

Commenters said, while Section 111 does not require regular review and revision, nothing in the statute prohibits EPA fro m instituting periodic review for those sources to ensure that they also account for new technology developments. Commenters stated, prior EPA rulemaking interpretations and related case law have supported the EPA in exercising agency discretion where t he Clean Air Act is ambiguous. Commenters said, it is unreasonable to interpret the absence of any express updating authority in Section 111(d) as reflecting a congressional intent that EPA regulate a source category only once under Section 111(d).310 Com menters stated, section 111(d)'s duty to set standards for existing sources within a category is triggered by the establishment of standard for new sources within the category under section 111(b). Commenters stated, given that the duty to set existi ng source standard under subsection (d) is directly linked to the duty to set new source standard under subsection (b), EPA must read the provision as a matter of plain meaning to trigger a review/revision requirement for existing source standards whenever review/revision falls due for new source standards. Commenters said, at the very least, EPA would be reasonable in reading the statute this way

- to freeze existing source standards in place for all time irrespective of the need for continued emission re ductions and irrespective of the occurrence of improvements in technology and costs would be highly unreasonable.

Some c ommenters stated, the review and update should start in 2025. Other c ommenters said the EPA could establish a similar review schedule to the RGGI program which is every three
years

. Other c ommenters stated, the legal obligation to review and, if appropriate, revise these standards would be, at the latest, in June 2023. These c ommenters recommended EPA review the standards on a five

- year cycle, i.e., by June 2020 and each five years thereafter, breaking the proposed 10

- year interim standard into two parts, with the 2025 standard establishing more ambitious targets for the second five

- yea r period that reflects the full technological and economic potential for emission reductions. These c ommenters also recommended that EPA set post

- 2030 standards on a five

- year cycle, so that the 2030 standard would apply for the years 2030

- 034, and

a st andard would be set for each subsequent five

- year period.

Comment 3: Multiple comments supporting a 8

- year review of the state goals similar to the NSPS review required under CAA section 111(b)(1)(B), and recommending that the EPA be clear up front that goals will be revised in the future

. Response 3: We are not finalizing any provision that would require additional emission reductions after 2030; instead we are requiring that the 2030 goal be maintained. We are also not finalizing any position with res pect to the implications of the 8

- year review of the NSPS with respect to possible future revision of this guideline; it is unnecessary to address this issue at this point in time. Therefore, these comments are generally moot.

The following are summaries of the specific public comments under this comment:

Multiple commenters supported 8

- year review of the state goals similar to the NSPS review required under CAA section 111(b)(1)(B). Some commenters recommended that EPA be clear up front that goals will be revised in the future.

Commenters addressed EPA's request for comment: " The EPA notes that CAA section 111(b)(1)(B) calls for the EPA, at least every eight years, to review and, if appropriate, revise federal standards of performance for new sources. This requirement provides for regular updating of performance standards as technical advances provide technologies that are cleaner or less costly. The agency requests comment on the implications of this concept, if any, for CAA311 section 111(d). " The commenters stated that, while Section 111(d) does not require regular review and revision, as it is silent on the issue, there is nothing preventing EPA from instituting such a review of the standards. The commenters stated that in order to ensure that the BSER does not ultimately outpace requirements in the 111(d) context as well, EPA should review and revise the Section 111(d) standards as well to capture the technological advance (new, innovative, or imp roved compliance tools have been adequately demonstrated). The commenters stated that it would be inconsistent with the statutory scheme to set a weak standard that adequately demonstrated systems achieve and exceed in practice without updating them. Thus, the commenters stated that the 8

- year review concept should be applied to Section 111(d), or that EPA consider committing to review the BSER and resulting state targets for existing sources at least every 8 years

.

Commenters stated that the secti on 111(d) guidelines should send a durable regulatory signal that greenhouse gas pollution from the power sector must be significantly reduced, and that further reductions will be required as systems of emission reduction further improve. According to the commenters, sending that signal requires setting meaningful endpoints for states to reach during the initial compliance period, and committing to regularly review (and, in all likelihood tighten) the guidelines over time. Although the commenters recognized that states may reach these endpoints at different times, the commenters stated that it was important the standards be clear that the endpoints, once reached, are ceilings. The commenters stated that emissions levels (whether set as mass ceilings or maxim um emissions rates) cannot be allowed to rise above the target after the end of the initial compliance period. The commenters contended that reduction opportunities available with current adequately demonstrated systems will expand down the road as further deployment of existing clean technologies takes place. The commenters suggested that EPA be clear that it will be regularly revisiting its guidelines to assess new pollution control opportunities

.

The commenters noted that section 111(b)(1)(B) and its implementing regulations already specify that EPA will review, and if appropriate, revise its new source regulations every 8 years and that it will publish draft and final existing source guidelines "[c]oncurrently upon or after" proposing new source stand ards. Although the rules thus anticipate revisions, the commenters recommended that EPA further clarify this review obligation by providing, by rule, that it would review and (if appropriate) revise its existing source standards by a date on the same 8

- yea r timeline as applies to its new source standards . The commenters stated that this would be a sensible provision that would allow EPA to evaluate the power fleet as a whole in each review. The commenters noted that such regulatory deadlines are not unusual . In the greenhouse gas context, the commenters noted that the EPA included enforceable deadlines in its "tailoring" rule for major source permitting, requiring the agency to regularly revisit its rulemaking over time, as greenhouse gas regulation experien ce is gained. The commenters indicated that a similar

course would be appropriate here where a review commitment would make clear to all parties that the emissions glide paths will continue to decline long after the first compliance period has passed

.

The commenters stated that the EPA carbon standard is only the first step in curbing harmful emissions, and that emissions must continue to decline beyond 2030. Commenters noted that the consensus among climate scientists is that emission reductions of at least 80% are required by 2050 in order to prevent the worst impacts of a changing climate. While the emissions from the312 electricity sector in New York and the other RGGI states have declined at a pace that would surpass that reduction target, the comme nters indicated that EPA's projection that this rule will achieve a nationwide 30% reduction by 2030 is inadequate to place the nation's power sector on a trajectory to achieve the reductions needed by 2050. The commenters indicated that their recommendati ons to strengthen Building Blocks Two, Three, and Four would help by increasing national emission reductions. In the longer term, the commenters stated that EPA should make clear that additional reductions will be required after 2030. According to the comm enters, such long term market signals are needed to provide the incentive for industry

-- and the states

-- to make the transformative investments in a highly efficient, low carbon electricity sector needed to achieve the emission reductions required by 2050. The commenters therefor e recommended that EPA signal its intention to establish more ambitious state targets for existing sources in future years, as part of the eight year reviews required under section 111(b)(1)(B) of the CAA.

Similarly, commenters stated that under section 111(b)(1)(B), the EPA reviews and, if appropriate, revises its standards of performance for new sources. The commenters stated that Section 111(d) does not require regular review and revision of the rule like section 111(b)(1)(B)

, but because section 111(d) is silent on the issue, EPA has discretion to institute a periodic review of its standard for existing sources. The commenters argued that because section 111(d) is intended to capture reasonably anticipated regulatory and techn ological developments, it would be inconsistent with the statutory scheme for EPA not to revisit and update the BSER and state goals periodically. In addition, the commenters stated that periodic review would be consistent with the "no backsliding" policy set forth in the Clean Power Plan to ensure that emissions reductions are maintained during and after the compliance period. To ensure that state goals continue to be a reflection of the BSER, the commenters recommended that EPA treat the 2030 goals as a default and review the final goals by no later than 2024 (some said by 2025), in addition to 8

- year updates

. Further, t he commenters stated that such an updating approach is consistent with the statute, with the kind of authority normally available to a regulatory agency, and with EPA's interpretation in past Section 111(d) rulemakings. The commenters stated that by contrast, it is unreasonable to interpret the absence of any express updating authority in Section 111(d) as reflecting a Congressional in tent that EPA regulate a source category only once under Section 111(d). The commenters stated that an interpretation restricting EPA in that way would be grossly inconsistent with the strong emphasis in Section 111

-- and in the Clean Air Act generally

-- on protecting the environment and public health and promoting technological innovation

. Commenters said existing source standards, like new source standards, should be updated to reflect development of cleaner and less costly new technologies in updated s tandards . The commenters noted that with the costs and performance of low carbon technologies improving rapidly, this type of review will be essential for ensuring we achieve the full potential for cost

effective emission reductions. The commenters noted t he experience of the nine states participating in the Regional Greenhouse Gas Initiative (RGGI), which recently tightened the cap on carbon emissions based on new data on cost and impacts of the program. Based on the recent dramatic growth of renewable energy and corresponding precipitous drop in costs, the commenters stated that it seems reasonable to assume that the economic calculations will have changed by the end of the compliance period, and that additional cost

- effective reductions in CO2 should b e included in the BSER. The commenters noted that, in the coming decade, several313 states, such as New York, California, and Minnesota, will likely update utility market regulations and structures as strategies with a goal of reducing carbon pollution. Th e commenters said the costs of wind and solar may drop faster or slower than expected, and energy storage technology will likely significantly improve. Thus the commenters strongly recommended that the EPA send a clear signal to states at the time of fi nalization of this rule that it is committed to this review and update process.

The commenters stated that the electricity market is in a very dynamic period and we have seen tremendous changes just within the last 5 years in terms of the cost

- competitiven ess of cleaner generation sources. The commenters stated that they expect that these changes will continue, especially with the incentives provided by the Clean Power Plan. According to the commenters, it is critical that the CPP be updated by 2025 to take account of technological and market advances, with the aim of achieving even deeper emission reductions in 2030 and beyond.

The commenters stated that by 2025, it is also likely that our scientific understanding of the risks of worsening climate impacts will have advanced , creating a greater demand for steep emissions reductions. The commenters recommended that by 2025, the EPA should also establish emission reduction targets for the post

- 2030 period, for at least 2035 and 2040, to signal the continued need to drive down emissions.

Commenters suggested that the EPA reevaluate the BSER periodically and increase the stringency, as appropriate, and ensure compliance timing. The commenters noted that section 111(b) of the Clean Air Act, under which EPA is proposing to regulate carbon emissions from new fossil

- fired power plants, directs the agency, at least every 8 years, to review and, if appropriate, revise federal emission standards of performance for such sources to account for new technology develop ments. The commenters stated that w hile Section 111(d), which applies to existing fossil

- fired power plants, does not require regular review and revision, nothing in the statute prohibits EPA from instituting such a review of periodic review for those sou rces to ensure that they also account for new technology developments. To that end, the commenters suggested that the EPA should commit to reviewing the BSER and resulting state targets for existing sources at least every 8 years.

Comment 4: Multiple comments opposing using the CAA section 111(b)(1)(B) 8

- year NSPS review provision to set more stringent performance goals after 2030.

Response 4: We are not finalizing any provision that would require additional emission reductions after 2030; instead we are requiring that the 2030 goal be maintained. We are also not finalizing any position with respect to the implications of the 8

- year review of the NSPS with respect to possible future revision of this guideline; it is unnecessary to address this issue a t this point in time. Therefore, these comments are generally moot.

The following are summaries of the specific public comments under this comment:

Commenters opposed using the CAA section 111(b)(1)(B) 8

- year NSPS review provision to set more stringen t performance goals after 2030.314 Commenters noted that EPA requested comment on whether it should establish BSER

- based state emission performance goals for affected EGUs that extend further into the future. According to the commenters, under this altern ative, EPA would apply its goal

- setting methodology to 2030 and some specified date beyond. The commenters also pointed to EPA's statement that section 111(b)(1)(B) calls for EPA to review standards of performance for new
sources every 8 years and if updat ing is necessary. The commenters did not support this alternative. The commenters noted that EPA is already proposing a plan requiring staged reductions over a 15

- year period. The commenters argued that EPA has failed to show that the current 2030 projecti ons have any resemblance to reality, and the commenters argued that additional projections beyond 2030 would only compound the current errors inherent in EPA's analysis. The commenters noted EPA's additional statement that, because they are determining emi ssion performance based on BSER, it " raises the question of whether affected EGU emission performance should only be maintained

-- or instead should be further improved

-- once the final goal is met in 2030. " The commenters did not see how the EPA could even j ustify the question. The commenters argued that the review process contemplated by the CAA is the process set in place to review the appropriateness of BSER at a single point in time . The commenters stated that EPA could not deviate from this process.

Com menters stated that the NSPS process for existing plants does not require automatic revisions every 8 years

. The commenters noted that the NSPS process allows EPA to consider revisions to the standards every 8 years, but there has been some confusion as to whether this reconsideration and possible revision can occur automatically. The commenters argued that such action is not automatic.

Commenters stated that EPA has proposed that a state must maintain the required level of performance and requests c omment on an alternative of requiring continued improvement. The commenters noted that the agency requested comment on the implications of the CAA section 111(b)(1)(B) 8

- year NSPS review provision, if any, for CAA section 111(d). The commenters stated that , while EPA review and revision of an NSPS is permissible for new sources under section 111(b), section 111(d) does not authorize EPA to review and lower existing source standards at intervals in the future . The commenters stated that in 8 years, existing sources (those in existence as of January 8, 2014) will face the same difficulty in making improvements to structures and processes that are already in place that they face now. The commenters stated that such sources will also face the same possibility th at section 111(d) seeks to avoid

- becoming stranded assets. The commenters stated that the EPA must operate within the authority section 111(d) gives it, which does not include expanding the authority EPA has under section 111(b) to "ratchet down" perform ance standards in the future

. EPA does not have the authority to revise its Section 111(d) procedures every eight years.

Commenters stated, EPA does not have the authority to review and potentially revise Section 111(d) requirements every eight years. Commenters stated, unlike the new source standards

, Section 111(d) is silent regarding whether EPA is to review its procedures , and this silence should not be interpreted as evidence of Congressional intent that the eight

- year review period explicitly mandated under Section 111(b) also should be applied to Section 111(d). [Lamie v. United States Trustee, 540 U.S. 526, 538 (2004).] Comm enters said, doing so would "rewrite[e]315 rules that Congress has affirmatively and specifically enacted." [Id.] Commenters said, incorporating an eight

- year review requirement into Section 111(d) would fundamentally alter the impact of Section 111(d) by req uiring existing sources to continuously meet increasingly stringent standards rather than complying with an ESPS once. Commenters said, "Congress ... does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions ... i t does not hide elephants in mouseholes." [Whitman v. Am. Trucking Ass'ns, Inc., 531 U.S. 457, 468 (2001).] Commenters stated, if Congress had intended for existing sources regulated under Section 111(d) to meet increasingly strict standards on a set sc hedule, it would have established a timeline for EPA to review its procedures, as it did with the eight

- year timeline for reviewing NSPS. Commenters said, considering the "particularization and detail" with which Congress provided the schedule for review o f Section 111(b) standards, inferring that EPA's actions under Section 111(d) should be reviewed every eight years would amount to "enlargement" of Section 111(d) rather than "construction" of it. [Iselin v. United States, 270 U.S. 245, 250 (1926).] Commen ters said, as the Supreme Court also has noted, "where Congress includes particular language in one section of a statute but omits it in another . . . , it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or e xclusion." [Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433 (1933).] Commenters stated, Congress' determination that standards for new sources should be periodically reviewed, while standards for existing sources are set just once, makes sense since existing sources retire, are modified, or are otherwise replaced by "new" sources, an d gradually become obsolete so updates are not needed.

Commenters stated, EPA lacks legal authority under section 111 to establish a subsequent BSER based on levels of improved performance. Commenters said EPA cannot re

- issue an NSPS for new sources tha t have already gone through the process , and likewise, existing sources that have undergone a section 111(d) process cannot be forced to undergo it again. Commenters stated that Section 111(d) s tandards to date have been interpreted as a one

- time standa rd.

Comment 5: Comment opposing establishing a deadline for the update of a state plan 10 years in advance, and that a state plan submittal requesting comment on an anticipation to update a state plan by 2025 seems appropriate.

Response 5: The EPA is not finalizing a requirement to update state plans for 2030 and beyond. The proposal presented for public comment the idea of requiring states to make a second submittal in 2025 showing whether their approved plan measures still appear sufficie nt to maintain the final

- goal level of emission performance after 2030. The EPA believes that decisions can be made in the future about plan updates in 2025 or beyond to ensure that approved plans remain sufficient to meet and maintain emissions performan ce consistent with the final goal.

The following are summaries of the specific public comments under this comment:316 The commenter s opposed establishing a deadline for the update of a state plan 10 years in advance. There should be an opportunity to update corrective measures, but establishing a deadline a decade in advance presumes that there will be enough information to establish or confirm plans. The commenters suggested that a state submittal requesting comment on an anticipation to update a state plan by 2025 seems appropriate since this could inform the EPA on the progress or anticipated challenges to the state plan.