Good evening. My name is Sheila Holman and I am the Director ofthe Division ofAir Quality in Department ofEnvironment and Natural Resources, or NCDENR. I am here to provide comments regarding the proposed guidelines for greenhouse gases (GHGs) from existingpowerplants on behalf ofNCDENR. NCDENR believes EPA'sproposed rules under §11l(d) to reduce GHGs from both powerplants and beyond powerplants is legally and technically flawed. EPA appears to recognize the legal vulnerabilities by proposing to make each ofthe "buildingblocks" independently severable

-as ifrealizing they will be vacated by the Court duringjudicialreview.

While there are a number oftechnical and legal issues in the proposed rule, the issue that I wanted to begin with is limited State resources. Ifthis rule is finalized in its current fonn, states will be immediately required to amend not onlytheir state airprograms, but will be required to fundamentally restructure the State's entire energy generation and delivery system. This significant undertaking will run parallel withjudicialreview ofthis rulemaking. States have been through several exercises where EPA's shaky legal interpretations have resulted in States taking actions to satisfy a federal rule that is later detenninedby the Courts to be illegal. Look no further than the interstate transport rulemakings from the Clean Air Interstate Rule, or CAIRto the Cross State Air Pollution Rule, or CSAPR. A more recent example is the PSD Tailoring Rule.

The final rule, whatever form it ultimately takes, should not require states to begin taking action until the completion of judicialreview. This is to preserve the state's limited resources and ensure that actions taken in response to the EPA rule will not be for naught. NCDENR is calling this approach a "legal trigger" deadline and we urge the EPA to respecttheir state partners and include this provision in any final rule.
With respect to the significant legal issues associatedwith the currently proposedrule;
1) EPA's currentproposal to regulate new fossil fuel-fired electric utility units under section 111(b) ofthe Act is based on their finding that carbon capture and sequestration (CCS) has been adequately demonstrated. CCS has not been adequately demonstrated. Farfrom having been demonstrated, there is uncertainty with respectto even the feasibility ofthe separation technology onthis scale as well as continued concerns about the availability ofgeologic fonnations for subsequent sequestration. The legal implication is critical since EPA is barred from implementing an existing source rule under 111(d) without having successfully promulgated a new source standard under 111(b).
2) Next, section 111(d) prohibits the overlap of 111(d) with two otherprograms in the Act. Section 111(d) prohibits EPA from regulatingpollutants from source categories regulated under sections 112 as well as pollutants regulated under thatprogram. In 2011 EPA issued regulations under section 112 applicable to fossil fuel-fired electric generating units thereby foreclosing regulation under section Ill(d). In the past EPAhas suggestedthatthe provision which was the culmination ofboth Senate and House amendments represents a conflict in the statutory language ofsection 111(d) with regard to whetherthe 112 prohibition was pollutant specific or source category specific. NCDENR disagrees with this assertion, as there is no internal conflict in section 111(d). Priorto 1990, section 112 was a pollutant-specific program. In 1990 the structure ofsection 112 was changed from a program thatregulatedpollutantsto one that regulates source categories. To prevent overlap with the newly structured 112 program, Section 11l(d)was augmented to exclude not only section 112 pollutants, but also section 112 regulated source categories. The two exclusions are entirely self-consistent and should notbe used to invoke Chevron deference. This question has been considered in the recent past in litigation ofEPA's Clean Air Mercury Rule in 2007. NCDENR agrees with NRDC who also argued in that case thatthe text ofSection 111(d)(l)(A) prohibits EPA from regulating-e apollutantthat is "emittedfrom a source category which is regulated under section 112." Regarding Chevron deference, NCDENR also agrees with NRDC when they argued the perceived ambiguity was "manufactured" by EPA in an "attemptto exploit a non-substantive difference between the two amendments to 111."

3) Additionally,, NCDENR cautions EPA from reading the Supreme Court's decision inAEPv. Connecticut to grant EPA the authority to regulate GHGs under lll(d). Dicta in that case regarding the suitability of§Ill(d) in regulating GHGs was based on an erroneous paraphrase ofthe relevant statute. In addition, that decision was issued prior to EPA's regulation ofelectric generating units under §112.

4) While NCDENRtakes no position on whetherEPA should establish aNAAQS for greenhouse gas emissions, the agency is concerned that a CAA §111(d) action is prohibited because GHGs have constructively been listed under CAA §108. As a result ofthe EPA's Title II rulemaking, all ofthe conditions precedentto list greenhouse gases under CAA §108 appear to have already been met. NCDENR agrees with arguments made by the Sierra Club in NRDCv. Train (1976) when the Sierra Club succeeded in forcing EPA to define a NAAQS for lead under substantially similar facts.

In that case, as is the case now, EPA has already made an endangermentfinding under Title II ofthe CAA. Second, EPA found then for lead, and found now for GHGs that both are emitted from numerous or diverse mobile or stationary sources. EPA has already made this finding. Finally, the court inNRDC v. Train (1976) found that once the first two provisions under § 1 08(a)(l) are met, the thirdprovision is constructively satisfied. Because all three criteria under §108 are satisfied, EPA is prohibited from regulating GHGs under §lll(d).
5) In cases where EPA does have the authority to establish emission guidelines under section Ill( d), that authority is limited. EPA can only establish a unit-specific guideline that describes whatcontrol technologies have been demonstrated. NCDENR agrees with the Sierra Club when it argued inAsarco v. EPA (1978) that §Ill ofthe CAA cannot be applied to a combination offacilities within a plant site orthe plant site as a whole. Itcertainly cannot be expanded to include facilities outside the plant site, or to source categories outside the proposed §1ll(d) source category. The plain language ofthe Act as well as legal precedentprecludes EPA and States from implementingbuildingblocks 2, 3, and 4- all designed to require emission reductions outside ofthe affected emissions unit.6) EPA's economicjustification for the proposed rule relies heavily on the reductions in a§108 pollutant (PM) thatEPA believes will result as a corollary offorcing America's electric generation to convert substantially to natural gas. In other words, EPA is relying on the regulation ofa §108 pollutanttojustify a rule under §111(d)- a provision that explicitly prohibits regulation ofa §108 pollutant. EPA must defend the regulation ofGHGs based on the benefit ofreducing GHGs.
Finally, on an equitable issue, EPA has defined reductions on a State by State basis. The basis was the existing power generation technologies, andpolicies unique to each State. For example, some States relied more on nuclear generation, while others relied more on coal combustion for their generation. EPAthen based each State's GHG reduction requirement on each State's natural gas electricity generation, nuclear generation, solar generation, wind generation, policies that incentivized energy efficiency, and policies that reduce consumption ofelectricity through demand side management. Since EPA based the potential improvements on the current energy portfolio, the resultant rule has the outcome ofrequiring the smallest GHG reductions from States withthe highest coal usage. This outcome is a direct result ofEPA's use ofsource categories for compliance other than that regulated by the proposed standard, i.e., coal-fired powerplants.

NCDENRbelieves the Clean AirAct's § 111(d) for coal-fired powerplants should simply apply to each coal-fired powerplant taking into account the statutory factors such as the remaining useful life ofthe unit to determine whatthe emission standard should be.

Thankyou for the opportunity to give comment to this very importantrule.