From: Vasu, Amy

Sent: Wednesday, July 29, 2015 11:07 PM

To: nfrey@omb.eop.gov

Cc: Szabo, Aaron; Tsirigotis, Peter; Culligan, Kevin; Harvey, Reid

Subject: Additional -- responses to 7/27 summary of interagency comments and status --

Clean Power Plan Final Rule

Nathan,

I have attached EPA’s responses to the 7/27 10-pager summary of interagency review comments.

As an update on the CPP Final Rule package, we believe that we are close to having fully

addressed interagency review comments, and we are in the process of:

1) Completing improved cost rationale that we plan to include in Section V.A.4.d;

2) Making final improvements to the leakage discussion (Section VII.D); and

3) Completing revisions to the BB4 rationale.

We are also continuing to make conforming and clarifying.

Please let us know if you have any questions about this.

Thank you.

Amy

~~~~~~~~~~~~~~~~~~~~~~~ Amy B. Vasu

U.S. EPA / OAQPS

Sector Policies and Programs Division

email: vasu.amy@epa.gov

phone: 919.541.0107

<< EPA Responses to Summaryofinteragencycomments_2015_7_26_CPP.docx >>

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

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1 General Comments

1. Reviewer requests the opportunity to see the rest of the Technical Support Documents including

the Greenhouse Gas Mitigation Measures Technical Support Document and New Source

Complements to Mass Goals Technical Support Document.

EPA response: We have now provided all of the TSDs for review.

2. Reviewer requests the opportunity to talk with EPA about the math in step 7 of the goal

computation and associated text justification included starting on page 891 RLSO.

3. State measures rate plans. Reviewer notes that EPA has been deleting the State Rate plans as

viable options in many instances. The reviewer noticed the concept in the text on the top of P.

31 (and did not understand why), but way later on in the preamble on state plans there is a

regular deletion of the "rate" clause from what had been "State rate and mass based plans". It

happens many times, and the reviewer cannot figure out why, especially since rate

‐ based plans

are the original state option concept (albeit not preferred). Reviewer recommends that EPA

reconcile these inconsistencies. EPA response: Since state measures plans must demonstrate

plan performance based on the mass goal, the preamble does not discuss rate

‐ based state

measures plans.

Merged state rates. Reviewer notes that it is not clear if cooperating rate

‐ based states need to

merge their rates, or can just link ERCs for trading. Reviewer notes that the preamble seems to

say the states can either merge or trade without merging. The reg text seems to say the states

all have to submit linked plans that are similar. Are these texts compatible

‐ is the necessary

state "similarity" related to unit ERC definition ? EPA Response: States implementing rate

‐ based

emission trading programs in a state plan can facilitate interstate trading of ERCs through

coordinated individual plans or through multi

‐ state plans. Interstate ERC trading is provided

through individual plan where states implement emission standards equal to the subcategorized

CO 2 emission performance rates in the emission guidelines. Interstate ERC trading is provided

through a multi

‐ state plan where states implement emission standards equal to the joint

weighted average rate

‐ based CO 2 goal for the participating states. This is a weighted average of

the individual state rate

‐ based CO 2 goals, weighted by 2012 generation by affected EGUs.

We will check to ensure that the reg text matches the current approaches provided for in the

preamble.

4. Awaiting EPA's thoughts on language that could encourage states to preserve marginally

economic merchant nuclear. EPA had mooted a requirement in the mid

‐ course state reports.

Specific Comments

1. Reviewer notes that a common definition for “equivalent” regarding emission performance and

goals would be useful throughout the preamble.

2. Page 97 RLSO: Reviewer questions if the Mt is intended to be MMT. Current text reads: “Those

states that take advantage of this option will be eligible to receive from the EPA a limited

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2 number of matching allowances or ERCs, up to a total limit for all states that represents the

equivalent of 300 Mt of CO2 emissions.”

EPA response: This has been revised and now reads “300 million short tons.”

3. Page 97 RLSO: Reviewer requests clarification as to what states are allowed to do with the

allowances/ERCs they receive from EPA for early action.

EPA response: Language has been updated in new version. States must pass ERCs/allowances

along to project providers.

4. Page 97 RLSO: In the discussion on Early Action, the reviewer noticed a number of pieces of

information that need to be provided in either the preamble or the forthcoming guidance. 1)

How is it shown that RE benefits a low income community? 2) What is the definition of a low

income community?

EPA response: EPA intends to solicit comment on these items in a subsequent action on the

CEIP.

5. Page 97 RLSO:

Reviewer recommends that the value for early action is only one ERC or allowance per MWh of

zero emitting generation or efficiency. Reviewer recommends that early action eligibility is

technology neutral so that all types of zero

‐ emitting generation are eligible, all types of

renewable energy, energy efficiency, new nuclear, and nuclear uprates. Reviewer recommends

that half of credits come out of the existing state targets rather than being additive to state

targets. Reviewer recommends EPA consider some type of interstate transfer opportunity.

EPA response: We have updated the text on the Clean Energy Incentive Program throughout the

preamble.

Reviewer recommends that, in order to limit credits going to projects that are already

underway, credit could start when final plans are submitted or approved, rather than when the

rule is released. Projects that will be built in 2016, for example, are already underway.

EPA response: Text has been edited. Eligible projects must commence construction following

the effective date of an approved final state plan.

6. Page 399 RLSO: Reviewer notes that portions of the discussion of new natural gas combined

cycle (NGCC) units are factually incorrect. Reviewer is available to discuss.

Reviewer recommends revising the section as follows:

“(iii) Generation from new NGCC units.

“New NGCC units

– ‐ that is, units that had not commenced construction as of January

8, 2014, the date of publication of the proposed CO2 standards of performance for new EGUs

under section 111(b)

– ‐ are not subject to the standards of performance that will be established

for existing sources under section 111(d) plans based on the BSER determined in this final rule.

In the June 2014 proposed emission guidelines for existing EGUs, the EPA solicited comment on

whether to include this measure in the BSER. Commenters raised numerous concerns opined

both in support of and against including new NGCC capacity in the BSER

, and after consideration

of the comments, we are not including replacement of generation from affected EGUs through

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3 the construction of new NGCC capacity in the BSER. Because no clear consensus emerged on

this question, EPA decided to defer consideration of new NGCC as part of this rule, but may

consider it in subsequent revisions.” In this section, we discuss the reasons for our approach.

The EPA did not include reduced generation from affected EGUs achieved through

construction and operation of new NGCC capacity in the proposed BSER because we expected

that the CO2 emission reductions achieved through such actions would, on average, be more

costly than CO2 emission reductions achieved through the proposed BSER measures. Our

determination not to include new construction and operation of new NGCC capacity in the BSER

in this final rule rests primarily on achievable magnitude of emission reductions rather than

costs

.

Unlike emission reductions achieved through the use of any of the building blocks,

emission reductions achieved through the use of new NGCC capacity require the construction of

additional CO2

‐ emitting generating capacity, a consequence that is inconsistent with the long

‐

term need to continue reducing CO2 emissions beyond the reductions that will be achieved

through this rule. New generating assets are planned and built for long lifetimes

– ‐ frequently 40

years or more

– ‐ that are likely longer than the expected remaining lifetimes of the steam EGUs

whose CO2 emissions would initially be displaced be the generation from the new NGCC units.

The new capacity is likely to continue to emit CO2 throughout these longer lifetimes, absent

decisions to retire the units before the end of their planned lifetimes or to install CCS technology

in the future at substantial additional cost. Because of the likelihood of CO2 emissions for

decades, the overall net emission reductions achievable through the construction and operation

of new NGCC are less than for the measures including in the BSER, such as increased generation

at existing NGCC capacity, which would be expected to reach the end of its useful life sooner

than new NGCC capacity, or construction and operation of zero

‐ emitting RE generating capacity.

We view the production of long

‐ term CO2 emissions that otherwise would not be created as

inconsistent with the BSER requirement that we consider the magnitude of emissions reductions

that can be achieved. For this reason, we are not including replacement of generation from

affected EGUs through the construction and operation of new NGCC capacity in the final BSER.

Commenters raised a concern with the interrelation of section 111(b) and section

111(d). New NGCC capacity is distinguished from the other non

‐ BSER measures discussed above

by the fact that its CO2 emissions would be subject to the CO2 standards for new EGUs being

established under section 111(b). Section 111 creates an express distinction between the

sources subject to section 111(b) and the sources subject to section 111(d), and commenters

expressed concern that to allow section 111(b) sources to play a direct role in setting the BSER

under section 111(d) would be inconsistent with congressional intent to treat the two sets of

sources separately. Section VIII of this preamble includes a discussion of ways to address new

NGCC capacity in the context of different types of section 111(d) plans.

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4 EPA response: We disagree with the reviewer’s characterization and recommended changes.

We have verified the accuracy of the current text and are not making changes to it.

7. Page 440 RLSO: Reviewer suggests changing “by 2030” to “in 2030.” Current text reads: “We

note that taken together, the modifications yield emission reductions requirements that

commence more gradually than the proposed goals but are projected to produce greater

emission reductions overall by 2030. 1 ”

EPA response: The preamble text has been clarified to say “... but are projected to produce

greater overall annual emission reductions by 2030.”

8. Page 445 RLSO: Reviewer recommends striking the egregious nuclear language.

Reviewer recommends that EPA strike this language: “ and that the inclusion of the generation in

the goals is premature because the units’ actual completion dates could be delayed .” Watts Bar

2 is on schedule for commercial operation within the year (June 2016). Both Vogle and Summer

are on schedule to be operational by 2020. Vogle is backed by a DOE loan guarantee which

demonstrates the Administrations’ confidence that the plant will meet its construction schedule

Reviewer recommends that EPA strike this language: “... we also acknowledge that, in contrast

to RE generating technology, investments in new nuclear units tend to be very large and

“lumpy” and have historically been susceptible to delays that increase costs

. Also, there is no

clear trend demonstrating increased construction of new nuclear capacity. We view these

factors as distinguishing the under

‐ construction nuclear units from RE generating capacity,

indicating that the new nuclear capacity is of higher cost and therefore less appropriate for

inclusion in the BSER.” The current trend is that 5 units are under construction demonstrating

5.5GW with additional units under consideration including site characterization activities at two

sites for SMR deployment in the mid 2020’s.

EPA should realize that it is basing this assessment on first of a kind plants and therefore

claiming that nuclear plants show a trend of being over cost and delayed is inappropriate.



### EPA response: We disagree with the reviewer’s characterization and recommended changes.

We have verified the accuracy of the current text and are not making changes to it.

9. Page 445 RLSO: Section VIII.K.1.a.(8) is mentioned in the nuclear section but it appears to only

address NGCC and RE.

EPA response: We have verified that nuclear generation is addressed in section VIII.K.1.a.(8) and

that the cross

‐ reference is correct.

10. Page 481/482 RLSO: Reviewer suggests striking this sentence about BB3 for Alaska, Hawaii, and

Puerto Rico because RE potential data for those states is available: “ In addition, at present we

lack the data to quantify the emissions reductions available from building block 3 in these

isolated areas using the same methodology used for the contiguous portions of the U.S. ”

EPA response: We have deleted the sentence.

1 For the proposed rule, the EPA projected total CO 2 emission reductions from 2005 levels of 29% in 2025 and 30% in 2030. For

the final rule, the EPA projects total CO 2 emissions reductions from 2005 levels of 28% in 2025 and 32% in 2030. See Regulatory

Impact Analysis for the CPP Proposed Rule, Table 3

‐ 6, and Regulatory Impact Analysis for the CPP Final Rule, Table 3

‐ 6, available

in the docket.

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

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5 11. Page 516 RLSO: Current text reads “ Lower wholesale power prices would make further RE

deployment less competitive against generation from existing emitting sources; this dynamic

puts upward pressure on the cost of achieving CO 2 reductions through increased RE

deployment.”

Reviewer recommends noting that lower wholesale prices will also reduce the cost of electricity

to consumers: “Lower wholesale power prices would make further RE deployment less

competitive against generation from existing emitting sources; while this dynamic will reduce

the cost of electricity to consumers, it may also put upward pressure on the cost of achieving

CO 2 reductions through increased RE deployment.”

EPA response: The text has been edited to read: “Lower wholesale power prices would make

further RE deployment less competitive against generation from existing emitting sources; while

this dynamic would generally reduce electricity prices to consumers, it also puts upward

pressure on the cost of achieving CO 2 reductions through increased RE deployment.”

12. Page 850 RLSO: Reviewer recommends the following edit for accuracy. “The EPA has determined

that the statewide rate

‐ based and mass

‐ based CO 2 goals are expressions of the emission

performance rates equivalent to application of the emission performance rates to affected EGUs

within a state when the technology specific share of existing fossil EGUs is the same as in 2012 .”

EPA Response: The suggested edit was not made. The concept of “equivalence” in this context is

grounded in the baseline data foundation of the BSER quantification procedure; as a result, the

suggested language is not suitable because it implicitly compares the baseline data to some

unspecified alternative data that is not relevant to the equivalence demonstration.

13. Page 857 RLSO: Reviewer suggests adding back “adjusted 2012” to describe the baseline data in

footnote 739as the adjective is correct and needed for clarity. “However, as discussed here and

in the next section, in order to provide maximum flexibility to states, the EPA averages these

two emission rates together for each state using their adjusted 2012 baseline generation share

to arrive at a single statewide emission performance goal.”

EPA response: We have made the suggested edit.

14. Page 827 RLSO: Reviewer suggest the edit to make the report title correct: “In addition to wind

and solar technologies, the EPA evaluated hydropower deployment potential based on the

latest cost and performance data from NREL’s Renewable Energy Economic Potential study. “

EPA response: We have made the suggested edit.

15. Page 828 RLSO: Current text reads: “Commenters detailed several issues with applying the

benchmark development rate

, including that it limits future performance to historical levels of

development ...”

Reviewer notes that this same criticism could be levied against the final BB3

methodology. Reviewer recommends striking the clause.

EPA response: We have made the suggested edit.

16. Page 830 RLSO: Reviewer notes that it’s not clear why the values in Table 9 have been revised

downward from the previous version of the preamble.

EPA response: The values in Table 9 reflect the most current version of data available for the

building block 3 methodology.

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6 17. Page 834 RLSO: Current text read: “As such, applying the 30 percent constraints at the IPM sub

‐

region level provides a high degree of assurance that the RE capacity deployment pattern

projected by the model would not incur significant grid integration costs.”

While this is true, reviewer recommends maintaining previous language referring to this

constraint as conservative. It is indeed highly conservative. Reviewer suggests adding this

language “ As such, applying the 30 percent constraints at the IPM sub

‐ region level *is a very

conservative constraint and* provides a high degree of assurance that the RE capacity

deployment pattern projected by the model would not incur significant grid integration costs. "

EPA response: The text has been edited to read: “As such, applying the 30 percent constraints at

the IPM sub

‐ region level is very conservative and provides a high degree of assurance that the

RE capacity deployment pattern projected by the model would not incur significant grid

integration costs.”

18. Page 870 RLSO: Reviewer recommends the following edit because using a different data year

wouldn’t change the total NGCC, but would change the incremental NGCC used in the next step

to come to the final tech specific rates. Reviewer believes that the first sentence in this quote

gets EPA’s point across, but the second should be deleted because it could create confusion

about how changing the data year would affect the rate goals. “Therefore, a different data year

may change a baseline data point, but it would not change the ending point total potential

NGCC generation for quantifying the emission performance rates in these circumstances. As a

consequence the lower amount of NGCC generation in the baseline would be offset by a larger

NGCC incremental potential in the building block to get back to the same total potential NGCC

generation level. ”

EPA response: We have made the suggested edit.

19. Page 888: Reviewer recommends the following edit. “In other words, the regional NGCC

capacity factor was only assumed to reach 75 percent if there was sufficient higher

‐ emitting

fossil steam generation that it could replace after step five.”

EPA response: We have made the suggested edit.

20. Page 888

‐ 889 RLSO: Reviewer recommends the following edits because the latest version of the

Goal Computation TSD does not introduce the intensity rate equations until Step 7.

“The increase in NGCC generation in the NGCC denominator at this step compared to the post

‐ building block 3 level was matched by an equal decrease in fossil steam generation in the steam

denominator reflecting the 1 for 1 MWh hour replacement. In parallel, the emissions from NGCC

numerator was were increased by emissions corresponding to the baseline NGCC emissions rate

times the additional generation post

‐ building block 3

, and the emissions from steam numerator

were decreased by the fossil steam emissions rate times the displaced generation. At this point,

the equations generation and emission levels for both steam and NGCC reflect the final

distribution of generation between them the subcategories that comprises BSER. But the

compliance emission rates in step seven must account for CO2 emissions and generation from

substituted renewable and gas generation that comprise building blocks 2 and 3, to reflect and

enable the emission reductions achievable under the best system of emission reduction, and

ensure that the shared implementation of BSER by steam and NGCC generation is reflected in

the compliance rates. This is addressed in step seven. ”

EPA response: We have made the suggested edits.

21. Page 889

‐ 893 RLSO: Reviewer recommends the following edits to strengthen and clarify the

explanation of step seven. Review did not think the “second” and “third” were used

appropriately for what they were descripting and recommends EPA review.

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7 “For building block two, a similar mechanism is used needed

....

Second As discussed above, it is beneficial that the baseline from which compliance emission

rates are derived be transparent and based on observable historic data.

...

In Section VIII, we discuss methods for creating ERCs for implementing shifting of generation

from steam to NGCC, and this discussion illustrates the value of relying on an observable and

concrete baseline. In that section we suggest that incentivizing and facilitating the purchase of

ERCs as a compliance option for steam units could be implemented through the use of a factor

that creates an increment a fraction of an allowable credit for each hour that an NGCC operates.

This factor is derived from the actual incremental generation of NGCC post

‐ building block two

, relative to the 2012 baseline. While a different factor could be derived from the hypothetical

intermediate baseline resulting from the pro rata application of zero emissions generation to

NGCC in building block three ( by transferring the full amount of NGCC emissions and generation

replacing steam generation in building block 2), EPA believes that grounding baselines in

concrete historical data (such as those used to derive the 2012 baseline) is both more

transparent and easier to understand in a way that is more useful to states and utilities, in

contrast to the practical challenges of relying on a calculated baseline that corresponds to an

interim step within the performance rate calculation. As long as the crediting framework for

creating ERCs is consistent with the amount of gas emissions and generation that is transferred

to the coal rate, either this the chosen option or the option of transferring the entire quantity of

gas emissions and generation that occurred in block 2 to the coal rate would provide an

incentive for the power market to implement the shift in generation from coal to gas from

building block 2.

ThirdAlso as discussed above, it is important that the compliance equations reflect the BSER pro

rata allocation of renewable energy to fossil steam and NGCC generation. The first approach to

define the quantity of NGCC generation and emissions to be averaged into the steam rate would

require the steam rate to take into account the total additional NGCC capacity that results from

the application of building block 3 before building block 2 has been applied. This approach

would reflect in the compliance rate for steam units a greater share of the implementation of

building block 3 than is consistent with the pro rata methodology for building block 3 that

comprises the BSER. Ensuring that compliance emission rates for both steam and gas units

reflect the emission reduction potential of building block 3 is integral to the building block 3

methodology and also recognizes that application of building block three on a pro

‐ rata basis was

intended to achieve emission reductions from both NGCC and fossil steam commensurate with

their emissions reduction opportunities.

If the EPA were to use the increment of NGCC emissions and generation derived at the

intermediary step after the application of building block three, rather than the increment

relative to the 2012 baseline, the effect would be to largely re

‐ assign to fossil steam the

potential for increased NGCC generation due the building block three generation shift.”

EPA response: We have made the suggested edits.

22. Page 921

‐ 922 RLSO: Reviewer recommends the following edit for accuracy. “Consequently, the

statewide goals are equivalent to the CO 2 emission performance rates when the technology

specific share of existing fossil EGUs is the same as in 2012 and are thus an equivalent

expression of the BSER.”

EPA response: We have not made the suggested edit. See response to comment 12 above.

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8 23. Page 922 RLSO: Reviewer recommends the following edit for clarity. “The starting place for

quantifying mass

‐ based statewide CO 2 emission performance goals are the emissions directly

represented in the numerator of the statewide rate

‐ based CO 2 emission performance goals.”

EPA response: We have made the suggested edit.

24. Page 923

‐ 924 RLSO: Reviewer recommends the following edit for accuracy and clarity. “Due to

the nature of the emission performance rate methodology, which selects the highest regional

value for each source category as the CO 2 emission performance rate, there are cost

‐ effective

lower

‐ emitting generation opportunities quantified under the building blocks that are not

necessary for affected EGUs i n the Western and Texas interconnects to demonstrate compliance

at historical generation levels. The EPA recognizes that these lower

‐ emitting generation

opportunities are available to affected EGUs at a national level as a means to increase their own

output (and, as a result, their own emissions) while maintaining the relevant emission

performance rate.”

EPA response: We have made the suggested edit.

25. Page 928 RLSO: Reviewer recommends the following edit for accuracy and clarity.

“Rate

‐ based goals minimize leakage relative to mass

‐ based goals that do not address leakage

because under a rate

‐ based state goal, similar to the subcategory

‐ specific emission performance

rates, existing lower

‐ emitting affected EGUs,”

EPA Response: The suggested edit was not made. We feel that it is important to make this point

with respect to rate

‐ based state goals independently of comparison to mass

‐ based state goals,

which are discussed elsewhere in section VII.

26. Pg. 970 RLSO: Current text reads? “Allowances or ERCs awarded by the EPA pursuant to this

program may be used for compliance by an affected EGU with its emission standards and are

fully transferrable prior to such use.” Does EPA mean that these ERCs are fully transferrable

within the state in which they are awarded, or across state lines, meaning that trades could

result in more than 300 million tons of emissions being allowed as a result of the program?

Reviewer suggests clarifying that the “ERCs are fully transferrable within the state to which they

were awarded ”. 

### EPA response: Intent is that ERCs are fully transferrable without

limitation. May be transferred between states and banked within in and between

interim and final performance periods.

27. Page 971 RLSO: Reviewer recommends clarifying the requirement of a demonstration:

“Specifically, the state must demonstrate in its plan that it has a mechanism in place that

enables issuance of ERCs or allowances from the state to parties effectuating reductions in 2020

and 2021 in a manner that would have no impact on the emission performance of affected EGUs

required to meet rate

‐ based or mass

‐ based emission standards during the compliance

periods. 2 ”

Reviewer recommends further clarifying: 1) whether or not states are only responsible for

demonstrating that stringency is maintained with respect to the allowances/ERCs issued by the

state, and not those provided on a matching basis by EPA, and 2) amend footnote 788 to include

an example of how a state with a rate

‐ based target could meet this demonstration, to

2 For example, under a mass-based implementation, the state plan could include

a set-aside of allowances from an emissions budget that itself reflects the

state goals. Allocation of those allowances to parties effectuating

reductions in 2020 and 2021 would have no impact on the total emissions

budget, which sets the total allowable emissions in the compliance periods.

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9 complement the existing example of how the demonstration could be done in a mass state.

Possible text: “ Under a rate

‐ based implementation, a state could elect to participate in the

Clean Energy Incentive Program, and set targets for the three interim step periods that, after

the ERCs awarded under the program were accounted for, could be demonstrated to meet the

interim target .” 

### EPA response: Footnote has been added to illustrate one pathway a rate

‐

based state could use to make this demonstration

– the concept of “borrowing” from

the pool of ERCs issued during 2022

‐ 2029.

28. Page 982

‐ 984 RLSO: For the bullets starting on page 983:

Bullet 1

– Reviewer recommends clarifying what cap is acceptable for the unaffected units in

this case.

Bullet 2

– Reviewer recommends that it would be much clearer if the output based set

‐ aside

(and RE set

‐ aside) was mentioned. It was difficult at first to figure out how bullet 1 and 2

differed in their treatment of affected sources.

Bullet 3

– Reviewer recommends the following edit for clarity. “Establishing federally

enforceable rate

‐ based CO 2 emission standards at a single level that applies for all affected

EGUs, consistent with the state rate

‐ based CO 2 goal for affected EGUs in the emission

guidelines. This approach provides for interstate emission trading, through a multi

‐ state plan

where the states in a multi

‐ state plan combine their rates into a single joint rate .” EPA

Response: We have edited this section to further clarify the streamlined plan approaches, based

on these comments.

Pages 995 & 999 RLSO: Reviewer recommends clarifying in the section with the description of

emission standard mass

‐ based plans how “(1) Mass

‐ based emission standard applied to

individual affected EGUs” on page 997 differed from “(3) Mass

‐ based emission standards based

on operational or other standards” on page 1001. They seemed similar or the same to the

reviewer. Does option (3) include option (1) for some units and option (2) for other units? EPA

response: Subsection (3) is just clarifying that you could base an emission standard in subsection

(1) on an operational or other standard.

29. Page 1293 RLSO: Reviewer recommends providing more guidance regarding the 48

‐ hour

notification requirement for RSV events, especially whether notification would be required in

anticipation of a possible RSV event but where it is not yet known whether the triggering event

would warrant use of an RSV (e.g., it may take longer than 48 hours to determine the length of

an outage recovery and the impact thereon emissions/compliance). Reviewer also recommends

clarifying what's required for a "full description" under the initial/48 hour notice vs the 7 day

follow

‐ up "full description". Note that any changes in response to this comment may also need

to be reflected in the reg text on Pg. 1871 (redline version). EPA Response: Clarifying language

added to say that the information that is submitted within 48 hours should be accurate to

extent known at the time. The notice is not required until the event occurs and it is thought to

require use of the RSV.

30. Page 1351 RLSO: Generally, reviewer supports EPA providing mass budgets that include new

fossil EGUs. However, reviewer requests the opportunity to comment on the methodology used

to arrive at these budgets and to review the and New Source Complements to Mass Goals

Technical Support Document. EPA response: TSD has been provided to the interagency

reviewers.

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10 31. Page 1353 & 1355 RLSO: Reviewer recommends the following edits. The first line edit is to make

it clear that both types of allocation strategies are needed. The reviewer notes that the mention

of the 2 nd set

‐ aside on page 1365 says RE and EE is included in the federal plan, which is

supported by DOE. However, the reference to the same set

‐ aside on page 1355 says that only RE

is included in the federal plan set

‐ aside, but states could include EE in an alternative set

‐ aside if

they wanted. Reviewer recommends including EE and nuclear in the federal plan set

‐ aside. At a

minimum, reviewer recommends including nuclear as an option states may choose.

Page 1353 “The EPA is proposing the inclusion of that two allocation strategies be

included as part of the mass

‐ based approach in the proposed federal plan and model rule:

updating output

‐ based allocations for existing NGCC and allowance set

‐ asides that target RE

, and demand

‐ side EE

, and new and up

‐ rated nuclear units .”

Page 1355 “The other allocation strategy included as part of the mass

‐ based approach in

the proposed federal plan and model rule is a set

‐ aside of allowances to be allocated to

providers of incremental RE. A set

‐ aside can also be allocated to providers of demand

‐ side EE,

new or up

‐ rated nuclear, or a combination of the three. to both RE and demand

‐ side EE .” EPA

response: edits made in VIII.J.2.b to make it clear both strategies can be used.

32. Page 1358 RLSO: “However, without a better understanding of the different mechanisms that

states may ultimately choose to meet the emission guidelines, and how different requirements

in different states may interact, the EPA cannot project every potential differential incentive

that could lead to a loss of CO2 emission reductions. Therefore, once program implementation

begins, the EPA will assess how emission performance across states may be affected by the

interaction of different regulatory structures implemented through state plans. Based upon

that evaluation, the EPA will determine whether there are potential concerns and what course

of action may be appropriate to remedy such concerns. ” Reviewer strongly supports the

inclusion of this language, and recommends clarifying if this assessment will be part of the 8

‐

year updating process as authorized under the Clean Air Act

. EPA response: edits made in

VIII.J.2.b

33. Pg. 1374 RLSO: Section title appears to be inconsistent with text as edited; reviewer

recommends changing section title from “Links among emission budget trading programs that

only include affected EGUs” to “ Links among emission budget trading programs that only

include affected EGUs or affected EGUs and applicable new fossil fired EGUs .” EPA Response:

We agree, and have revised this title to “Links among emission budget trading programs that

only include affected EGUs or affected EGUs and new fossil fuel

‐ fired EGUs”.

34. Page 1390 RLSO: Reviewer suggests removing these sentences on 1390: “ As a result, the MWh

accounting method addresses interstate effects, because it inherently accounts for how

generation replacement and CO2 emission reduction impacts may cross state borders... Instead,

this accounting method is indifferent to avoided CO2 emission rates and creates the same

number of zero

‐ emitting credits or adjustment for each MWh of energy generation or savings,

wherever they occur .” Reviewer notes these sentences may do more harm than good in calling

attention to the potential disparity between assumed emissions reductions from BSER and a

MWh

‐ only accounting approach applied uniformly across the range of target rates that entities

may be using for compliance, highlighting the potential detachment between a measured MWh

of savings and actual emissions avoided. EPA response: disagree, edit not made.

35. 36. Page 1399 RLSO: Reviewer suggests making the following edit to footnote 965 for clarity, or

if this is not what is meant, providing further clarification:

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

11 “As used here, a measure is “tied to a state plan” if it is issued an ERC under approved

procedures in a rate

‐ based emission standards plan

, or represents quantified and verified MWh

energy generation or energy savings achieved by an approved state measure in a state measures

plan.” EPA response: edit made

36. Page 1452 RLSO: Reviewer recommends clarifying the following sentences because in the

current version it sounds as if only NGCC generation below 2012 levels generates ERCs using this

equation, but all NGCC generation should create ERCs in this manner plus there should be a way

of accounting for ERCs due to building block 2 replacing fossil steam which is what EPA requires

states to propose an accounting method for or to use the method that is in the final model rule.

“For an affected NGCC stationary combustion turbine, the following equation provides a required

accounting method for the non

‐ incremental generating ERCs based on operation expected: (EPA

could add a footnote here if they think it is needed to make it clear that NGCC generation from

BB2 that displaces steam generation also can create ERCs using a different accounting

mechanism.)

ERCs = total NGCC reported MWh x ((NGCC CO 2 emission standard

– NGCC reported CO 2

emission rate)/ NGCC CO 2 emission standard)

According to this equation, ERC issuance is assessed based on the difference between the

CO 2 emission rate limit for the NGCC unit and the reported CO 2 emission rate of the affected

NGCC unit. In other words, affected NGCC stationary combustion turbines earn ERCs for non

‐

incremental all generation when they perform at an emission rate better than the reference rate

for stationary combustion turbines, similarly to how affected steam units can earn ERCs.” EPA

response: Edits made in VIII.K.2.a to clarify the text in response to this comment.

37. Page 1453 RLSO: “A state plan that provides for the use of ERCs issued based on incremental

affected NGCC generation must provide a required calculation method that allows for issuance

of ERCs based on the ability of incremental generation from affected stationary combustion

turbines to substitute for generation from affected steam generating units (as represented in

building block 2), while also respecting the fact that affected stationary combustion turbines

must also meet an assigned CO 2 emission rate limit for the entirety of its MWh energy output.

This accounting method must reflect the application of the BSER, as described in section V, and

the accounting method must not create incentives to rearrange dispatch between existing NGCC

units to generate additional ERCs without changing the overall level of NGCC generation .” EPA

response: Edit made

38. Page 1528

‐ 30 RLSO: Reviewer recommends that the “ready for interstate trading” options listed

on pages 1528

‐ 30 must restate, for clarity, that these options are only possible for states that

have adopted the subcategory emissions standards, as described on 1526

‐ 27. EPA Response:

The section includes an upfront statement to this effect. However, we will further review the

section addressed by the commenter to make sure this is abundantly clear throughout, and will

make any edits as necessary.

39. Page 1555

‐ 56: Current text read: “The incentive to target the location of zero

‐ emitting

generation or energy savings between states based on variation in its emission reduction value

has been minimized by the fact that states participating in rate

‐ based interstate trading must

adopt the same emission performance rates or rate

‐ based state goals.” Reviewer recommends

adding a clause at the end to refer to the section where these restrictions appear, as reviewer

## Summary	of	Interagency	Working	Com ments	on	Draft	Language	under

EO12866/13563	Interagency	Review.		Subject	to	Further	Policy	Re view.

12 was unable to locate a specific section where these two options for interstate trading were

clearly established

. EPA response: we will add language to clarify.

40. Page 1881 RLSO: Reviewer notes that two definitions appear to be missing on page

1881:“Compliance Period means...”

“ Demand

‐ side energy efficiency means...

41. Page 1896 RLSO: Reviewer recommends double checking the calculation of Georgia’s mass goal.