From: Higgins, Cortney [mailto:Cortney_Higgins@omb.eop.gov] 

Sent: Thursday, April 10, 2014 5:05 PM 

To: Wayland, Robertj 

Cc: Nizich, Sharon; Elman, Barry 

Subject: FW: PA DEP White Paper on 111(d) 

Hi Bob, 

Consistent with EO 12866, attached is information we received on the 111(d) rule (RIN 2060-

AR33). 

Regards, 

Cortney 

From: Adams, Tammey [mailto:taadams@pa.gov] On Behalf Of Brisini, Vincent 

Sent: Thursday, April 10, 2014 11:53 AM 

To: Higgins, Cortney 

Subject: PA DEP White Paper on 111(d) 

Dear Ms. Higgins, 

Today, Pennsylvania is releasing the white paper “Commonwealth of Pennsylvania’s 

Recommended Framework for the Section 111(d) Emissions Guidelines Addressing Carbon 

Dioxide Standards for Existing Fossil Fuel-Fired Power Plants” that presents an innovative and 

flexible framework for achieving lower carbon dioxide (CO2) emissions and preserving a beneficial 

environmental business sector. This white paper is intended to address the pending federal 

regulatory actions related to existing facilities. 

Pennsylvania, second nationally in energy production, is making great progress in its efforts to 

position the state as a world leader in the new energy economy. A key part of this plan is 

maintaining the stable and diverse supply of electricity that is vital to our economy and national 

security. 

This plan would preserve states’ authority and discretion in the development and implementation of 

flexible emission control programs. We are recommending that the Environmental Protection 

Agency should establish targets for reductions, rather than mandate pathways to achieve them. A 

flexible approach avoids picking “winners and losers” and empowers states to design the most 

cost-effective compliance options for their constituents. 

As stated in our white paper, the key to the success of any effort to reduce CO2 is optimizing and 

maximizing the benefits of energy efficiency projects. We are submitting this white paper to the 

EPA to endorse, adopt and implement our proposal to modify the New Source Review applicability 

test. If this change is made, a paradigm shift would be accomplished that would result in 
considerable investment in energy efficiency efforts not just in the fossil fuel-fired electric 

generating sector but throughout the entire U.S. economy. 

Pennsylvania is committed to achieving the goals that would be established under a flexible CO2 

program in a fashion that allows us to best serve the needs of our citizens. We look forward to 

hearing your feedback on our proposal and pledge our commitment to continue to work with all of 

our stakeholders with the goal of building on state leadership, providing flexibility and taking 

advantage of a wide range of energy sources and technologies towards building a cleaner power 

sector. 

The white paper has been attached for your review and can also be located at 

www.dep.state.pa.us, and click on “Air,” then “Bureau of Air Quality.” 

Sincerely, 

Vincent J. Brisini | Deputy Secretary 

Department of Environmental Protection | Office of Waste, Air, Radiation and Remediation 

Rachel Carson State Office Building 

400 Market Street | Hbg PA 17101 

Phone: 717.772.2725 | Fax: 717.787.8885 

www.dep.state.pa.us 

<< 111(d) letter to Gina McCarthy with logo.pdf >> 

<< 2700-UK-DEP4446 White Paper combined without letter.pdf >> 
Secretary

Rachel Carson State Office Building | P.O. Box 2063 | Harrisburg, PA 17105-2063 | 717.787.2814 | www.depweb.state.pa.us

April 10, 2014

Gina McCarthy, Administrator

Environmental Protection Agency

Ariel Rios Building

1200 Pennsylvania Avenue, NW

Washington, DC 20460

Dear Administrator McCarthy: 

Pennsylvania is making great progress in its efforts to position the state as a world leader in the 

new energy economy. A key part of this plan is maintaining the stable and diverse supply of 

electricity that is vital to our economy and national security. 

To that end, I am pleased to provide you with a copy of a new Pennsylvania white paper that 

presents an innovative and flexible framework for achieving lower carbon dioxide (CO2) 

emissions from existing fossil fuel-fired power plants. 

At the heart of this plan is the preservation of states’ authority and discretion in the development 

and implementation of flexible emission control programs. EPA should establish targets for 

reductions, rather than mandate pathways to achieve them. A flexible approach avoids picking 

“winners and losers” and empowers states to design the most cost-effective compliance options 

for their constituents.

As stated in our white paper, Pennsylvania believes that a key to the success of any effort to 

reduce CO2 is optimizing and maximizing the benefits of energy efficiency projects. For that to 

occur, it is critical for EPA to endorse, adopt and implement our proposal to modify the New 

Source Review applicability test. If this change is made, a paradigm shift would be 

accomplished that would result in considerable investment in energy efficiency efforts not just in 

the fossil fuel-fired electric generating sector but throughout the entire U.S. economy. 

Companies paying to make energy efficiency improvements would benefit economically through 

lower operating costs, which results in lower prices for consumers while achieving lower CO2

emissions. This change would provide an incentive to companies to make investments that 

would result in emissions reductions, including CO2, from all emitting sources without the need 

of a regulation to force the reduction. 

Pennsylvania is committed to achieving the goals that would be established under a flexible CO2 

program in a fashion that allows us to best serve the needs of our citizens. We look forward to 

hearing your feedback on our proposal and pledge our commitment to work in partnership with 

your staff as you craft a plan to meet President Obama’s directive to build on state leadership, 

provide flexibility and take advantage of a wide range of energy sources and technologies 

towards building a cleaner power sector. 

Sincerely,

E. Christopher Abruzzo

Secretary
Recommended Framework for the Section 111(d) 

Emissions Guidelines Addressing Carbon Dioxide Standards 

for Existing Fossil Fuel-Fired Power Plants

COMMONWEALTH OF PENNSYLVANIA

Bureau of Air Quality

April 10, 2014

2700-UK-DEP4446
1

Commonwealth of Pennsylvania’s Recommended Framework for 

the Section 111(d) Emissions Guidelines Addressing Carbon 

Dioxide Standards for Existing Fossil Fuel-Fired Power Plants

If EPA develops emissions guidelines, it should be done under Section 111(d).

Section 111(d) of the Clean Air Act (CAA) is applicable for air pollutants that are neither 

regulated as a National Ambient Air Quality Standard (NAAQS) nor as a hazardous air pollutant 

(HAP) and where a New Source Performance Standard (NSPS) would apply for new affected 

sources. This section specifies that the U.S. Environmental Protection Agency (EPA) shall 

develop regulations establishing a procedure similar to the state implementation plan process 

which must be followed by the states. Further, this section obligates the states to prepare and 

implement plans that establish standards of performance for existing sources as well as provide 

for the implementation and enforcement of such standards. Under Section 111(d), states have 

the authority to devise flexible programs for existing units that achieve the federal guidelines

using provisions that work best for the individual states. Considering the dramatic differences 

among the states relative to fuel diversity and the market differences between rate-based markets 

and restructured markets, this state flexibility is critical. Therefore, Section 111(d) would be the 

most appropriate section of the CAA to regulate carbon dioxide (CO2) emissions from existing 

large fossil fuel-fired electric utility steam generating units (EGUs) and fossil fuel-fired 

combustion turbines. Using the guidelines, states would be required to develop Section 111(d) 

plans for existing sources. These requirements can and should be less stringent than the NSPS, 

taking into account, among other factors, the remaining useful life of the existing source to 

which the standards of performance apply, additional environmental benefits of a fuel source,

and other important considerations including market impacts and electric grid reliability.

Emissions guidelines should be developed in close consultation with the states.

The EPA must recognize state leadership and authority to regulate pollutants within their borders 

and should ensure preservation of states’ discretion in the development and implementation of 

flexible emission control programs that are consistent with Section 111(d) provisions. The EPA 

should develop emissions guidelines that provide for maximum flexibility to the states in 

meeting those guidelines. The emissions guidelines should establish targets, not mandate how to 

achieve the established targets. Only the states have the authority to design and implement 

pollution control programs to meet the requirements adopted to regulate carbon dioxide in 

accordance with Section 111(d), except in areas where the authority has been delegated to a local 

agency, or a state has failed to submit the necessary plan.
2

The emissions guidelines should address CO2 emission reductions achieved by the affected

sources.

Emissions guidelines should establish targets based upon actions that can be taken directly by 

and at existing sources affected by a Section 111(d) CO2 program. This approach is consistent 

with EPA’s previous emissions guidelines promulgated for other source categories under the 

CAA. Furthermore, the EPA should limit the definition of “best system of emission reduction” 

(BSER) to actions that can be taken by the affected existing source without redefining the source. 

This will require the consideration of the inherent differences within the universe of existing 

boilers and combustors that are included in the fleet of fossil-fuel fired electric generation 

sources.

If an energy-efficiency project or some other project with unique environmental benefits (e.g.,

municipal waste-to-energy projects) associated with a “non-affected” source is to be granted a

“credit” under a Section 111(d) program, the “credited” reductions must be quantifiable and 

enforceable consistent with the quantification by a source affected under the program. The 

owner, operator or entity receiving credit for actions taken at a non-affected source must be

responsible for ensuring that the CO2 reductions continue at the credited level. To ensure the 

integrity of Section 111(d) programs which include actions taken by non-affected sources, it is 

critical to have very high data quality standards. Absent high quality data, the effectiveness of 

the program would be compromised to the economic benefit of some and detriment of others. 

Consequently, it is suggested that the quantification methods for credits awarded to non-affected 

sources be standardized by or be required to receive approval from the EPA when using 

reductions from non-affected sources in a Section 111(d) program.

It is important to note that energy efficiency projects not associated with existing sources or 

facilities are actually emissions avoidance efforts and not emissions reduction efforts. 

Consequently, only energy efficiency efforts at existing sources or facilities, or new energy 

efficiency projects that are coupled with the replacement or retirement of an existing source or

facility, should be considered for crediting toward a Section 111(d) program. In the case of a 

project with unique environmental benefits, the amount of credit should be demonstrated on a 

continuous basis. Because of the complications of a program that includes non-affected sources, 

EPA should establish Section 111(d) guidelines for CO2 emissions that only consider currently

available and economically feasible technologies that improve energy efficiency at affected

sources.

Emissions guidelines should provide for unit averaging for a rate-based program or accumulation

of emissions from multiple sources if the program is mass-based. Also, because CO2 is not a 

pollutant for which a short-term ambient air quality standard is necessary or desirable, a multiyear (e.g., five-year) rolling average can be used to demonstrate compliance. This methodology 

provides recognition of year-to-year variations in operations without requiring the use of 

emission allowances. After the close of the reporting period, a “true up” period should be 
3

provided to allow “over-emitters” and “under-emitters” to reach a negotiated settlement that 

provides for “net” compliance with emissions obligations. This approach may be a very 

desirable option for restructured energy markets as it provides for flexibility without picking 

“winners and losers,” as can occur with allowance-based programs. These opportunities would 

enable states to design the most flexible programs and the owners and operators of affected 

sources to select the most cost-effective compliance options for meeting their compliance 

obligations.

States must be allowed to join with other states in multi-state or regional programs.

States must have the opportunity to collaborate with other states in either formal or ad-hoc

forums while developing compliance demonstration options. The opportunity to collaborate 

should also be provided to the owners and operators of affected sources to allow them flexibility

in achieving the most effective compliance options. This collaborative process should be 

provided for, but not obligated in the guidelines developed by EPA. The most critical aspect of 

having creditable and high-functioning programs is the quantification of the emissions. In the 

case of EGUs, monitoring provisions are consistent and specified under federal regulation. This 

consistent quantification of emissions obviates the need of emission allowances for the success 

of multi-state trading programs. However, the decision to utilize an emission allowance-based 

program should be at the state’s discretion. Importantly, the emission allowance-based program

must also be reliant upon the consistent quantification of emissions.

EPA must recognize the different makeup of existing power generation in each state and 

recognize flexible compliance pathways or mechanisms.

The existing power generation fleet in Pennsylvania is extremely diverse in terms of fuel 

sources, combustion technology, and vintage. As the Commonwealth is intimately familiar with 

the exact composition of the fleet, Pennsylvania is best suited to design the plan to meet the final 

emissions guidelines promulgated by EPA and also to be adequately flexible to accommodate 

Pennsylvania’s diverse resources. This is true for all state and local agencies.

Importantly, states should also have the ability to exclude certain electric generators that have 

environmental benefits that are beyond the CO2 emissions from those sources. Examples of fuel 

sources that this may apply to are coal refuse and coal bed methane.

An excellent example of an electric generation source category with multi-media benefits is coal 

refuse combustion units. In Pennsylvania, large piles of coal refuse are a legacy issue and these 

facilities turn this refuse into electricity in a controlled combustion process rather than through 

uncontrolled burning, which occurs due to the exposure of coal refuse piles to air. The exposure 

of a mining refuse pile to atmospheric oxygen and pressure promotes heat generating reactions, 

primarily oxidation of the coal refuse itself (i.e., the coal refuse piles are slowly burning),

releasing CO2 emissions as well as sulfur oxides, particulate matter, and other pollutants 
4

associated with poor combustion. The benefits of utilizing this fuel source are that it is 

essentially carbon neutral, emissions of other pollutants from coal refuse-fired sources are well

controlled, and sources of acid mine drainage and ground water pollution are removed. 

Additionally, the use of coal refuse reduces the emissions from use of “new” coal or natural gas 

from being combusted to generate electricity in an amount that would reflect the amount of 

electricity generated by the coal refuse-fired combustion units.

Because the ash from the controlled combustion of coal refuse is used to remediate the site where 

the coal refuse pile was located, these areas are reclaimed without any funding necessary from 

Pennsylvania taxpayers. At this point, over 7,200 acres of affected land in Pennsylvania have 

been reclaimed through the use of this fuel source. This represents savings to Pennsylvania 

taxpayers of $140 to $220 million dollars while providing jobs, environmental benefits, and 

taxes to the localities where these coal refuse-fired facilities operate. For perspective, the 

industry estimates there are still approximately 170,000 acres affected by coal refuse remaining 

in the Commonwealth.

Emissions guidelines should provide for emission reductions compared to a designated 

baseline period.

Regulating greenhouse gas such as CO2 is unique when compared to criteria pollutants. Section 

111(d) of the CAA allows EPA to consider flexible approaches when establishing the guidelines

and allows states to utilize flexible approaches for compliance demonstrations. Potential 

strategies include state budgets, multi-year averaging, and early reductions. EPA should 

establish specific goals for the states based on standards of performance, recognizing that 

existing sources have very limited options when compared to new sources. New sources have 

the opportunity to incorporate emissions controls and efficiency improvements into their design

much easier than existing sources. Further confounding the installation of controls on existing 

units is the New Source Review (NSR) process specified in the CAA and the regulations. EPA 

should address the NSR ramifications of the installation of controls or modifications on existing 

units used to meet the standards of performance established under the guidelines. NSR

ramifications should not impede the maximum possible implementation of energy efficiency 

improvement projects at these affected sources.

Pennsylvania recommends the EPA’s emissions guidelines provide for a state budget approach

option for only existing sources being regulated for CO2 under a Section 111(d) program. This is

because new affected sources will be regulated under Section 111(b) through the New Source 

Performance Standards (NSPS), which, as proposed, establish unit-specific CO2 limits. Under 

Section 111(d), EPA should provide for a state budget based on achievable rate-based standards 

of performance which can then be converted to a mass-based target by multiplying the baseline 

year energy output (i.e., the gross output in MWh for the baseline year) multiplied by the ratebased standard (expressed in lbs/MWh (gross)) to determine the mass-based target in tons per 
5

year. Pennsylvania recommends that the EPA use 2005 as the appropriate baseline year as 

suggested by President Obama’s Climate Change Action Plan. The emission guidelines should 

allow compliance with the budget to be demonstrated using system-wide averaging or 

accumulation on a rolling five-year basis for facilities under common control. This system of 

implementation would provide states the ability to recognize and use all quantifiable and 

enforceable reductions including, but not limited to, source retirements, permanent curtailments,

and early reductions.

EPA must recognize the differences inherent in regulated versus competitive energy 

markets and the need to provide for electric grid reliability.

EGUs in Pennsylvania are participating in a competitive energy market. Therefore, the costs to 

comply with state plans implementing the emissions guidelines cannot be directly passed on to 

the customers. On the other hand, EGUs participating in a regulated rate-based market can 

directly recover the costs of compliance after obtaining approval from the Public Utility 

Commission and will be compensated with a return on investment for costs associated with 

compliance efforts. EPA must recognize the fundamental differences in these marketplaces by 

recognizing the authority of the states to design and implement programs that best serve the 

affected sources located within their jurisdiction.

Emissions guidelines mandating an electric grid system-based approach, which includes the redispatch of EGUs based on a lower CO2 emission rate as proposed by regional transmission 

organizations (RTO), independent system operators (ISO), and the ISO/RTO Council (IRC)

should not be used, as they further disrupt the competitive energy market. That type of 

interference would disproportionately affect coal-fired EGUs and place additional coal-fired 

EGUs at risk of early retirement, resulting in additional job losses and potential grid reliability 

issues. The dispatch of EGUs is beyond the scope of the EPA’s authority, and the regulation of 

carbon dioxide emissions is beyond the authority of PJM or any other RTO or ISO. The 

operation of a competitive energy market is the role of RTOs and ISOs while the regulation of 

environmental pollution in Pennsylvania is the responsibility of the Pennsylvania Department of 

Environmental Protection. This type of interference by PJM would likely make it impossible for 

coal-fired EGUs to effectively and economically participate in the market, which can only impair 

the reliability and affordability of domestic energy supplies by diminishing the diversity of 

electricity generation sources that are vital to maintain the energy security and prosperity of the 

United States.

Changes to major New Source Review regulations should be considered to encourage

efficiency improvements.

Any physical change or change in the method of operation relating to efficiency improvements at 

an affected facility would trigger NSR applicability determinations. If NSR is triggered, the 

owner or operator may opt out of such efficiency improvement projects or choose not to 
6

optimize or maximize the benefits of the project, which is counter to the intent of the emissions

guidelines. Therefore, we recommend that NSR regulations for EGUs be amended to redefine 

major modification as a modification that increases any regulated air pollutant emissions in terms 

of the lbs/MWh (gross), rather than the current threshold of tons per year.

There are likely other provisions in the CAA that have “absurd results” when it is used to 

regulate CO2 or other greenhouse gases. Those provisions should all be identified and “tailored”

to provide for the greatest opportunity to avoid unintended or negative consequences should this 

program for EGUs be implemented under Section 111(d) of the CAA. As previously addressed 

by EPA, circumstances that have absurd results should be corrected through regulatory 

amendments as was done under the “Tailoring Rule.”