Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units, 48035-48049 [2017-22349]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)]
[Proposed Rules]
[Pages 48035-48049]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22349]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 60

[EPA-HQ-OAR-2017-0355; FRL-9969-75-OAR]
RIN 2060-AT55


Repeal of Carbon Pollution Emission Guidelines for Existing 
Stationary Sources: Electric Utility Generating Units

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In this action, the U.S. Environmental Protection Agency (EPA) 
is proposing to repeal the Carbon Pollution Emission Guidelines for 
Existing Stationary Sources: Electric Utility Generating Units (EGUs), 
commonly referred to as the Clean Power Plan (CPP), as promulgated on 
October 23, 2015.

DATES: Comments. Comments must be received on or before December 15, 
2017.
    Public Hearing. If anyone contacts us requesting a public hearing 
on or before October 31, 2017, we will hold a hearing. Additional 
information about the hearing, if requested, will be published in a 
subsequent Federal Register document.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No. 
EPA-HQ-OAR-2017-0355, at https://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. The EPA may publish any 
comment received to its public docket. Do not submit electronically any 
information you consider to be Confidential Business Information (CBI) 
or other information whose disclosure is restricted by statute. 
Multimedia submissions (audio, video, etc.) must be accompanied by a 
written comment. The written comment is considered the official comment 
and should include discussion of all points you wish to make. The EPA 
will generally not consider comments or comment contents located 
outside of the primary submission (i.e., on the Web, cloud, or other 
file sharing system). For additional submission methods, the full EPA 
public comment policy, information about CBI or multimedia submissions, 
and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.
    Instructions. Direct your comments on the proposed rule to Docket 
ID No. EPA-HQ-OAR-2017-0355. The EPA's policy is that all comments 
received will be included in the public docket and may be made 
available online at https://www.regulations.gov, including any personal 
information provided, unless the comment includes information claimed 
to be CBI or other information whose disclosure is restricted by 
statute. Do not submit information that you consider to be CBI or 
otherwise protected through https://www.regulations.gov or email. The 
https://www.regulations.gov Web site is an ``anonymous access'' system, 
which means the EPA will not know your identity or contact information 
unless you provide it in the body of your comment. If you send an email 
comment directly to the EPA without going through https://www.regulations.gov, your email address will be automatically captured

[[Page 48036]]

and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, the EPA recommends that you include your name and other 
contact information in the body of your comment and with any disk or 
CD-ROM you submit. If the EPA cannot read your comment due to technical 
difficulties and cannot contact you for clarification, the EPA may not 
be able to consider your comment. Electronic files should avoid the use 
of special characters, any form of encryption, and be free of any 
defects or viruses.
    Docket. The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2017-0355. The EPA has previously established 
a docket for the October 23, 2015, CPP under Docket ID No. EPA-HQ-OAR-
2013-0602. All documents in the docket are listed in the https://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, will be publicly available only in hard copy 
form. Publicly available docket materials are available either 
electronically at https://www.regulations.gov or in hard copy at the EPA 
Docket Center (EPA/DC), EPA WJC West Building, Room 3334, 1301 
Constitution Ave. NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding holidays. 
The telephone number for the Public Reading Room is (202) 566-1744, and 
the telephone number for the EPA Docket Center is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Mr. Peter Tsirigotis, Sector Policies 
and Programs Division (D205-01), U.S. Environmental Protection Agency, 
Research Triangle Park, NC 27711; telephone number: (888) 627-7764; 
email address: airaction@epa.gov.

SUPPLEMENTARY INFORMATION: Submitting CBI. Do not submit information 
that you consider to be CBI electronically through https://www.regulations.gov or email. Send or deliver information identified as 
CBI to only the following address: OAQPS Document Control Officer (Room 
C404-02), Environmental Protection Agency, Research Triangle Park, 
North Carolina 27711; Attn: Docket ID No. EPA-HQ-OAR-2017-0355.
    Clearly mark the part or all of the information that you claim to 
be CBI. For CBI information in a disk or CD-ROM that you mail to the 
EPA, mark the outside of the disk or CD-ROM as CBI and then identify 
electronically within the disk or CD-ROM the specific information that 
is claimed as CBI. In addition to one complete version of the comment 
that includes information claimed as CBI, a copy of the comment that 
does not contain the information claimed as CBI must be submitted for 
inclusion in the public docket. If you submit a CD-ROM or disk that 
does not contain CBI, mark the outside of the disk or CD-ROM clearly 
that it does not contain CBI. Information marked as CBI will not be 
disclosed except in accordance with procedures set forth in 40 Code of 
Federal Regulations (CFR) part 2.
    Acronyms and Abbreviations. A number of acronyms and abbreviations 
are used in this preamble. While this may not be an exhaustive list, to 
ease the reading of this preamble and for reference purposes, the 
following terms and acronyms are defined:

BACT Best available control technology
BDT Best demonstrated technology
BSER Best system of emission reduction
CAA Clean Air Act
CBI Confidential business information
CFR Code of Federal Regulations
CO2 Carbon dioxide
CPP Clean Power Plan
EGU Electric utility generating unit
EPA U.S. Environmental Protection Agency
GHGs Greenhouse gases
MACT Maximum achievable control technology
NESHAP National emission standards for hazardous air pollutants
NTTAA National Technology Transfer and Advancement Act
OMB Office of Management and Budget
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
UMRA Unfunded Mandates Reform Act

    Organization of This Document. The following outline is provided to 
aid in locating information in this preamble.

I. Executive Summary
II. Background
    A. The CPP
    B. Judicial Challenge to the CPP
    C. Executive Order 13783 and the EPA's Review of the CPP
III. Basis for Proposed Repeal of the CPP
    A. Statutory Text
    B. Legislative History
    C. Prior Agency Practice
    D. Statutory Context
    E. Broader Policy Concerns
    F. Proposed Rescission of Legal Memorandum
    G. Conclusion
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Executive Order 13771: Reducing Regulation and Controlling 
Regulatory Costs
    C. Paperwork Reduction Act (PRA)
    D. Regulatory Flexibility Act (RFA)
    E. Unfunded Mandates Reform Act (UMRA)
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act (NTTAA)
    K. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
V. Statutory Authority

I. Executive Summary

    By this notice, the EPA is proposing to repeal the CPP. See 80 FR 
64662 (October 23, 2015). In accordance with Executive Order 13783, 82 
FR 16093 (March 31, 2017), the EPA has reviewed the CPP and is 
initiating this action based on the outcome of that review. 
Specifically, the EPA proposes a change in the legal interpretation as 
applied to section 111(d) of the Clean Air Act (CAA), on which the CPP 
was based, to an interpretation that the Agency proposes is consistent 
with the CAA's text, context, structure, purpose, and legislative 
history, as well as with the Agency's historical understanding and 
exercise of its statutory authority. Under the interpretation proposed 
in this notice, the CPP exceeds the EPA's statutory authority and would 
be repealed. The EPA welcomes comment on the legal interpretation 
addressed in this proposed rulemaking.
    The EPA has not determined the scope of any potential rule under 
CAA section 111(d) to regulate greenhouse gas (GHG) emissions from 
existing EGUs, and, if it will issue such a rule, when it will do so 
and what form that rule will take. The EPA is considering the scope of 
such a rule and is intending to issue an Advance Notice of Proposed 
Rulemaking (ANPRM) in the near future. That ANPRM will solicit 
information on systems of emission reduction that are in accord with 
the legal interpretation proposed in this notice (i.e., those that are 
applicable at and to an individual source). The ANPRM will also solicit 
information on compliance measures and state planning requirements. 
However, the EPA is not soliciting comments on such information with 
this proposal.
    CAA section 111(d) requires the EPA to promulgate emission 
guidelines for existing sources that reflect the ``best

[[Page 48037]]

system of emission reduction'' (BSER) under certain circumstances. 
Notwithstanding the CPP, all of the EPA's other CAA section 111 
regulations are based on a BSER consisting of technological or 
operational measures that can be applied to or at a single source.\1\ 
The CPP departed from this practice by instead setting carbon dioxide 
(CO2) emission guidelines for existing power plants that can 
only realistically be effected by measures that cannot be employed to, 
for, or at a particular source. Instead, the CPP encompassed measures 
that would generally require power generators to change their energy 
portfolios through generation-shifting (rather than better equipping or 
operating their existing plants), including through the creation or 
subsidization of significant amounts of generation from power sources 
entirely outside the regulated source categories, such as solar and 
wind energy. This raised substantial concerns that the CPP would 
necessitate changes to a state's energy policy, such as a grid-wide 
shift from coal-fired to natural gas-fired generation, and from fossil 
fuel-fired generation to renewable generation.
---------------------------------------------------------------------------

    \1\ This is true not only for all of the handful of existing CAA 
section 111(d) regulations issued prior to the CPP, but also of the 
much larger set of new source performance standards issued under CAA 
section 111(b), which are predicated on the same key statutory term 
``best system of emission reduction.''
---------------------------------------------------------------------------

    Executive Order 13783 directs the EPA to determine whether the CPP 
exceeds the bounds of the authority delegated to the Agency by 
Congress. See Executive Order 13783, Sections 1(e) and 4(c). In the 
course of this review, the EPA is reconsidering the legal 
interpretation underlying the CPP and is proposing to interpret the 
phrase ``best system of emission reduction'' in a way that is 
consistent with the Agency's historical practice of determining a BSER 
by considering only measures that can be applied to or at the source. 
As discussed in more detail below, under the interpretation proposed 
here, the CPP exceeds the bounds of the statute. Consistent with this 
proposed interpretation, we propose to repeal the CPP and rescind the 
accompanying legal memoranda.

II. Background

A. The CPP

    The EPA promulgated the CPP under section 111 of the CAA. 42 U.S.C. 
7411. Clean Air Act section 111(b) authorizes the EPA to issue 
nationally applicable new source performance standards limiting air 
pollution from ``new sources'' in source categories that cause or 
contribute to air pollution that may reasonably be anticipated to 
endanger public health or welfare. Id. Sec.  7411(b)(1). In 2015, the 
EPA issued such a rule for CO2 emissions from certain new 
fossil fuel-fired power plants \2\ in light of the Agency's assessment 
``that [greenhouse gases] endanger public health, now and in the 
future.'' Standards of Performance for Greenhouse Gas Emissions from 
New, Modified, and Reconstructed Stationary Sources: Electric 
Generating Units, 80 FR 64510, 64518 (October 23, 2015) (New Source 
Rule); see also Endangerment and Cause or Contribute Findings for 
Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 FR 66496 
(December 15, 2009).\3\ Under certain circumstances, when the EPA 
issues a CAA section 111(b) standard, the EPA must then prescribe CAA 
section 111(d) regulations under which each state must submit a plan to 
establish standards for existing sources in the same category. 42 
U.S.C. 7411(d)(1). The EPA relied on that authority to issue the CPP, 
which, for the first time, required states to submit plans specifically 
designed to limit CO2 emissions from certain fossil fuel-
fired power plants.
---------------------------------------------------------------------------

    \2\ The rule identified ``[f]ossil fuel-fired EGUs'' as ``by far 
the largest emitters of [greenhouse gases] among stationary sources 
in the U.S., primarily in the form of CO2.'' 80 FR 64510, 
64522 (October 23, 2015).
    \3\ The substance of the 2009 Endangerment Finding is not at 
issue in this proposed rulemaking, and we are not soliciting comment 
on the EPA's assessment of the impacts of GHGs with this proposal.
---------------------------------------------------------------------------

    The CPP established emission guidelines for states to follow in 
limiting CO2 emissions from those plants. These emission 
guidelines included nationally uniform CO2 emission 
performance rates for two subcategories of existing fossil fuel-fired 
power plants: Electric utility steam generating units and stationary 
combustion turbines. See 80 FR 64707.
    In the CPP, the EPA determined that the BSER for CO2 
emissions from existing fossil fuel-fired power plants was the 
combination of emission rate improvements and limitations on overall 
emissions by affected power plants that can be accomplished through a 
combination of three sets of measures, which the EPA called ``building 
blocks'':
    1. Improving heat rate at affected coal-fired steam generating 
units;
    2. Substituting increased generation from lower-emitting existing 
natural gas combined cycle units for decreased generation from higher-
emitting affected steam generating units; and
    3. Substituting increased generation from new zero-emitting 
renewable energy generating capacity for decreased generation from 
affected fossil fuel-fired generating units. Id. at 64707.
    While building block 1 constituted measures that could be applied 
directly to a source--that is, integrated into its design or 
operation--building blocks 2 and 3 employed measures that departed from 
this traditional, source-specific approach to regulation and that were 
expressly designed to shift the balance of coal-, gas-, and renewable-
generated power at the grid-wide level, subjecting these building 
blocks to claims that they constituted energy, rather than 
environmental, policy.
    That the CPP depends on the employment of measures that cannot be 
applied at and to an individual source is evident from its treatment of 
coal-fired power plants. The rule established performance standards for 
coal-fired plants assuming a uniform emissions rate well below that 
which could be met by existing units through any retrofit technology of 
reasonable cost available at the time. This means that, in order to 
comply, many owners or operators of existing coal-fired units were 
expected to shift generation from such units to gas-fired units or to 
renewable generation. Similarly, the rule contemplated that gas-fired 
units would shift generation to renewable generation. The rule, 
therefore, is formulated in reliance on and anticipation of actions 
taken across the electric grid, rather than actions taken at and 
applied to individual units.

B. Judicial Challenge to the CPP

    Due to concerns about the EPA's legal authority and record, 27 
states and a number of other parties sought judicial review of the CPP 
in the United States Court of Appeals for the District of Columbia 
Circuit. West Virginia v. EPA, No. 15-1363 (and consolidated cases) 
(D.C. Cir.). On February 9, 2016, the Supreme Court stayed 
implementation of the CPP pending judicial review. Order in Pending 
Case, West Virginia v. EPA, No. 15A773 (U.S. February 9, 2016). The 
cases were argued before the D.C. Circuit, sitting en banc, on 
September 27, 2016. Following oral argument, the EPA moved to hold the 
cases in abeyance, and, on April 28, 2017, the court granted motions to 
hold the cases in abeyance for 60 days and directed the parties to file 
briefs addressing whether the cases should be remanded to the Agency 
rather than held in abeyance. Order, Docket Entry No. 1673071. On 
August 8, 2017, the court issued an order holding the cases in abeyance 
for a further 60-day period

[[Page 48038]]

and directed the EPA to file status reports at 30-day intervals. Order, 
Docket Entry No. 1687838.

C. Executive Order 13783 and the EPA's Review of the CPP

    On March 28, 2017, President Trump issued Executive Order 13783, 
which affirms the ``national interest to promote clean and safe 
development of our Nation's vast energy resources, while at the same 
time avoiding regulatory burdens that unnecessarily encumber energy 
production, constrain economic growth, and prevent job creation.'' See 
Executive Order 13783, Section 1(a). The Executive Order directs all 
executive departments and agencies, including the EPA, to ``immediately 
review existing regulations that potentially burden the development or 
use of domestically produced energy resources and appropriately 
suspend, revise, or rescind those that unduly burden the development of 
domestic energy resources beyond the degree necessary to protect the 
public interest or otherwise comply with the law.'' Id. Section 1(c). 
The Executive Order further affirms that it is ``the policy of the 
United States that necessary and appropriate environmental regulations 
comply with the law.'' Id. Section 1(e). Moreover, the Executive Order 
specifically directs the EPA to review and initiate reconsideration 
proceedings to ``suspend, revise, or rescind'' the CPP, ``as 
appropriate and consistent with law.'' Id. Section 4(a)-(c). (The 
Executive Order also directs the EPA to undertake this process of 
review and reconsideration with regard to the New Source Rule issued 
under CAA section 111(b), which was a condition precedent to the 
promulgation of the CPP.)
    In a document signed the same day as Executive Order 13783, and 
published in the Federal Register at 82 FR 16329 (April 4, 2017), the 
EPA announced that, consistent with the Executive Order, it was 
initiating its review of the CPP and providing notice of forthcoming 
proposed rulemakings consistent with the Executive Order.\4\
---------------------------------------------------------------------------

    \4\ The EPA also withdrew the proposed federal plan and model 
trading rules, proposed amendments to certain regulations under 40 
CFR subpart B implementing CAA section 111(d), and proposed rule 
regarding the Clean Energy Incentive Plan. 82 FR 16144 (April 3, 
2017).
---------------------------------------------------------------------------

    The EPA has concluded its initial review of the CPP, as directed by 
Executive Order 13783. That review raised substantial concerns that the 
CPP is not consistent with the policy articulated in Section 1 of the 
Executive Order. See Executive Order 13783, Section 4(a). For example, 
numerous states, regulated entities and other stakeholders warned that 
the CPP threatened to impose massive costs on the power sector and 
consumers; invaded traditional areas of state regulation over the mix 
of energy generation within their borders; departed radically from 
prior regulatory practice and longstanding reading of the statute; and 
did not adequately ensure the national interest in affordable, reliable 
electricity, including from coal generation. See id. Section 1(b).
    In the course of the EPA's review of the CPP, the Agency also 
reconsidered its interpretation of CAA section 111, and it is on that 
basis that the Agency now proposes to repeal the CPP. Section 1 of the 
Executive Order recognizes that the EPA should, ``to the extent 
permitted by law, . . . take appropriate actions to promote clean air 
and clean water for the American people, while also respecting the 
proper roles of Congress and the States concerning these matters in our 
constitutional republic.'' Id. Section 1(d). As discussed below, the 
EPA proposes to determine that the CPP is not within Congress's grant 
of authority to the Agency under the governing statute. It is not in 
the interests of the EPA, or in accord with its mission of 
environmental protection consistent with the rule of law, to expend its 
resources along the path of implementing a rule, receiving and passing 
judgment on state plans, or promulgating federal plans in furtherance 
of a policy that is not within the bounds of our statutory authority.
    The EPA is proposing to repeal the CPP in its entirety. The EPA 
proposes to take this action because it proposes to determine that the 
rule exceeds its authority under the statute, that those portions of 
the rule which arguably do not exceed its authority are not severable 
and separately implementable, and that it is not appropriate for a rule 
that exceeds statutory authority--especially a rule of this magnitude 
and with this level of impact on areas of traditional state regulatory 
authority--to remain in existence pending a potential, successive 
rulemaking process. Specifically, the performance standards that the 
CPP established for existing sources were predicated on a combined use 
of the three ``building blocks'' described above. Because, under the 
interpretation proposed here, the second and third ``building blocks'' 
exceed the EPA's authority under CAA section 111, and because, as the 
EPA determined when it issued the CPP, the first ``building block,'' as 
designed, could not stand on its own if the other ``building blocks'' 
were repealed, any potential future rule that regulates GHG emissions 
from existing EGUs under CAA section 111(d) must begin with a 
fundamental reevaluation of appropriate and authorized control measures 
and recalculation of performance standards.
    The EPA's mission is to ``protect and enhance the quality of the 
Nation's air resources,'' 42 U.S.C. 7401(b)(1), but the Agency must do 
so within the authority delegated to it by Congress. To that end, ``[a] 
primary goal'' of the CAA ``is to encourage or otherwise promote 
reasonable Federal, State, and local governmental actions, consistent 
with the provisions of [the CAA] . . . .'' 42 U.S.C. 7401(c) (emphases 
added). Where the EPA's regulations exceed the Agency's statutory 
authority, it is appropriate for the Agency to correct that error and 
consider what statutory tools are duly available to it, to ensure that 
its regulations are effective, enforceable, administrable, and grounded 
in valid authority. Accordingly, the EPA continues to consider whether 
it should issue another CAA section 111(d) rule addressing GHG 
emissions from existing EGUs and, if so, what would be the appropriate 
form and scope of that rule. See, e.g., API v. EPA, 52 F.3d 1113, 1119 
(D.C. Cir. 1995) (``It is axiomatic that an administrative agency's 
power to promulgate legislative regulations is limited to the authority 
delegated by Congress'') (internal citations omitted); see also 
Michigan v. EPA, 268 F.3d 1075 (D.C. Cir. 2001) (same). The EPA is 
engaged in the process of considering the scope of such a rule, and is 
intending to issue an ANPRM in the near future to solicit information 
on systems of emission reduction that are in accord with the legal 
interpretation proposed in this notice (i.e., those that are applicable 
to and at an individual source), as well as information on compliance 
measures and state planning requirements. This notice does not solicit 
comment on such issues, which will be open for comment in the ANPRM.

III. Basis for Proposed Repeal of the CPP

    The basis for the proposed repeal of the CPP is the EPA's proposed 
interpretation of CAA section 111, which is discussed in this notice. 
The EPA proposes to determine that this interpretation is the most 
appropriate reading of the statute in light of the text, its 
legislative history, prior practice under CAA section 111, statutory 
context, and in consideration of broader policy implications. If the 
proposed

[[Page 48039]]

interpretation is finalized, the CPP would be repealed.\5\
---------------------------------------------------------------------------

    \5\ Under the EPA's proposal, the Agency lacks authority to 
consider measures other than those that apply at, to, and for a 
particular source when determining the BSER. Because the CPP is in 
large part premised on such measures, if the proposed interpretation 
is finalized, the CPP would be repealed. Although on-site efficiency 
measures may be considered in a future CAA section 111 standard, as 
explained in the CPP, building block 1, as analyzed, cannot stand on 
its own. 80 FR 64758 n.444; see also id. at 64658 (discussing 
severability of the building blocks). As noted above, the EPA is not 
taking comment on on-site efficiency measures with this proposal.
---------------------------------------------------------------------------

    The EPA's ability to revisit existing regulations is well-grounded 
in the law. Specifically, the EPA has inherent authority to reconsider, 
repeal, or revise past decisions to the extent permitted by law so long 
as the Agency provides a reasoned explanation. The CAA complements the 
EPA's inherent authority to reconsider prior rulemakings by providing 
the Agency with broad authority to prescribe regulations as necessary. 
42 U.S.C. 760l(a). The authority to reconsider prior decisions exists 
in part because the EPA's interpretations of statutes it administers 
``[are not] instantly carved in stone,'' but must be evaluated ``on a 
continuing basis.'' Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 
863-64 (1984). This is true when, as is the case here, review is 
undertaken ``in response to . . . a change in administrations.'' 
National Cable & Telecommunications Ass'n v. Brand X Internet Services, 
545 U.S. 967, 981 (2005). Indeed, ``[a]gencies obviously have broad 
discretion to reconsider a regulation at any time.'' Clean Air Council 
v. Pruitt, 862 F.3d 1, 8-9 (D.C. Cir. 2017).
    After reconsidering the statutory text, context, and legislative 
history, and in consideration of the EPA's historical practice under 
CAA section 111 as reflected in its other existing CAA section 111 
regulations, the Agency proposes to return to a reading of CAA section 
111(a)(1) (and its constituent term, ``best system of emission 
reduction'') as being limited to emission reduction measures that can 
be applied to or at an individual stationary source. That is, such 
measures must be based on a physical or operational change to a 
building, structure, facility, or installation at that source, rather 
than measures that the source's owner or operator can implement on 
behalf of the source at another location. The EPA believes that this is 
the best construction of CAA section 111(a)(1), as explained in detail 
below, for several reasons. First, it accords with the meaning and 
application of relevant terms and phrases in CAA section 111 as they 
are used in other, related sections of the CAA. Second, it aligns with 
the Congressional intent underlying CAA section 111 as informed by 
relevant legislative history. Third, it aligns with the EPA's prior 
understanding of CAA section 111 as reflected in the Agency's prior 
regulatory actions.\6\ Fourth, it avoids illogical results when 
considered in light of other provisions of the statute. Finally, it 
avoids a policy shift of great significance for the relationship 
between the federal government and the states and avoids conflict with 
other federal legislation and interference with the separate role and 
jurisdiction of another federal agency, where there is inadequate 
indication that Congress intended to authorize the EPA to take actions 
leading to those results.
---------------------------------------------------------------------------

    \6\ As noted above, the EPA's prior understanding of this 
statutory section and its key term ``best system of emission 
reduction'' is reflected not only in the handful of existing CAA 
section 111(d) rules that predated the CPP, but also in the much 
larger set of new-source rules under CAA section 111(b).
---------------------------------------------------------------------------

A. Statutory Text

    The phrase ``system of emission reduction'' provides the starting 
point for developing performance standards under CAA section 111. An 
expansive interpretation of the phrase ``system of emission reduction'' 
would yield a greater universe of measures that could be considered to 
establish emission limits; conversely, a narrower reading would have 
the opposite effect. See 80 FR 64720 (explaining that the ``first 
step'' is to ``identify `system[s] of emission reduction' that have 
been `adequately demonstrated' for a particular category.'').\7\ Thus, 
the phrase's scope correlates directly with the breadth of the 
Administrator's discretion in determining what system is the best for 
purposes of establishing the degree of emission limitation to be 
reflected in a standard of performance. See 42 U.S.C. 7411(a)(1) 
(``[t]he term `standard of performance' means a standard for emissions 
of air pollutants which reflects the degree of emission limitation 
achievable through the application of the [BSER]'').
---------------------------------------------------------------------------

    \7\ Historically, this step is referred to as a ``technology 
review,'' and leads to a level of control ``commonly referred to as 
best demonstrated technology (BDT).'' See Oil and Natural Gas 
Sector: New Source Performance Standards and National Emission 
Standards for Hazardous Air Pollutants Review, 76 FR 52738, 52741 
(August 23, 2011); Regulating Greenhouse Gas Emissions Under the 
Clean Air Act, 73 FR 44354, 44486 (July 30, 2008).
---------------------------------------------------------------------------

    Though not further defined in the CAA, the phrase ``system of 
emission reduction'' cannot be read in isolation. In promulgating the 
CPP, the EPA explained that the phrase carries important limitations. 
Id. at 64762. Specifically, the EPA reasoned that ``because the `degree 
of emission limitation' must be `achievable through the application of 
the best system of emission reduction' (emphasis added), the `system of 
emission reduction' must be limited to a set of measures that work 
together to reduce emissions that are implementable by the sources 
themselves.'' Id. ``As a practical matter,'' the EPA continued, ``the 
`source' includes the `owner or operator' of any building, structure, 
facility, or installation for which a standard of performance is 
applicable.'' Id. ``Thus, a `system of emission reduction' for purposes 
of CAA section 111(d) means a set of measures that source owners or 
operators can implement to achieve an emission limitation applicable to 
their existing source.'' Id. In reaching this conclusion, the EPA noted 
that ``the terms `implement' and `apply' are used interchangeably.'' 
See Legal Memorandum at 84 n.175. Here, contrary to the conclusion in 
the CPP, the EPA is proposing to interpret the phrase ``through the 
application of the best system of emission reduction'' as requiring 
that the BSER be something that can be applied to or at the source and 
not something that the source's owner or operator can implement on 
behalf of the source at another location. Interpreting the statute as 
carrying this additional limiting principle ensures conformity with the 
statutory context and congressional intent.
    The EPA's proposed interpretation is also guided by CAA section 
111(d)'s direction that standards be established ``for any existing 
source,'' (emphasis added) and not for other sources or entities. See 
also 42 U.S.C. 7401(a)(3) (finding that ``air pollution control at its 
source is the primary responsibility of States and local governments'') 
(emphasis added). Further, the ``for any existing source'' phrasing in 
CAA section 111(d) mirrors the ``for new sources'' phrasing in the 
first sentence of section 111(b)(1)(B). In other words, as applied to 
both new source standards and existing source standards promulgated 
under CAA section 111, if standards must be set for individual sources, 
it is reasonable to expect that such standards would be predicated on 
measures that can be applied to or at those same individual sources.
    Adopting a source-oriented reading of ``through the application of 
the best system of emission reduction'' also keeps CAA section 111 in 
line with other CAA standard-setting provisions. The term 
``application'' is used throughout the statute in many different 
contexts. But under the CAA's standard-setting provisions, it signals a 
physical

[[Page 48040]]

or operational change to a source--for example, maximum achievable 
control technology (MACT) is developed ``through application of 
measures, processes, methods, systems or techniques including, but not 
limited to, measures which--(A) reduce the volume of, or eliminate 
emissions of, such pollutants through process changes, substitution of 
materials or other modifications, (B) enclose systems or processes to 
eliminate emissions, (C) collect, capture or treat such pollutants when 
released from a process, stack, storage or fugitive emissions point, 
(D) are design, equipment, work practice, or operational standards . . 
. , or (E) are a combination of the above;'' \8\ best available control 
technology (BACT) is developed ``through application of production 
processes and available methods, systems, and techniques, including 
fuel cleaning, clean fuels, or treatment or innovative fuel combustion 
techniques for control;'' \9\ and motor vehicle and engine standards 
reflect the ``application of technology,'' \10\ and the ``application 
of the requisite control measures'' to specific sources.\11\ In short, 
the term suggests that--while a source's owner or operator indeed 
implements each of these measures--the measures should be applied to 
the source itself (i.e., from the perspective of the source and not its 
owner or operator).
---------------------------------------------------------------------------

    \8\ 42 U.S.C. 7412(d)(2).
    \9\ 42 U.S.C. 7479(e).
    \10\ 42 U.S.C. 7521(a)(3)(A)(i) (applying technology available 
by model year for mobile sources).
    \11\ 42 U.S.C. 7521(a)(3)(D) (concerning rebuilding practices of 
heavy-duty engines).
---------------------------------------------------------------------------

B. Legislative History

    Even if the term ``application'' did not denote a source-oriented 
``system of emission reduction,'' the term ``system'' too is 
historically rooted in a physical or operational change to the source 
itself. As discussed in the CPP, CAA section 111(a)(1)--particularly 
the phrase ``system of emission reduction''--evolved from a joint 
conference between committees of the House and Senate during the 1970 
CAA Amendments. 80 FR 64763-64. The underlying House bill provided that 
new sources must be ``designed and equipped'' to control emissions 
using ``available technology.'' H.R. Rep. No. 91-1146 (June 3, 1970), 
1970 CAA Legis. Hist. at 900; see also H.R. 17255, 5, 1970 CAA Legis. 
Hist. at 922. The Senate bill provided that standards of performance 
reflect achievable limits ``through application of the latest available 
control technology, processes, operating methods, or other 
alternatives.'' S. 4358, 6, 1970 CAA Legis. Hist. at 555. Though the 
Senate's formulation is broader than the House bill, ``other 
alternatives'' should be interpreted ejusdem generis (of the same kind, 
class, or nature) with the preceding control techniques. ``Control 
technology,'' ``processes,'' and ``operating methods'' are properly 
read to denote measures applied at or to, and implementable at the 
level of, the individual source--and ``other alternatives'' should be 
read in the same fashion. Thus, the emission-reduction measures 
contemplated by the Senate also targeted a physical or operational 
change to the source itself. In short, both bills were premised on 
physical or operational changes that would be applied to a source, and 
there is no indication that the enacted phrase ``system of emission 
reduction'' was intended to expand the scope of CAA section 111 to 
authorize the EPA to determine that the BSER encompasses measures that 
extend beyond-the-source itself.\12\
---------------------------------------------------------------------------

    \12\ ``System'' appears in a few places in the 1970 CAA 
Amendments. Most notably, Congress used the term throughout Title 
II, which sheds light on what Congress may have understood 
``system'' to mean at the time. Specifically, section 202 of the CAA 
provided that ``[s]uch standards shall be applicable to such 
vehicles and engines for their useful life . . . whether such 
vehicles and engines are designed as complete systems or incorporate 
devices to prevent or control such pollution.'' H.R. Rep. No. 91-
1783 (December 17, 1970), 1970 CAA Legis. Hist. at 166. See also, 
e.g., section 203, id. at 170 (``for the purpose of permitting 
modifications to the emission control device or system of such 
vehicle''); section 206, id. (``The Administrator shall test any 
emission control system incorporated in a motor vehicle or motor 
vehicle engine'' and ``the Administrator shall issue a verification 
of compliance with emission standards for such system when 
incorporated in vehicles''). In each of these instances, the word 
``system'' appears to be more expansive than a discrete emission 
control device, but is nonetheless a vital part of the source: The 
vehicle or vehicle engine. It is evident, therefore, that Congress 
associated the word ``system'' with phrases that correspond with a 
source-specific scope. In CAA section 111, the word ``system'' as 
used within the phrase ``best system of emission reduction'' and its 
relevance in setting standards of performance, which are themselves 
established ``for new sources'' and ``for any existing source,'' 
similarly suggest that a ``system of emission reduction'' is applied 
to or at the source.
---------------------------------------------------------------------------

    The 1977 CAA Amendments do not undermine this understanding. 
Congress added the word ``technological'' to ``system of emission 
reduction'' in order to ``upgrade'' standards of performance ``to 
require the use of the best technological system'' and ``preclude the 
use of low-sulfur coal alone as a means of compliance.'' \13\ H.R. Rep. 
No. 95-654 (August 3, 1977), 1977 CAA Legis. Hist. at 510. Thus, as 
explained in the House report, the addition of the word 
``technological'' was intended to prohibit sole reliance on a 
particular control technique from being considered the BSER. It was not 
an indication that CAA section 111 previously authorized beyond-the-
source controls. The question of whether a control technique or 
emission reduction system is or is not ``technological'' is a distinct 
question from whether it applies at and is limited to the level of the 
individual source.
---------------------------------------------------------------------------

    \13\ In the CPP, the EPA explained that Congress added 
``precombustion cleaning or treatment of fuels'' to CAA section 111 
because it recognized that even technological ``systems of emission 
reduction'' could involve actions that were implemented on behalf of 
the source and not merely applied to the source. 80 FR 64765; Legal 
Memorandum at 87, 129. First, Congress added ``precombustion 
cleaning or treatment of fuels'' to the definition of 
``technological system of continuous emission reduction'' in CAA 
section 111(a)(7) because Congress also redefined ``standard of 
performance'' to require fossil fuel-fired power plants to achieve 
``a percentage reduction in the emissions . . . which would have 
resulted from the use of fuels which are not subject to treatment 
prior to combustion.'' 1977 CAA Amendments, Public Law 95-95, 109, 
91 Stat. 685, 700 (August 7, 1977). Second, precombustion cleaning 
or treatment of fuels is integral to the operation of a regulated 
source and does not necessarily occur off-site of an existing 
source. And regardless of where these preparatory measures are 
conducted, the use of the fuels is a measure applicable to and 
performed at the level of, and at or within, the bounds of an 
individual source. Finally, to the extent that fuel cleaning does 
occur off-site, this demonstrates that Congress understood CAA 
section 111 to be limited to source-specific measures unless 
specific authorization was otherwise provided.
---------------------------------------------------------------------------

    Though the 1990 CAA Amendments removed the term ``technological'' 
from CAA section 111(a)(1), there is no indication that Congress 
intended to expand the phrase ``system of emission reduction'' beyond a 
physical or operational change to the source. With the newly enacted 
Acid Rain provisions under title IV (which instituted a sulfur dioxide 
(SO2) cap-and-trade program for fossil fuel-fired power 
plants), Congress no longer required the use of technological controls 
under CAA section 111, but provided that if the SO2 cap for 
new sources was abolished, then CAA section 111 would again impose a 
technological standard. 1990 CAA Amendments, Public Law 101-549, 403, 
104 Stat. at 2631 (November 15, 1990). In effect, this authorized the 
EPA to consider revising standards to once again allow new sources to 
use low-sulfur coal in lieu of installing the latest technological 
control. But there is nothing in the statutory text or its legislative 
history to suggest that CAA section 111 standards may be based on 
something other than a physical or operational change to the source 
itself.

C. Prior Agency Practice

    Associating a ``system of emission reduction'' with a physical or 
operational change to the source itself

[[Page 48041]]

reflects the EPA's historical understanding of this statutory provision 
as reflected in its prior regulatory actions under this statutory 
provision. Indeed, the EPA has issued numerous rules under CAA section 
111 (both the limited set of existing source rules under CAA section 
111(d) and the much larger set of new source rules under CAA section 
111(b)). All those rules limited their BSER to physical or operational 
measures taken at and applicable to individual sources, with only one 
exception--a rule that was vacated by the D.C. Circuit on other 
grounds.\14\
---------------------------------------------------------------------------

    \14\ The Clean Air Mercury Rule, 70 FR 28606 (May 18, 2005), as 
discussed in footnote 21, was still ultimately predicated on 
measures taken at the level of individual sources, an approach 
fundamentally different than the CPP's second and third ``building 
blocks.''
---------------------------------------------------------------------------

    The EPA first interpreted the phrase ``system of emission 
reduction'' as it relates to CAA section 111(d) when the Agency 
promulgated procedures and requirements for the submittal of state 
plans in 1975. At the time of the 1970 CAA Amendments, CAA section 
111(d) required states to submit plans that established ``emission 
standards'' for existing sources, a term that the statute did not 
define. In its 1974 notice of proposed rulemaking, the EPA interpreted 
that term by explaining that CAA ``section 111(d) permits [the 
Administrator] to approve State emission standards only if they reflect 
application of the best systems of emission reduction (considering the 
cost of such reduction) that are available for designated facilities.'' 
39 FR 36102, 36102 (October 7, 1974) (emphasis added). By interpreting 
``emission standards'' as requiring application of the BSER, however, 
many commenters were confused and assumed that the degree of control 
required would be the same as that required by a ``standard of 
performance'' for new sources under CAA section 111(b), which Congress 
had explicitly defined in that way.\15\ To clear up this confusion, the 
EPA explained that, ``[a]lthough the general principle (application of 
best adequately demonstrated technology, considering costs) will be the 
same in both cases, the degrees of control represented by the Agency's 
emission guidelines will ordinarily be less stringent than those 
required by standards of performance for new sources because the costs 
of controlling existing facilities will ordinarily be greater than 
those for control of new sources.'' \16\ 40 FR 53340, 53341 (November 
17, 1975) (emphases added). The EPA also described the legislative 
history of CAA section 111, explaining that Congress ``intended the 
technology-based approach of that section to extend (making allowances 
for the costs of controlling existing sources) to action under section 
111(d). In this view, it was unnecessary . . . to specify explicit 
substantive criteria in section 111(d) because the intent to require a 
technology-based approach could be inferred from placement of the 
provision in section 111.'' Id. at 53342 (emphases added); see also id. 
at 53343 (``[T]he approach taken in section 111(d) may be viewed as . . 
. [a] decision[ ] . . . [t]o adopt a technology-based approach similar 
to that for new sources.''). Thus, in 1975, the EPA clearly interpreted 
the phrase ``system of emission reduction'' to be technology-based and 
source-focused for both CAA section 111(b) standards of performance and 
CAA section 111(d) emission standards.\17\ The EPA believes that the 
Agency's historical interpretation of CAA section 111(d) and the phrase 
``system of emission reduction,'' expressed at the point in time 
closest to when Congress enacted those provisions, is the most 
appropriate reading of the statute.
---------------------------------------------------------------------------

    \15\ Currently, the same statutory definition in CAA section 
111(a)(1) applies to new and existing sources, and we can identify 
no legislative history to suggest that Congress had a different 
scope in mind for existing sources. We think it unlikely that 
Congress would have intended a significantly broader scope without 
indicating some intent to do so. Indeed, the opposite may be true. 
In 1977, Congress expressly declined to apply the term 
``technological'' to existing source performance standards. But 
after the 1990 CAA Amendments, the same definition applies to new 
and existing source performance standards.
    \16\ The EPA's historical view that emission guidelines for 
existing sources would be less stringent than standards of 
performance for new sources also weighs against the expansive 
interpretation of ``system of emission reduction'' adopted in the 
CPP. As many commenters on that rule pointed out, the EPA's approach 
in the CPP, relying on measures beyond those that can be applied to 
and at an individual source, resulted in the uniform performance 
rates prescribed by the CAA section 111(d) emission guidelines being 
more stringent than the standards of performance the Agency 
promulgated for new sources under CAA section 111(b). 80 FR 64785-
87. We justified this result in two primary ways. First, we pointed 
out the timing differences between the two rules' requirements, 
noting that the CAA section 111(b) standards of performance were 
applicable as of the date of the proposed rule, whereas the CPP's 
requirements were not applicable until 7 years after promulgation, 
with final compliance due in 2030. Id. at 64785. Thus, we concluded 
that the proper ``point of comparison'' was the year 2023, right 
after the first obligations under the CPP were due and the Agency's 
8-year review of the CAA section 111(b) standards would be complete. 
Id. Second, we argued that the CPP contained sufficient 
flexibilities, both for sources and for states, that any comparison 
between the two rules was inapt. Id. at 64785-86. The EPA has 
reconsidered these arguments and now considers them insufficient 
justification for abandoning the Agency's historical view of the 
appropriate relative stringency of CAA section 111(b) and 111(d) 
requirements. With respect to timing, it is entirely speculative 
that some future standard of performance promulgated under CAA 
section 111(b) might be more stringent than the current CAA section 
111(d) emission guidelines. And while the CPP does contain certain 
flexibilities to ease the burdens of compliance, such as phased-in 
compliance deadlines, those flexibilities were only necessary 
because actual affected sources could not meet the overly stringent 
uniform performance rates (or the equivalent rate- or mass-based 
goals) without them.
    \17\ Additionally, the EPA historically equated the phrase 
``system of emission reduction'' with the CAA's ``best available 
retrofit technology'' (BART) requirement. See 45 FR 80084, 80090 
(December 2, 1980) (codified at 40 CFR 51.301) (defining BART as an 
``emission limitation based on the degree of reduction achievable 
through the application of the best system of continuous emission 
reduction for each pollutant which is emitted by an existing 
stationary facility''). While the EPA's BART regulations permit 
states, subject to certain conditions, to implement trading programs 
and other ``alternative'' measures in lieu of BART, see 40 CFR 
51.308(e)(2), these measures are not considered to be BART. Instead, 
states may adopt them ``rather than requiring sources to install, 
operate, and maintain BART,'' but only if they will achieve 
``greater reasonable progress'' toward Congress's national 
visibility goal. Id. (emphasis added).
---------------------------------------------------------------------------

D. Statutory Context

    The EPA's proposed interpretation of CAA section 111 is reinforced 
by the section's broader statutory context. Indeed, interpreting CAA 
section 111(a)(1) to extend beyond-the-source could have the unintended 
consequence of imposing greater emissions reductions under CAA section 
111 than could be established as the BACT under CAA section 165, which 
relies on CAA section 111 standards as a floor.\18\ See 40 CFR 
52.21(b)(12); see also 40 CFR 51.165(a)(1)(xiii) (defining ``lowest 
achievable emission rate,'' i.e., LAER, as in no event authorizing 
emissions ``in excess of the amount allowable under an applicable new 
source performance standard''). BACT requires certain major emitting 
sources \19\ to achieve an emission limitation ``through application of 
production processes and available methods, systems, and techniques, 
including fuel cleaning, clean fuels, or treatment or innovative fuel 
combustion techniques for control.'' 42 U.S.C. 7479(3). Traditionally, 
the EPA has recommended that permitting

[[Page 48042]]

authorities ``conduct a separate BACT analysis for each emissions unit 
at a facility,'' but more recently has interpreted CAA section 169 to 
include control methods that can be used facility-wide. EPA, PSD and 
Title V Permitting Guidance for Greenhouse Gases, 22-23 (March 2011). 
Nonetheless, the EPA has consistently held that BACT encompasses ``all 
`available' control options . . . that have the potential for practical 
application to the emissions unit and the regulated pollutant under 
evaluation.'' Id. at 24.
---------------------------------------------------------------------------

    \18\ Although BACT applies to new and modified sources, like CAA 
section 111(b), the EPA can discern no textual basis in CAA section 
111(a)(1) to interpret the BSER differently for purposes of CAA 
section 111(d). Indeed, the EPA ruled out generation-shifting 
measures for new sources based on practicability rather than legal 
grounds. See Legal Memorandum at 1-5. Accordingly, interpretative 
constraints applicable to CAA section 111(a)(1) for purposes of CAA 
section 111(b) should also apply for purposes of CAA section 111(d).
    \19\ 42 U.S.C. 7479(1) (defining ``major emitting facility'' as 
sources within certain source categories ``which emit, or have the 
potential to emit, one hundred tons per year or more of any air 
pollutant'' or ``any other source with the potential to emit two 
hundred and fifty tons per year or more of any air pollutant.'').
---------------------------------------------------------------------------

    In other words, BACT must be applied to the source itself (on a 
unit-specific or facility-wide basis) and does not include control 
options that are beyond-the-source, such as generation-shifting 
measures.\20\ Accordingly, the EPA proposes to determine that the 
statutory scheme is appropriately read to harmonize these provisions. 
Under this interpretation, the BSER should be interpreted as a source-
specific measure, in light of the fact that BACT standards, for which 
the BSER is expressly linked by statutory text, are unambiguously 
intended to be source-specific.
---------------------------------------------------------------------------

    \20\ See U.S. EPA, PSD and Title V Permitting Guidance for 
Greenhouse Gases, 24 (March 2011) (BACT encompasses ``all 
`available' control options . . . that have the potential for 
practical application to the emissions unit'').
---------------------------------------------------------------------------

    Neither title IV nor the interstate-transport rulemakings (e.g., 
the Cross-State Air Pollution Rule) supports a different interpretation 
of CAA section 111. In the CPP, the EPA identified the Acid Rain 
program under title IV and the various interstate-transport rulemakings 
as evidence of the viability of cap-and-trade programs for the utility 
power sector. 80 FR 64696-97. But recognizing ``the long history of 
trading'' under title IV and CAA section 110(a)(2)(D)(i)(I) to 
demonstrate the ``achievability'' of the ``performance rates'' in the 
CPP does not clarify the interpretive question the Agency faces under 
CAA section 111(a)(1)--i.e., what is the ``best system of emission 
reduction'' that can be applied to an affected source? To the contrary, 
Congress expressly established the cap-and-trade program under title 
IV, 42 U.S.C. 7651-7651o, and expressly authorized the use of 
``marketable permits'' to implement ambient air quality standards under 
CAA section 110, id. at Sec.  7410(a)(2)(A). We think it unlikely that 
Congress would have silently authorized the Agency to point to trading 
in order to justify generation-shifting as a ``system of emission 
reduction.'' \21\
---------------------------------------------------------------------------

    \21\ Even the cap-and-trade program promulgated in the since-
vacated Clean Air Mercury Rule, was ``based on control technology 
available'' for installation at individual existing sources. 70 FR 
28617. It was not predicated on a BSER that encompassed measures 
that could not be applied at or to a particular source.
---------------------------------------------------------------------------

    Therefore, the EPA proposes that the BSER be limited to measures 
that physically or operationally can be applied to or at the source 
itself to reduce its emissions. Generation shifting--which accounts for 
a significant percentage of the emissions reductions projected in the 
CPP and without which individual sources could not meet the CPP's 
requirements--fails to comply with this limitation. Accordingly, the 
EPA proposes to repeal the CPP.

E. Broader Policy Concerns

    Finally, the EPA's proposed interpretation is more consistent with 
certain broader policy concerns of the Agency and stakeholders. Those 
policy concerns are discussed below, and the EPA invites comment 
generally on the policy implications of the legal interpretation 
proposed in this action. The EPA notes that States, the regulated 
community, and other commenters identified potentially serious economic 
and political implications arising from the CPP's reliance on measures 
that extend beyond those that can be applied at and to a particular, 
individual source, such as generation shifting, which in turn raised 
questions as to whether the interpretations underlying the CPP violated 
the ``clear statement'' rule. See Util. Air Regulatory Grp. v. EPA, 134 
S. Ct. 2427, 2444 (2014) (quoting FDA v. Brown & Williamson Tobacco 
Corp., 529 U.S. 120, 160 (2000)) (holding that, under certain 
circumstances, an interpretation that would have ``vast `economic and 
political significance' '' requires a clear statement from Congress 
assigning the agency that authority). The EPA seeks comment on whether 
the interpretation proposed today, by substantially diminishing the 
potential economic and political consequences of any future regulation 
of CO2 emissions from existing fossil fuel-fired EGUs, has 
the advantage of not implicating this doctrine, in that it would avoid 
potentially transformative economic, policy, and political significance 
in the absence of a clear Congressional statement of intent to confer 
such authority on the Agency.
    In addition, while the EPA is authorized to regulate emissions from 
sources in the power sector and to consider the impact of its standards 
on the generation mix in setting standards to avoid negative energy 
impacts, regulation of the nation's generation mix itself is not within 
the Agency's authority. Regulation of the energy sector qua energy 
sector is generally undertaken by the Federal Energy Regulatory 
Commission (FERC) and states, depending on which markets are being 
regulated. The EPA recognizes that Part II of the Federal Power Act 
(sections 201-223 (16 U.S.C. 824-824w)) establishes long-recognized 
regulatory authority for the FERC over electric utilities engaged in 
interstate commerce, including wholesale sales, transmission of 
electric energy in interstate commerce, and reliability. Moreover, 
section 310 of the CAA, 42 U.S.C. 7610(a), states that the Act ``shall 
not be construed as superseding or limiting the authorities and 
responsibilities, under any other provision of law, of the 
Administrator or any other Federal officer, department, or agency.'' 
The EPA solicits comment on whether the CPP exceeded the EPA's proper 
role and authority in this regard and whether the Agency's proposed 
reading in this notice, which limits the BSER to measures that can be 
applied to or at individual sources, would ensure that CAA section 111 
has not been construed in a way that supersedes or limits the 
authorities and responsibilities of the FERC or that infringes upon the 
roles of the states.

F. Proposed Rescission of Legal Memorandum

    As part of this action, the EPA is also proposing to rescind the 
documents in the CPP docket titled ``Legal Memorandum for Proposed 
Carbon Pollution Emission Guidelines for Existing Electric Utility 
Generating Units'' (in the docket for the proposed rule) and ``Legal 
Memorandum Accompanying Clean Power Plan for Certain Issues'' (a 
supplementary document in the docket for the final rule), to the extent 
those memoranda are inconsistent with the statutory interpretation that 
the EPA has proposed in this notice. The EPA is proposing to rescind 
these documents because, as is evident from the discussion above, they 
are in large part and in fundamental premise inconsistent with the 
statutory interpretation proposed here.
    Specifically, significant portions of the documents are devoted to 
arguing that the BSER on which performance standards under CAA section 
111(d) is based can encompass measures other than physical or 
operational changes taken at the level of and applicable to an 
individual source. The point of departure for this interpretation is a 
perceived ambiguity in the word ``system'' within the phrase ``best 
system of emissions reduction.'' For the

[[Page 48043]]

reasons stated above, the EPA is proposing to determine that, in full 
consideration of the statutory text and context, the legislative 
history, the Agency's historical practice under CAA section 111(d), and 
certain policy consequences of the statutory interpretation underlying 
the CPP, the best reading of the statute is that the BSER does not 
encompass the types of measures that constitute the second and third 
``building block'' of the CPP. To the extent that the statutory 
interpretation embodied in the legal memoranda contradicts or is 
otherwise inconsistent with the interpretation proposed in this action, 
the EPA intends that the interpretation proposed here, to the extent it 
is finalized, shall supersede the interpretation in the memoranda. The 
EPA welcomes comment on this proposed interpretation.
    Further, other significant portions of the memoranda, especially 
the supplemental one, are concerned with defending particular aspects 
of the CPP's constituent ``building blocks.'' For the reasons stated 
above, the EPA is proposing to determine that the second and third 
``building blocks'' exceed the Agency's authority under the statute, 
and, in accord with the Agency's position when it issued the CPP, that 
the first ``building block'' cannot stand on its own in the form in 
which it was issued. The two legal memoranda are therefore in material 
part either inconsistent with this proposal or rendered moot by it.
    Accordingly, to the extent that the EPA finalizes its statutory 
interpretation as proposed in this notice, the Agency proposes to 
rescind the documents to the extent they are inconsistent with the 
finalized positions. The EPA is intending to issue an ANPRM in the near 
future to solicit comment on the existing EGUs. Other issues discussed 
in the memoranda may be relevant to such a potential rulemaking, and 
the EPA's position with regard to those issues will be determined in 
the course of any such rulemaking, as required and appropriate.

G. Conclusion

    For these reasons discussed above, the EPA is proposing that the 
BSER must be something that physically or operationally changes the 
source itself, and that is taken at or applied to individual, 
particular sources. Generation shifting--which accounts for a 
significant percentage of the emissions reductions projected in the CPP 
and without which sources could not meet the CPP's requirements and 
state plans could not be approved--fails to comply with this 
limitation. As explained in the CPP and the accompanying Legal 
Memorandum, generation shifting is accomplished through actions that 
owners or operators take on behalf of an affected source that might 
lead only indirectly to emissions reductions from the source. For 
example, owners or operators were expected to purchase power from 
qualifying lower-emitting generators or invest in lower-emitting 
generation, or purchase emissions credits. See 80 FR 64796-97 (building 
block 2); id. at 64804-06 (building block 3); and Legal Memorandum, 
137-48. But none of these options involves a physical or operational 
change applicable to the source itself. Accordingly, the EPA proposes 
to repeal the CPP and supersede the legal interpretations presented in 
it and the accompanying Legal Memorandum.

IV. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This proposed action is an economically significant regulatory 
action that was submitted to the Office of Management and Budget (OMB) 
for review. Any changes made in response to OMB recommendations have 
been documented in the docket. The EPA prepared an analysis of the 
avoided compliance costs and forgone benefits associated with this 
action in the analysis years of 2020, 2025, and 2030. This analysis, 
which is contained in the Regulatory Impact Analysis (RIA) for this 
rulemaking is consistent with Executive Order 12866 and is available in 
the docket.
    We present various preliminary approaches to assess the regulatory 
impacts of the CPP repeal proposal. The analysis underscores the 
substantial uncertainties associated with the possible benefits and 
costs of CPP implementation, and, therefore, the preliminary repeal 
being offered at this time.\22\ Due to these uncertainties, the EPA 
requests comments on the avoided compliance costs, forgone benefits, 
modeling assumptions, uncertainties, and other relevant matters related 
to the development of the RIA for this rulemaking. This RIA uses two 
quantitative approaches to analyze the effects of the CPP in order to 
present information on the potential effects of the proposed repeal of 
the CPP. The first approach involves a modest reworking of the 2015 CPP 
RIA to increase transparency and illuminate the uncertainties 
associated with assessing benefits and costs of the CPP, as reflected 
in the 2015 analysis, as well as analyzing the potential effects of the 
CPP repeal. More specifically, this analysis increases transparency of 
the 2015 CPP analysis by presenting the energy efficiency cost savings 
as a benefit rather than a cost reduction and provides a bridge to 
future analyses that the agency is committed to performing. The current 
analysis also provides alternative approaches for examining the forgone 
benefits, including more clearly distinguishing the direct benefits 
from the co-benefits and exploring alternative ways to illustrate the 
impacts on the total net benefits of the uncertainty in health co-
benefits at various PM2.5 cutpoints. This approach shifts 
the focus to the domestic (rather than global) social cost of carbon, 
and employs both 3 percent and 7 percent discount rates. Finally, we 
consider how changing market conditions and technologies may have 
affected future actions that may have been undertaken by states to 
comply with the CPP and how these changes may affect the potential 
benefits and costs of the CPP repeal.
---------------------------------------------------------------------------

    \22\ The EPA plans to conduct a more robust analysis before any 
final action is taken by the agency and provide an opportunity for 
the public to comment on the re-analysis. The EPA also plans to 
carry forward the approach that underscores the uncertainty 
associated with any agency action of this magnitude, especially in 
actions where discretion is afforded to State governments.
---------------------------------------------------------------------------

    The second approach uses the U.S. Energy Information 
Administration's (EIA) 2017 Annual Energy Outlook (AEO) projections to 
present a series of observations on recent power sector trends and 
produce alternative estimates of the forgone benefits and avoided 
compliance costs arising from the proposed repeal of the CPP. We also 
provide a review of recent studies of the CPP's projected costs and 
CO2 emission reductions performed by non-governmental 
institutions in order to provide a broader understanding of the 
uncertainties associated with the proposed repeal of the CPP.
    The RIA presents several different estimates of avoided compliance 
costs using various accounting frameworks. A first set of avoided 
compliance costs is based upon estimates presented in the 2015 Final 
CPP RIA, and counts savings from energy efficiency programs as a 
benefit of the rule, not as a cost-savings. A second set of avoided 
compliance costs is based upon a comparison of the AEO2017 Reference 
Case (CPP) and the AEO2017 No CPP Case. Here, the

[[Page 48044]]

accounting framework treats the value of reduced electricity demand 
from demand-side energy efficiency programs as a cost credit (or 
negative cost). However, the EPA was unable to approximate the value of 
energy cost savings attributable to the demand-side energy efficiency 
measures using the AEO2017-based information. Because the EPA could not 
make this adjustment to the benefits and costs estimates using the 
AEO2017 information, the 2015 CPP RIA-based and AEO2017-based benefit 
and cost estimates cannot be directly compared with each other.
    We estimate the forgone climate benefits from this proposed 
rulemaking using a measure of the domestic social cost of carbon (SC-
CO2), using estimates of forgone CO2 emission 
reductions from both the 2015 RIA and the AEO2017 cases. The SC-
CO2 is a metric that estimates the monetary value of impacts 
associated with marginal changes in CO2 emissions in a given 
year. The SC-CO2 estimates used in this RIA focus on the 
direct impacts of climate change that are anticipated to occur within 
U.S. borders. As mentioned earlier, the EPA approximated the value of 
energy cost savings from the reduced demand attributable to the demand-
side energy efficiency measures and this value is counted as a forgone 
benefit. Also, under this proposed repeal, the CPP would no longer 
reduce emissions of certain precursor pollutants (e.g., SO2, 
NOX, and directly emitted particles), which in turn would no 
longer lower ambient concentrations of PM2.5 and ozone. The 
RIA presents the estimated forgone health co-benefits associated with 
the projected changes in ambient air quality under the CPP. We estimate 
the forgone benefits using three alternative assumptions regarding the 
risk of PM-related premature death.
    The first approach calculates PM-related premature deaths at all 
levels of PM2.5. We then present two alternative approaches: 
(a) Forgone PM2.5 co-benefits fall to zero in areas whose 
model-predicted air quality is at or below the annual average 
PM2.5 NAAQS of 12 [micro]g/m\3\ in the year 2025; and (b) 
forgone PM2.5 co-benefits fall to zero the below the LML in 
the epidemiological studies used to derive the concentration response 
function (8 and 5.8 [micro]g/m\3\). To calculate the forgone co-
benefits for this proposed rule, we applied a benefit-per-ton estimate 
corresponding to broad regions of the U.S. and that is based upon an 
emissions reduction scenario from the 2014 CPP proposal to the 
corresponding forgone emission reductions. As the benefit-per-ton 
estimates are based on a scenario that does not match the forgone 
emission reductions in this rulemaking, the estimates may over- or 
under-state the value of the forgone PM2.5 and ozone-related 
benefits. To the extent feasible, the EPA intends to perform full-scale 
photochemical air quality modeling to inform subsequent CPP-related 
regulatory analyses. Additionally, as part of a project now underway, 
the EPA is systematically evaluating the uncertainty associated with 
its technique for generating and applying this reduced-form technique 
for quantifying benefits, with the goal of better understanding the 
suitability of this and comparable approaches to estimating the health 
impacts of criteria pollutant emissions changes. The EPA will make 
drafts of these analysis available to the public at the time of peer 
review, consistent with OMB's Information Quality Bulletin for Peer 
Review.
    The co-benefit analysis draws upon estimates of forgone 
SO2 and NOX emission reductions from both the 
2015 RIA and the AEO2017 cases. As the RIA analyzes costs and benefits 
applying a variety of different methods and discount rates, there is a 
relatively large number of results.
    In the decision-making process, because, in part, of the 
interactions mentioned below, it is useful to consider the benefits due 
to reductions in the target pollutant relative to the costs, and 
whether alternative regulatory designs can achieve reductions in the 
targeted pollutants and/or the other affected pollutants more cost 
effectively. The EPA believes that this may be an appropriate way to 
evaluate this and future regulatory actions, and presents this 
information as part of its decision-making process.\23\ Therefore, in 
Tables 1 and 2 we present a comparison of the forgone benefits from the 
targeted pollutant--CO2--(the costs of this proposed rule) 
with the avoided compliance cost (the benefits of this proposed 
rule).\24\
---------------------------------------------------------------------------

    \23\ Cf. Transcript of Oral Argument at 64:1-6, Michigan v. EPA, 
135 Sup. Ct. 2699 (2015) (No. 14-46) (statement of Roberts, C.J.) 
(``[I]t's a good thing if your regulation also benefits in other 
ways. But when it's such a disproportion, you begin to wonder 
whether it's an illegitimate way of avoiding the different--quite 
different limitations on EPA that apply in the criteria program.'').
    \24\ Excluded from this comparison are the forgone benefits from 
the SO2 and NOX emission reductions that were 
also projected to accompany the CO2 reductions. However, 
had those SO2 and NOX reductions been achieved 
through other means, then they would have been represented in the 
baseline for this proposed repeal (as well as for the 2015 Final 
CPP), which would have affected the estimated costs and benefits of 
controlling CO2 emissions alone.
---------------------------------------------------------------------------

    Regulating pollutants jointly can promote a more efficient outcome 
in pollution control management. However, in practice regulations are 
promulgated sequentially and therefore, the benefit-cost analyses 
supporting those regulations are also performed sequentially. The 
potential for interaction between regulations suggests that their 
sequencing may affect the realized efficiency of their design and the 
estimated net benefits for each regulation. To note, when considering 
whether a regulatory action is a potential welfare improvement it is 
necessary to consider all impacts of the action. The EPA requests 
comment on the extent that the EPA should rely on consideration of the 
benefits due to reductions in the target pollutant relative to the 
costs in the decision-making process.

   Table 1--Avoided Compliance Costs, Forgone Domestic Climate Benefits, Forgone Demand-Side Energy Efficiency
                     Benefits, and Net Benefits of Repeal Associated With Targeted Pollutant
                                               (Billions of 2011$)
----------------------------------------------------------------------------------------------------------------
                                                                      Forgone     Forgone demand-  Net benefits
                                   Discount rate      Avoided        domestic       side energy     associated
              Year                      (%)         compliance        climate       efficiency     with targeted
                                                       costs         benefits        benefits        pollutant
----------------------------------------------------------------------------------------------------------------
                                                   Rate-Based
----------------------------------------------------------------------------------------------------------------
2020............................               3            $3.7            $0.4            $1.2            $2.1
                                               7             4.2             0.1             1.2             2.9
2025............................               3            10.2             1.4             9.2           (0.4)

[[Page 48045]]

 
                                               7            14.1             0.2             9.2             4.7
2030............................               3            27.2             2.7            18.8             5.7
                                               7            33.3             0.5            18.8            14.0
----------------------------------------------------------------------------------------------------------------
                                                   Mass-Based
----------------------------------------------------------------------------------------------------------------
2020............................               3             2.6             0.4             1.2             1.0
                                               7             3.1             0.1             1.2             1.8
2025............................               3            13.0             1.6            10.0             1.4
                                               7            16.9             0.3            10.0             6.6
2030............................               3            24.5             2.7            19.3             2.5
                                               7            30.6             0.5            19.3            10.8
----------------------------------------------------------------------------------------------------------------
Note: Estimates are rounded to one decimal point and may not sum due to independent rounding.


Table 2--Avoided Compliance Costs, Forgone Domestic Climate Benefits, and Net Benefits of Repeal Associated With
                           Targeted Pollutant, Based on the 2017 Annual Energy Outlook
                                               (Billions of 2011$)
----------------------------------------------------------------------------------------------------------------
                                                                                      Forgone      Net benefits
                                                   Discount rate      Avoided        domestic       associated
                      Year                              (%)         compliance        climate      with targeted
                                                                       costs         benefits        pollutant
----------------------------------------------------------------------------------------------------------------
2020............................................               3          ($0.3)            $0.1          ($0.4)
                                                               7  ..............             0.0           (0.3)
2025............................................               3            14.5             1.3            13.2
                                                               7  ..............             0.2            14.3
2030............................................               3            14.4             2.5            11.9
                                                               7  ..............             0.4            14.0
----------------------------------------------------------------------------------------------------------------
Note: Estimates are rounded to one decimal point and may not sum due to independent rounding.

    We also present the full suite of avoided compliance cost, forgone 
benefit, and net benefit results discussed in the RIA in Tables 3 
through 5. Table 3 presents results for the rate-based illustrative 
plan scenario from the 2015 CPP RIA. Table 4 presents results for the 
mass-based illustrative plan scenario from the 2015 CPP RIA. Table 5 
presents results based upon the EPA's analysis of the AEO2017 Reference 
Case (CPP) and the AEO2017 No CPP Case. The tables report two estimates 
of forgone benefits. One value represents the sum of the forgone 
CO2, energy efficiency, PM2.5 co-benefits 
calculated using the Krewski et al. (2009) risk coefficient and ozone 
co-benefits calculated using the Bell et al. (2004) risk coefficient. 
The other value represents the sum of the forgone CO2, 
energy efficiency, PM2.5 co-benefits calculated using the 
Lepeule et al. (2012) risk coefficient and ozone co-benefits calculated 
using the Levy et al. (2005) risk coefficient. Note again that, due to 
different accounting frameworks, benefits and costs presented in the 
EPA 2015 CPP RIA-based Tables 1 and 2 are not directly comparable to 
the AEO2017-based benefits and costs presented in Table 3.

             Table 3--Monetized Forgone Benefits, Avoided Compliance Costs, and Net Benefits Based on Rate-Based Approach From 2015 CPP RIA
                                                                   (Billions of 2011$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Cost of repeal: forgone         Net benefits of repeal
                                                           Discount rate    Benefit of               benefits            -------------------------------
                          Year                                  (%)           repeal:    --------------------------------
                                                                           avoided costs         A               B               A               B
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Forgone Health Co-Benefits (Full Range of Ambient PM2.5 Concentrations)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3            $3.7            $2.3            $3.4            $0.3            $1.4
                                                                       7             4.2             1.9             3.0             1.2             2.3
2025....................................................               3            10.2            18.0            28.4          (18.1)           (7.8)
                                                                       7            14.1            16.2            25.6          (11.5)           (2.0)
2030....................................................               3            27.2            35.8            55.5          (28.3)           (8.6)
                                                                       7            33.3            32.2            50.2          (16.9)             1.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 48046]]

 
                                           Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below LML)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3             3.7             2.2             2.8             0.9             1.5
                                                                       7             4.2             1.9             2.4             1.8             2.3
2025....................................................               3            10.2            17.5            20.7          (10.5)           (7.3)
                                                                       7            14.1            15.7            18.7           (4.6)           (1.6)
2030....................................................               3            27.2            34.8            40.7          (13.5)           (7.6)
                                                                       7            33.3            31.3            36.9           (3.6)             2.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below NAAQS)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3             3.7             1.7             2.1             1.5             2.0
                                                                       7             4.2             1.4             1.8             2.4             2.8
2025....................................................               3            10.2            11.4            13.3           (3.1)           (1.1)
                                                                       7            14.1            10.2            12.1             2.1             4.0
2030....................................................               3            27.2            23.0            26.5             0.7             4.2
                                                                       7            33.3            20.7            24.1             9.2            12.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Estimates are rounded to one decimal point and may not sum due to independent rounding. Forgone benefits include forgone climate, energy
  efficiency, and air quality benefits. Estimate A is based upon the sum of the forgone CO2, energy efficiency, PM2.5 co-benefits calculated using the
  Krewski et al. (2009) risk coefficient and ozone co-benefits calculated using the Bell et al. (2004) risk coefficient. Estimate B is based on the sum
  of the forgone CO2, energy efficiency, PM2.5 co-benefits calculated using the Lepeule et al. (2012) risk coefficient and ozone co-benefits calculated
  using the Levy et al. (2005) risk coefficient.


             Table 4--Monetized Forgone Benefits, Avoided Compliance Costs, and Net Benefits Based on Mass-Based Approach From 2015 CPP RIA
                                                                   (Billions of 2011$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Cost of repeal: forgone         Net benefits of repeal
                                                           Discount rate    Benefit of               benefits            -------------------------------
                          Year                                  (%)           repeal:    --------------------------------
                                                                           avoided costs         A               B               A               B
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Forgone Health Co-Benefits (Full Range of Ambient PM2.5 Concentrations)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3            $2.6            $3.6            $6.4          ($3.8)          ($1.0)
                                                                       7             3.1             3.1             5.6           (2.5)             0.0
2025....................................................               3            13.0            18.7            28.8          (15.8)           (5.7)
                                                                       7            16.9            16.7            26.0           (9.1)             0.2
2030....................................................               3            24.5            33.8            50.1          (25.7)           (9.3)
                                                                       7            30.6            30.4            45.5          (14.8)             0.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below LML)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3             2.6             3.5             4.4           (1.8)           (0.9)
                                                                       7             3.1             2.9             3.8           (0.7)             0.2
2025....................................................               3            13.0            18.2            21.6           (8.5)           (5.2)
                                                                       7            16.9            16.3            19.5           (2.5)             0.7
2030....................................................               3            24.5            32.9            38.1          (13.7)           (8.4)
                                                                       7            30.6            29.7            34.7           (4.0)             0.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below NAAQS)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3             2.6             1.8             2.4             0.2             0.8
                                                                       7             3.1             1.5             2.0             1.1             1.7
2025....................................................               3            13.0            12.4            14.6           (1.6)             0.6
                                                                       7            16.9            11.1            13.2             3.7             5.9
2030....................................................               3            24.5            23.3            26.6           (2.1)             1.2
                                                                       7            30.6            21.0            24.2             6.4             9.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Estimates are rounded to one decimal point and may not sum due to independent rounding. Forgone benefits include forgone climate, energy
  efficiency, and air quality benefits. Estimate A is based upon the sum of the forgone CO2, energy efficiency, PM2.5 co-benefits calculated using the
  Krewski et al. (2009) risk coefficient and ozone co-benefits calculated using the Bell et al. (2004) risk coefficient. Estimate B is based on the sum
  of the forgone CO2, energy efficiency, PM2.5 co-benefits calculated using the Lepeule et al. (2012) risk coefficient and ozone co-benefits calculated
  using the Levy et al. (2005) risk coefficient.


[[Page 48047]]


                    Table 5--Monetized Forgone Benefits, Avoided Compliance Costs, and Net Benefits, Based on EPA Analysis of AEO2017
                                                                   (Billions of 2011$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Cost of repeal: forgone         Net benefits of repeal
                                                           Discount rate    Benefit of               benefits            -------------------------------
                          Year                                  (%)           repeal:    --------------------------------
                                                                           avoided costs         A               B               A               B
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Forgone Health Co-Benefits (Full Range of Ambient PM2.5 Concentrations)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3          ($0.3)          ($0.5)          ($0.2)          ($0.2)            $0.1
                                                                       7  ..............           (0.5)           (0.2)           (0.1)             0.1
2025....................................................               3            14.5             9.0            19.6           (5.0)             5.5
                                                                       7  ..............             7.2            16.9           (2.3)             7.3
2030....................................................               3            14.4            20.6            44.9          (30.6)           (6.3)
                                                                       7  ..............            16.8            39.0          (24.6)           (2.5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                           Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below LML)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3           (0.3)           (0.2)           (0.1)           (0.2)           (0.2)
                                                                       7  ..............           (0.2)           (0.2)           (0.2)           (0.1)
2025....................................................               3            14.5             8.4            11.5             3.1             6.1
                                                                       7  ..............             6.7             9.6             5.0             7.8
2030....................................................               3            14.4            19.3            25.8          (11.4)           (4.9)
                                                                       7  ..............            15.6            21.7           (7.3)           (1.3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Forgone Health Co-Benefits (PM2.5 Benefits Fall to Zero Below NAAQS)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2020....................................................               3           (0.3)             0.1             0.2           (0.5)           (0.5)
                                                                       7  ..............             0.0             0.1           (0.5)           (0.4)
2025....................................................               3            14.5             2.0             3.6            10.9            12.6
                                                                       7  ..............             0.9             2.5            12.0            13.7
2030....................................................               3            14.4             4.0             7.3             7.1            10.4
                                                                       7  ..............             1.8             5.0             9.4            12.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Estimates are rounded to one decimal point and may not sum due to independent rounding. Forgone benefits include forgone climate and air quality
  benefits. Estimate A is based upon the sum of the forgone CO2, energy efficiency, PM2.5 co-benefits calculated using the Krewski et al. (2009) risk
  coefficient and ozone co-benefits calculated using the Bell et al. (2004) risk coefficient. Estimate B is based on the sum of the forgone CO2, energy
  efficiency, PM2.5 co-benefits calculated using the Lepeule et al. (2012) risk coefficient and ozone co-benefits calculated using the Levy et al.
  (2005) risk coefficient.

    In evaluating the impacts of the proposed action, the RIA discusses 
a number of uncertainties. The RIA quantitatively examines 
uncertainties in the approaches that states and affected EGUs may have 
taken under the final CPP to accomplish state emission performance 
goals, in estimates of the avoided compliance costs, and in estimates 
of forgone climate, energy efficiency, and air quality benefits. Other 
types of uncertainties are acknowledged but remain unquantified. In 
addition, the EPA plans to perform updated modeling and analysis of 
avoided compliance costs, forgone benefits, and other impacts, which 
will be made available for public comment before any action that 
relates to the CPP is finalized. To the extent feasible, the EPA 
intends to perform full-scale gridded photochemical air quality 
modeling to support the air quality benefits assessment informing 
subsequent regulatory analyses of CPP-related actions. Such model 
predictions would supply the data needed to: (1) Quantify the 
PM2.5 and ozone-related impacts of the policy case; (2) 
perform the full suite of sensitivity analyses summarized above, 
particularly the concentration cut-point assessment. The EPA further 
commits to characterizing the uncertainty associated with applying 
benefit-per-ton estimates by comparing the EPA's approach with other 
reduced-form techniques found in the literature. All of these analyses 
will be available for peer review consistent with the requirements of 
OMB's Information Quality Bulletin for Peer Review within 6 months.

B. Executive Order 13771: Reducing Regulation and Controlling 
Regulatory Costs

    This proposed rule is expected to be an EO 13771 deregulatory 
action. Details on the estimated cost savings of this proposed rule can 
be found in the rule's RIA.

C. Paperwork Reduction Act (PRA)

    This proposed rule does not impose an information collection burden 
under the PRA.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. 
Emission guidelines established under CAA section 111(d) do not impose 
any requirements on regulated entities and, thus, will not have a 
significant economic impact upon a substantial number of small 
entities. After emission guidelines are promulgated, states establish 
emission standards on existing sources, and it is those requirements 
that could potentially impact small entities. This proposed action will 
not impose any requirements on small entities. As a result, this action 
will not have a significant economic impact on a substantial number of 
small entities under the RFA.
    Our analysis in the accompanying RIA is consistent with the 
analysis of the analogous situation arising when the EPA establishes 
NAAQS, which do not impose any requirements on regulated entities. As 
with the description in the RIA, any impact of a NAAQS on small 
entities would only arise when states take subsequent action to 
maintain and/or achieve the NAAQS through their state implementation 
plans. See American Trucking Assoc. v. EPA, 175 F.3d 1029, 1043-45 
(D.C. Cir. 1999) (NAAQS do not have significant impacts upon small 
entities because

[[Page 48048]]

NAAQS themselves impose no regulations upon small entities).

E. Unfunded Mandates Reform Act (UMRA)

    This proposed action does not contain an unfunded mandate of $100 
million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action imposes 
no enforceable duty on any state, local, or tribal governments or the 
private sector.

F. Executive Order 13132: Federalism

    The EPA proposes to conclude that the CPP would have negative 
federalism implications and that this proposed repeal of the CPP would 
restore the status quo ante. The EPA has concluded that this proposed 
action does not have negative federalism implications. It will not have 
substantial negative direct effects on the states, on the relationship 
between the national government and the states, or on the distribution 
of power and responsibilities among the various levels of government.

G. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175. It will not have substantial direct effects on 
tribal governments, on the relationship between the federal government 
and Indian tribes, or on the distribution of power and responsibilities 
between the federal government and Indian tribes, as specified in 
Executive Order 13175. Thus, Executive Order 13175 does not apply to 
the action.
    Consistent with the EPA Policy on Consultation and Coordination 
with Indian Tribes, the EPA will engage in consultation with tribal 
officials during the development of this action.

H. Executive Order 13045: Protection of Children From Environmental 
Risks and Health Risks

    This action is subject to Executive Order 13045 because it is an 
economically significant regulatory action as defined by Executive 
Order 12866. The CPP was anticipated to lower ambient concentrations of 
PM2.5 and ozone, and some of the benefits of reducing these 
pollutants would have accrued to children. As previously discussed 
above in Section IV.A on Executive Order 12866, and as discussed in 
detail in the RIA that accompanies this document of proposed 
rulemaking, recent changes in the electric power sector have affected 
expectations about the impact of the CPP since its supporting analysis 
was conducted in 2015. In general, current expectations about future 
emissions of pollution from the electric power sector without the CPP 
are lower than they were at the time the final CPP was analyzed. 
Relative to its 2015 projections of the electric power sector, the 
EIA's 2017 AEO forecasts lower future emissions levels without the CPP. 
Specifically, in AEO2017, the forecast for NOx emissions from the 
electric power sector in 2030 without the CPP is approximately 27 
percent lower than the analogous forecast in AEO2015. The forecast for 
SO2 emissions from the electric power sector in 2030 is 6 
percent lower in AEO2017 than in AEO2015. Therefore, there is 
significant uncertainty as to the current applicability of results from 
the 2015 CPP analysis, including the assessment human health benefits.
    Furthermore, the proposed action does not affect the level of 
public health and environmental protection already being provided by 
existing NAAQS and other mechanisms in the CAA. This proposed action 
does not affect applicable local, state, or federal permitting or air 
quality management programs that will continue to address areas with 
degraded air quality and maintain the air quality in areas meeting 
current standards. Areas that need to reduce criteria air pollution to 
meet the NAAQS will still need to rely on control strategies to reduce 
emissions. To the extent that states use other mechanisms in order to 
comply with the NAAQS, and still achieve the criteria pollution 
reductions that would have occurred under the CPP, this proposed 
rescission will not have a disproportionate adverse effect on 
children's health.

I. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply Distribution or Use

    This action, which is a significant regulatory action under 
Executive Order 12866, is likely to have a significant effect on the 
supply, distribution, or use of energy. In the RIA for the CPP, we 
estimated that the CPP could have a 1- to 2-percent impact on retail 
electricity prices on average across the U.S. in 2025 and a 22- to 23-
percent reduction in coal-fired electricity generation. The EPA also 
estimated that the utility power sector delivered natural gas prices 
would increase by up to 2.5 percent in 2030. A repeal of the CPP would 
directionally have the opposite impact.
    The energy impacts the EPA estimates from the proposed rule may be 
under- or over-estimates of the true energy impacts associated with the 
proposed repeal of the CPP. Some states are likely to pursue emissions 
reduction strategies independent of EPA action. Additionally, the 
compliance cost estimates were based upon information available in 
2015, so important economic and technical factors that influence the 
estimates may have changed since 2015 or may change in the future. 
However, these estimates of energy impacts associated with the proposed 
action are currently the best estimates available.

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    The EPA believes that this proposed action is unlikely to have 
disproportionately high and adverse human health or environmental 
effects on minority populations, low-income populations and/or 
indigenous peoples as specified in Executive Order 12898 (59 FR 7629, 
February 16, 1994). The CPP anticipated reductions in CO2 
emissions, as well as lower concentrations of PM2.5 and 
ozone due to changes in EGU emissions. The EPA conducted a proximity 
analysis for the CPP and identified that low-income and minority 
communities located in proximity to EGUs may have experienced an 
improvement in air quality as a result of the emissions reductions. 
However, the EPA did not address the potential distribution of 
compliance costs associated with the CPP.
    The RIA that accompanies this document of proposed rulemaking 
discusses how the potential impacts of this proposed action might be 
distributed across the population, as the impacts are not expected to 
be experienced uniformly by different individuals, communities, or 
industry sectors.
    The distribution of avoided compliance costs associated with this 
action depends on how the degree to which costs would have been passed 
through to consumers. As discussed in the RIA, this proposal is 
expected to result in lower electricity prices. Low-income households 
typically spend a greater share of their household income on energy, 
and to the extent that this action reduces energy costs, those low-
income households will experience lower energy bills. This result is 
complicated by expectations regarding

[[Page 48049]]

how energy efficiency programs may have been adopted under the CPP. 
However, the EPA does not know how states would have implemented those 
programs and, therefore, the impact of those program on low-income 
households. The overall distribution of the avoided compliance costs 
associated with this action is uncertain, but may result in lower 
household energy bills for low-income households.
    With respect to the forgone benefits associated with this action, 
the EPA conducted a proximity analysis for the CPP which showed a 
higher percentage of low-income and minority households living in 
proximity to EGUs that may have reduced emissions under the CPP. These 
communities may experience forgone benefits as a result of this action. 
However, any changes in ambient air quality depends on stack height, 
atmospheric conditions, and dispersion patterns. Therefore, the 
distribution of forgone benefits is highly uncertain. Also expected, as 
a result of the CPP, were shifts in regional workforces, particularly 
in the electricity, coal, and natural gas sectors. While employment 
effects are not experienced uniformly across the population and may be 
offset by new opportunities in different sectors, localized impacts 
could have adversely affected individuals and their communities. 
Workers losing jobs in regions or occupations with weak labor markets 
would have been most vulnerable. With limited re-employment 
opportunities, or if new employment offered lower earnings, then 
unemployed workers could face extended periods without work, or 
permanently reduced future earnings. In addition, past research has 
suggested that involuntary job loss may increase risks to health, of 
substance abuse, and even of mortality. These adverse impacts may be 
avoided with the proposed repeal of the CPP.

V. Statutory Authority

    The statutory authority for this action is provided by sections 
111, 301, 302, and 307(d)(1)(V) of the CAA, as amended (42 U.S.C. 7411, 
7601, 7602, 7607(d)(1)(V)). This action is also subject to section 
307(d) of the CAA (42 U.S.C. 7607(d)).

    Dated: October 10, 2017.
E. Scott Pruitt,
Administrator.
[FR Doc. 2017-22349 Filed 10-13-17; 8:45 am]
BILLING CODE 6560-50-P