82 FR 48035 - Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units
ENVIRONMENTAL PROTECTION AGENCY Federal Register Volume 82, Issue 198 (October 16, 2017)
Federal Register Volume 82, Issue 198 (October 16, 2017)
| Page Range | 48035-48049 | |
| FR Document | 2017-22349 |
[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)] [Proposed Rules] [Pages 48035-48049] From the Federal Register Online [www.thefederalregister.org] [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 http://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 http://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 http://www.regulations.gov or email. The http://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 http://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 http://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 http://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: [email protected]. SUPPLEMENTARY INFORMATION: Submitting CBI. Do not submit information that you consider to be CBI electronically through http://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
![Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules 48035
of the rule that are not the subject of an submission, the EPA may publish any Power Plan (CPP), as promulgated on
adverse comment. comment received to its public docket. October 23, 2015.
Dated: September 27, 2017. Do not submit electronically any DATES: Comments. Comments must be
Cecil Rodrigues,
information you consider to be received on or before December 15,
confidential business information (CBI) 2017.
Acting Regional Administrator, Region III.
or other information whose disclosure is Public Hearing. If anyone contacts us
[FR Doc. 2017–22240 Filed 10–13–17; 8:45 am]
restricted by statute. Multimedia requesting a public hearing on or before
BILLING CODE 6560–50–P submissions (audio, video, etc.) must be October 31, 2017, we will hold a
accompanied by a written comment. hearing. Additional information about
The written comment is considered the the hearing, if requested, will be
ENVIRONMENTAL PROTECTION
official comment and should include published in a subsequent Federal
AGENCY
discussion of all points you wish to Register document.
40 CFR Part 52 make. EPA will generally not consider ADDRESSES: Comments. Submit your
comments or comment contents located comments, identified by Docket ID No.
[EPA–R03–OAR–2016–0592; FRL–9969–38– outside of the primary submission (i.e.
Region 3]
EPA–HQ–OAR–2017–0355, at http://
on the web, cloud, or other file sharing www.regulations.gov. Follow the online
system). For additional submission instructions for submitting comments.
Approval and Promulgation of Air
methods, please contact the person Once submitted, comments cannot be
Quality Implementation Plans; Virginia;
identified in the FOR FURTHER edited or removed from Regulations.gov.
Amendment to Ambient Air Quality
INFORMATION CONTACT section. For the The EPA may publish any comment
Standard for Ozone
full EPA public comment policy, received to its public docket. Do not
AGENCY: Environmental Protection information about CBI or multimedia submit electronically any information
Agency (EPA). submissions, and general guidance on you consider to be Confidential
ACTION: Proposed rule. making effective comments, please visit Business Information (CBI) or other
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SUMMARY: The Environmental Protection commenting-epa-dockets. restricted by statute. Multimedia
Agency (EPA) proposes to approve the FOR FURTHER INFORMATION CONTACT: submissions (audio, video, etc.) must be
state implementation plan (SIP) revision Gavin Huang, (215) 814–2042, or by accompanied by a written comment.
submitted by the Commonwealth of email at huang.gavin@epa.gov. The written comment is considered the
Virginia for the purpose of adding a official comment and should include
SUPPLEMENTARY INFORMATION: For
revised 8-hour ozone standard of 0.070 discussion of all points you wish to
further information, please see the
parts per million (ppm) to the Virginia make. The EPA will generally not
information provided in the direct final
SIP. This revision incorporates the 2015 consider comments or comment
action, with the same title, that is
ozone national ambient air quality contents located outside of the primary
located in the ‘‘Rules and Regulations’’
standards (NAAQS) as promulgated by submission (i.e., on the Web, cloud, or
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publication.
set out in our regulations. In the Final additional submission methods, the full
Rules section of this Federal Register, Dated: September 22, 2017.
EPA public comment policy,
EPA is approving Virginia’s SIP Cecil Rodrigues,
information about CBI or multimedia
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DATES: Comments must be received in Units
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ethrower on DSK3G9T082PROD with PROPOSALS
OAR–2016–0592 at http:// means the EPA will not know your
www.regulations.gov/, or via email to SUMMARY: In this action, the U.S. identity or contact information unless
stahl.cynthia@epa.gov. For comments Environmental Protection Agency (EPA) you provide it in the body of your
submitted at Regulations.gov, follow the is proposing to repeal the Carbon comment. If you send an email
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![Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules 48037
system of emission reduction’’ (BSER) or contribute to air pollution that may 3. Substituting increased generation
under certain circumstances. reasonably be anticipated to endanger from new zero-emitting renewable
Notwithstanding the CPP, all of the public health or welfare. Id. energy generating capacity for decreased
EPA’s other CAA section 111 § 7411(b)(1). In 2015, the EPA issued generation from affected fossil fuel-fired
regulations are based on a BSER such a rule for CO2 emissions from generating units. Id. at 64707.
consisting of technological or certain new fossil fuel-fired power While building block 1 constituted
operational measures that can be plants 2 in light of the Agency’s measures that could be applied directly
applied to or at a single source.1 The assessment ‘‘that [greenhouse gases] to a source—that is, integrated into its
CPP departed from this practice by endanger public health, now and in the design or operation—building blocks 2
instead setting carbon dioxide (CO2) future.’’ Standards of Performance for and 3 employed measures that departed
emission guidelines for existing power Greenhouse Gas Emissions from New, from this traditional, source-specific
plants that can only realistically be Modified, and Reconstructed Stationary approach to regulation and that were
effected by measures that cannot be Sources: Electric Generating Units, 80 expressly designed to shift the balance
employed to, for, or at a particular FR 64510, 64518 (October 23, 2015) of coal-, gas-, and renewable-generated
source. Instead, the CPP encompassed (New Source Rule); see also power at the grid-wide level, subjecting
measures that would generally require Endangerment and Cause or Contribute these building blocks to claims that they
power generators to change their energy Findings for Greenhouse Gases Under constituted energy, rather than
portfolios through generation-shifting Section 202(a) of the Clean Air Act, 74 environmental, policy.
(rather than better equipping or FR 66496 (December 15, 2009).3 Under That the CPP depends on the
operating their existing plants), certain circumstances, when the EPA employment of measures that cannot be
including through the creation or issues a CAA section 111(b) standard, applied at and to an individual source
subsidization of significant amounts of the EPA must then prescribe CAA is evident from its treatment of coal-
generation from power sources entirely section 111(d) regulations under which fired power plants. The rule established
outside the regulated source categories, each state must submit a plan to performance standards for coal-fired
such as solar and wind energy. This establish standards for existing sources plants assuming a uniform emissions
raised substantial concerns that the CPP in the same category. 42 U.S.C. rate well below that which could be met
would necessitate changes to a state’s 7411(d)(1). The EPA relied on that by existing units through any retrofit
energy policy, such as a grid-wide shift authority to issue the CPP, which, for technology of reasonable cost available
from coal-fired to natural gas-fired the first time, required states to submit at the time. This means that, in order to
generation, and from fossil fuel-fired plans specifically designed to limit CO2 comply, many owners or operators of
generation to renewable generation. emissions from certain fossil fuel-fired existing coal-fired units were expected
Executive Order 13783 directs the to shift generation from such units to
power plants.
EPA to determine whether the CPP gas-fired units or to renewable
The CPP established emission
exceeds the bounds of the authority generation. Similarly, the rule
guidelines for states to follow in
delegated to the Agency by Congress. contemplated that gas-fired units would
limiting CO2 emissions from those
See Executive Order 13783, Sections shift generation to renewable
plants. These emission guidelines
1(e) and 4(c). In the course of this generation. The rule, therefore, is
included nationally uniform CO2
review, the EPA is reconsidering the formulated in reliance on and
emission performance rates for two
legal interpretation underlying the CPP anticipation of actions taken across the
subcategories of existing fossil fuel-fired
and is proposing to interpret the phrase electric grid, rather than actions taken at
power plants: Electric utility steam
‘‘best system of emission reduction’’ in and applied to individual units.
generating units and stationary
a way that is consistent with the B. Judicial Challenge to the CPP
combustion turbines. See 80 FR 64707.
Agency’s historical practice of
In the CPP, the EPA determined that Due to concerns about the EPA’s legal
determining a BSER by considering only
the BSER for CO2 emissions from authority and record, 27 states and a
measures that can be applied to or at the
existing fossil fuel-fired power plants number of other parties sought judicial
source. As discussed in more detail
was the combination of emission rate review of the CPP in the United States
below, under the interpretation
improvements and limitations on Court of Appeals for the District of
proposed here, the CPP exceeds the
overall emissions by affected power Columbia Circuit. West Virginia v. EPA,
bounds of the statute. Consistent with
this proposed interpretation, we plants that can be accomplished through No. 15–1363 (and consolidated cases)
propose to repeal the CPP and rescind a combination of three sets of measures, (D.C. Cir.). On February 9, 2016, the
the accompanying legal memoranda. which the EPA called ‘‘building Supreme Court stayed implementation
blocks’’: of the CPP pending judicial review.
II. Background 1. Improving heat rate at affected coal- Order in Pending Case, West Virginia v.
A. The CPP fired steam generating units; EPA, No. 15A773 (U.S. February 9,
2. Substituting increased generation 2016). The cases were argued before the
The EPA promulgated the CPP under from lower-emitting existing natural gas D.C. Circuit, sitting en banc, on
section 111 of the CAA. 42 U.S.C. 7411. combined cycle units for decreased September 27, 2016. Following oral
Clean Air Act section 111(b) authorizes generation from higher-emitting affected argument, the EPA moved to hold the
the EPA to issue nationally applicable steam generating units; and cases in abeyance, and, on April 28,
new source performance standards
2017, the court granted motions to hold
limiting air pollution from ‘‘new
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2 The rule identified ‘‘[f]ossil fuel-fired EGUs’’ as
sources’’ in source categories that cause the cases in abeyance for 60 days and
‘‘by far the largest emitters of [greenhouse gases]
among stationary sources in the U.S., primarily in directed the parties to file briefs
1 This is true not only for all of the handful of the form of CO2.’’ 80 FR 64510, 64522 (October 23, addressing whether the cases should be
existing CAA section 111(d) regulations issued 2015). remanded to the Agency rather than
3 The substance of the 2009 Endangerment
prior to the CPP, but also of the much larger set of held in abeyance. Order, Docket Entry
new source performance standards issued under Finding is not at issue in this proposed rulemaking,
CAA section 111(b), which are predicated on the and we are not soliciting comment on the EPA’s
No. 1673071. On August 8, 2017, the
same key statutory term ‘‘best system of emission assessment of the impacts of GHGs with this court issued an order holding the cases
reduction.’’ proposal. in abeyance for a further 60-day period
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![48038 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules
and directed the EPA to file status states, regulated entities and other from existing EGUs under CAA section
reports at 30-day intervals. Order, stakeholders warned that the CPP 111(d) must begin with a fundamental
Docket Entry No. 1687838. threatened to impose massive costs on reevaluation of appropriate and
the power sector and consumers; authorized control measures and
C. Executive Order 13783 and the EPA’s
invaded traditional areas of state recalculation of performance standards.
Review of the CPP
regulation over the mix of energy
On March 28, 2017, President Trump The EPA’s mission is to ‘‘protect and
generation within their borders;
issued Executive Order 13783, which enhance the quality of the Nation’s air
departed radically from prior regulatory
affirms the ‘‘national interest to promote practice and longstanding reading of the resources,’’ 42 U.S.C. 7401(b)(1), but the
clean and safe development of our statute; and did not adequately ensure Agency must do so within the authority
Nation’s vast energy resources, while at the national interest in affordable, delegated to it by Congress. To that end,
the same time avoiding regulatory reliable electricity, including from coal ‘‘[a] primary goal’’ of the CAA ‘‘is to
burdens that unnecessarily encumber generation. See id. Section 1(b). encourage or otherwise promote
energy production, constrain economic In the course of the EPA’s review of reasonable Federal, State, and local
growth, and prevent job creation.’’ See the CPP, the Agency also reconsidered governmental actions, consistent with
Executive Order 13783, Section 1(a). its interpretation of CAA section 111, the provisions of [the CAA] . . . .’’ 42
The Executive Order directs all and it is on that basis that the Agency U.S.C. 7401(c) (emphases added). Where
executive departments and agencies, now proposes to repeal the CPP. Section the EPA’s regulations exceed the
including the EPA, to ‘‘immediately 1 of the Executive Order recognizes that Agency’s statutory authority, it is
review existing regulations that the EPA should, ‘‘to the extent appropriate for the Agency to correct
potentially burden the development or permitted by law, . . . take appropriate that error and consider what statutory
use of domestically produced energy actions to promote clean air and clean tools are duly available to it, to ensure
resources and appropriately suspend, water for the American people, while that its regulations are effective,
revise, or rescind those that unduly also respecting the proper roles of enforceable, administrable, and
burden the development of domestic Congress and the States concerning grounded in valid authority.
energy resources beyond the degree these matters in our constitutional Accordingly, the EPA continues to
necessary to protect the public interest republic.’’ Id. Section 1(d). As discussed consider whether it should issue
or otherwise comply with the law.’’ Id. below, the EPA proposes to determine another CAA section 111(d) rule
Section 1(c). The Executive Order that the CPP is not within Congress’s addressing GHG emissions from existing
further affirms that it is ‘‘the policy of grant of authority to the Agency under EGUs and, if so, what would be the
the United States that necessary and the governing statute. It is not in the appropriate form and scope of that rule.
appropriate environmental regulations interests of the EPA, or in accord with See, e.g., API v. EPA, 52 F.3d 1113, 1119
comply with the law.’’ Id. Section 1(e). its mission of environmental protection
Moreover, the Executive Order (D.C. Cir. 1995) (‘‘It is axiomatic that an
consistent with the rule of law, to
specifically directs the EPA to review administrative agency’s power to
expend its resources along the path of
and initiate reconsideration proceedings promulgate legislative regulations is
implementing a rule, receiving and
to ‘‘suspend, revise, or rescind’’ the passing judgment on state plans, or limited to the authority delegated by
CPP, ‘‘as appropriate and consistent promulgating federal plans in Congress’’) (internal citations omitted);
with law.’’ Id. Section 4(a)–(c). (The furtherance of a policy that is not within see also Michigan v. EPA, 268 F.3d 1075
Executive Order also directs the EPA to the bounds of our statutory authority. (D.C. Cir. 2001) (same). The EPA is
undertake this process of review and The EPA is proposing to repeal the engaged in the process of considering
reconsideration with regard to the New CPP in its entirety. The EPA proposes to the scope of such a rule, and is
Source Rule issued under CAA section take this action because it proposes to intending to issue an ANPRM in the
111(b), which was a condition determine that the rule exceeds its near future to solicit information on
precedent to the promulgation of the authority under the statute, that those systems of emission reduction that are
CPP.) portions of the rule which arguably do in accord with the legal interpretation
In a document signed the same day as not exceed its authority are not proposed in this notice (i.e., those that
Executive Order 13783, and published severable and separately implementable, are applicable to and at an individual
in the Federal Register at 82 FR 16329 and that it is not appropriate for a rule source), as well as information on
(April 4, 2017), the EPA announced that exceeds statutory authority— compliance measures and state planning
that, consistent with the Executive especially a rule of this magnitude and requirements. This notice does not
Order, it was initiating its review of the with this level of impact on areas of solicit comment on such issues, which
CPP and providing notice of traditional state regulatory authority—to will be open for comment in the
forthcoming proposed rulemakings remain in existence pending a potential, ANPRM.
consistent with the Executive Order.4 successive rulemaking process.
The EPA has concluded its initial Specifically, the performance standards III. Basis for Proposed Repeal of the
review of the CPP, as directed by that the CPP established for existing CPP
Executive Order 13783. That review sources were predicated on a combined
The basis for the proposed repeal of
raised substantial concerns that the CPP use of the three ‘‘building blocks’’
is not consistent with the policy the CPP is the EPA’s proposed
described above. Because, under the
articulated in Section 1 of the Executive interpretation proposed here, the second interpretation of CAA section 111,
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Order. See Executive Order 13783, and third ‘‘building blocks’’ exceed the which is discussed in this notice. The
Section 4(a). For example, numerous EPA’s authority under CAA section 111, EPA proposes to determine that this
and because, as the EPA determined interpretation is the most appropriate
4 The EPA also withdrew the proposed federal when it issued the CPP, the first reading of the statute in light of the text,
plan and model trading rules, proposed ‘‘building block,’’ as designed, could not its legislative history, prior practice
amendments to certain regulations under 40 CFR under CAA section 111, statutory
subpart B implementing CAA section 111(d), and
stand on its own if the other ‘‘building
proposed rule regarding the Clean Energy Incentive blocks’’ were repealed, any potential context, and in consideration of broader
Plan. 82 FR 16144 (April 3, 2017). future rule that regulates GHG emissions policy implications. If the proposed
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![Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules 48039
interpretation is finalized, the CPP as they are used in other, related Specifically, the EPA reasoned that
would be repealed.5 sections of the CAA. Second, it aligns ‘‘because the ‘degree of emission
The EPA’s ability to revisit existing with the Congressional intent limitation’ must be ‘achievable through
regulations is well-grounded in the law. underlying CAA section 111 as the application of the best system of
Specifically, the EPA has inherent informed by relevant legislative history. emission reduction’ (emphasis added),
authority to reconsider, repeal, or revise Third, it aligns with the EPA’s prior the ‘system of emission reduction’ must
past decisions to the extent permitted by understanding of CAA section 111 as be limited to a set of measures that work
law so long as the Agency provides a reflected in the Agency’s prior together to reduce emissions that are
reasoned explanation. The CAA regulatory actions.6 Fourth, it avoids implementable by the sources
complements the EPA’s inherent illogical results when considered in themselves.’’ Id. ‘‘As a practical matter,’’
authority to reconsider prior light of other provisions of the statute. the EPA continued, ‘‘the ‘source’
rulemakings by providing the Agency Finally, it avoids a policy shift of great includes the ‘owner or operator’ of any
with broad authority to prescribe significance for the relationship building, structure, facility, or
regulations as necessary. 42 U.S.C. between the federal government and the installation for which a standard of
760l(a). The authority to reconsider states and avoids conflict with other performance is applicable.’’ Id. ‘‘Thus, a
prior decisions exists in part because federal legislation and interference with ‘system of emission reduction’ for
the EPA’s interpretations of statutes it the separate role and jurisdiction of purposes of CAA section 111(d) means
administers ‘‘[are not] instantly carved another federal agency, where there is a set of measures that source owners or
in stone,’’ but must be evaluated ‘‘on a inadequate indication that Congress operators can implement to achieve an
continuing basis.’’ Chevron U.S.A. Inc. intended to authorize the EPA to take emission limitation applicable to their
v. NRDC, Inc., 467 U.S. 837, 863–64 actions leading to those results. existing source.’’ Id. In reaching this
(1984). This is true when, as is the case conclusion, the EPA noted that ‘‘the
A. Statutory Text
here, review is undertaken ‘‘in response terms ‘implement’ and ‘apply’ are used
to . . . a change in administrations.’’ The phrase ‘‘system of emission interchangeably.’’ See Legal
National Cable & Telecommunications reduction’’ provides the starting point Memorandum at 84 n.175. Here,
Ass’n v. Brand X Internet Services, 545 for developing performance standards contrary to the conclusion in the CPP,
U.S. 967, 981 (2005). Indeed, ‘‘[a]gencies under CAA section 111. An expansive the EPA is proposing to interpret the
obviously have broad discretion to interpretation of the phrase ‘‘system of phrase ‘‘through the application of the
reconsider a regulation at any time.’’ emission reduction’’ would yield a best system of emission reduction’’ as
Clean Air Council v. Pruitt, 862 F.3d 1, greater universe of measures that could requiring that the BSER be something
8–9 (D.C. Cir. 2017). be considered to establish emission that can be applied to or at the source
After reconsidering the statutory text, limits; conversely, a narrower reading and not something that the source’s
context, and legislative history, and in would have the opposite effect. See 80 owner or operator can implement on
consideration of the EPA’s historical FR 64720 (explaining that the ‘‘first behalf of the source at another location.
practice under CAA section 111 as step’’ is to ‘‘identify ‘system[s] of Interpreting the statute as carrying this
reflected in its other existing CAA emission reduction’ that have been additional limiting principle ensures
section 111 regulations, the Agency ‘adequately demonstrated’ for a conformity with the statutory context
proposes to return to a reading of CAA particular category.’’).7 Thus, the and congressional intent.
section 111(a)(1) (and its constituent phrase’s scope correlates directly with The EPA’s proposed interpretation is
term, ‘‘best system of emission the breadth of the Administrator’s also guided by CAA section 111(d)’s
reduction’’) as being limited to emission discretion in determining what system direction that standards be established
reduction measures that can be applied is the best for purposes of establishing ‘‘for any existing source,’’ (emphasis
to or at an individual stationary source. the degree of emission limitation to be added) and not for other sources or
That is, such measures must be based on reflected in a standard of performance. entities. See also 42 U.S.C. 7401(a)(3)
See 42 U.S.C. 7411(a)(1) (‘‘[t]he term (finding that ‘‘air pollution control at its
a physical or operational change to a
‘standard of performance’ means a source is the primary responsibility of
building, structure, facility, or
standard for emissions of air pollutants States and local governments’’)
installation at that source, rather than
which reflects the degree of emission (emphasis added). Further, the ‘‘for any
measures that the source’s owner or
limitation achievable through the existing source’’ phrasing in CAA
operator can implement on behalf of the
application of the [BSER]’’). section 111(d) mirrors the ‘‘for new
source at another location. The EPA Though not further defined in the
believes that this is the best sources’’ phrasing in the first sentence
CAA, the phrase ‘‘system of emission of section 111(b)(1)(B). In other words,
construction of CAA section 111(a)(1), reduction’’ cannot be read in isolation.
as explained in detail below, for several as applied to both new source standards
In promulgating the CPP, the EPA and existing source standards
reasons. First, it accords with the explained that the phrase carries promulgated under CAA section 111, if
meaning and application of relevant important limitations. Id. at 64762. standards must be set for individual
terms and phrases in CAA section 111
sources, it is reasonable to expect that
6 As noted above, the EPA’s prior understanding
5 Under the EPA’s proposal, the Agency lacks
such standards would be predicated on
of this statutory section and its key term ‘‘best
authority to consider measures other than those that system of emission reduction’’ is reflected not only
measures that can be applied to or at
apply at, to, and for a particular source when in the handful of existing CAA section 111(d) rules those same individual sources.
determining the BSER. Because the CPP is in large that predated the CPP, but also in the much larger Adopting a source-oriented reading of
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part premised on such measures, if the proposed set of new-source rules under CAA section 111(b). ‘‘through the application of the best
interpretation is finalized, the CPP would be 7 Historically, this step is referred to as a
repealed. Although on-site efficiency measures may
system of emission reduction’’ also
‘‘technology review,’’ and leads to a level of control
be considered in a future CAA section 111 standard, ‘‘commonly referred to as best demonstrated keeps CAA section 111 in line with
as explained in the CPP, building block 1, as technology (BDT).’’ See Oil and Natural Gas Sector: other CAA standard-setting provisions.
analyzed, cannot stand on its own. 80 FR 64758 New Source Performance Standards and National The term ‘‘application’’ is used
n.444; see also id. at 64658 (discussing severability Emission Standards for Hazardous Air Pollutants
of the building blocks). As noted above, the EPA is Review, 76 FR 52738, 52741 (August 23, 2011);
throughout the statute in many different
not taking comment on on-site efficiency measures Regulating Greenhouse Gas Emissions Under the contexts. But under the CAA’s standard-
with this proposal. Clean Air Act, 73 FR 44354, 44486 (July 30, 2008). setting provisions, it signals a physical
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![48040 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules
or operational change to a source—for alternatives.’’ S. 4358, 6, 1970 CAA 95–654 (August 3, 1977), 1977 CAA
example, maximum achievable control Legis. Hist. at 555. Though the Senate’s Legis. Hist. at 510. Thus, as explained
technology (MACT) is developed formulation is broader than the House in the House report, the addition of the
‘‘through application of measures, bill, ‘‘other alternatives’’ should be word ‘‘technological’’ was intended to
processes, methods, systems or interpreted ejusdem generis (of the same prohibit sole reliance on a particular
techniques including, but not limited to, kind, class, or nature) with the control technique from being considered
measures which—(A) reduce the preceding control techniques. ‘‘Control the BSER. It was not an indication that
volume of, or eliminate emissions of, technology,’’ ‘‘processes,’’ and CAA section 111 previously authorized
such pollutants through process ‘‘operating methods’’ are properly read beyond-the-source controls. The
changes, substitution of materials or to denote measures applied at or to, and question of whether a control technique
other modifications, (B) enclose systems implementable at the level of, the or emission reduction system is or is not
or processes to eliminate emissions, (C) individual source—and ‘‘other ‘‘technological’’ is a distinct question
collect, capture or treat such pollutants alternatives’’ should be read in the same from whether it applies at and is limited
when released from a process, stack, fashion. Thus, the emission-reduction to the level of the individual source.
storage or fugitive emissions point, (D) measures contemplated by the Senate Though the 1990 CAA Amendments
are design, equipment, work practice, or also targeted a physical or operational removed the term ‘‘technological’’ from
operational standards . . . , or (E) are a change to the source itself. In short, both CAA section 111(a)(1), there is no
combination of the above;’’ 8 best bills were premised on physical or indication that Congress intended to
available control technology (BACT) is operational changes that would be expand the phrase ‘‘system of emission
developed ‘‘through application of applied to a source, and there is no reduction’’ beyond a physical or
production processes and available indication that the enacted phrase operational change to the source. With
methods, systems, and techniques, ‘‘system of emission reduction’’ was the newly enacted Acid Rain provisions
including fuel cleaning, clean fuels, or intended to expand the scope of CAA under title IV (which instituted a sulfur
treatment or innovative fuel combustion section 111 to authorize the EPA to dioxide (SO2) cap-and-trade program for
techniques for control;’’ 9 and motor determine that the BSER encompasses fossil fuel-fired power plants), Congress
vehicle and engine standards reflect the measures that extend beyond-the-source no longer required the use of
‘‘application of technology,’’ 10 and the itself.12 technological controls under CAA
‘‘application of the requisite control The 1977 CAA Amendments do not section 111, but provided that if the SO2
measures’’ to specific sources.11 In undermine this understanding. Congress cap for new sources was abolished, then
short, the term suggests that—while a added the word ‘‘technological’’ to CAA section 111 would again impose a
source’s owner or operator indeed ‘‘system of emission reduction’’ in order technological standard. 1990 CAA
implements each of these measures—the to ‘‘upgrade’’ standards of performance Amendments, Public Law 101–549, 403,
measures should be applied to the ‘‘to require the use of the best 104 Stat. at 2631 (November 15, 1990).
source itself (i.e., from the perspective technological system’’ and ‘‘preclude In effect, this authorized the EPA to
of the source and not its owner or the use of low-sulfur coal alone as a consider revising standards to once
operator). means of compliance.’’ 13 H.R. Rep. No. again allow new sources to use low-
sulfur coal in lieu of installing the latest
B. Legislative History 12 ‘‘System’’ appears in a few places in the 1970
technological control. But there is
CAA Amendments. Most notably, Congress used
Even if the term ‘‘application’’ did not the term throughout Title II, which sheds light on nothing in the statutory text or its
denote a source-oriented ‘‘system of what Congress may have understood ‘‘system’’ to legislative history to suggest that CAA
emission reduction,’’ the term ‘‘system’’ mean at the time. Specifically, section 202 of the section 111 standards may be based on
too is historically rooted in a physical CAA provided that ‘‘[s]uch standards shall be something other than a physical or
applicable to such vehicles and engines for their
or operational change to the source useful life . . . whether such vehicles and engines operational change to the source itself.
itself. As discussed in the CPP, CAA are designed as complete systems or incorporate
section 111(a)(1)—particularly the devices to prevent or control such pollution.’’ H.R.
C. Prior Agency Practice
phrase ‘‘system of emission Rep. No. 91–1783 (December 17, 1970), 1970 CAA Associating a ‘‘system of emission
Legis. Hist. at 166. See also, e.g., section 203, id.
reduction’’—evolved from a joint at 170 (‘‘for the purpose of permitting modifications
reduction’’ with a physical or
conference between committees of the to the emission control device or system of such operational change to the source itself
House and Senate during the 1970 CAA vehicle’’); section 206, id. (‘‘The Administrator shall
Amendments. 80 FR 64763–64. The test any emission control system incorporated in a merely applied to the source. 80 FR 64765; Legal
motor vehicle or motor vehicle engine’’ and ‘‘the Memorandum at 87, 129. First, Congress added
underlying House bill provided that Administrator shall issue a verification of ‘‘precombustion cleaning or treatment of fuels’’ to
new sources must be ‘‘designed and compliance with emission standards for such the definition of ‘‘technological system of
equipped’’ to control emissions using system when incorporated in vehicles’’). In each of continuous emission reduction’’ in CAA section
‘‘available technology.’’ H.R. Rep. No. these instances, the word ‘‘system’’ appears to be 111(a)(7) because Congress also redefined ‘‘standard
more expansive than a discrete emission control of performance’’ to require fossil fuel-fired power
91–1146 (June 3, 1970), 1970 CAA device, but is nonetheless a vital part of the source: plants to achieve ‘‘a percentage reduction in the
Legis. Hist. at 900; see also H.R. 17255, The vehicle or vehicle engine. It is evident, emissions . . . which would have resulted from the
5, 1970 CAA Legis. Hist. at 922. The therefore, that Congress associated the word use of fuels which are not subject to treatment prior
Senate bill provided that standards of ‘‘system’’ with phrases that correspond with a to combustion.’’ 1977 CAA Amendments, Public
source-specific scope. In CAA section 111, the word Law 95–95, 109, 91 Stat. 685, 700 (August 7, 1977).
performance reflect achievable limits ‘‘system’’ as used within the phrase ‘‘best system of Second, precombustion cleaning or treatment of
‘‘through application of the latest emission reduction’’ and its relevance in setting fuels is integral to the operation of a regulated
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available control technology, processes, standards of performance, which are themselves source and does not necessarily occur off-site of an
operating methods, or other established ‘‘for new sources’’ and ‘‘for any existing existing source. And regardless of where these
source,’’ similarly suggest that a ‘‘system of preparatory measures are conducted, the use of the
emission reduction’’ is applied to or at the source. fuels is a measure applicable to and performed at
8 42 U.S.C. 7412(d)(2). 13 In the CPP, the EPA explained that Congress the level of, and at or within, the bounds of an
9 42 U.S.C. 7479(e). added ‘‘precombustion cleaning or treatment of individual source. Finally, to the extent that fuel
10 42 U.S.C. 7521(a)(3)(A)(i) (applying technology
fuels’’ to CAA section 111 because it recognized cleaning does occur off-site, this demonstrates that
available by model year for mobile sources). that even technological ‘‘systems of emission Congress understood CAA section 111 to be limited
11 42 U.S.C. 7521(a)(3)(D) (concerning rebuilding reduction’’ could involve actions that were to source-specific measures unless specific
practices of heavy-duty engines). implemented on behalf of the source and not authorization was otherwise provided.
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![Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules 48041
reflects the EPA’s historical Agency’s emission guidelines will emission standards.17 The EPA believes
understanding of this statutory ordinarily be less stringent than those that the Agency’s historical
provision as reflected in its prior required by standards of performance interpretation of CAA section 111(d)
regulatory actions under this statutory for new sources because the costs of and the phrase ‘‘system of emission
provision. Indeed, the EPA has issued controlling existing facilities will reduction,’’ expressed at the point in
numerous rules under CAA section 111 ordinarily be greater than those for time closest to when Congress enacted
(both the limited set of existing source control of new sources.’’ 16 40 FR 53340, those provisions, is the most
rules under CAA section 111(d) and the 53341 (November 17, 1975) (emphases appropriate reading of the statute.
much larger set of new source rules added). The EPA also described the
D. Statutory Context
under CAA section 111(b)). All those legislative history of CAA section 111,
rules limited their BSER to physical or explaining that Congress ‘‘intended the The EPA’s proposed interpretation of
operational measures taken at and technology-based approach of that CAA section 111 is reinforced by the
applicable to individual sources, with section to extend (making allowances section’s broader statutory context.
only one exception—a rule that was for the costs of controlling existing Indeed, interpreting CAA section
vacated by the D.C. Circuit on other sources) to action under section 111(d). 111(a)(1) to extend beyond-the-source
grounds.14 In this view, it was unnecessary . . . to could have the unintended consequence
The EPA first interpreted the phrase specify explicit substantive criteria in of imposing greater emissions
‘‘system of emission reduction’’ as it section 111(d) because the intent to reductions under CAA section 111 than
relates to CAA section 111(d) when the require a technology-based approach could be established as the BACT under
Agency promulgated procedures and could be inferred from placement of the CAA section 165, which relies on CAA
requirements for the submittal of state provision in section 111.’’ Id. at 53342 section 111 standards as a floor.18 See 40
plans in 1975. At the time of the 1970 (emphases added); see also id. at 53343 CFR 52.21(b)(12); see also 40 CFR
CAA Amendments, CAA section 111(d) (‘‘[T]he approach taken in section 111(d) 51.165(a)(1)(xiii) (defining ‘‘lowest
required states to submit plans that may be viewed as . . . [a] decision[ ] achievable emission rate,’’ i.e., LAER, as
established ‘‘emission standards’’ for . . . [t]o adopt a technology-based in no event authorizing emissions ‘‘in
existing sources, a term that the statute approach similar to that for new excess of the amount allowable under
did not define. In its 1974 notice of sources.’’). Thus, in 1975, the EPA an applicable new source performance
proposed rulemaking, the EPA clearly interpreted the phrase ‘‘system standard’’). BACT requires certain major
interpreted that term by explaining that of emission reduction’’ to be emitting sources 19 to achieve an
CAA ‘‘section 111(d) permits [the technology-based and source-focused emission limitation ‘‘through
Administrator] to approve State for both CAA section 111(b) standards application of production processes and
emission standards only if they reflect of performance and CAA section 111(d) available methods, systems, and
application of the best systems of techniques, including fuel cleaning,
emission reduction (considering the cost 16 The EPA’s historical view that emission clean fuels, or treatment or innovative
of such reduction) that are available for guidelines for existing sources would be less fuel combustion techniques for control.’’
stringent than standards of performance for new 42 U.S.C. 7479(3). Traditionally, the
designated facilities.’’ 39 FR 36102, sources also weighs against the expansive
36102 (October 7, 1974) (emphasis interpretation of ‘‘system of emission reduction’’ EPA has recommended that permitting
added). By interpreting ‘‘emission adopted in the CPP. As many commenters on that
rule pointed out, the EPA’s approach in the CPP, 17 Additionally, the EPA historically equated the
standards’’ as requiring application of relying on measures beyond those that can be phrase ‘‘system of emission reduction’’ with the
the BSER, however, many commenters applied to and at an individual source, resulted in CAA’s ‘‘best available retrofit technology’’ (BART)
were confused and assumed that the the uniform performance rates prescribed by the requirement. See 45 FR 80084, 80090 (December 2,
degree of control required would be the CAA section 111(d) emission guidelines being more 1980) (codified at 40 CFR 51.301) (defining BART
stringent than the standards of performance the as an ‘‘emission limitation based on the degree of
same as that required by a ‘‘standard of Agency promulgated for new sources under CAA reduction achievable through the application of the
performance’’ for new sources under section 111(b). 80 FR 64785–87. We justified this best system of continuous emission reduction for
CAA section 111(b), which Congress result in two primary ways. First, we pointed out each pollutant which is emitted by an existing
the timing differences between the two rules’ stationary facility’’). While the EPA’s BART
had explicitly defined in that way.15 To requirements, noting that the CAA section 111(b) regulations permit states, subject to certain
clear up this confusion, the EPA standards of performance were applicable as of the conditions, to implement trading programs and
explained that, ‘‘[a]lthough the general date of the proposed rule, whereas the CPP’s other ‘‘alternative’’ measures in lieu of BART, see
principle (application of best adequately requirements were not applicable until 7 years after 40 CFR 51.308(e)(2), these measures are not
promulgation, with final compliance due in 2030.
demonstrated technology, considering considered to be BART. Instead, states may adopt
Id. at 64785. Thus, we concluded that the proper
them ‘‘rather than requiring sources to install,
costs) will be the same in both cases, the ‘‘point of comparison’’ was the year 2023, right after
operate, and maintain BART,’’ but only if they will
degrees of control represented by the the first obligations under the CPP were due and the
achieve ‘‘greater reasonable progress’’ toward
Agency’s 8-year review of the CAA section 111(b)
Congress’s national visibility goal. Id. (emphasis
standards would be complete. Id. Second, we
14 The Clean Air Mercury Rule, 70 FR 28606 (May added).
argued that the CPP contained sufficient
18, 2005), as discussed in footnote 21, was still flexibilities, both for sources and for states, that any
18 Although BACT applies to new and modified
ultimately predicated on measures taken at the level comparison between the two rules was inapt. Id. at sources, like CAA section 111(b), the EPA can
of individual sources, an approach fundamentally 64785–86. The EPA has reconsidered these discern no textual basis in CAA section 111(a)(1) to
different than the CPP’s second and third ‘‘building arguments and now considers them insufficient interpret the BSER differently for purposes of CAA
blocks.’’ justification for abandoning the Agency’s historical section 111(d). Indeed, the EPA ruled out
15 Currently, the same statutory definition in CAA
view of the appropriate relative stringency of CAA generation-shifting measures for new sources based
section 111(a)(1) applies to new and existing section 111(b) and 111(d) requirements. With on practicability rather than legal grounds. See
sources, and we can identify no legislative history respect to timing, it is entirely speculative that Legal Memorandum at 1–5. Accordingly,
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to suggest that Congress had a different scope in some future standard of performance promulgated interpretative constraints applicable to CAA section
mind for existing sources. We think it unlikely that under CAA section 111(b) might be more stringent 111(a)(1) for purposes of CAA section 111(b) should
Congress would have intended a significantly than the current CAA section 111(d) emission also apply for purposes of CAA section 111(d).
broader scope without indicating some intent to do guidelines. And while the CPP does contain certain 19 42 U.S.C. 7479(1) (defining ‘‘major emitting
so. Indeed, the opposite may be true. In 1977, flexibilities to ease the burdens of compliance, such facility’’ as sources within certain source categories
Congress expressly declined to apply the term as phased-in compliance deadlines, those ‘‘which emit, or have the potential to emit, one
‘‘technological’’ to existing source performance flexibilities were only necessary because actual hundred tons per year or more of any air pollutant’’
standards. But after the 1990 CAA Amendments, affected sources could not meet the overly stringent or ‘‘any other source with the potential to emit two
the same definition applies to new and existing uniform performance rates (or the equivalent rate- hundred and fifty tons per year or more of any air
source performance standards. or mass-based goals) without them. pollutant.’’).
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![48044 Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules
accounting framework treats the value The first approach calculates PM- RIA and the AEO2017 cases. As the RIA
of reduced electricity demand from related premature deaths at all levels of analyzes costs and benefits applying a
demand-side energy efficiency programs PM2.5. We then present two alternative variety of different methods and
as a cost credit (or negative cost). approaches: (a) Forgone PM2.5 co- discount rates, there is a relatively large
However, the EPA was unable to benefits fall to zero in areas whose number of results.
approximate the value of energy cost model-predicted air quality is at or In the decision-making process,
savings attributable to the demand-side below the annual average PM2.5 NAAQS because, in part, of the interactions
energy efficiency measures using the of 12 mg/m3 in the year 2025; and (b) mentioned below, it is useful to
AEO2017-based information. Because forgone PM2.5 co-benefits fall to zero the consider the benefits due to reductions
the EPA could not make this adjustment below the LML in the epidemiological in the target pollutant relative to the
to the benefits and costs estimates using studies used to derive the concentration costs, and whether alternative
the AEO2017 information, the 2015 CPP response function (8 and 5.8 mg/m3). To regulatory designs can achieve
RIA-based and AEO2017-based benefit calculate the forgone co-benefits for this
reductions in the targeted pollutants
and cost estimates cannot be directly proposed rule, we applied a benefit-per-
and/or the other affected pollutants
compared with each other. ton estimate corresponding to broad
We estimate the forgone climate more cost effectively. The EPA believes
regions of the U.S. and that is based
benefits from this proposed rulemaking that this may be an appropriate way to
upon an emissions reduction scenario
using a measure of the domestic social evaluate this and future regulatory
from the 2014 CPP proposal to the
cost of carbon (SC–CO2), using estimates actions, and presents this information as
corresponding forgone emission
of forgone CO2 emission reductions part of its decision-making process.23
reductions. As the benefit-per-ton
from both the 2015 RIA and the Therefore, in Tables 1 and 2 we present
estimates are based on a scenario that
AEO2017 cases. The SC–CO2 is a metric a comparison of the forgone benefits
does not match the forgone emission
that estimates the monetary value of reductions in this rulemaking, the from the targeted pollutant—CO2—(the
impacts associated with marginal estimates may over- or under-state the costs of this proposed rule) with the
changes in CO2 emissions in a given value of the forgone PM2.5 and ozone- avoided compliance cost (the benefits of
year. The SC–CO2 estimates used in this related benefits. To the extent feasible, this proposed rule).24
RIA focus on the direct impacts of the EPA intends to perform full-scale Regulating pollutants jointly can
climate change that are anticipated to photochemical air quality modeling to promote a more efficient outcome in
occur within U.S. borders. As inform subsequent CPP-related pollution control management.
mentioned earlier, the EPA regulatory analyses. Additionally, as However, in practice regulations are
approximated the value of energy cost part of a project now underway, the EPA promulgated sequentially and therefore,
savings from the reduced demand is systematically evaluating the the benefit-cost analyses supporting
attributable to the demand-side energy uncertainty associated with its those regulations are also performed
efficiency measures and this value is technique for generating and applying sequentially. The potential for
counted as a forgone benefit. Also, this reduced-form technique for interaction between regulations suggests
under this proposed repeal, the CPP quantifying benefits, with the goal of that their sequencing may affect the
would no longer reduce emissions of better understanding the suitability of realized efficiency of their design and
certain precursor pollutants (e.g., SO2, this and comparable approaches to the estimated net benefits for each
NOX, and directly emitted particles), estimating the health impacts of criteria regulation. To note, when considering
which in turn would no longer lower pollutant emissions changes. The EPA whether a regulatory action is a
ambient concentrations of PM2.5 and will make drafts of these analysis potential welfare improvement it is
ozone. The RIA presents the estimated available to the public at the time of necessary to consider all impacts of the
forgone health co-benefits associated peer review, consistent with OMB’s action. The EPA requests comment on
with the projected changes in ambient Information Quality Bulletin for Peer the extent that the EPA should rely on
air quality under the CPP. We estimate Review. consideration of the benefits due to
the forgone benefits using three The co-benefit analysis draws upon reductions in the target pollutant
alternative assumptions regarding the estimates of forgone SO2 and NOX relative to the costs in the decision-
risk of PM-related premature death. emission reductions from both the 2015 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 Net benefits
Discount Avoided demand-side
domestic associated
Year rate compliance energy
climate with targeted
(%) costs efficiency
benefits pollutant
benefits
Rate-Based
2020 ..................................................................................... 3 $3.7 $0.4 $1.2 $2.1
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7 4.2 0.1 1.2 2.9
2025 ..................................................................................... 3 10.2 1.4 9.2 (0.4)
23 Cf. Transcript of Oral Argument at 64:1–6, the different—quite different limitations on EPA reductions been achieved through other means,
Michigan v. EPA, 135 Sup. Ct. 2699 (2015) (No. 14– that apply in the criteria program.’’). then they would have been represented in the
46) (statement of Roberts, C.J.) (‘‘[I]t’s a good thing 24 Excluded from this comparison are the forgone baseline for this proposed repeal (as well as for the
if your regulation also benefits in other ways. But benefits from the SO2 and NOX emission reductions 2015 Final CPP), which would have affected the
when it’s such a disproportion, you begin to that were also projected to accompany the CO2 estimated costs and benefits of controlling CO2
wonder whether it’s an illegitimate way of avoiding reductions. However, had those SO2 and NOX emissions alone.
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![Federal Register / Vol. 82, No. 198 / Monday, October 16, 2017 / Proposed Rules 48049
how energy efficiency programs may height, atmospheric conditions, and addition, past research has suggested
have been adopted under the CPP. dispersion patterns. Therefore, the that involuntary job loss may increase
However, the EPA does not know how distribution of forgone benefits is highly risks to health, of substance abuse, and
states would have implemented those uncertain. Also expected, as a result of even of mortality. These adverse
programs and, therefore, the impact of the CPP, were shifts in regional impacts may be avoided with the
those program on low-income workforces, particularly in the proposed repeal of the CPP.
households. The overall distribution of electricity, coal, and natural gas sectors.
the avoided compliance costs associated While employment effects are not V. Statutory Authority
with this action is uncertain, but may experienced uniformly across the
result in lower household energy bills population and may be offset by new The statutory authority for this action
for low-income households. opportunities in different sectors, is provided by sections 111, 301, 302,
With respect to the forgone benefits localized impacts could have adversely and 307(d)(1)(V) of the CAA, as
associated with this action, the EPA affected individuals and their amended (42 U.S.C. 7411, 7601, 7602,
conducted a proximity analysis for the communities. Workers losing jobs in 7607(d)(1)(V)). This action is also
CPP which showed a higher percentage regions or occupations with weak labor subject to section 307(d) of the CAA (42
of low-income and minority households markets would have been most U.S.C. 7607(d)).
living in proximity to EGUs that may vulnerable. With limited re-employment Dated: October 10, 2017.
have reduced emissions under the CPP. opportunities, or if new employment
E. Scott Pruitt,
These communities may experience offered lower earnings, then
forgone benefits as a result of this unemployed workers could face Administrator.
action. However, any changes in extended periods without work, or [FR Doc. 2017–22349 Filed 10–13–17; 8:45 am]
ambient air quality depends on stack permanently reduced future earnings. In BILLING CODE 6560–50–P
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Document Created: 2017-10-14 01:42:47
Document Modified: 2017-10-14 01:42:47
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed rule. | |
| Dates | Comments. Comments must be received on or before December 15, 2017. | |
| 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; | |
| FR Citation | 82 FR 48035 | |
| RIN Number | 2060-AT55 |
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