[Senate Report 114-159]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 283
                                                       
114th Congress  }                                      {   Report
                                 SENATE
 1st Session    }                                      {  114-159

======================================================================



 
            AFFORDABLE RELIABLE ELECTRICITY NOW ACT OF 2015

                                _______
                                

                October 29, 2015.--Ordered to be printed

                                _______
                                

    Mr. Inhofe, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                         [To accompany S. 1324]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred the bill (S. 1324) to require the Administrator of the 
Environmental Protection Agency to fulfill certain requirements 
before regulating standards of performance for new, modified, 
reconstructed fossil fuel-fired electric utility generating 
units, and for other purposes, having considered the same, 
reports favorably thereon without amendment and recommends that 
the bill do pass.

                    General Statement and Background

    On June 25, 2013, President Obama announced his ``Climate 
Action Plan'' which provided three main categories of action: 
cut carbon emissions in America, prepare the U.S. for the 
impacts of climate change, and lead international efforts to 
address global climate change. As a part to this plan, the 
President issued an Executive Order directing the EPA to set 
standards of emissions reductions for new and existing fossil 
fuel-fired power plants.
    New Source Performance Standard: On September 20, 2013, the 
EPA re-proposed CO2 emissions limits for new power 
plants. The proposal, entitled ``Standards of Performance for 
Greenhouse Gas Emissions for New Stationary Sources: Electric 
Utility Generation Units'' would limit emissions from coal-
fired power plants to 1,100 pounds (lbs) of CO2 per 
mega-watt hour (MWh) and either 1,000 or 1,100 lbs per MWh at 
natural gas-fired power plants. The average coal plant emits 
2,249 lbs of CO2 per MWh.
    The proposed New Source Performance Standard (NSPS) was 
published in the Federal Register January 8, 2014, and had a 
120-day comment period. EPA received around 2 million comments 
and missed the finalization deadline, which was January 8, 
2015. EPA issued a press release stating the agency planned to 
finalize the NSPS rule by ``mid-summer.''
    Existing Source Performance Standard: On June 2, 2014, the 
EPA proposed a rule to limit CO2 emissions from 
existing power plants, entitled ``Emission Guidelines for 
Existing Stationary Sources: Electric Generating Units,'' 
referred to by the agency as the ``Clean Power Plan.'' The 
proposal set emission rate targets each state would be required 
to meet in an interim period from 2020 to 2029 and a final 
target to be met by 2030. Using 2012 CO2 emissions 
as a baseline, the proposal's stated goal was to reduce U.S. 
greenhouse gas (GHG) emissions by 30% when compared to 2005 
levels.
    The EPA calculated a state's emissions reduction target 
based on 4 main assumptions, referred to by the agency as 
``building blocks,'' that ranged from heat-rate efficiency 
improvements to expansion of certain low and zero-emitting 
power sources, primarily renewables, to demand-side efficiency 
programs. EPA proposed to give states a one-year deadline to 
submit implementation plans with a possible one or two year 
extension.
    The agency held a 165-day comment period for the proposed 
Existing Source Performance Standard (ESPS), which received 
over 4 million public comments. On January 7, 2015, EPA 
announced it would publish the existing plant final rule by 
``midsummer'' along with the new plant final rule and a model 
Federal Implementation Plan (FIP).
    Modified and Reconstructed Sources: On June 2, 2014, the 
EPA also announced a proposal to limit CO2 from 
modified and reconstructed power plants. The proposal sets the 
qualifying standards by which any qualifying modification or 
reconstruction made at an existing plant would require 
compliance with an emission standard based on a combination of 
best operating practices and equipment upgrades. After a 120-
day comment period, the proposal received 235 public comments.
    Final Carbon Rules: On August 3, 2015, the EPA announced a 
prepublication version of the final carbon standards for new, 
modified, reconstructed, and existing power plants. While the 
final rules, and primarily the existing source standard, 
represent a significant revision of the proposed rules, many of 
the technical, legal and procedural concerns remain. Further, 
the agency has announced it will not formally publish the final 
rules until ``mid to late October'' delaying both legal and 
certain legislative challenges.
    Stakeholder Concerns and Legal Status of Carbon Rules: The 
agency has embarked on an unprecedented misuse of the Clean Air 
Act (CAA) to perpetuate a presidential agenda that could not be 
achieved legislatively. The agency attempts to use creative 
legal arguments that would vastly expand EPA's authority under 
section 111 of the CAA. A diverse and expansive list of 
impacted stakeholders has expressed serious concerns over the 
proposed and final carbon rules. These concerns have led to 
multiple legal challenges at both the state and federal level 
that raise basic technical concerns and questions regarding 
procedural integrity of our regulatory system.
    The New Source Proposal. To comply with the proposed and 
final carbon standard, a newly constructed coal-fired power 
plant would have to install carbon capture and storage (CCS) 
technology. CCS is in the early stages of development and has 
yet to be proven on a commercial scale. Given the infancy of 
CCS technology, the agency failed to meet basic legal standards 
required under section 111--that the system of emission 
reduction be ``adequately demonstrated.''
    Counter to restrictions in the Energy Policy Act of 2005, 
the agency cites three U.S. CCS projects heavily reliant on 
government support through the Department of Energy's Clean 
Coal Power Initiative as proof that CCS is a demonstrated 
technology. Because of the government support, these projects 
cannot be used to make that demonstration. Further, since the 
new source standard was initially proposed, only one of the 
three U.S.-based projects continues today after DOE decided to 
pull support from the California and Illinois projects.
    Beyond legal obstacles, numerous technical experts agree 
CCS is neither technically feasible nor viable. Many experts 
have testified before House and Senate committees, including an 
October 2013 hearing before the House Committee on Science, 
Space, and Technology where DOE's former Assistant Secretary 
for Fossil Energy, Charles D. McConnell, testified that ``it is 
disingenuous to state that the technology is ready.'' In 
January 2015, the National Coal Council released a study 
assessing the state of CCS in response to a request from DOE 
Secretary Moniz. The study concluded that ``the DOE CCS/CCUS 
program has not yet achieved critical mass'' and ``without 
adequate demonstration there can be no commercialization.'' 
Requiring use of a technology that is not available amounts to 
a de facto ban on new coal plant construction in the U.S.
    The Existing Source Standard: Given significant legal 
concerns raised by the proposed and now final rule, the 
existing source standard has been subject to numerous 
challenges. A basic threshold issue is whether EPA has 
authority to proceed with the rules under Section 111(d) at 
all. Per the express language of the U.S. Code, EPA is 
precluded from regulating existing power plants under Section 
111 because they are already subject to the EPA's Mercury and 
Air Toxics Standard under section 112.
    EPA's existing source standard is also counter to the 
limited historic application of authority under 111(d). Since 
the establishment of the CAA, section 111 has only been 
successfully used five times. Previous uses assigned emission 
reduction responsibility to a specified source. In contrast, 
under the power plant existing source standard, the agency 
attempts a drastic expansion of authority ``beyond the source'' 
or ``beyond the fence-line'' resulting in federal regulatory 
control over energy generation, dispatch and use.
    The rule intrudes on state authority and undermines the 
concept of cooperative federalism whereby states and the 
federal government are meant to work as partners to achieve 
environmental objectives. Per the Federal Power Act, states 
have exclusive jurisdiction over intrastate electricity 
matters. Under the existing source rule, the EPA is attempting 
to regulate a state's entire electricity industry, from 
generation to consumption, thereby undermining the states 
longstanding autonomy over such matters. If a state chooses to 
submit a State Implementation Plan (SIP) it would cede to EPA 
approval authority over matters traditionally set by state 
legislatures, including renewable portfolio standards, building 
codes, and energy efficiency standards. Such actions raise 
additional questions about how EPA plans to enforce plans that 
address areas where EPA lacks institutional expertise and legal 
authority. In addition to state intrusion, the existing source 
standard potentially complicates the prerogatives of the 
Federal Energy Regulatory Commission (FERC), which is charged 
with primary regulatory jurisdiction over the interstate 
transmission of electricity.
    Beyond the legal arguments, technical experts at the local 
and state level have expressed concerns over the practical 
application of the existing source standard. Compliance would 
force a rapid and unnatural restructuring of local energy 
systems undermining grid reliability at exorbitant costs. A 
significant amount of existing coal-fired generation would be 
shut down. Separate analyses by the EPA and the Energy 
Information Administration estimate fifty gigawatts would 
retire, with the majority of retirements occurring well before 
the 2030 final deadline. Of further concern in both the 
proposed and final versions of the rule is that this massive 
reduction in reliable electricity generation is expected to 
largely be replaced by intermittent renewable generation, like 
wind. During the proposed version's comment period, numerous 
stakeholders raised concerns about reliability including the 
Southwest Power Pool, which warned the rule would cause 
``cascading outages'' and ``voltage collapse.''
    Alongside reduced reliability, the existing source standard 
comes at a high compliance cost and will increase the price of 
electricity. In the proposed version, EPA estimated costs to 
range from $5.5 billion to $8.8 with a four to seven percent 
increase in retail electricity prices on average. Other 
estimates place costs at a much higher range of $366 to $479 
billion with double digit electricity price increases occurring 
in over 43 states.\1\
---------------------------------------------------------------------------
    \1\NERA Economic Consulting, ``Potential Energy Impacts of the EPA 
Proposed Clean Power Plan,'' October 2014 available at http://
www.nera.com/content/dam/nera/publications/2014/
NERA_ACCCE_CPP_Final_10.17.2014.pdf
---------------------------------------------------------------------------
    Committee experts testified that such increases would be 
especially harmful to low and fixed-income households that 
already spend a larger portion of their household budgets on 
energy costs.\2\ Various analyses and surveys have found that 
in the face of increased energy costs, these household make 
decisions adverse to their own health and welfare including 
foregoing food, prescription use and medical care.\3\ At a 
hearing before the Clean Air and Nuclear Safety Subcommittee on 
June 23, 2015, the President of the Black Chamber of Commerce 
also testified that increased energy costs are particularly 
harmful to minority communities. The existing source rule alone 
would increase Black poverty by 23% and increase Hispanic 
poverty by 26%. Unemployment rates of Blacks and Hispanics 
would increase with an estimated loss of nearly 200,000 jobs 
held by Black workers and more than 300,000 jobs held by 
Hispanic workers.
---------------------------------------------------------------------------
    \2\See Testimony of Eugene Trisko, available at http://
www.epw.senate.gov/public/>cache/files/4204e97b-87b8-4629-ab45-
ac55d475fd36/spw-062315.pdf
    \3\Id.
---------------------------------------------------------------------------
    Such technical, procedural and legal shortcomings are why 
32 states opposed the proposed rule and sixteen states 
alongside leading industry stakeholders brought multiple 
challenges. The final rule was published in the Federal 
Register on October 23, 2015, a total of 81 days after it was 
initially announced. The publication date initiated an influx 
of legal petitions against the rules, including challenges by 
over half the states.
    There are also numerous concerns from stakeholders 
regarding limited opportunities to meaningfully participate in 
the regulatory process. The final rules evolved from a 
settlement agreement that limited substantive involvement to a 
select group of environmental activists and some state and 
local governments. In the rush to comply with the arbitrary 
deadlines, the agency deviated from established policies and 
circumvented transparency laws and basic public participation 
requirements. The ensuing technical, legal and policy 
challenges are the result of the one-sided and insular approach 
used to develop these regulations.
    Initial findings of an ongoing Committee investigation into 
the role environmental activist organizations played in EPA's 
rulemaking process further solidified these concerns. 
Preliminary findings were documented in a 72-page Majority 
Staff Report on August, 4, 2015, entitled ``Obama's Carbon 
Mandate: An Account of Collusion, Cutting Corners, and Costing 
Americans Billions.''
    Finally, while the existing source standard is being 
labeled as the core component of the President's domestic 
climate agenda, the EPA failed to measure whether it would 
produce any meaningful environmental benefits. Industry 
analysis using EPA's numbers and methods, found that 
CO2 concentrations would be reduced by less than 0.5 
percent, global temperature rise would be reduced by 0.016 
degrees Fahrenheit, and sea level rise would be reduced by the 
thickness of three sheets of paper.\4\ For the final rule, the 
same analysis found CO2 concentrations would be 
reduced by 0.2 percent, global temperature would be reduced by 
0.01 degrees Fahrenheit and sea level reduced would be reduced 
by the thickness of two human hairs.\5\ Even more concerning is 
that the CO2 reductions achieved over the 11-year 
life of the existing source rule would be rendered pointless by 
a few months of CO2 emissions in China.\6\
---------------------------------------------------------------------------
    \4\American Coalition for Clean Coal Electricity, ``Climate Effects 
of EPA's Proposed Carbon Regulations,'' June 2014, available at: http:/
/www.americaspower.org/sites/default/files/
Climate%20Effects%20Issue%20Paper%20June%202014.pdf
    \5\American Coalition for Clean Coal Electricity, ``Climate Effects 
of EPA's Final Clean Power Plan,'' August 2015, available at: http://
americaspower.org/sites/default/files/Climate-Effects- Paper-August-6-
2015.pdf
    \6\See Testimony of Stephen Eule on behalf of the U.S. Chamber, 
June 2015 available at https://www.uschamber.com/sites/default/files/
150624_steveeule_ testimony_eia_analysis_ 
of_epa_clean_power_plan_house_science_sbcmt.pdf
---------------------------------------------------------------------------

                     Objectives of the Legislation

    Given the range of technical, procedural and legal concerns 
regarding the President's carbon mandates, S. 1324 repeals the 
final rules and sets forth new requirements the agency must 
follow in setting replacement standards under section 111. The 
bill reinstates balance and a range of protections for impacted 
stakeholders through the following provisions.
    First, S. 1324 requires EPA set standards for new, modified 
and reconstructed plants based on existing technology. In 
particular, the bill requires that any new technology be used 
for at least 12-months at 6 separate power facilities 
throughout the country. The bill also prevents the EPA from 
using any demonstration projects--projects that are reliant on 
federal support as specified in the Energy Policy Act of 2005--
from being used to set the standard.
    Second, S. 1324 requires EPA to measure the environmental 
impacts of any proposed standards. Specifically, the bill 
requires EPA to submit a report to Congress that includes 
projected domestic and global GHG reductions alongside measured 
impacts on any associated ``climate indicators.''
    Third, the S. 1324 prevents EPA from mandating a one-size-
fits-all approach to compliance. The bill requires EPA issue 
state-specific model plans that account for a state's energy 
needs, existing infrastructure and local laws.
    Fourth, S. 1324 extends compliance dates. The bill would 
extend deadlines for compliance, including deadlines for state 
plan submissions, until after any legal challenges raised 
during the first 60 days of Federal Register publication have 
been resolved.
    Fifth, S. 1324 provides a safe harbor for states to protect 
their ratepayers. The bill prevents a state from being forced 
to implement a SIP or FIP that the state's governor determines 
would negatively impact economic growth, negatively impact the 
reliability of their electricity system, or negatively impact 
electricity costs for ratepayers.
    Sixth, S. 1324 prevents highway fund sanctions for 
noncompliance. The bill would prevent the EPA from withholding 
highway funds from any state that chooses to forego or opt-out 
of standards set under section 111.
    Finally, S. 1324 restates existing law. Existing power 
plants are already subject to regulation under the Mercury and 
Air Toxics rule. The Clean Air Act explicitly prevents this 
type of double regulation. This is a restatement of existing 
law to prevent EPA from attempting to rewrite the law to 
support their illegal and unprecedented actions.
    Despite the multitude of concerns raised by stakeholders 
regarding basic legal authority, costs, reliability and 
stakeholder input, the agency is pushing forward with its now 
final rules and associated deadlines. States have already and 
will continue to be forced to assess and develop a plan of 
action for rules that were developed with limited state 
involvement, lack basic legal backing, and will cause harm to 
their local communities. However these plans of action are 
characterized, they will be extremely complex and require 
significant time and resource investment.

                      Section-by-Section Analysis


Section 1. Short title

    This section designates the title of the bill as the 
``Affordable Reliable Electricity Now Act of 2015''

Section 2. Definitions

    This section defines ``Administrator'' as the Administrator 
of the Environmental Protection Agency; ``Demonstration 
project'' as a project to test or demonstrate the feasibility 
of carbon capture and storage technologies that have received 
government funding or financial assistance; ``Existing Source'' 
as the meaning given the term in section 111(a) of the Clean 
Air Act; ``Greenhouse gas'' as any of the following: carbon 
dioxide, methane, nitrous oxide, sulfur hexafluoride, 
hydrofluorocarbons or perfluorocarbons; ``Modification'' as the 
meaning given the term in section 111(a) of the Clean Air Act; 
``Modified Source'' as a stationary source that undergoes a 
modification after enactment of this Act; ``New source'' as the 
meaning given such term in CAA section 111(a); and 
``Reconstructed Source'' as any stationary source that 
undergoes reconstruction as defined in section 60.15 of title 
40, Code of Federal Regulations after the date of enactment of 
this Act.

Section 3. Standards of performance for new, modified, and 
        reconstructed fossil fuel--fired electric utility generating 
        units

    This section provides direction relating to the 
establishment of standards for new, modified, and reconstructed 
fossil fuel-fired electricity generating units (EGUs). This 
section provides that the EPA Administrator must establish 
separate source categories for new EGUs fueled with coal and 
natural gas. This section also provides that for any fossil 
fuel-fired electric generating units, the EPA Administrator may 
not set a standard unless it has been achieved for a continuous 
12-month period by at least 6 EGUs located at different power 
plants in the United States, which EGUs collectively are 
representative of the operating characteristics of EGUs at 
different locations in the U.S. and which have operated for the 
entire 12-month period on a full commercial basis. This section 
sets a subcategory for EGUs fueled by lignite coal and 
restricts standards based on results from a demonstration 
project.

Section 4. Standards of performance for existing fossil fuel-fired 
        electric utility generating units, compliance extension, and 
        ratepayer protection

    This section provides direction relating to the 
establishment of standards for existing fossil fuel-fired 
electricity generating units (EGUs). This section provides that 
the Administrator must submit a report to Congress describing 
the quantity of projected GHG emissions reductions and 
assessing the impacts of a rule to EPA's climate indicators. 
The section further requires EPA to issue state-specific model 
plans, extends compliance dates until legal questions are 
resolved, and allows States to opt-out of compliance if the 
rule would have negative impacts on economic growth, 
reliability or result in electricity rate increases.

Section 5. Limitation on effect of noncompliance

    This section provides that noncompliance by a State with 
any proposed, modified, or final rule described within shall 
not be subject to highway sanctions under Section 179(b)(1) of 
the Clean Air Act.

Section 6. Repeal of earlier rules and guidelines

    This section provides that the EPA's proposed standards for 
new, modified and reconstructed, and existing fossil fuel-fired 
EGUs, and any substantially similar rules that do not meet the 
requirements of the Act, are of no force and effect.

Section 7. Restatement of existing law

    This section provides a restatement of existing law that 
existing sources regulated under section 112 of the Clean Air 
Act are precluded from being regulated under Section 111 of the 
Clean Air Act.

                          Legislative History

    On May 13, 2015, Senator Capito, introduced S. 1324, the 
ARENA Act. Senators Inhofe, Manchin, Alexander, Barrasso, 
Blunt, Boozman, Cassidy, Coats, Cornyn, Cotton, Crapo, Cruz, 
Daines, Enzi, Fischer, Hoeven, Isakson, McConnell, Paul, 
Perdue, Risch, Roberts, Rounds, Thune, Tillis and Wicker were 
original cosponsors of the legislation. The bill was referred 
to the Senate Committee on Environment and Public Works.
    On August 5, 2015, the Senate Committee on Environment and 
Public Works conducted a business meeting to consider S. 1324. 
The bill, as amended, was favorably reported out of Committee 
by voice vote.

                                Hearings

    During the 114th Congress, the Committee held three full 
committee hearings and two subcommittee hearings to conduct 
oversight and hear from stakeholders regarding concerns related 
to the proposed and now final carbon emission standards.
    2/11/2015 Full Committee Hearing: ``Examining EPA's 
proposed carbon dioxide emissions rules from new, modified, and 
existing power plants''
    3/11/2015 Full Committee Hearing: ``Examining State 
Perspectives of the EPA's proposed carbon dioxide emissions 
rule for existing power Plants''
    3/23/2015 Full Committee Field Hearing: ``Regional Impacts 
of EPA Carbon Regulations: The Case of West Virginia''
    5/5/2015 Subcommittee on Clean Air and Nuclear Safety 
Hearing: ``Legal Implications of the Clean Power Plan''
    6/23/2015 Subcommittee on Clean Air and Nuclear Safety 
Hearing: ``The Impacts of EPA's proposed Carbon Regulations on 
Energy Costs for American Businesses, Rural Communities and 
Families, and a legislative hearing on S. 1324''

                             Rollcall Votes

    The Committee on Environment and Public Works met to 
consider S. 1324 on August 5, 2015.
    The committee did not agree to an amendment by Senator 
Merkley by a rollcall vote of 9 ayes, 11 nays, and 0 not 
voting. Voting in favor were Senators Booker, Boxer, Cardin, 
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse. 
Voting against the amendment were Senators Barrasso, Boozman, 
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, 
Vitter and Wicker.
    The committee did not agree to an amendment by Senator 
Whitehouse by a rollcall vote of 9 ayes, 11 nays, and 0 not 
voting. Voting in favor were Senators Booker, Boxer, Cardin, 
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse. 
Voting against the amendment were Senators Barrasso, Boozman, 
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, 
Vitter and Wicker.
    The committee did not agree to an amendment by Senator 
Markey by a rollcall vote of 9 ayes, 11 nays, and 0 not voting. 
Voting in favor were Senators Booker, Boxer, Cardin, Carper, 
Gillibrand, Markey, Merkley, Sanders and Whitehouse. Voting 
against the amendment were Senators Barrasso, Boozman, Capito, 
Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, Vitter and 
Wicker.
    The committee did not agree to another amendment by Senator 
Markey by a rollcall vote of 9 ayes, 11 nays, and 0 not voting. 
Voting in favor were Senators Booker, Boxer, Cardin, Carper, 
Gillibrand, Markey, Merkley, Sanders and Whitehouse. Voting 
against the amendment were Senators Barrasso, Boozman, Capito, 
Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, Vitter and 
Wicker.
    The committee did not agree to an amendment by Senator 
Gillibrand by a rollcall vote of 9 ayes, 11 nays, and 0 not 
voting. Voting in favor were Senators Booker, Boxer, Cardin, 
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse. 
Voting against the amendment were Senators Barrasso, Boozman, 
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, 
Vitter and Wicker.
    The committee did not agree to another amendment by Senator 
Whitehouse by a rollcall vote of 9 ayes, 11 nays, and 0 not 
voting. Voting in favor were Senators Booker, Boxer, Cardin, 
Carper, Gillibrand, Markey, Merkley, Sanders and Whitehouse. 
Voting against the amendment were Senators Barrasso, Boozman, 
Capito, Crapo, Fischer, Inhofe, Rounds, Sessions, Sullivan, 
Vitter and Wicker.
    The Committee on Environment and Public Works ordered S. 
1324 reported favorably to the Senate by voice vote with a 
quorum present.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee makes evaluation of 
the regulatory impact of the reported bill. The committee finds 
that S. 1324 does not create any additional regulatory burdens, 
nor will it cause any adverse impact on the personal privacy of 
individuals.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee note that the Congressional 
Budget Office found, `S. 1324 contains no intergovernmental or 
private-sector mandates as defined in the Unfunded Mandates 
Reform Act.'

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:

                                                   October 8, 2015.
Hon. Jim Inhofe,
Chairman, Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1324, the Affordable 
Reliable Electricity Now Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman and Jon Sperl.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

S. 1324--Affordable Reliable Electricity Now Act of 2015

    S. 1324 would repeal or require changes to rules and 
guidelines issued by the Environmental Protection Agency (EPA) 
that address greenhouse gas emissions from power plants that 
use fossil fuels. Under the bill, before proposing any new 
rules or guidance related to those emissions, EPA would need to 
meet certain standards and follow certain procedures. Final 
rules that would be affected by this legislation include:
     Standards of Performance for Greenhouse Gas 
Emissions from New, Modified, and Reconstructed Stationary 
Sources: Electric Utility Generating Units, signed by the 
Environmental Protection Agency on August 3, 2015;
     Standards of Performance for Greenhouse Gas 
Emissions from New Stationary Sources: Electric Utility 
Generating Units, published in the Federal Register on January 
8, 2014;
     Carbon Pollution Emission Guidelines for Existing 
Stationary Sources: Electric Utility Generating Units, 
published in the Federal Register on June 18, 2014; and
     Carbon Pollution Emission Guidelines for Existing 
Stationary Sources: EGUs in Indian Country and U.S. 
Territories; Multi-Jurisdictional Partnerships, published in 
the Federal Register on November 4, 2014.
    Before developing any rules or guidance for existing power 
plants, the legislation would require EPA to provide a report 
to the Congress that describes the level of emissions 
reductions a rule is projected to achieve both globally and 
domestically, conduct modeling of the effect of the rule on 
climate indicators, and issue state-specific plans for 
reductions in greenhouse gas emissions.
    In addition, when developing any rules or guidance for 
power plants that are new, modified or reconstructed, this 
legislation would require EPA to create separate categories for 
power plants that use natural gas as a fuel source and for 
power plants that use coal as a fuel source, and to base any 
new emissions standards on actual emissions levels achieved by 
at least six different electric generating units across the 
United States when operating for a continuous 12-month period. 
CBO expects that under S. 1324, EPA would likely propose a new 
rule for carbon emissions from new, modified, and reconstructed 
power plants, consistent with the requirements of this 
legislation.
    The bill would not prohibit EPA from continuing to work on 
activities related to power plants, such as developing guidance 
and providing technical assistance to states. Based on 
information from EPA, CBO estimates that implementing this 
legislation would not have a significant effect on EPA's 
workload or spending related to power plant emissions.
    Enacting S. 1324 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 1324 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    The CBO staff contacts for this estimate are Susanne S. 
Mehlman and Jon Sperl. The estimate was approved by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

MINORITY VIEWS OF BOXER, CARPER, CARDIN, SANDERS, WHITEHOUSE, MERKLEY, 
   GILLIBRAND, BOOKER, AND MARKEY ON S. 1324, AS REPORTED BY THE EPW 
                               COMMITTEE

    Power plants are the largest source of the nation's harmful 
carbon pollution, accounting for nearly 31% of U.S. greenhouse 
gas emissions. The final Clean Power Plan standard that 
President Obama announced on August 3, 2015 is the first rule 
to limit the amount of carbon pollution that can be released 
into the air from existing power plants. On August 3, 2015, 
President Obama also announced final standards for carbon 
pollution from new, modified, and reconstructed power plants 
(NSPS).
    When it is fully implemented in 2030, the final Clean Power 
Plan will cut emissions from power plants 32% below 2005 
levels. In addition, the Clean Power Plan will increase the 
percentage of our electricity generating capacity from 
renewables to 28% in 2030.
    S. 1324 blocks implementation of the President's Clean 
Power Plan and the standards for new, modified, and 
reconstructed power plants. Furthermore, the bill allows states 
to opt out of complying with any future plan. The bill creates 
giant loopholes that make it nearly impossible to take any 
meaningful action to address climate change and reduce harmful 
carbon pollution from power plants. Turning away from the 
President's Clean Power Plan, as S. 1324 would do, would not 
only move us toward the most devastating impacts of climate 
change, but hurt the health of the American people.
    S. 1324 would block the climate pollution reductions and 
public health benefits of the Clean Power Plan and it would 
alter the Clean Air Act in several significant and harmful 
ways:
          Place new restrictions on the ability of the 
        Environmental Protection Agency (EPA) to issue any 
        carbon pollution standards for both new and existing 
        power plants;
          Repeal all previous EPA proposals and rules 
        controlling carbon pollution from new, modified, and 
        existing power plants;
          Change the way EPA is able to regulate new 
        power plants by limiting the technologies EPA can 
        consider in setting the standards;
          Alter the Clean Air Act by allowing states to 
        opt out of any new climate rule under Section 111 for 
        existing power plants;
          Delay any new carbon regulation from being 
        implemented until all the lawsuits are resolved--which 
        could take a number of years; and
          Alter the Clean Air Act to require EPA to 
        take a ``pick your poison'' approach by prohibiting EPA 
        from regulating power plants for both air toxics, such 
        as mercury, and carbon pollution.
    Letters opposing this bill from dozens of public health, 
business, environmental, and religious groups were entered into 
the record at the legislative hearing. These letters criticized 
the damaging changes to the Clean Air Act that would result 
from S. 1324 and highlighted the benefits of the Clean Power 
Plan, which are addressed below.

                          THE CLEAN POWER PLAN

Public health benefits
    The Clean Power Plan will deliver important health benefits 
for our families in 2030 and every year after. By cutting the 
air pollutants that are emitted along with climate pollution 
the Clean Power Plan will avoid:
          3,600 premature deaths;
          1,700 heart attacks;
          90,000 asthma attacks; and
          300,000 missed workdays and schooldays by 
        2030.
    In addition, for every dollar invested through the Clean 
Power Plan, American families will see up to $4 in health 
benefits from the soot and smog pollution reductions achieved.
Employment
    The EPA estimates that the Clean Power Plan will create 
thousands of jobs, including jobs in the energy efficiency 
field. The final plan includes the Clean Energy Incentive 
Program (CEIP), which incentivizes early expansion of 
renewables and investment in energy efficiency. This program 
will help accelerate job growth in those important sectors. EPA 
estimates that improving demand-side energy efficiency will 
create approximately 53,000 to 84,000 jobs in 2025 and about 
52,000 to 83,000 jobs in 2030.
Consumer savings and benefits to low-income communities
    The Clean Power Plan will lower household electricity bills 
by encouraging energy efficiency. By 2030, the EPA estimates 
families will save, on average, $85 a year. There will also be 
benefits for low-income communities through the CEIP, which 
prioritizes early investment in energy efficiency projects in 
low-income communities. In addition, implementation of the plan 
will accelerate the development of clean, renewable energy and 
reduce pollution from power plants, which has a 
disproportionate negative effect on low-income, minority 
communities.
    According to a statement issued by the NAACP on August 4, 
2015:

          ``Power plants are the country's single biggest 
        source of carbon pollution-responsible for up to 40% of 
        the country's emissions of greenhouse gases. According 
        to the plan, these measures will reduce the pollutants 
        that contribute to life-threatening soot and smog by 
        70% which would have significant implications for 
        communities of color. Three out of every four African 
        Americans live within 30 miles of a coal-fired power 
        plant. These communities are disproportionately 
        represented among those with respiratory illnesses, 
        such as lung cancer and pulmonary disease. In fact, 
        African American children are 3 times more likely to be 
        admitted to the hospital for an asthma attack and twice 
        as likely to die of asthma.''

    The NAACP Director of Environment and Climate Justice 
specifically addressed the harms of carbon pollution to 
minorities and low-income communities:

          ``We stridently refute the contentions of those who 
        have used an equity and civil rights frame to oppose 
        regulations on carbon pollution by claiming undue cost 
        burden on vulnerable communities. The cost these 
        communities are paying from their close proximity to 
        polluting plants and from choking down toxins daily is 
        the toll that compromised health, negative educational 
        outcomes and challenged work performance takes on 
        community well-being and growth potential. Still others 
        see the devastating climate change impacts from 
        pollution including disasters, rising sea levels, and 
        decreasing availability of affordable nutritious foods, 
        all of which disproportionately affect our most 
        vulnerable communities.''\1\
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    \1\(August 4, 2015). NAACP Statement on President Obama's Clean 
Power Plan. National Association for the Advancement of Colored People. 
Retrieved from http://www.naacp.org/press/entry/naacp-statement-on-
president-obamas-clean-power-plan.
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Economic benefits outweigh costs
    The EPA estimates that the combined health and climate 
benefits of the Clean Power Plan in 2030 are worth an estimated 
$34 billion to $54 billion. These benefits far outweigh the 
estimated costs of $8.4 billion. As it has with other Clean Air 
Act regulations, industry has made extreme claims about the 
costs of the proposed rule. The U.S. Chamber of Commerce 
analysis of the proposed rule, which provides the basis for 
industry's criticism of the rule, has been roundly criticized 
as it applied to the proposed rule; it is not relevant to the 
final rule.\2\
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    \2\(August 26, 2015). Why Media Should Stop Citing NERA's Flawed 
Study on the EPA Climate Plan. Media Matters for America. Retrieved 
from http://mediamatters.org/research/2015/08/26/why-media-should-stop-
citing-neras-flawed-study/205177.
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Broad public support for the Clean Power Plan
    The final Clean Power Plan drew strong support from a broad 
range of religious organizations and public health groups\3\ 
and is strongly supported by voters. An August 2015 poll shows 
60% of voters support the plan, while just 31% oppose it. 
``[T]hose who strongly support this plan outnumber those who 
strongly oppose it by eight percentage points (27% to 
19%).''\4\ Another poll from August 2015 shows that 59% of 
voters say states should move forward and develop a plan to cut 
carbon pollution from power plants.\5\
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    \3\See, e.g., (August 3, 2015). APHA applauds the Clean Power Plan. 
American Public Health Association. Retrieved from http://www.apha.org/
news-and-media/news-releases/apha-news-releases/apha-applauds-the-
clean-power-plan; (August 3, 2015). National Religious Organizations 
Praise Clean Power Plan. The National Religious Partnership for the 
Environment. Retrieved from http://www.nrpe.org/uploads/2/4/4/7/
24473122/nrpe_cpp_release_august_2015.pdf.
    \4\(August 13, 2015). Support for the Clean Power Plan. Hart 
Research Associates and Chesapeake Beach Consulting. Retrieved from 
http://www.lcv.org/issues/polling/clean-power-plan-poll.pdf.
    \5\(August 4, 2015). Americans Strongly In Favor of Plan to Limit 
Carbon Emissions. Public Policy Polling. Retrieved from http://
aufc.3cdn.net/ae95ea4da2c00733cc_9am6ib5ns.pdf.
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    The opposition to the proposed rule has been overstated and 
claims that 32 states opposed the proposed rule have been 
refuted.\6\ States, including some that express concern with 
the rule, (MI, GA, ND, MT) are moving forward with developing 
their plans.\7\
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    \6\Doniger, D. (March 11, 2015). 32 States, What? Senator Inhofe's 
Fuzzy Math on States and EPA. Retrieved from http://
switchboard.nrdc.org/blogs/ddoniger/
32_states_what_senator_inhofes.html.
    \7\See, e.g., http://www.eenews.net/interactive/clean_power_plan/
states/montana.
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The Clean Power Plan reflects an inclusive process and incorporates 
        public comments

    EPA received more than 4.3 million comments on the proposed 
Clean Power Plan. The final rule differs from the proposal in 
several significant ways that address issues raised in the 
comments. The final rule affords states additional time to 
submit State Implementation Plans to EPA, providing up to 3 
years rather than 1-2 years. States also have additional time 
to begin making reductions in emissions--the initial compliance 
date is now 2022 instead of 2020. The final rule also provides 
for a more gradual phase-in of reductions to avoid concerns 
about the steep reductions in the proposed rule.

Flexibility for states to implement the Clean Power Plan

    In the Clean Power Plan, EPA establishes specific goals for 
each state to reduce the carbon pollution from its power 
producing system based on separate standards for both gas and 
coal-fired plants. Each state is given broad flexibility on how 
it will meet its state-specific goal. Various approaches range 
from improving the efficiency of existing coal and natural gas 
power plants, expanding the use of renewable energy, 
implementing emissions trading plans, increasing energy 
efficiency, upgrading transmission, or including nuclear and 
hydropower uprates in their plans.
    The final rule also gives states two options for developing 
their plans--rate-based goals which apply to each power plant 
in the state or mass-based goals which set an emissions target 
for the state. These options allow states to customize a path 
forward for achieving reductions in carbon pollution. Finally, 
the CEIP encourages investment in energy efficiency in low 
income communities and the development of renewable energy that 
will begin generating power between 2020 and 2022, which will 
enable states to generate credits toward compliance.
    EPA also issued a draft Federal Implementation plan that 
states can use to guide the development of their own plans.

Reliability is addressed in the Clean Power Plan

    Climate change is a threat to the reliability of our 
electricity system. According to the Department of Energy 
(DOE), severe weather is the number one cause of power outages 
in the U.S. and costs the economy billions of dollars a year in 
lost output and wages, spoiled inventory, delayed production, 
inconvenience and damage to grid infrastructure. Between 2003 
and 2012, roughly 679 power outages, each affecting at least 
50,000 customers, occurred due to weather events.\8\
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    \8\(August 2013). Economic Benefits of Increasing Grid Resilience 
to Weather Outages. Executive Office of the President. Retrieved from 
http://energy.gov/sites/prod/files/2013/08/f2/
Grid%20Resiliency%20Report--FINAL.pdf.
---------------------------------------------------------------------------
    The Clean Power Plan includes several provisions that are 
intended to ensure reliability of the nation's electricity 
supply as states implement the rule. Some of the changes in the 
final rule, such as starting reductions in 2022 and the 
flexibility states and utilities have to plan for and achieve 
reductions, including trading and multi-state approaches to 
achieve emissions reductions, will ensure that compliance with 
the rule provides reliable electricity. In addition, state 
plans must consider reliability and the final rule allows 
states to revise a plan if there is an unanticipated or 
significant reliability challenge that arises. Further, the 
rule includes a ``safety valve'' provision in the final rule 
for emergency situations.
    Along with the final rule EPA issued a memo of coordination 
with DOE and the Federal Energy Regulatory Commission (FERC). 
This memo describes steps that will be taken to ensure reliable 
electricity generation and transmission as the Clean Power Plan 
is implemented and provides for ongoing communication and 
cooperation between EPA, DOE and FERC.

   FINAL STANDARDS FOR NEW, MODIFIED, AND RECONSTRUCTED POWER PLANTS

    On August 3, 2015, the EPA also issued final standards for 
new, modified or reconstructed power plants under section 
111(b) of the Clean Air Act. This rule complements the Clean 
Power Plan by setting carbon pollution standards for new coal 
or gas fired plants as well as modified or reconstructed plants 
that require the application of the best system of emission 
reduction (BSER).
    Given that the Clean Air Act calls for standards for new 
plants to be technology forcing, the final standard for new 
coal plants is based on partial carbon capture and storage 
(CCS) technology as BSER. CCS technology is being utilized at 
facilities in Canada and the U.S.\9\ According to EPA, the 
final rule is consistent with the current investment trends in 
the industry and the standards ``are not expected to have 
notable costs and are not projected to impact electricity 
prices or reliability.''\10\
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    \9\Duffy, J., & Weeks, A. (June 15, 2015). Let's Go EPA--Remain 
Strong on Power Plant Rules. Clean Air Task Force. Retrieved from 
http://www.catf.us/blogs/ahead/2015/06/15/lets-go-epa-remain-strong-on-
power-; see also (July 10, 2015). Technical Support Document. 
Environmental Protection Agency. Retrieved from http://www3.epa.gov/
airquality/cpp/tsd-cps-literature-survey-carbon-capture-technology.pdf.
    \10\EPA Fact Sheet: Carbon Pollution Standards, http://
www3.epa.gov/airquality/cpp/fs-cps-overview.pdf.
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             LEGAL AUTHORITY FOR CARBON POLLUTION STANDARDS

    Both the Clean Power Plan and the final standards for new, 
modified, and reconstructed power plants are promulgated 
pursuant to EPA's established authority under the Clean Air Act 
to regulate carbon pollution. The U.S. Supreme Court has ruled 
three times in support of EPA's legal authority to control 
carbon pollution under existing law. In 2007, the Supreme Court 
confirmed in Massachusetts v. EPA that the Clean Air Act 
covered carbon pollution. Four years later, the Supreme Court 
in American Electric Power v. Connecticut, specifically found 
that the Clean Air Act has provisions (Section 111) in place to 
limit carbon pollution from power plants--the very provisions 
EPA is using in its proposed existing power plant carbon 
standards. Lastly, on June 23, 2014, the Supreme Court in 
Utility Air Resources Group v. EPA again confirmed that the 
Clean Air Act covers carbon pollution. The case upheld EPA's 
rules requiring that if an individual industrial source needs a 
pre-construction air permit (known as a PSD permit) because of 
the amount of conventional air pollutants it will emit, EPA can 
require that the same source consider how it will also best 
control carbon pollution.

                          AMENDMENTS TO S.1324

    During markup, as noted in the Rollcall Votes section 
above, the Committee considered six amendments that addressed 
the impacts of climate change, the need to ensure the benefits 
of implementing the Clean Power Plan, the need for federal 
action, as well as the need to express the sense of the Senate 
regarding the science of climate change.
    Each amendment was rejected on a party line vote of 9 yeas 
and 11 nays.
    Senator Markey offered an amendment that recognized the 
significant public health benefits that will come with 
implementation of the Clean Power Plan, including the 
prevention of 3,600 premature deaths, 90,000 asthma attacks, 
and the avoidance of 300,000 missed days of work or school. The 
amendment stated that S. 1324 does not take effect before a 
plan is in place to achieve the health benefits created by the 
Clean Power Plan. All of the Republicans voted against the 
amendment; the amendment was defeated.
    Senator Markey offered another amendment to ensure S. 1324 
would not apply if the bill has a negative impact on clean 
energy jobs. The EPA estimates that the Clean Power Plan will 
create thousands of jobs, and in particular EPA estimates that 
improving demand-side energy efficiency will create the need 
for about 53,000 to 84,000 jobs in 2025 and about 52,000 to 
83,000 jobs in 2030. All of the Republicans voted against the 
amendment; the amendment was defeated.
    Senators Gillibrand and Markey offered an amendment 
recognizing that climate change is a threat to our coasts as 
sea levels rise. The American Meteorological Society issued its 
State of the Climate in 2014 Report noting that numerous key 
climate change indicators were at or near record levels in 
2014, including a record high for sea levels--2.5 inches above 
1993 levels. The amendment prohibited the Act from taking 
effect if its implementation contributes to an increase in sea 
level rise and coastal erosion. All of the Republicans voted 
against the amendment; the amendment was defeated.
    Senator Merkley offered an amendment to express the sense 
of the Senate that climate change is real and due to human 
activity. The amendment recognized that leading scientists 
worldwide, as well as our own government experts at NASA and 
NOAA, tell us that climate change is real and that human 
activity is causing it. In addition, the amendment recognized 
that the climate change impacts that scientists predicted years 
ago are happening now, including record heat, droughts, 
wildfires, storms, and sea ice melt. All of the Republicans 
voted against the amendment; the amendment was defeated.
    Senator Whitehouse offered an amendment to create a new 
findings section in S. 1324 stating the sense of the Senate 
that climate change is real and not a hoax, and human activity 
significantly contributes to it; and the federal government has 
a responsibility to act. According to a Washington Post-ABC 
poll, a bipartisan majority of the American people want federal 
limits on carbon pollution. Approximately 70 percent say the 
federal government should require limits on carbon pollution 
from existing power plants, and 70 percent support requiring 
states to limit the amount of carbon pollution within their 
borders. Further, 97% of scientists agree human activity is 
leading to dangerous climate change that threatens our 
families. All of the Republicans voted against the amendment; 
the amendment was defeated.
    The second amendment offered by Senator Whitehouse would 
have required the federal government to have another program or 
legislative proposal in place that would reduce carbon 
pollution by at least as much as the EPA's power plant rules 
before the Act can take effect. When the Clean Power Plan is 
fully implemented it will cut carbon pollution from the power 
sector by 32%. These reductions are an essential element of 
President Obama's Climate Action Plan and this amendment would 
require an alternative plan to be in place to secure equivalent 
reductions. All of the Republicans voted against the amendment; 
the amendment was defeated.

                                   Barbara Boxer.
                                   Thomas Carper.
                                   Benjamin Cardin.
                                   Bernard Sanders.
                                   Sheldon Whitehouse.
                                   Jeff Merkley.
                                   Kirsten Gillibrand.
                                   Cory Booker.
                                   Edward Markey.

                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill 
as reported are shown as follows: Existing law proposed to be 
omitted is enclosed in [black brackets], new matter is printed 
in italic, existing law in which no change is proposed is shown 
in roman:

           *       *       *       *       *       *       *


                             CLEAN AIR ACT


          standards of performance for new stationary sources

  Sec. 111. (a) For purposes of this section:
          (1)* * *

           *       *       *       *       *       *       *

  [(d)(1) The Administrator]
  (d) Standards of Performance for Existing Sources; Remaining 
Useful Life of Source.--
          (1) In general.--The Administrator ;shall prescribe 
        regulations which shall establish a procedure similar 
        to that provided by section 110 under which each State 
        shall submit to the Administrator a plan which (A) 
        establishes standards of performance for any existing 
        source for any air pollutant (i) for which air quality 
        criteria have not been issued or which is not included 
        on a list published under [section 108(a) [or emitted 
        from a source category which is regulated under section 
        112][or 112(b)]\24\ but]section 108(a) or emitted from 
        a source category that is regulated under section 112, 
        but (ii) to which a standard of performance under this 
        section would apply if such existing source were a new 
        source, and (B) provides for the implementation and 
        enforcement of such standards of performance. 
        Regulations of the Administrator under this paragraph 
        shall permit the State in applying a standard of 
        performance to any particular source under a plan 
        submitted under this paragraph to take into 
        consideration, among other factors, the remaining 
        useful life of the existing source to which such 
        standard applies.
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    \24\US Code executes the amendment as follows: ``(1) The 
Administrator shall prescribe regulations which shall establish a 
procedure similar to that provided by section 7410 of this title under 
which each State shall submit to the Administrator a plan which (A) 
establishes standards of performance for any existing source for any 
air pollutant (i) for which air quality criteria have not been issued 
or which is not included on a list published under section 7408(a) of 
this title or emitted from a source category which is regulated under 
section 7412 of this title but (ii) to which a standard of performance 
under this section would apply if such existing source were a new 
source, and (B) provides for the implementation and enforcement of such 
standards of performance. Regulations of the Administrator under this 
paragraph shall permit the State in applying a standard of performance 
to any particular source under a plan submitted under this paragraph to 
take into consideration, among other factors, the remaining useful life 
of the existing source to which such standard applies.'' 42 USC 
7411(d)(1).
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  [(2) The Administrator]
  (2) Authority of the administrator.--The Administrator shall 
have the same authority--
          (A) to prescribe a plan for a State in cases where 
        the State fails to submit a satisfactory plan as he 
        would have under section 110(c) in the case of failure 
        to submit an implementation plan, and
          (B) to enforce the provisions of such plan in cases 
        where the State fails to enforce them as he would have 
        under sections 113 and 114 with respect to an 
        implementation plan. [In promulgating a standard]
          (3) Considerations.--In promulgating a standard of 
        performance under a plan prescribed under this 
        paragraph, the Administrator shall take into 
        consideration, among other factors, remaining useful 
        lives of the sources in the category of sources to 
        which such standard applies.
          (4) Prohibition.--The Administrator shall not 
        regulate as an existing source under this subsection 
        any source category regulated under section 112.