[Federal Register Volume 83, Number 170 (Friday, August 31, 2018)]
[Proposed Rules]
[Pages 44746-44813]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18755]



[[Page 44745]]

Vol. 83

Friday,

No. 170

August 31, 2018

Part III





Environmental Protection Agency





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40 CFR Parts 51, 52, and 60





Emission Guidelines for Greenhouse Gas Emissions From Existing Electric 
Utility Generating Units; Revisions to Emission Guideline Implementing 
Regulations; Revisions to New Source Review Program; Proposed Rule

  Federal Register / Vol. 83 , No. 170 / Friday, August 31, 2018 / 
Proposed Rules  

[[Page 44746]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 51, 52, and 60

[EPA-HQ-OAR-2017-0355; FRL-9982-89-OAR]
RIN 2060-AT67


Emission Guidelines for Greenhouse Gas Emissions From Existing 
Electric Utility Generating Units; Revisions to Emission Guideline 
Implementing Regulations; Revisions to New Source Review Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing three 
distinct actions, including Emission Guidelines for Greenhouse Gas 
Emissions from Existing Electric Utility Generating Units (EGUs). 
First, EPA is proposing to replace the Clean Power Plan (CPP) with 
revised emissions guidelines (the Affordable Clean Energy (ACE) rule) 
that inform the development, submittal, and implementation of state 
plans to reduce greenhouse gas (GHG) emission from certain EGUs. In the 
proposed emissions guidelines, consistent with the interpretation 
described in the proposed repeal of the CPP, the Agency is proposing to 
determine that heat rate improvement (HRI) measures are the best system 
of emission reduction (BSER) for existing coal-fired EGUs. Second, EPA 
is proposing new regulations that provide direction to both EPA and the 
states on the implementation of emission guidelines. The new proposed 
implementing regulations would apply to this action and any future 
emission guideline issued under section 111(d) of the Clean Air Act 
(CAA). Third, the Agency is proposing revisions to the New Source 
Review (NSR) program that will help prevent NSR from being a barrier to 
the implementation of efficiency projects at EGUs.

DATES: 
    Comments. Comments must be received on or before October 30, 2018. 
Under the Paperwork Reduction Act (PRA), comments on the information 
collection provisions are best assured of consideration if the Office 
of Management and Budget (OMB) receives a copy of your comments on or 
before October 1, 2018.
    Public hearing: EPA is planning to hold at least one public hearing 
in response to this proposed action. Information about the hearing, 
including location, date, and time, along with instructions on how to 
register to speak at the hearing, will be published in a second Federal 
Register document.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No. 
EPA-HQ-OAR-2017-0355, at https://www.regulations.gov. Follow the online 
instructions for submitting comments. Once submitted, comments cannot 
be edited or removed from Regulations.gov. See SUPPLEMENTARY 
INFORMATION for detail about how EPA treats submitted comments. 
Regulations.gov is our preferred method of receiving comments.\1\ 
However, other submission methods are accepted:
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    \1\ Comments submitted on the proposed repeal will be considered 
in the promulgation of this rulemaking so there is no need to 
resubmit comments that have already been timely submitted.
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     Email: [email protected]. Include Docket ID No. EPA-
HQ-OAR-2017-0355 in the subject line of the message.
     Fax: (202) 566-9744. Attention Docket ID No. EPA-HQ-OAR-
2017-0355.
     Mail: To ship or send mail via the United States Postal 
Service, use the following address: U.S. Environmental Protection 
Agency, EPA Docket Center, Docket ID No. EPA-HQ-OAR-2017-0355, Mail 
Code 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460.
     Hand/Courier Delivery: Use the following Docket Center 
address if you are using express mail, commercial delivery, hand 
delivery, or courier: EPA Docket Center, EPA WJC West Building, Room 
3334, 1301 Constitution Avenue NW, Washington, DC 20004. Delivery 
verification signatures will be available only during regular business 
hours.

FOR FURTHER INFORMATION CONTACT: For questions about this proposed 
action, contact Mr. Nicholas Swanson, Sector Policies and Programs 
Division (Mail Code D205-01), Office of Air Quality Planning and 
Standards, U.S. Environmental Protection Agency, Research Triangle 
Park, North Carolina 27711; telephone number: (919) 541-4080; fax 
number: (919) 541-4991; and email address: [email protected].

SUPPLEMENTARY INFORMATION: 
    Docket. EPA has established a docket for this rulemaking under 
Docket ID No. EPA-HQ-OAR-2017-0355. All documents in the docket are 
listed in Regulations.gov. Although listed, some information is not 
publicly available, e.g., confidential business information (CBI) or 
other information whose disclosure is restricted by statute. Certain 
other material, such as copyrighted material, is not placed on the 
internet and will be publicly available only in hard copy. Publicly 
available docket materials are available either electronically in 
Regulations.gov or in hard copy at the EPA Docket Center, Room 3334, 
EPA WJC West Building, 1301 Constitution Avenue NW, Washington, DC. The 
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through 
Friday, excluding legal 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.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2017-0355. EPA's policy is that all comments received will be included 
in the public docket without change and may be made available online at 
https://www.regulations.gov, including any personal information 
provided, unless the comment includes information claimed to be CBI or 
other information whose disclosure is restricted by statute. Do not 
submit information that you consider to be CBI or otherwise protected 
through https://www.regulations.gov or email. This type of information 
should be submitted by mail as discussed below.
    EPA may publish any comment received to its public docket. 
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. 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.
    The https://www.regulations.gov website allows you to submit your 
comments anonymously, which means 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 EPA without going through 
https://www.regulations.gov, your email address will be automatically 
captured 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, EPA recommends that you include your name and other 
contact information in the body of your comment and with any

[[Page 44747]]

digital storage media you submit. If EPA cannot read your comment due 
to technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment. Electronic files should not 
include special characters or any form of encryption and be free of any 
defects or viruses. For additional information about EPA's public 
docket, visit the EPA Docket Center homepage at https://www.epa.gov/dockets.
    Throughout this proposal, EPA is soliciting comment on numerous 
aspects of the proposed rule. EPA has indexed each comment solicitation 
with an alpha-numeric identifier (e.g., ``C-1'', ``C-2'', ``C-3'', . . 
.). EPA included similar identifiers in the advance notice of proposed 
rulemaking (ANPRM) and asked commenters to identify the main topic area 
that corresponded with their comment. In this proposal, we are 
modifying this approach to include a unique identifier for each 
individual comment solicitation to provide a consistent framework for 
effective and efficient provision of comments.
    Accordingly, we ask that commenters include the corresponding 
identifier when providing comments relevant to that comment 
solicitation. We ask that commenters include the identifier in either a 
heading, or within the text of each comment (e.g., ``In response to 
solicitation of comment C-1, . . .'') to make clear which comment 
solicitation is being addressed. We emphasize that we are not limiting 
comment to these identified areas and encourage provision of any other 
comments relevant to this proposal.
    Submitting CBI. Do not submit information containing CBI to EPA 
through https://www.regulations.gov or email. Clearly mark the part or 
all of the information that you claim to be CBI. For CBI information on 
any digital storage media that you mail to EPA, mark the outside of the 
digital storage media as CBI and then identify electronically within 
the digital storage media the specific information that is claimed as 
CBI. In addition to one complete version of the comments that includes 
information claimed as CBI, you must submit a copy of the comments that 
does not contain the information claimed as CBI directly to the public 
docket through the procedures outlined in Instructions above. If you 
submit any digital storage media that does not contain CBI, mark the 
outside of the digital storage media clearly that it does not contain 
CBI. Information not marked as CBI will be included in the public 
docket and the EPA's electronic public docket without prior notice. 
Information marked as CBI will not be disclosed except in accordance 
with procedures set forth in 40 Code of Federal Regulations (CFR) part 
2. Send or deliver information identified as CBI only to the following 
address: OAQPS Document Control Officer (C404-02), OAQPS, U.S. 
Environmental Protection Agency, Research Triangle Park, North Carolina 
27711, Attention Docket ID No. EPA-HQ-OAR-2017-0355.
    Preamble acronyms and abbreviations. We use multiple acronyms and 
terms in this preamble. While this list may not be exhaustive, to ease 
the reading of this preamble and for reference purposes, EPA defines 
the following terms and acronyms here:

ACE Affordable Clean Energy Rule
AEO Annual Energy Outlook
ANPRM Advance Notice of Proposed Rulemaking
BACT Best Available Control Technology
BSER Best System of Emission Reduction
Btu British Thermal Unit
CAA Clean Air Act
CBI Confidential Business Information
CCS Carbon Capture and Storage (or Sequestration)
CFR Code of Federal Regulation
CO2 Carbon Dioxide
CPP Clean Power Plan
EGU Electric Utility Generating Unit
EIA Energy Information Administration
EPA Environmental Protection Agency
FIP Federal Implementation Plan
FR Federal Register
GHG Greenhouse Gas
HRI Heat Rate Improvement
IGCC Integrated Gasification Combined Cycle
kW Kilowatt
kWh Kilowatt-hour
MW Megawatt
MWh Megawatt-hour
NAAQS National Ambient Air Quality Standards
NGCC Natural Gas Combined Cycle
NOX Nitrogen Oxides
NSPS New Source Performance Standards
NSR New Source Review
OMB Office of Management and Budget
PM2.5 Fine Particulate Matter
PRA Paperwork Reduction Act
PSD Prevention of Significant Deterioration
RIA Regulatory Impact Analysis
RTC Response to Comments
SIP State Implementation Plan
SO2 Sulfur Dioxide
UMRA Unfunded Mandates Reform Act of 1995
U.S. United States
VFD Variable Frequency Drive

    Organization of this document. The information in this preamble is 
organized as follows:

I. General Information
    A. Executive Summary
    B. Where can I get a copy of this document and other related 
information?
II. Background
    A. Regulatory and Judicial History of GHG Requirements for EGUs
    B. Executive Order 13783 and EPA's Review of the CPP
    C. Industry Trends
III. Legal Authority
    A. Authority to Revisit Existing Regulations
    B. Authority to Regulate EGUs
    C. Legal Authority for Determination of the BSER
IV. Affected Sources
V. Determination of the BSER
    A. Identification of the BSER
    B. HRIs for Steam-Generating EGUs
    C. HRI for Natural Gas-fired Stationary Combustion Turbines
    D. Other Considered Systems of GHG Emission Reductions
VI. State Plan Development
    A. Establishing Standards of Performance
    B. Flexibilities for States and Sources
    C. Submission of State Plans
VII. Proposed New Implementing Regulations for Section 111(d) 
Emission Guidelines
    A. Changes to the Definition of ``Emission Guideline''
    B. Updates to Timing Requirements
    C. Compliance Deadlines
    D. Completeness Criteria
    E. Standard of Performance
    F. Variance
VIII. New Source Review Permitting of HRIs
    A. What is New Source Review?
    B. Interaction of NSR and the ACE Rule
    C. ANPRM Solicitation and Comments Received
    D. Proposing NSR Changes for Improved ACE Implementation
IX. Impacts
    A. What are the air impacts?
    B. What are the energy impacts?
    C. What are the compliance costs?
    D. What are the economic and employment impacts?
    E. What are the forgone benefits of the proposed action?
X. 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
XI. Statutory Authority

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I. General Information

A. Executive Summary

    EPA is proposing the Affordable Clean Energy (ACE) rule as a 
replacement to the CPP (promulgated on October 23, 2015, 80 FR 64662), 
which sets GHG emission guidelines for existing EGUs. This proposal 
relies in part on the legal analysis presented in the CPP repeal that 
was proposed on October 16, 2017, 82 FR 48035. In the proposed repeal, 
EPA asserted that the BSER in the CPP exceeded EPA's authority because 
it established the BSER using measures that applied to the power sector 
as whole, rather than measures that apply at and to, and can be carried 
out at the level of, individual facilities. This proposed action aligns 
with EPA's statutory authority and obligation because, as EPA has done 
in the dozens of NSPSs issued to date, the BSER is to be determined by 
evaluating technologies or systems of emission reduction that are 
applicable to, at, and on the premises of the facility for an affected 
source. This proposal will ensure that coal-fired power plants (the 
most carbon dioxide (CO2) intensive portion of the 
electricity generating fleet) address their contribution to climate 
change by reducing their CO2 intensity (i.e., the amount of 
CO2 they emit per unit of electricity generated).
    Accordingly, the proposed ACE rule consists of three discrete 
sections. First, EPA is proposing to determine the BSER for existing 
EGUs based on HRI measures that can be applied at an affected source. 
EPA also proposes a corresponding emission guideline clarifying the 
roles of EPA and the states under CAA section 111(d). EPA's primary 
role in implementing CAA section 111(d) is to provide emission 
guidelines that inform the development, submittal, and implementation 
of state plans, and to subsequently determine whether submitted state 
plans are approvable. Per the CAA, once EPA publishes a final emission 
guideline, states have the primary role of developing standards of 
performance consistent with application of the BSER. Congress also 
expressly required that EPA allow states to consider source-specific 
factors--including, among other factors, the remaining useful life of 
the affected source--in applying a standard of performance. In this 
way, the state and federal roles complement each other as EPA has the 
authority and responsibility to determine a nationally applicable BSER 
while the states have the authority and responsibility to establish and 
apply existing source standards of performance, in consideration of 
source-specific factors.
    Second, EPA is proposing new implementing regulations that apply to 
this action and any future emission guidelines promulgated under CAA 
section 111(d). The purpose of proposing new implementing regulations 
is to harmonize our 40 CFR part 60 subpart B regulations with the 
statute by making it clear that states have broad discretion in 
establishing and applying emissions standards consistent with the BSER. 
The discussion for the proposed revisions is found in Section VII 
below.
    Third, EPA is proposing to give the owners/operators of EGUs more 
latitude to make the efficiency improvements that are consistent with 
EPA's proposed BSER without triggering onerous and costly NSR permit 
requirements. This change will allow states, in establishing standards 
of performance, to consider HRIs that would otherwise not be cost-
effective due to the burdens incurred from triggering NSR. The 
discussion of this issue is included in Section VII.
    As with other regulations of this nature, this notice concludes 
with a summary of the impacts of this proposal and is supported by a 
Regulatory Impact Analysis (RIA) that can be found in the docket for 
this action. As reported in the RIA, EPA evaluated three illustrative 
policy scenarios modeling HRI at coal-fired EGUs. EPA estimates that 
there are cost savings under two of the three illustrative scenarios, 
with average annual compliance costs ranging from a cost savings of 
about $0.5 billion to a cost of about $0.3 billion. As noted 
previously, this action is preceded by a proposed repeal of the CPP.\2\ 
That proposal included a detailed legal analysis demonstrating that 
``building blocks'' two and three of the CPP exceeded EPA's authority. 
That analysis is incorporated into this proposal. Because two of the 
three ``building blocks'' used to establish the CPP emission guidelines 
were legally flawed (and because ``building block'' one was not 
designed in such a manner that it could or was intended to stand on its 
own without the other building blocks), EPA proposed that the CPP 
emission guidelines be withdrawn. With the ACE rule, EPA proposes to 
possibly replace the CPP with a rule that corrects the fundamental 
legal flaws in the CPP to more appropriately balance federal and state 
responsibilities under CAA section 111(d), and revise the NSR program 
as it applies to affected EGUs to better accommodate energy efficiency 
projects.
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    \2\ The accompanying RIA focuses on presenting the difference 
between the CPP and the concepts in ACE, but also includes a 
scenario with no CPP, providing sufficient information to understand 
the impact of a full repeal of the CPP, a two-step approach in which 
the CPP is repealed and then an alternative BSER is put in place or 
a case in which the Agency revises the BSER promulgated in the CPP.
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    This proposed action has been informed by comments submitted in 
response to the ANPRM, published December 28, 2017, see 82 FR 61507. 
EPA notes that it does not intend to respond to the comments received 
on the ANPRM. If commenters believe that any of their previously 
submitted comments are still applicable, they should resubmit those 
comments to this rulemaking to ensure they are considered.

B. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this action is available on the internet. Following signature by the 
EPA Administrator, EPA will post a copy of this proposed action at 
https://www.epa.gov/stationary-sources-air-pollution/electric-utility-generating-units-emission-guidelines-greenhouse. Following publication 
in the Federal Register, EPA will post the Federal Register version of 
the proposal and key technical documents at this same website.

II. Background

A. Regulatory and Judicial History of GHG Requirements for EGUs

    When passing and amending the CAA, Congress sought to address and 
remedy the dangers posed by air pollution to human beings and the 
environment. While the text of the CAA does not reflect an explicit 
intent on the part of Congress to address the potential effects of 
elevated atmospheric GHG concentrations, the Supreme Court in 
Massachusetts v. EPA, 549 U.S. 497 (2007), concluded that Congress had 
drafted the CAA broadly enough so that GHGs constituted air pollutants 
within the meaning of the CAA. EPA subsequently determined that 
emissions of GHGs from new motor vehicles cause or contribute to air 
pollution that may reasonably be anticipated to endanger public health 
or welfare. See 74 FR 66496 (December 15, 2009). This determination 
required EPA to regulate GHG emissions from motor vehicles.
    In 2009, and again in 2016, the EPA Administrator issued findings 
under sections 202(a) and 231(a)(2)(A) of the Clean Air Act, 
respectively, that the current, elevated concentrations of six well-
mixed GHGs in the atmosphere may reasonably be anticipated to endanger 
public health and welfare of current and future generations in the

[[Page 44749]]

United States.\3\ In 2015, after determining that GHGs from EGUs 
merited regulation under CAA section 111, EPA promulgated standards of 
performance for new, modified, and reconstructed EGUs under section 
111(b). 80 FR 64510. Consequentially, this led to EPA's obligation to 
develop a 111(d) rule for existing EGUs, as described in Section III. 
EPA believes that the BSER in ACE is consistent both with our legal 
authorities under 111(d) and with what is technically feasible and 
appropriate for coal-fired power plants. Therefore, EPA believes that 
the emission reductions required from state plans are the appropriate 
amount for a 111(d) rule.
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    \3\ ``Finding that Greenhouse Gas Emissions From Aircraft Cause 
or Contribute to Air Pollution That May Reasonably Be Anticipated to 
Endanger Public Health and Welfare,'' 81 FR 54422 (August 15, 2016).
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    While the market in the power sector is driving GHG emissions down, 
the EPA, by proposing this emission guideline, is reinforcing the 
market in many respects and also ensuring that available emission 
reductions that are not market driven are achieved. Many regulations 
are promulgated to correct market failures, which otherwise lead to a 
suboptimal allocation of resources within the free market. Air quality 
and pollution control regulations address ``negative externalities'' 
whereby the market does not internalize the full opportunity cost of 
production borne by society as public goods such as air quality are 
unpriced.
    While recognizing that optimal social level of pollution may not be 
zero, GHG emissions impose costs on society, such as negative health 
and welfare impacts, that are not reflected in the market price of the 
goods produced through the polluting process. For this regulatory 
action the good produced is electricity. If a fossil fuel-fired 
electricity producer pollutes the atmosphere when it generates 
electricity, this cost will be borne not by the polluting firm but by 
society as a whole, thus the producer is imposing a negative 
externality, or a social cost of emissions. The equilibrium market 
price of electricity may fail to incorporate the full opportunity cost 
to society of generating electricity. Consequently, absent a regulation 
on emissions, the EGUs will not internalize the social cost of 
emissions and social costs will be higher as a result. This regulation 
will work towards addressing this market failure by causing affected 
EGUs to begin to internalize the negative externality associated with 
CO2 emissions.
    Further discussion of GHG impacts, as well as the benefits of this 
proposal, can be found in the RIA for this action. As detailed in 
Chapter 3 of the RIA, EPA evaluated three illustrative policy scenarios 
representing ACE. These scenarios are projected to result in a decrease 
of annual CO2 emissions of about 7 million to 30 million 
short tons relative to a future without a CAA section 111(d) regulation 
affecting the power sector.
    Along with the 111(b) standard, EPA issued, under CAA section 
111(d), its ``Clean Power Plan,'' consisting of GHG emission guidelines 
for existing EGUs, which states would use to develop emission standards 
as mentioned above. 80 FR 64662 (October 23, 2015). In February 2016, 
the U.S. Supreme Court stayed implementation of the CPP pending 
judicial review. West Virginia v. EPA, No. 15A773 (S.Ct. Feb. 9, 2016).
    In March 2017, President Trump issued Executive Order 13873, which 
among other things, directed EPA to reconsider the CPP. After 
considering the statutory text, context, legislative history and 
purpose, and in consideration of EPA's historical practice under CAA 
section 111 as reflected in its other existing CAA section 111 
regulations and of certain policy concerns, EPA proposed to repeal the 
CPP. See 82 FR 48035. In a separate but related action, EPA published 
an ANPRM to solicit comment on what EPA should include in a potential 
new existing source regulation under CAA section 111(d), including 
soliciting comment on aspects of the respective roles of the states and 
EPA in that process, on the BSER in context of the statutory 
interpretation contained in the proposed repeal of the CPP, on what 
systems of emission reduction might be available and appropriate, and 
the potential flexibility that could be afforded under the NSR program 
to improve the implementation of a potential new existing source 
regulation for EGUs under CAA section 111(d). 82 FR 61507 (December 28, 
2017). EPA received more than 270,000 comments on the ANPRM, which have 
informed this proposed rulemaking.
    In ACE, EPA is proposing to determine that the BSER for GHG 
emissions from existing coal-fired EGUs is heat rate improvements that 
can be applied at the source, consistent with the legal interpretation 
expressed in the proposed repeal. The Agency is also, in this action, 
clarifying the respective roles of the states and EPA under CAA section 
111(d), including by proposing revisions to the regulations, in 40 CFR 
part 60 subpart B, implementing that section. Section 111(d)(1) of the 
CAA states that EPA's ``Administrator shall prescribe regulations which 
shall establish a procedure . . . 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 . . . 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.'' See 
42 U.S.C. 7411(d). CAA section 111(d)(1) also requires the 
Administrator to ``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.'' Id.
    As the plain language of the statute provides, EPA's authorized 
role under CAA section 111(d)(1) is to develop a procedure for states 
to establish standards of performance for existing sources. Indeed, the 
Supreme Court has acknowledged the role and authority of states under 
section 111(d): This provision allows ``each State to take the first 
cut at determining how best to achieve EPA emissions standards within 
its domain.'' Am. Elec. Power Co. v. Connecticut, 131 S. Ct. 2527, 2539 
(2011). The Court addressed the statutory framework as implemented 
through regulation, under which EPA promulgates emission guidelines and 
the states establish performance standards: ``For existing sources, EPA 
issues emissions guidelines; in compliance with those guidelines and 
subject to federal oversight, the States then issue performance 
standards for stationary sources within their jurisdiction, [42 U.S.C.] 
Sec.  7411(d)(1).'' Id. at 2537-38.
    As contemplated by CAA section 111(d)(1), states possess the 
authority and discretion to establish appropriate standards of 
performance for existing sources. CAA section 111(a)(1) defines 
``standard of performance'' as ``a standard of emissions of air 
pollutants which reflects'' what is colloquially referred to as the 
``Best System of Emission Reduction'' or ``BSER''--i.e., ``the degree 
of emission limitation achievable through the application of the best 
system of emission reduction which (taking into account the cost of 
achieving such reduction and any nonair quality health and 
environmental impact and energy requirements) the Administrator 
determines has been adequately demonstrated.'' 42 U.S.C. 7411(a)(1) 
(emphasis added).

[[Page 44750]]

    In order to effectuate the Agency's role under CAA section 
111(d)(1), EPA promulgated implementing regulations in 1975 to provide 
a framework for subsequent EPA rules and state plans under section 
111(d). See 40 CFR part 60, subpart B (hereafter referred to as the 
``implementing regulations''). The implementing regulations reflect 
EPA's principal task under CAA section 111(d)(1), which is to develop a 
procedure for states to establish standards of performance for existing 
sources through state plans. EPA is proposing to promulgate an updated 
version of the implementing regulations as part of ACE (see Section 
VII). Per the new proposed implementing regulations, EPA effectuates 
its role by publishing, an ``emission guideline'' \4\ that, among other 
things, contains EPA's determination of the BSER for the category of 
existing sources being regulated. See 40 CFR 60.22a(b) [``Guideline 
documents published under this section will provide information for the 
development of State plans, such as: . . . (4) An emission guideline 
that reflects the application of the best system of emission reduction 
(considering the cost of such reduction) that has been adequately 
demonstrated.''] In undertaking this task, EPA ``will specify different 
emissions guidelines . . . for different sizes, types and classes of . 
. . facilities when costs of control, physical limitations, geographic 
location, or similar factors make subcategorization appropriate.'' 40 
CFR 60.22(b)(5).
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    \4\ See Section VII.A. for proposed changes to the definition of 
``emission guideline'' as part of EPA's proposed new implementing 
regulations.
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    In short, under EPA's new proposed regulations implementing CAA 
section 111(d), which tracks with the existing implementing regulations 
in this regard, the guideline document serves to ``provide information 
for the development of state plans.'' 40 CFR 60.22a(b), with the 
``emission guideline,'' reflecting BSER as determined by EPA, being the 
principal piece of information states rely on to develop their plans 
that establish standards of performance for existing sources.
    Because the CAA cannot necessarily be applied to GHGs in the same 
manner as other pollutants, Utility Air Regulatory Group, 134 S. Ct. 
2427, 2455 (2014) (Alito, J., concurring in part and dissenting in 
part), it is fortuitous that CAA section 111(d) recognizes that states 
possess considerable flexibility in developing their plans in response 
to the emissions guideline(s) established by EPA. Specifically, the Act 
requires that EPA permit states to consider, ``among other factors, the 
remaining useful life'' of an existing source in applying a standard of 
performance to such sources. CAA section 111(d)(1).
    Additionally, while CAA section 111(d)(1) clearly authorizes states 
to develop state plans that establish performance standards and 
provides states with certain discretion in determining appropriate 
standards, CAA section 111(d)(2) provides EPA specifically a role with 
respect to such state plans. This provision authorizes EPA to prescribe 
a plan for a state ``in cases where the State fails to submit a 
satisfactory plan.'' CAA section 111(d)(2)(A). EPA therefore is charged 
with determining whether state plans developed and submitted under 
section 111(d)(1) are ``satisfactory,'' and the proposed new 
implementing regulations at 40 CFR 60.27a accordingly provides timing 
and procedural requirements for EPA to make such a determination. Just 
as guideline documents may provide information for states in developing 
plans that establish standards of performance, they may also provide 
information for EPA to consider when reviewing and taking action on a 
submitted state plan, as the new proposed implementing regulations at 
40 CFR 60.27a(c) references the ability of EPA to find a state plan as 
``unsatisfactory because the requirements of (the implementing 
regulations) have not been met.'' \5\
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    \5\ See also 40 FR 53343 (``If there is to be substantive 
review, there must be criteria for the review, and EPA believes it 
is desirable (if not legally required) that the criteria be made 
known in advance to the States, to industry, and to the general 
public. The emission guidelines, each of which will be subjected to 
public comment before final adoption, will serve this function.'').
---------------------------------------------------------------------------

B. Executive Order 13783 and 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 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 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).
    In a document signed the same day as Executive Order 13783, and 
published in the Federal Register at 82 FR 16329 (April 4, 2017), 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.\6\ In the course of 
EPA's review of the CPP, the Agency also reevaluated its interpretation 
of CAA section 111, and, on that basis, the Agency proposed to repeal 
the CPP. See 82 FR 48035.
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    \6\ EPA also withdrew the proposed federal plan and model 
trading rules, proposed amendments to certain regulations under 40 
CFR part 60, subpart B, implementing CAA section 111(d), and 
proposed rule regarding the Clean Energy Incentive Plan. 82 FR 16144 
(April 3, 2017).
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    This action proposes a BSER for GHGs from existing EGUs in line 
with the interpretation presented in the proposed CPP repeal. See 82 FR 
48038-42. Comments submitted on the proposed repeal will be considered 
in the promulgation of this rulemaking so there is no need to resubmit 
comments that have already been timely submitted.

C. Industry Trends

    Carbon dioxide emissions in the power sector have steadily declined 
in recent years due to a variety of power industry trends, which are 
expected to continue. The reduction in power sector CO2 
emissions is the result of industry trends away from coal-fired 
generation and toward low- and zero-emitting generation sources. These 
trends have been driven by market factors, reduced electricity demand, 
and policy and regulatory efforts. These trends have resulted in a 
notable change to the country's overall generation mix, as more natural 
gas and renewable energy is used to generate electricity relative to 
coal-fired electricity. The price of natural gas is expected to remain 
low for the foreseeable future as improvements in drilling technologies 
and techniques continue to reduce the cost of extraction. In addition, 
the existing fleet of coal-fired EGUs is aging and there are very few 
new coal-fired generation

[[Page 44751]]

projects under development. With a continued (but reduced) tax credit 
and declining capital costs, solar capacity will continue to grow 
through 2050 while tax credits that phase out for plants entering 
service through 2024 provide incentives for new wind capacity in the 
near-term. Some power plant generators have announced that they expect 
to continue to change their generation mix away from coal-fired 
generation toward natural-gas fired generation, renewables and more 
deployment of energy efficiency measures. All of these trends, in 
total, are expected to result in declining power sector CO2 
emissions.
    In the near-term, according to the U.S. Energy Information 
Administration's (EIA) 2018 Annual Energy Outlook, ``the cumulative 
effect of increased coal plant retirements, lower natural gas prices 
and lower electricity demand in the AEO2018 Reference case is a 
reduction in the projected [CO2] emissions from electric 
generators, even without the [CPP]. In 2020, electric power sector 
CO2 emissions are projected to be 1.72 billion metric tons, 
which is 120 million metric tons (7 percent) lower than the projected 
level of CO2 emissions in the AEO2017 Reference case without 
the CPP.'' \7\ In other words, these declining emission trends have 
continued to develop even in the absence of implementation of the CPP.
---------------------------------------------------------------------------

    \7\ U.S. EIA, Annual Energy Outlook 2018 with projections to 
2050 (February 6, 2018), at 102, available at https://www.eia.gov/outlooks/aeo/pdf/AEO2018.pdf.
---------------------------------------------------------------------------

    In consideration of these ongoing and projected power sector trends 
and a resulting decline in power sector CO2 emissions, EPA 
is soliciting comment on whether and how to consider such trends in 
developing CO2 emission guidelines for the power sector. A 
comparison of EIA projections to EPA analysis for the original proposed 
CPP demonstrates that the rapid changes in the power sector are leading 
to CO2 emission reductions at a faster rate than projected 
even a few years ago when the CPP was promulgated (Comment C-1). EPA 
also notes that CO2 emissions are projected to increase over 
time in some EIA AEO side cases, and, given the uncertainties 
associated with long-term emission projections, solicits comments on 
the applicability of those alternative results.
    Because of the rapid pace of these power sector changes, it is 
difficult for sector analysts to fully account for these changing 
trends in near-term and long-term sector-wide projections. This means 
that regulatory decisions made today could be based on information that 
may very well be outdated within the next several years. If that is the 
case, work put in by federal and state regulatory agencies--as well as 
by the affected sources themselves--to address section 111(d) 
requirements could quickly be overtaken by external market forces which 
could make those efforts redundant or, even worse, put them in conflict 
with industry trends that are already reducing CO2 
emissions.

III. Legal Authority

A. Authority To Revisit Existing Regulations

    EPA's ability to revisit existing regulations is well-grounded in 
the law. Specifically, 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 EPA's 
inherent authority to reconsider prior rulemakings by providing the 
Agency with broad authority to prescribe regulations as necessary. 42 
U.S.C. 7601(a); see also Emission Guidelines and Compliance Times for 
Municipal Solid Waste Landfills, 81 FR 59276, 59277-78 (August 29, 
2016). The authority to reconsider prior decisions exists in part 
because 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).

B. Authority To Regulate EGUs

    In the CPP, EPA stated that EPA's then-concurrent promulgation of 
standards of performance regulating CO2 emissions from new, 
modified, and reconstructed EGUs triggered the need to regulate 
existing sources under CAA section 111(d). 80 FR 64715. In ACE, we are 
not re-opening any issues related to this conclusion, but for the 
convenience of stakeholders and the public, we will summarize our 
explanation here.
    We explained in the CPP that CAA section 111(d)(1) requires EPA to 
promulgate regulations under which states must submit state plans 
regulating ``any existing source'' of certain pollutants ``to which a 
standard of performance would apply if such existing source were a new 
source.'' Id. Under CAA section 111(a)(2) and 40 CFR 60.15(a), a ``new 
source'' is defined as any stationary source, the construction, 
modification, or reconstruction of which is commenced after the 
publication of proposed regulations prescribing a standard of 
performance under CAA section 111(b) applicable to such source. We 
noted that, at that time, we were concurrently finalizing a rulemaking 
under CAA section 111(b) for CO2 emissions from affected 
EGUs, which provided the requisite predicate for applicability of CAA 
section 111(d). Id.
    EPA explained in the 111(b) rule (80 FR 64529) that ``CAA section 
111(b)(1)(A) requires the Administrator to establish a list of source 
categories to be regulated under section 111. A category of sources is 
to be included on the list `if in [the Administrator's] judgment it 
causes, or contributes significantly to, air pollution which may 
reasonably be anticipated to endanger public health and welfare.' '' 
This determination is commonly referred to as an ``endangerment 
finding'' and that phrase encompasses both the ``causes or contributes 
significantly'' component and the ``endanger public health and 
welfare'' component of the determination. Then, for the source 
categories listed under section 111(b)(1)(A), the Administrator 
promulgates, under section 111(b)(1)(B), ``standards of performance for 
new sources within such category.'' EPA further explained that, because 
EGUs had previously been listed, it was unnecessary to make an 
additional finding. The Agency also noted that, under section 
111(b)(1)(A), findings are category specific and not pollutant 
specific, so a new finding is not needed with regard to a new 
pollutant. The Agency further asserted that, even if it were required 
to make a finding, given the large amount of CO2 emitted 
from this source category (the largest single stationary source 
category of emissions of CO2 by far) that EGUs would easily 
meet that standard. The Agency further noted that, given the large 
amount of emissions from the source category, it was not necessary in 
that rule ``for the EPA to decide whether it must identify a specific 
threshold for the amount of emissions from a source category that 
constitutes a significant contribution.'' 80 FR 64531.
    That CAA section 111(b) rulemaking remains on the books, although 
EPA is currently considering revising it. Accordingly, it continues to 
provide the requisite predicate for applicability of CAA section 
111(d). Any comments on the issues discussed in this subsection would 
be more appropriately addressed

[[Page 44752]]

to the docket on EPA's intended forthcoming proposal with regard to the 
new source rule.

C. Legal Authority for Determination of the BSER

    As discussed above, EPA's authorized role under CAA section 111(d) 
is to establish a procedure under which states submit plans 
establishing standards of performance for existing sources, reflecting 
the application of the best system of emission reduction that EPA has 
determined is adequately demonstrated for the source category. In the 
CPP, 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.

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 generation-shifting 
measures that departed from this traditional, source-specific approach 
to regulation.
    As explained in the proposed repeal, after reconsidering the 
statutory text, context and legislative history, and in consideration 
of EPA's historical practice under CAA section 111 as reflected in its 
other existing section 111 regulations, the Agency proposes to return 
to a reading of 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 the source's owner or operator can 
implement at another location. For a more detailed discussion of EPA's 
proposed interpretation, see 82 FR 48039-42.
    In proposing ACE, EPA offers additional legal rationale to support 
its determination that heat-rate improvements constitute the BSER. EPA 
solicits comment on these additional legal interpretations (Comment C-
2).
    First, as explained in the CPP preamble, reduced utilization ``does 
not fit within our historical and current interpretation of the BSER.'' 
See 80 FR 64780; see also id. at 64762 (``EPA has generally taken the 
approach of basing regulatory requirements on controls and measures 
designed to reduce air pollutants from the production process without 
limiting the aggregate amount of production.'') Whereas some emission 
reduction measures (such as a scrubber) may have an incidental impact 
on a source's production levels, reduced utilization is directly 
correlated with a source's output. Moreover, predicating a CAA section 
111 standard on a source's non-performance would inappropriately inject 
the Agency into an owner/operator's production decisions. In returning 
to our historical understanding of and practice under section 111, we 
reiterate that reduced utilization is not a valid system of emission 
reduction for purposes of establishing a standard of performance. EPA 
believes our proposed interpretation that the BSER be limited to 
measures that can be applied at or to a source does not command a 
different result.
    Second, as explained in the proposed repeal notice, interpretative 
constraints that may apply to interpreting CAA section 111(a)(1) (i.e., 
determining what types of measures that may be considered as the BSER) 
for purposes of setting a new source performance standard under section 
111(b) reasonably may be applied to interpreting the BSER for purposes 
of setting existing source standards under section 111(d) as well (and, 
given that ``standard of performance'' is given a unitary definition 
for purposes of the entire statutory section, applying the same 
interpretative constraints may in fact be required). For example, we 
proposed that ``the BSER should be interpreted as a source-specific 
measure, in light of the fact that [Best Available Control Technology, 
or BACT] standards, for which the BSER is expressly linked by statutory 
text, are unambiguously intended to be source-specific.'' \8\ See 82 FR 
48042.
---------------------------------------------------------------------------

    \8\ See 40 CFR 52.21(b)(12); see also 42 U.S.C. 7479(3).
---------------------------------------------------------------------------

    Under the CAA and applicable regulations, certain preconstruction 
permits must contain emissions limitations based on application of BACT 
for certain regulated pollutants. EPA recommends that permitting 
authorities follow a five-step ``top-down'' BACT analysis, which calls 
for all available control technologies for a given pollutant to be 
identified and ranked in descending order of control effectiveness.\9\ 
The options are then assessed in consideration of technical, energy, 
environmental and economic factors until an option is selected as BACT.
---------------------------------------------------------------------------

    \9\ The five steps are: (1) Identify all available control 
technologies; (2) eliminate technically infeasible options; (3) rank 
remaining control technologies; (4) evaluate most effective controls 
and document results; and (5) select the BACT.
---------------------------------------------------------------------------

    In reviewing our BACT guidance, we have identified additional 
interpretive constraints that may be applied to CAA section 111. 
Specifically, in EPA's PSD and Title V Permitting Guidance for 
Greenhouse Gases, we explained that a BACT analysis ``need not 
necessarily include inherently lower polluting processes that would 
fundamentally redefine the nature of the source proposed by the permit 
applicant.'' Id. at 26 (emphasis added). Furthermore, we explained that 
``BACT should generally not be applied to regulate the applicant's 
purpose or objective for the proposed facility.'' Id. Indeed, ``EPA has 
recognized that the initial list of control options for a BACT analysis 
does not need to include `clean fuel' options that would fundamentally 
redefine the source. Such options include those that would require a 
permit applicant to switch to a primary fuel type (i.e., coal, natural 
gas or biomass) other than the type of fuel that an applicant proposes 
to use for its primary combustion process.'' Id. at 27. EPA has even 
noted that ``applicants proposing to construct a coal-fired electric 
generator, have not been required by EPA as part of a BACT analysis to 
consider building a natural gas-fired electric turbine although the 
turbine may be inherently less polluting per unit product (in this case 
electricity).'' \10\ Although in the CPP we believed that EPA's 
``redefining the source'' policy was not relevant for purposes of 
section 111(d), see CPP RTC Chapter 1A, 170-72, we now believe that 
such a policy is relevant in light of the relationship between BACT and 
BSER. In the response to comments accompanying the CPP, EPA rejected 
the relevance to BSER under section 111 of the Agency's general policy 
against ``redefining the source'' in the context of PSD/BACT. EPA now 
believes that it was incorrect in its response, and that it is worth 
examining this point in some detail because it encapsulates several key 
aspects of the CPP's interpretation

[[Page 44753]]

of section 111 in general and section 111(d) in particular that EPA now 
proposes to conclude in ACE are not appropriate interpretations of the 
statute.
---------------------------------------------------------------------------

    \10\ New Source Review Workshop Manual, at B.13 (Draft) (October 
1990), available at https://www.epa.gov/sites/production/files/2015-07/documents/1990wman.pdf.
---------------------------------------------------------------------------

    In its response to comments, EPA largely based its rejection of the 
relevance of PSD to BSER on what it saw as the salient distinctions 
between the sources subject to, and mode of operation of, the two 
statutory programs. In this regard, EPA spoke of the ``distinct context 
of the PSD program, which involves the case-by-case review of the 
construction of an individual stationary source. . . . BACT is not 
applicable to unmodified existing sources nor is it applied on a source 
category basis. The CAA's PSD program is administered primarily by 
state and local permitting authorities as [an] individualized 
preconstruction requirement under CAA section 165. Under section 
111(d), the Administrator identifies a list of adequately demonstrated 
control options in use by the industry, selects the best of those 
control options after considering cost and other factors, then selects 
an achievable limit for the category through the application of the 
BSER across the industry. . . .'' (Emphases added.)
    Here, EPA's response disregarded the fact that under CAA section 
111(d), the statute explicitly tasks states--not the Administrator--
with ``establishing standards of performance'' for existing sources, 
and that the statute expressly requires EPA to allow the state to take 
into account source-specific factors when doing so. A ``standard of 
performance'' is defined at section 111(a)(1) as ``a standard for 
emissions of air pollutants which reflects the degree of emission 
limitation achievable through the application of the'' BSER. (Emphasis 
added.) Therefore, it is the state, not EPA, that is tasked in the 
first instance with ``select[ing] an achievable limit'' for existing 
sources--and section 111(d)'s emphasis on source-specific factors at 
the very least renders questionable EPA's unqualified assertion that 
BSER for existing sources ``is applied on a source category basis.'' In 
the instant proposal, EPA proposes to give full meaning to these 
textual and structural features of the existing-source program under 
section 111(d) that render it in important respects distinct from the 
new-source program under section 111(b) and similar to the source-by-
source PSD program: Section 111(d), unlike section 111(b), is 
implemented in the first instance by the states, and it is expressly 
linked to source-specific factors. These similarities counsel against 
EPA's prior rejection of the relevance of the general policy under PSD 
against ``redefining the source.''
    Furthermore, speaking of the generation-shifting measures that 
constituted the second and third ``building blocks'' of the CPP, EPA 
asserted that ``those measures are part of the business purposes and 
objectives within the power sector. Accordingly, the BSER, which 
incorporates building blocks 2 and 3, cannot be said to force a 
fundamental redefinition of the business of generating electric 
power.'' (Emphases added.) The emphasized phrases reveal the influence 
of EPA's statutory interpretation underlying the CPP: That EPA can 
regulate under CAA section 111 at the level of an entire industrial 
sector, and that the business that it is regulating is ``generating 
electric power'' writ large--rather than a recognition in line with the 
statute's text and structure, and EPA's practice prior to the CPP, of 
regulating the performance of individual sources through measures 
carried out at and by the individual source.
    EPA rested on its discretionary prerogative: ``EPA's policies under 
CAA section 165 regarding the construction of individual sources are 
not controlling for purposes of establishing category-wide standards 
for existing sources under CAA section 111(d). Even if the PSD 
`redefining the source' policies were applicable in this context, it 
would be within the Administrator's discretion to consider requiring a 
fundamental redesign of a newly constructed or modified source[ ]. 
EPA's case-by-case application of CAA section 165 in the PSD program 
does not limit the Administrator's discretion in establishing an 
emission guideline for an entire category of existing sources under CAA 
section 111(d).'' (Emphases added.) EPA has explained, both in the 
proposed repeal and the instant proposal, why it is proposing to 
conclude that the statute does not, in fact, delegate discretion to the 
Administrator to ``establish . . . for an entire category of existing 
sources'' standards that can only be accomplished by ``a fundamental 
redesign'' of that category, of the generation mix, and of the division 
of jurisdiction over electricity generation within the federal 
government and between the federal government and the states. But to 
the extent that the Agency, due to the fact that Congress did not 
expressly forbid such an approach, does possess that discretion, today 
it proposes not to exercise it.
    Third, notwithstanding the relationship between BACT and BSER, we 
believe that measures ``redefining the source'' should be excluded from 
consideration for purposes of CAA section 111(d). See, e.g., Sierra 
Club v. EPA, 499 F.3d 653, 655 (7th Cir. 2007) (``Refining the 
statutory definition . . . to exclude redesign is the kind of judgment 
by an administrative agency to which a reviewing court should 
defer.''). Indeed, the policy against redefining a source is even more 
sensible when applied to existing sources. Under section 111(d), 
regulated sources are well past the proposal stage and redefining such 
sources would likely require, at a minimum, significant modification 
and could even require decommissioning, redesign and new construction. 
Accordingly, we propose to recognize that the BSER analysis need not 
include options that would ``fundamentally redefine the source,'' 
irrespective of the application of that policy under PSD. For purposes 
of ACE, therefore, we did not consider natural gas repowering (i.e., 
converting from a coal-fired boiler to a gas-fired turbine) or 
refueling (i.e., converting from a coal-fired boiler to a natural gas-
fired boiler) as a system of emission reduction for coal-fired steam 
generating units.
    Fourth, the legislative history underlying CAA section 111 confirms 
that Congress intended this provision to be source oriented. The Senate 
Committee Report on Senate Bill 4358 explained that ``[t]he provisions 
for new source performance standards [i.e., S. 4538, section 113] \11\ 
are designed to insure [sic] that new stationary sources are designed, 
built, equipped, operated, and maintained so as to reduce emissions to 
a minimum.'' S. Committee Rep. to accompany S. 4358 (Sept. 17, 1970), 
1970 CAA Legis. Hist. at 415-16 (emphasis added). Similarly, 
``[e]mission standards developed under [S. 4538, section 114] would be 
applied to existing stationary sources. However, the Committee 
recognizes that certain old facilities may use equipment and processes 
which are not suited to the application of control technology.'' Id. at 
1970 CAA Legis. Hist. at 419 (emphasis added) (noting further that in 
such cases, the application of standards could be waived).
---------------------------------------------------------------------------

    \11\ Section 113 of Senate Bill 4538 would become CAA section 
111; section 114 of the Senate Bill would become CAA section 111(d).
---------------------------------------------------------------------------

    The proposed interpretive scope of the BSER is reasonable because 
it focuses the BSER on the performance of the emitting unit itself, 
rather than the performance of the emitting unit and the transmission 
system to which it belongs. EPA's area of expertise is control of 
emissions at the source. EPA is not the expert agency with regard to 
electricity management. FERC is the expert at the

[[Page 44754]]

federal level and public utility commissions are the experts at the 
state and local level. Numerous factors might be considered in 
determining which power plants dispatch on a given system or operate at 
any given time (e.g., cost of service, voltage support, electricity 
demand, availability of renewable resources, etc.). Moreover, numerous 
factors are relevant in determining how much new/replacement generation 
capacity is needed and what types of generating resources best satisfy 
that need. EPA has no express legal authority and no particular 
expertise in any of these areas. This is particularly relevant because, 
as noted below, there are already significant changes taking place 
within the power sector that are resulting in shifts away from coal-
fired generation to new technologies such as renewables. This shift is 
creating tremendous strain on the power infrastructure even without the 
added pressures of an EPA mandate to further shift away from additional 
coal-fired generation. Many experts have expressed concern that these 
pressures could create reliability problems. As DOE noted in a 2017 
report on electricity markets and reliability, ``Ultimately, the 
continued closure of traditional baseload power plants calls for a 
comprehensive strategy for long-term reliability and resilience. States 
and regions are accepting increased risks that could affect the future 
reliability and resilience of electricity delivery for consumers in 
their regions. Hydropower, nuclear, coal, and natural gas power plants 
provide essential reliability services and fuel assurance critical to 
system resilience. A continual comprehensive regional and national 
review is needed to determine how a portfolio of domestic energy 
resources can be developed to ensure grid reliability and resilience.'' 
\12\ Because EPA believes it is not appropriate to further challenge 
the nation's electricity system while these important technical and 
policy issues are being addressed. EPA believes that it is reasonable 
to focus on a ``BSER'' limited to consideration of emission control 
measures that can be applied at or to coal-fired units, ensuring that 
regardless of how much coal-fired generation remains, that generation 
is operated to minimize CO2 emissions.
---------------------------------------------------------------------------

    \12\ U.S. DOE, Staff Report to the Secretary on Electricity 
Markets and Reliability (August 2017) at 14, available at https://www.energy.gov/sites/prod/files/2017/08/f36/Staff%20Report%20on%20Electricity%20Markets%20and%20Reliability_0.pdf
.
---------------------------------------------------------------------------

    Also, the proposed interpretive scope of the BSER is reasonable 
considering the several important economic, policy and technology 
shifts occurring in the power sector. The first change is being driven 
by low natural gas prices that make lower carbon-emitting NGCC units 
more competitive as compared to higher carbon-emitting coal plants. 
Another important change is driven by both technology changes and by 
state and national energy policy decisions that have made renewable 
energy (e.g., solar and wind energy) more competitive compared to coal 
and natural gas. The third notable change is driven by aging coal 
plants, which considering the economic competitive pressures driven by 
natural gas and renewable generation, are leading companies to conclude 
that a significant number of coal plants are reaching the end of their 
useful economic life or are no longer economic to operate.
    These trends have driven down GHG emissions from power plants, 
which were also key components to the BSER as defined in the CPP. In 
fact, the analysis that EPA has done for ACE (see RIA), as well as 
analysis by many others (including EIA), show that these trends have 
already well outpaced the projections that went into the CPP for many 
states. For this reason, establishing a BSER on assumptions for 
generation by various sources that accounts for the continuation of 
these trends into the future would create significant work for both 
states and sources that may or may not result in emission reductions 
from ACE if the actual trends once again prove to be stronger than 
projected.
    While some might suggest that this argues that the BSER in ACE 
should still follow the same approach as the CPP, adjusting this 
proposal to be even more stringent ignores the fact that the 
uncertainties that have resulted in faster than projected emission 
reductions are also uncertain in the opposite direction. From 2005 to 
2008, gas prices experienced several unexpected peaks that were not 
anticipated. If this were to happen in the future, it would make any 
rule based on CPP-type assumptions significantly more expensive. 
Similarly, while the recent past has shown continued advances in 
renewable cost and performance, it is not certain that those trends 
will be sustained. It should be noted that federal tax subsidies that 
have been key to this trend are set to expire over the next several 
years which may play a role in the future.
    Because of these significant uncertainties that can have large 
impacts on electric reliability and the cost of electricity to 
consumers, EPA believes that this further supports the unreasonableness 
of basing the BSER on generation-shifting measures. Regardless of the 
path that the power sector takes, coal-fired power plants are likely to 
be an important part of the generation mix for the foreseeable future, 
therefore EPA believes it is reasonable to ensure that the remaining 
coal-fired generation (which is also the most CO2 intensive 
portion of the power sector) focuses on reducing that CO2 
emission intensity to the extent technically feasible considering cost.
    EPA believes that a BSER focused on making these plants as 
efficient as possible is the best way to ensure GHG emission reductions 
regardless of other factors such as technology changes for other types 
of generation, changes in fuel price, changes in electricity demand or 
changes in energy policy that neither environmental regulators nor 
power companies have the power to control.

IV. Affected Sources

    EPA is proposing that an affected EGU subject to regulation upon 
finalization of ACE is any fossil fuel-fired electric utility steam 
generating unit (i.e., utility boilers) that is not an integrated 
gasification combined cycle (IGCC) unit (i.e., utility boilers, but not 
IGCC units) that was in operation or had commenced construction as of 
August 31, 2018,\13\ and that meets the following criteria.\14\ To be 
an affected EGU, a fossil fuel-fired electric utility steam generating 
unit must serve a generator capable of selling greater than 25 MW to a 
utility power distribution system and have a base load rating greater 
than 260 GJ/h (250 MMBtu/h) heat input of fossil fuel (either alone or 
in combination with any other fuel).
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    \13\ Under section 111(a) of the CAA, determination of affected 
sources is based on the date that EPA proposes action on such 
sources. January 8, 2014 is the date the proposed GHG standards of 
performance for new fossil fuel-fired EGUs were published in the 
Federal Register (79 FR 1430).
    \14\ To be clear, this definition of an affected EGU does not, 
at this time, include stationary combustion turbines for reasons 
discussed later in this document.
---------------------------------------------------------------------------

    EPA is proposing different applicability criteria than in the CPP 
to reflect EPA's determination of the BSER for only fossil fuel-fired 
electric utility steam generating units. In ACE, EPA does not identify 
a BSER for stationary combustion turbines and IGCC units and, thus, 
such units are not affected EGUs for purposes of this action (see 
discussion below in Section V.B). It should be noted, in the CPP's 
identification of the BSER, no HRIs were identified as the BSER for 
stationary combustion turbines and IGCC units. Nevertheless, EPA 
solicits comment on systems of emission reduction that might be the 
BSER for these types of

[[Page 44755]]

EGUs (Comment C-3). EPA notes that, under the CPP, certain EGUs were 
not considered to be affected EGUs, and therefore were exempt from 
inclusion in a state plan. Similarly, EPA is proposing for ACE, the 
following EGUs would be excluded from a state's plan: (1) Those units 
subject to 40 CFR 60 subpart TTTT as a result of commencing 
modification or reconstruction; (2) steam generating units subject to a 
federally enforceable permit limiting net-electric sales to one-third 
or less of their potential electric output or 219,000 MWh or less on an 
annual basis; (3) non-fossil units (i.e., units capable of combusting 
at least 50 percent non-fossil fuel) that have historically limited the 
use of fossil fuels to 10 percent or less of the annual capacity factor 
or are subject to a federally enforceable permit limiting fossil fuel 
use to 10 percent or less of the annual capacity factor; (4) units that 
serve a generator along with other steam generating unit(s) where the 
effective generation capacity (determined based on a prorated output of 
the base load rating of each steam generating unit) is 25 MW or less; 
(5) municipal waste combustor unit subject to 40 CFR part 60, subpart 
Eb; or (6) commercial or industrial solid waste incineration units that 
are subject to 40 CFR part 60, subpart CCCC. EPA solicits comment on 
whether there should be a different definition of affected EGUs for ACE 
(Comment C-4).

V. Determination of the BSER

    CAA section 111(d)(1) directs EPA to promulgate regulations 
establishing a CAA section 110-like procedure under which states submit 
state plans that establish ``standards of performance'' for emissions 
of certain air pollutants from sources which, if they were new sources, 
would be subject to new source standards under section 111(b), and that 
provide for the implementation and enforcement of those standards of 
performance. The term ``standard of performance'' is defined in section 
111(a)(1) as ``a standard for emissions of air pollutants which 
reflects the degree of emission limitation achievable through the 
application of the best system of emission reduction [BSER] which 
(taking into account the cost of achieving such reduction and any 
nonair quality health and environmental impact and energy requirements) 
the Administrator determines has been adequately demonstrated.''
    Thus, EPA is authorized to determine the BSER for affected sources. 
See also 40 CFR 60.22. In making this determination, EPA identifies all 
``adequately demonstrated'' \15\ ``system[s] of emission reduction'' 
for a particular source category and then evaluates those systems to 
determine which is the ``best'' \16\ while ``taking into account'' the 
factors of ``cost . . . nonair quality health and environmental impact 
and energy requirements.'' Because CAA section 111 does not set forth 
the weight that should be assigned to each of these factors, courts 
have granted the Agency a great degree of discretion in balancing them. 
Lignite Energy Council v. EPA, 198 F.3d 930, 933 (D.C. Cir. 1999) 
(internal citations omitted).
---------------------------------------------------------------------------

    \15\ Case law under CAA section 111(b) explains that ``[a]n 
adequately demonstrated system is one which has been shown to be 
reasonably reliable, reasonably efficient, and which can reasonably 
be expected to serve the interests of pollution control without 
becoming exorbitantly costly in an economic or environmental way.'' 
Essex Chemical Corp. v. Ruckelshaus, 486 F.2d 427, 433-34 (D.C. Cir. 
1973). While some of these cases suggest that ``[t]he Administrator 
may make a projection based on existing technology,'' Portland 
Cement Ass'n v. Ruckelshaus, 486 F.2d 375, 391 (D.C. Cir. 1973), the 
D.C. Circuit has also noted that ``there is inherent tension'' 
between considering a particular control technique as both ``an 
emerging technology and an adequately demonstrated technology,'' 
Sierra Club v. Costle, 657 F.2d 298, 341 n.157 (D.C. Cir. 1981). See 
also NRDC v. Thomas, 805 F.2d 410, n. 30 (D.C. Cir. 1986) 
(suggesting that ``a standard cannot both require adequately 
demonstrated technology and also be technology-forcing.''). 
Nevertheless, EPA appears to ``have authority to hold the industry 
to a standard of improved design and operational advances, so long 
as there is substantial evidence that such improvements are 
feasible.'' Sierra Club, 657 F.2d at 364.
    \16\ The D.C. Circuit recognizes that EPA's evaluation of the 
``best'' system must also include ``the amount of air pollution as a 
relevant factor to be weighed . . . .'' Id. at 326.
---------------------------------------------------------------------------

    CAA section 111(d)(1) assigns responsibility to the states for 
establishing standards of performance for affected existing sources--in 
contrast to section 111(b), which directs EPA to set standards of 
performance for affected new sources.

A. Identification of the BSER

    In ACE, EPA identified several systems of emission reduction for 
existing fossil-fuel fired steam generating EGUs (i.e., heat rate 
improvements; carbon capture and storage; and fuel co-firing, including 
with natural gas and biomass) and evaluated each of these systems to 
determine which is the ``best'' while taking into account cost, nonair 
quality health and environmental impact and energy requirements.
    EPA proposes to identify ``heat rate improvements'' (which may also 
be referred to as ``efficiency improvements'') as the BSER for existing 
fossil-fuel fired steam generating EGUs. The basis for this 
determination is discussed below. A discussion of other potential 
CO2 reduction measures that EPA has determined are not BSER 
(but which states may allow sources to use for compliance purposes) is 
also provided below.
    The U.S. fleet of existing coal-fired EGUs is a diverse group of 
units with unique individual characteristics, spread across the 
country. Coal-fired power plants are customized facilities that were 
designed and built to meet local and regional electricity needs over 
the past 100 years, with no two plants being identical. Geography and 
elevation, unit size, coal type, pollution controls, cooling system, 
firing method and utilization rate are just a few of the parameters 
that can impact the overall efficiency and performance of individual 
units. As a result, heat rates of existing coal-fired EGUs in the U.S. 
vary substantially. The variation in heat rates among EGUs with similar 
design characteristics, as well as year-to-year variation in heat rate 
at individual EGUs, indicate that there is potential for HRIs that can 
improve CO2 emission performance for the existing coal-fired 
EGU fleet, but that this potential may vary considerably at the unit 
level.
    EPA does not currently have sufficient information on adequately 
demonstrated systems of emission reduction--including HRI 
opportunities--for existing natural gas-fired stationary combustion 
turbines. As such, the Agency is currently unable to determine the BSER 
for such units. In this action, EPA solicits information on adequately 
demonstrated systems of GHG emission reduction for such units--
especially on the efficiency, applicability, and cost of such systems 
(Comment C-5). This is discussed in greater detail below.

B. HRIs for Steam-Generating EGUs

    As mentioned above, EPA proposes in ACE to identify ``heat rate 
improvements'' as the BSER for existing steam generating fossil fuel-
fired EGUs. Heat rate is a measure of efficiency that is commonly used 
in the power sector. The heat rate is the amount of energy input, 
measured in British thermal units (Btu), required to generate one 
kilowatt-hour (kWh) of electricity. The lower an EGU's heat rate, the 
more efficiently it operates. As a result, an EGU with a lower heat 
rate will consume less fuel per kWh generated and emit lower amounts of 
CO2 and other air pollutants per kWh generated as compared 
to a less efficient unit. An EGU's heat rate can be affected by a 
variety of design characteristics, site-specific factors, and operating 
conditions, including:
     Thermodynamic cycle of the boiler;

[[Page 44756]]

     Boiler and steam turbine size and design;
     Cooling system type;
     Auxiliary equipment, including pollution controls;
     Operations and maintenance practices;
     Fuel quality; and
     Ambient conditions.
    In the CPP, EPA quantified emission reductions achievable through 
heat rate improvements on a regional basis (i.e., building block 1). 
The Agency concluded that EGUs can achieve on average a 4.3 percent 
improvement in the Eastern Interconnection, a 2.1 percent improvement 
in the Western Interconnection and a 2.3 percent improvement in the 
Texas Interconnection. See 80 FR 64789. The Agency then applied all 
three of the building blocks to 2012 baseline data and quantified, in 
the form of CO2 emission rates, the reductions achievable in 
each interconnection in 2030 and selected the least stringent as a 
national performance rate. Id. at 64811-819. EPA noted that building 
block 1 measures could not by themselves constitute the BSER because of 
a potential ``rebound effect.'' \17\ Id. at 64787.
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    \17\ As discussed below, EPA modeled a range of potential HRIs 
for ACE and the Agency's analysis indicates that system-wide 
emission decreases from heat rate improvements will likely outweigh 
any potential system-wide emission increases. Accordingly, EPA 
proposes to conclude that the ``rebound effect'' does not preclude a 
determination that HRIs constitute the BSER.
---------------------------------------------------------------------------

    EPA believes that building block 1, as constructed in CPP, does not 
represent an appropriate BSER, and ACE better reflects important 
changes in the formulation and application of the BSER in accordance 
with the CAA. For example, the percent improvement applied as the BSER 
under CPP was determined at the interconnect-level, and did not take 
into account remaining useful life or other source-specific factors, 
which are addressed in this proposed rule.\18\ The current fleet of 
existing fossil fuel-fired EGUs is quite diverse in terms of size, age, 
fuel type, operation (e.g., baseload, cycling), boiler type, etc. Many 
coal-fired EGUs now operate under load-following and cycling conditions 
as opposed to the steady baseload operating conditions that were more 
common a decade ago.
---------------------------------------------------------------------------

    \18\ The Agency solicits comments, nonetheless, on whether and 
how to retain building block 1 in lieu of the proposed approach.
---------------------------------------------------------------------------

    There are available technologies and equipment upgrades, as well as 
best operating and maintenance practices, that EGU owners or operators 
may utilize to improve an EGU's heat rate. In the ANPRM, EPA solicited 
information on a number of technology and equipment upgrades and good 
practices (specifically including, but not limited to, those that were 
listed in Tables 1 and 2 of the ANPRM, see 82 FR 61514) that have the 
potential to reduce an EGU's heat rate.
    Specifically, the Agency solicited information on: (1) Potential 
HRIs from technologies and best operating and maintenance practices; 
(2) costs of deploying the technologies and the best operating and 
maintenance practices, including applicable planning, capital and 
operating and maintenance costs; (3) owner and operator experiences 
deploying the technologies and employing best operating and maintenance 
practices; (4) barriers to or from deploying the technologies and 
operating and maintenance practices; and (5) any other technologies or 
operating and maintenance practices that may exist for improving heat 
rate, but were not listed in the ANPRM.
    EPA received useful information in the comments submitted in 
response to the ANPRM. Many commenters contended that any evaluation of 
the HRI potential of the coal-fired EGU fleet must be done on a unit-
by-unit basis since the opportunities for HRI are source-specific and 
dependent upon the individual unit's design, configuration, and 
operating and maintenance history. Many commenters emphasized the 
significant influence that the operating mode (i.e., whether the unit 
operates at consistent baseload conditions or in cycling or load-
following mode or as a low capacity factor unit that is subject to 
frequent startups and shutdowns) has on an individual EGU's heat rate 
and HRI potential. Many commenters also claimed that owners and 
operators of fossil fuel-fired EGUs already routinely conduct HRI 
efforts and, as a result, there are relatively few economic improvement 
opportunities available.
1. Potential HRI Measures--Technologies and Equipment Upgrades
    As mentioned above, numerous technologies and equipment upgrades, 
as well as best operating and maintenance practices (which are 
discussed in the next section), have been identified as potential 
measures to improve an EGU's heat rate. In the ANPRM, EPA solicited 
information on a large number of technology and equipment upgrades and 
best operating and maintenance practices that have the potential to 
reduce an EGU's heat rate. See Tables 1 and 2 of the ANPRM, 82 FR 
61514.
    In this action, EPA is proposing to determine that heat rate 
improvement is the BSER for affected existing coal-fired EGUs and is 
proposing a list of ``candidate technologies'' of HRI measures for 
states to use in establishing standards of performance under CAA 
section 111(d)(1). States can use the information that EPA provides on 
the ``degree of emission limitation achievable through application of 
the [BSER]'' to establish standards of performance for affected EGUs 
covered by a state's plan.\19\ While a large number of HRI measures 
have been identified in a variety of studies conducted by government 
agencies and outside groups (see Table 3 in ANPRM, 82 FR 61515), some 
of those identified technologies have limited applicability and many 
provide only negligible HRI. EPA believes that it would be overly 
burdensome to require States to evaluate the degree of emission 
limitation achievable from the application of every single identified 
HRI measure--including those with negligible benefits--at each source 
(or subcategory of sources) within their borders. Therefore, EPA has 
identified a list of the ``most impactful'' HRI measures that we are 
proposing to serve as technologies, equipment upgrades and best 
operating and maintenance practices that form the list of ``candidate 
technologies'' constituting the BSER. The candidate technologies of the 
BSER is listed in Table 1 below. Best operating and maintenance 
practices are discussed in the next section. States are expected to 
evaluate each of the BSER HRI measures in the candidate technologies in 
establishing a standard of performance for any particular source. The 
States, in applying a standard of performance, may take into 
consideration, among other factors, the remaining useful life of the 
existing source to which the standard would apply. EPA solicits 
comments on whether other unlisted HRI measures should also be included 
as part of the BSER and added to the candidate technologies (Comment C-
6). EPA also solicits comment on each of the candidate technologies 
described further below, including whether any additional technologies 
should be added to the list, and whether there is additional 
information that EPA should be aware of and consider in determining the 
BSER and establishing the candidate technologies for HRI measures 
(Comment C-7).
---------------------------------------------------------------------------

    \19\ The states, in applying the unit-specific standard, may 
also take into consideration, among other factors, the remaining 
useful life of the existing source to which the standard applies. 
See CAA section 111(d)(1).
---------------------------------------------------------------------------

    The technologies and operating and maintenance practices listed and

[[Page 44757]]

described below may not be available or appropriate for all types of 
EGUs; and some owners or operators will have already deployed some of 
the technologies and employed some of the best operating and 
maintenance practices.

                            Table 1--Summary of Most Impactful HRI Measures and Range of Their HRI Potential (%) by EGU Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      <200 MW                       200-500 MW                        >500 MW
                       HRI measure                       -----------------------------------------------------------------------------------------------
                                                                Min             Max             Min             Max             Min             Max
--------------------------------------------------------------------------------------------------------------------------------------------------------
Neural Network/Intelligent Sootblowers..................             0.5             1.4             0.3             1.0             0.3             0.9
Boiler Feed Pumps.......................................             0.2             0.5             0.2             0.5             0.2             0.5
Air Heater & Duct Leakage Control.......................             0.1             0.4             0.1             0.4             0.1             0.4
Variable Frequency Drives...............................             0.2             0.9             0.2             1.0             0.2             1.0
Blade Path Upgrade (Steam Turbine)......................             0.9             2.7             1.0             2.9             1.0             2.9
Redesign/Replace Economizer.............................             0.5             0.9             0.5             1.0             0.5             1.0
                                                         -----------------------------------------------------------------------------------------------
Improved O&M Practices..................................            Can range from 0 to >2.0% depending on the unit's historical O&M practices.
--------------------------------------------------------------------------------------------------------------------------------------------------------

a. Neural Network/Intelligent Sootblower
    Neural networks. Computer models, known as neural networks, can be 
used to simulate the performance of the power plant at various 
operating loads. Typically, the neural network system ties into the 
plant's distributed control system for data input (process monitoring) 
and process control. The system uses plant specific modeling and 
control modules to optimize the unit's operation and minimize the 
emissions. This model predictive control can be particularly effective 
at improving the plants performance and minimizing emissions during 
periods of rapid load changes. The neural network can be used to 
optimize combustion conditions, steam temperatures, and air pollution 
control equipment.
    Intelligent Sootblowers. During operations at a coal-fired power 
plant, particulate matter (ash or soot) builds up on heat transfer 
surfaces. This build-up degrades the performance of the heat transfer 
equipment and negatively affects the efficiency of the plant. Power 
plant operators use steam injection ``sootblowers'' to clean the heat 
transfer surfaces by removing the ash build-up. This is often done on a 
routine basis or as needed based on monitored operating 
characteristics. Intelligent sootblowers (ISB) are automated systems 
that use process measurements to monitor the heat transfer performance 
and strategically allocate steam to specific areas to remove ash 
buildup.
    The cost to implement an ISB system is relatively inexpensive if 
the necessary hardware is already installed. The ISB software/control 
system is often incorporated into the neural network software package 
mentioned above. As such, the HRIs obtained via installation of neural 
network and ISB systems are not necessarily cumulative.
    The efficiency improvements from installation of intelligent 
sootblowers are often greatest for EGUs firing subbituminous coal and 
lignite due to more significant and rapid fouling at those units as 
compared to EGUs firing bituminous coal.
b. Boiler Feed Pumps
    A boiler feed pump (or boiler feedwater pump) is a device used to 
pump feedwater into a boiler. The water may be either freshly supplied 
or returning condensate produced from condensing steam produced by the 
boiler. The boiler feed pumps consume a large fraction of the auxiliary 
power used internally within a power plant. Boiler feed pumps can 
require power in excess of 10 MW on a 500-MW power plant. Therefore, 
the maintenance on these pumps should be rigorous to ensure both 
reliability and high-efficiency operation Boiler feed pumps wear over 
time and subsequently operate below the original design efficiency. The 
most pragmatic remedy is to rebuild a boiler feed pump in an overhaul 
or upgrade.
c. Air Heater and Duct Leakage Control
    The air pre-heater is a device that recovers heat from the flue gas 
for use in pre-heating the incoming combustion air (and potentially for 
other uses such as coal drying). Properly operating air pre-heaters 
play a significant role in the overall efficiency of a coal-fired EGU. 
A major difficulty associated with the use of regenerative air pre-
heaters is air leakage from the combustion air side to the flue gas 
side. Air leakage affects boiler efficiency due to lost heat recovery 
and affects the axillary load since any leakage requires additional fan 
capacity. The amount of air leaking past the seals tends to increase as 
the unit ages. Improvements to seals on regenerative air pre-heaters 
have enabled the reduction of air leakage.
d. Variable Frequency Drives (VFDs)
    VFD on ID Fans. The increased pressure required to maintain proper 
flue gas flow through add-on air pollutant control equipment may 
require additional fan power, which can be achieved by an induced draft 
(ID) fan upgrade/replacement or an added booster fan. Generally, older 
power plant facilities were designed and built with centrifugal fans.
    The most precise and energy-efficient method of flue gas flow 
control is use of VFD. The VFD controls fan speed electrically by using 
a static controllable rectifier (thyristor) to control frequency and 
voltage and, thereby, the fan speed. The VFD enables very precise and 
accurate speed control with an almost instantaneous response to control 
signals. The VFD controller enables highly efficient fan performance at 
almost all percentages of flow turndown.
    Due to current electricity market conditions, many units no longer 
operate at base-load capacity and, therefore, VFDs, also known as 
variable-speed drives on fans can greatly enhance plant performance at 
off-peak loads. Additionally, because utilities are phasing in their 
environmental equipment upgrades, new fans are oversized and operated 
at lower capacities until all additional equipment has been added. 
Under these scenarios, VFDs can significantly improve the unit heat 
rate. VFDs as motor controllers offer many substantial improvements to 
electric motor power requirements. The drives provide benefits such as 
soft starts, which reduce initial electrical load, excessive torque, 
and subsequent equipment wear during startups; provide precise speed 
control; and enable high-efficiency operation of motors at less than 
the maximum efficiency point. During load turndown, plant auxiliary 
power could

[[Page 44758]]

be reduced by 30-60 percent if all large motors in a plant were 
efficiently controlled by VFD. With unit loads varying throughout the 
year, the benefits of using VFDs on large-size equipment, such as FD or 
ID fans, boiler feedwater and condenser circulation water pumps, can 
have significant impacts. Because plants today usually use either new 
booster ID fans or new ID fans, the option of investing in VFDs 
generally appeals to plant operators since they are incurring long 
outages to install the either new or additional air emission controls 
equipment. There are circumstances in which the HRI has been estimated 
to be much higher than that shown in Table 1, depending on the 
operation of the unit. Cycling units realize the greatest gains 
representative of the upper range of HRI, whereas units which were 
designed with excess fan capacity will exhibit the lower range.
    VFD on Boiler Feed Pumps. VFDs can also be used on boiler feed 
water pumps as mentioned previously. Generally, if a unit with an older 
steam turbine is rated below 350 MW the use of motor-driven boiler 
feedwater pumps as the main drivers may be considered practical from an 
efficiency standpoint. If a unit cycles frequently then operation of 
the pumps with VFDs will offer the best results on heat rate 
reductions, followed by fluid couplings. The use of VFDs for boiler 
feed pumps is becoming more common in the industry for larger units. 
And with the advancements in low pressure steam turbines, a motor-
driven feed pump can improve the thermal performance of a system up to 
the 600-MW range, as compared to the performance associated with the 
use of turbine drive pumps. Smaller and older units will generally not 
upgrade to a VFD boiler feed pump drive due to high capital costs.
e. Blade Path Upgrade (Steam Turbine)
    Upgrades or overhauls of steam turbines offer the greatest 
opportunity for HRI on many units. Significant increases in performance 
can be gained from turbine upgrades when plants experience problems 
such as steam leakages or blade erosion. The typical turbine upgrade 
depends on the history of the turbine itself and its overall 
performance. The upgrade can entail myriad improvements, all of which 
affect the performance and associated costs. The availability of 
advanced design tools, such as computational fluid dynamics (CFD), 
coupled with improved materials of construction and machining and 
fabrication capabilities have significantly enhanced the efficiency of 
modern turbines. These improvements in new turbines can also be 
utilized to improve the efficiency of older steam turbines whose 
efficiency has degraded over time. Upgrades or overhauls of steam 
turbines may offer the greatest opportunity for HRI on many units. 
Significant increases in performance can be gained from turbine 
upgrades when plants experience problems such as steam leakages or 
blade erosion. The typical turbine upgrade depends on the history of 
the turbine itself and its overall performance. The upgrade can entail 
myriad improvements, all of which affect the performance and associated 
costs.
f. Redesign/Replace Economizer
    In steam power plants, economizers are heat exchange devices used 
to capture waste heat from boiler flue gas which is then used to heat 
the boiler feedwater. This use of waste heat reduces the need to use 
extracted energy from the system and, therefore, improves the overall 
efficiency or heat rate of the unit. As with most other heat transfer 
devices, the performance of the economizer will degrade with time and 
use, and power plant representatives contend that economizer 
replacements are often delayed or avoided due to concerns about 
triggering NSR requirements. In some cases, economizer replacement 
projects have been undertaken concurrently with retrofit installation 
of selective catalytic reduction (SCR) systems because the entrance 
temperature for the SCR unit must be controlled to a specific range.
2. Potential HRI Measures--Best Operating and Maintenance Practices
    Many unit operators can achieve additional HRI by adopting best 
operating and maintenance practices. The amount of achievable HRI will 
vary significantly from unit to unit. In setting a standard of 
performance for a specific unit or subcategory of units, states should 
consider the opportunities for HRI from the following actions.
a. Adopt HRI Training for O&M Staff
    EGU operators can obtain HRI by adopting ``awareness training'' to 
ensure that all O&M staff are aware of best practices and how those 
practices affect the unit's heat rate.
b. Perform On-Site Appraisals To Identify Areas for Improved Heat Rate 
Performance
    Some large utilities have internal groups that can perform on-site 
evaluations of heat rate performance improvement opportunities. Outside 
(i.e., third party) groups can also provide site-specific/unit-specific 
evaluations to identify opportunities for HRI.
c. Improved Steam Surface Condenser--Cleaning
    Effective operation of the steam surface condenser in a power plant 
can significantly improve a unit's heat rate. In fact, in many cases it 
can pose the most significant hindrance to a plant trying to maintain 
its original design heat rate. Since the primary function of the 
condenser is to condense steam flowing from the last stage of the steam 
turbine to liquid form, it is most desirable from a thermodynamic 
standpoint that this occurs at the lowest temperature reasonably 
feasible. By lowering the condensing temperature, the backpressure on 
the turbine is lowered, which improves turbine performance.
    Condenser Cleaning. A condenser degrades primarily due to fouling 
of the tubes and air in-leakage. Tube fouling leads to reduced heat 
transfer rates, while air in-leakage directly increases the 
backpressure of the condenser and degrades the quality of the water. 
Condenser tube cleaning can be performed using either on-line methods 
or more rigorous off-line methods. A full economic analysis should be 
performed to determine which off-line cleaning method is to be used. 
Such an analysis would result in an optimum offline or reduced-load 
cleaning schedule that could average between two and three cleanings a 
year. These analyses consider inputs such as operating data, plant 
performance, loads, time of year, etc., to accurately assess cleaning 
schedules for optimum economic performance.
3. Cost of HRI
a. Reasonableness of Cost
    As mentioned earlier, under CAA section 111(a)(1), EPA is required 
to determine ``the best system of emission reduction which (taking into 
account the cost . . .) . . . has been adequately demonstrated.'' In 
several cases, the D.C. Circuit has elaborated on this cost factor in 
various ways, stating that EPA may not adopt a standard for which costs 
would be ``exorbitant,'' \20\ ``greater than the industry could bear 
and survive,'' \21\ ``excessive,'' \22\ or ``unreasonable.'' \23\ These 
formulations appear to be synonymous and suggest a cost-reasonableness 
standard. Therefore, in this action, EPA has evaluated

[[Page 44759]]

whether the costs of HRI are considered to be reasonable.
---------------------------------------------------------------------------

    \20\ Lignite Energy, 198 F.3d at 933.
    \21\ Portland Cement, 513 F.2d at 508.
    \22\ Sierra Club, 657 F.2d at 343.
    \23\ Id.
---------------------------------------------------------------------------

    Any efficiency improvement made by an EGU will also reduce the 
amount of fuel consumed per unit of electricity output; fuel costs can 
account for as much as 70 percent of production costs of power. The 
cost attributable to CO2 emission reductions, therefore, is 
the net cost of achieving HRIs after any savings from reduced fuel 
expenses. So, over some time period (depending upon, among other 
factors, the extent of HRIs, the cost to implement such improvements, 
and the unit utilization rate), the savings in fuel cost associated 
with HRIs may be sufficient to cover the costs of implementing the HRI 
measures. Thus, the net costs of HRIs associated with reducing 
CO2 emissions from affected EGUs can be relatively low 
depending upon each EGUs' individual circumstances. It should be noted 
that this cost evaluation is not an attempt to determine the 
affordability of the HRI in a business or economic sense (i.e., the 
reasonableness of the imposed cost is not determined by whether there 
is an economic payback within a predefined time period). However, the 
ability of EGUs to recoup some of the costs of HRIs through fuel 
savings supports a finding that cost recovery is a reasonable factor in 
determining cost effectiveness.\24\
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    \24\ While some EGUs may not realize the full potential of cost 
recuperation from fuel savings, we expect that the net costs of 
implementing heat rate improvements as an approach to reducing 
CO2 emissions from fossil fuel-fired EGUs are reasonable.
---------------------------------------------------------------------------

    Most often, when evaluating costs for criteria pollutants--in a 
BACT analysis, for example--the emphasis is focused on the cost of 
control relative to the amount of pollutant removed--a metric typically 
referred to as the ``cost-effectiveness.'' There have been relatively 
few BACT analyses evaluating GHG reduction technologies for coal-fired 
EGUs; and, therefore not a large number of GHG cost-effectiveness 
determinations to compare against as a measure of the cost 
reasonableness. Nevertheless, in PSD and Title V permitting guidance 
for GHG emissions, EPA noted that ``it is important in BACT reviews for 
permitting authorities to consider options that improve the overall 
energy efficiency of the source or modification--through technologies, 
processes and practices at the emitting unit. In general, a more energy 
efficient technology burns less fuel than a less energy efficient 
technology on a per unit of output basis.'' \25\ EPA has also noted 
that a ``number of energy efficiency technologies are available for 
application to both existing and new coal-fired EGU projects that can 
provide incremental step improvements to the overall thermal 
efficiency.'' \26\
---------------------------------------------------------------------------

    \25\ See page 21, ``PSD and Title V Permitting Guidance for 
Greenhouse Gases,'' EPA-457/B-11-001, March 2011; https://www.epa.gov/sites/production/files/2015-12/documents/ghgpermittingguidance.pdf.
    \26\ See page 25, ``Available and Emerging Technologies for 
Reducing Greenhouse Gas Emissions from Coal-fired Electric 
Generating Units,'' October 2010; https://www.epa.gov/sites/production/files/2015-12/documents/electricgeneration.pdf.
---------------------------------------------------------------------------

b. Cost of the HRI Candidate Technologies Measures
    The estimated costs for the BSER candidate technologies are 
presented below in Table 2. These are cost ranges from the 2009 S&L 
Study \27\ updated to $2016. These costs correspond to ranges of HRI 
(percent) presented earlier in Table 1.
---------------------------------------------------------------------------

    \27\ ``Coal-Fired Power Plant Heat Rate Reductions'' Sargent & 
Lundy report SL-009597 (2009) https://www.epa.gov/sites/production/files/2015-08/documents/coalfired.pdf.

                                                   Table 2--Summary of Cost ($2016/kW) of HRI Measures
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      <200 MW                       200-500 MW                        >500 MW
                       HRI measure                       -----------------------------------------------------------------------------------------------
                                                                Min             Max             Min             Max             Min             Max
--------------------------------------------------------------------------------------------------------------------------------------------------------
Neural Network/Intelligent Sootblowers..................             4.7             4.7             2.5             2.5             1.4             1.4
Boiler Feed Pumps.......................................             1.4             2.0             1.1             1.3             0.9             1.0
Air Heater & Duct Leakage Control.......................             3.6             4.7             2.5             2.7             2.1             2.4
Variable Frequency Drives...............................             9.1            11.9             7.2             9.4             6.6             7.9
Blade Path Upgrade (Steam Turbine)......................            11.2            66.9             8.9            44.6             6.2            31.0
Redesign/Replace Economizer.............................            13.1            18.7            10.5            12.7            10.0            11.2
                                                         -----------------------------------------------------------------------------------------------
Improved O&M Practices..................................                                       Minimal capital cost.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In the CPP, EPA estimated the potential national average net HRI by 
coal-fired EGUs to between 2.1 to 4.3 percent for each interconnection, 
or about 4 percent nationally, with the improvements coming from some 
combination of best operating practices and equipment upgrades. The 
Agency noted in the CPP that the maximum cost of HRI from Table 2 is 
expected to be less than the $100/kW value used in the CPP proposal, 
especially as the EGU size increases; and, therefore, the Agency 
assessed the economic effects of HRI costs that might range from $50 to 
$100/kW. The technical applicability and efficacy of HRI measures and 
the cost of implementing them are dependent upon site specific factors 
and can vary widely from site to site. Because there is inherent 
flexibility provided to the states in applying the standards of 
performance, there is a wide range of potential outcomes that are 
highly dependent upon how the standards are applied (and to what degree 
states take into consideration other factors, including remaining 
useful life).
    In the RIA accompanying this proposal, the Agency evaluates three 
illustrative scenarios that recognize the inherent flexibility provided 
to states in applying standards of performance and provide insight on 
potential outcomes. For those illustrative scenarios, EPA evaluates 
costs ranging from $50/kW to $100/kW. EPA requests comment, with 
analysis, on other cost ranges that may be appropriate.
4. Nonair Quality Health and Environmental Impacts, Energy 
Requirements, and Other Considerations
    As directed by CAA section 111(a)(1), EPA has taken into account 
nonair quality health and environment requirements, and energy 
requirements for each of the candidate BSER technologies listed in 
Tables 1 and 2. None of the candidate technologies, if implemented at a 
coal-fired EGU, would be expected to result in any deleterious effects 
on any of the liquid effluents (e.g., scrubber liquor) or solid by-
products (e.g., ash, scrubber solids). All of these candidate 
technologies, when

[[Page 44760]]

implemented, would have the effect of improving the efficiency of the 
coal-fired EGUs to which they are applied. As such, the EGU would be 
expected to use less fuel to produce the same amount of electricity as 
it did prior to the efficiency (heat rate) improvement. None of 
candidate technologies is expected to impose any significant additional 
auxiliary energy demand.
    Implementation of heat rate improvement measures also would achieve 
reasonable reductions in CO2 emissions from affected sources 
in light of the limited cost-effective and technically feasible 
emissions control opportunities. In the same vein, because existing 
sources face inherent constraints that new sources do not, existing 
sources present different, and in some ways more limited, opportunities 
for technological innovation or development. Nevertheless, the proposed 
emissions guidelines encourage technological development by promoting 
further development and market penetration of equipment upgrades and 
process changes that improve plant efficiency.
5. Potential HRI at Existing Coal-Fired EGUs
    Government agencies and laboratories, industry research 
organizations, engineering firms, equipment suppliers, and 
environmental organizations have conducted studies examining the 
potential for improving heat rate in the U.S. EGU fleet or a subset of 
the fleet. Table 3 below provides a list of some reports, case studies, 
and analyses about HRI opportunities in the United States. EPA is 
seeking comment on how these studies (and any others that the Agency 
should be aware of) can inform our understanding of potential HRI 
opportunities (Comment C-8).

            Table 3--HRI Reports, Case Studies, and Analyses
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
   HRI report organization/publication (author, if known)--title--year
                                  [URL]
------------------------------------------------------------------------
Government Studies:
    Congressional Research Service (Campbell)--Increasing the Efficiency
     of Existing Coal-fired Power Plants (R43343)--2013 [https://fas.org/sgp/crs/misc/R43343.pdf].
    EIA--Analysis of Heat Rate Improvement Potential at Coal-Fired Power
     Plants--2015 [https://www.eia.gov/analysis/studies/powerplants/heatrate/pdf/heatrate.pdf].
    EPA--Greenhouse Gas Mitigation Measures--2015 [https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0602-37114].
    NETL--Opportunities to Improve the Efficiency of Existing Coal-fired
     Power Plants--2009 [http://www.netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/OpportImproveEfficExistCFPP-ReportFinal.pdf].
    NETL--Improving the Thermal Efficiency of Coal-Fired Power Plants in
     the United States--2010 [http://www.netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/ThermalEfficCoalFiredPowerPlants-TechWorkshopRpt.pdf].
    NETL--Improving the Efficiency of Coal-Fired Power Plants for Near
     Term Greenhouse Gas Emissions Reductions (DOE/NETL-2010/1411)--2010
     [http://www.netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/DOE-NETL-2010-1411-ImpEfficCFPPGHGRdctns-0410.pdf].
    NETL--Options for Improving the Efficiency of Existing Coal-Fired
     Power Plants (DOE/NETL-2013/1611)--2014 [https://www.netl.doe.gov/energy-analyses/temp/FY14_OptionsforImprovingtheEfficiencyofExistingCoalFiredPowerPlants_040114.pdf].
    IEA (Reid)--Retrofitting Lignite Plants to Improve Efficiency and
     Performance (CCC/264)--2016 [http://bookshop.iea-coal.org/reports/ccc-264/83861].
    IEA (Henderson)--Upgrading and Efficiency Improvement in Coal-fired
     Power Plants (CCC/221)--2013 [http://bookshop.iea-coal.org/reports/ccc-221/83186].
    European Commission--Integrated Pollution Prevention and Control
     Reference Document on Best Available Techniques for Large
    Combustion Plants--2006 [http://eippcb.jrc.ec.europa.eu/reference/BREF/lcp_bref_0706.pdf].
Industry/Industrial Groups:
    EPRI--Range of Applicability of Heat Rate Improvements--2014 [https://www.epri.com/#/pages/product/000000003002003457].
    ABB Power Generation--Energy Efficient Design of Auxiliary Systems
     in Fossil-Fuel Power Plants [https://library.e.abb.com/public/5e627b842a63d389c1257b2f002c7e77/Energy%20Efficiency%20for%20Power%20Plant%20Auxiliaries-V2_0.pdf].
    Alstom Engineering (Sutton)--CO2 Reduction Through Energy Efficiency
     in Coal-Fired Boilers--2011 [http://www.mcilvainecompany.com/Universal_Power/Subscriber/PowerDescriptionLinks/Jim%20Sutton%20-%20Alstom%20-%203-31-2011.pdf].
    GE--Comments of the General Electric Company--2014 [https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0602-22971].
    National Petroleum Council--Electric Generation Efficiency--2007
     [http://www.npc.org/Study_Topic_Papers/4-DTG-ElectricEfficiency.pdf].
    S&L--Coal-fired Power Plant Heat Rate Reductions (SL-009597)--2009
     [https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0602-36895 36895].
    S&L--Coal Fired Power Plant Heat Rate Reduction--NRECA (SL-012541)--
     2014 [https://www.regulations.gov/document?D=EPA-HQ-OAR-2013-0602-22767 22767 Supp 33].
    Storm Technologies--Applying the Fundamentals for Best Heat Rate
     Performance of Pulverized Coal Fueled Boilers--2009 [http://www.stormeng.com/pdf/EPRI2009HeatRateConference%20FINAL.pdf].
Environmental Groups/Academic Studies:
    Lehigh University--Reducing Heat Rates of Coal-fired Power Plants--
     2009 [http://www.lehigh.edu/~inenr/leu/leu_61.pdf].
    NRDC--Closing the Power Plant Carbon Pollution Loophole: Smart Ways
     the Clean Air Act Can Clean Up America's Biggest Climate
    Polluters (12-11-A)--2013 [https://www.nrdc.org/sites/default/files/pollution-standards-report.pdf].
    Resources for the Future (Lin et al.)--Regulating Greenhouse Gases
     from Coal Power Plants Under the Clean Air Act (RFF-DP-13-05)--2014
     [http://www.rff.org/files/sharepoint/WorkImages/Download/RFF-DP-13-05.pdf].
    Sierra Club (Buckheit & Spiegel)--Sierra Club 52 Unit Study--2014
     [http://content.sierraclub.org/environmentallaw/sites/content.sierraclub.org.environmentallaw/files/Appendix%201%20-%20Rate%20v%20Load%20Summary.pdf].
Other Publications:
    Power Engineering International (CoX)--Dry Sorbent Injection for SOX
     Emissions Control--2017 [http://www.powerengineeringint.com/articles/print/volume-25/issue-6/features/dry-sorbent-injection-for-sox-emissions-control.html].
    Power Mag (Korellis)--Coal-Fired Power Plant Heat Rate Improvement
     Options, Parts 1 & 2--2014 [http://www.powermag.com/coal-fired-power-plant-heat-rate-improvement-options-part-2] [http://www.powermag.com/coal-fired-power-plant-heat-rate-improvement-options-part-1].
    Power Mag (Peltier)--Steam Turbine Upgrading: Low-hanging Fruit--
     2006 [http://www.powermag.com/steam-turbine-upgrading-low-hanging-fruit fruit].
------------------------------------------------------------------------


[[Page 44761]]

    It has been noted that unit-level HRIs, with the resulting 
reductions in variable operating costs at those improved EGUs, could 
lead to increases in utilization of those EGUs as compared to other 
generating options (i.e., ``rebound effect''). See generally 80 FR 
64745.
    As part of the cost-benefit analysis in the RIA for this proposed 
action, EPA modeled a range of potential HRIs (percent improvement, as 
described in the RIA). The results of the modeling, for the years of 
analysis for this rule, predict that there will be no cumulative 
increases in system-wide emissions relative to a scenario where no 
action is taken. While the RIA shows that, under certain assumptions, 
sources that adopt HRI may increase generation, due to their improved 
efficiency and relatively improved economic competitiveness, they also 
generally reduce emissions (as a group) because they can generate 
higher levels of electricity with a lower overall emission rate. Hence, 
EPA analysis indicates that the system-wide emission decreases due to 
reduced heat rate are likely to be larger than any system-wide 
increases due to increased operation. EPA solicits comment on this 
conclusion (Comment C-9).

C. HRI for Natural Gas-Fired Stationary Combustion Turbines

    EPA has also considered opportunities for emission reductions at 
natural gas-fired stationary combustion turbines as a part of the 
BSER--at both simple cycle turbines and combined cycle turbines--and 
previously determined that the available emission reductions would 
likely be expensive or would likely provide only small overall 
reductions relative to those that were predicted through application of 
other systems of emission reduction identified in the CPP building 
blocks. In the development of the CAA section 111(b) standards of 
performance for new, modified, and reconstructed EGUs, several 
commenters provided information on options that may be available to 
improve the efficiency of existing natural gas-fired stationary 
combustion turbines. See 80 FR 64620. Commenters--including turbine 
manufacturers--described specific technology upgrades for the 
compressor, combustor, and gas turbine components that operators of 
existing combustion turbines may deploy. The commenters noted that 
these state-of-the-art gas path upgrades, software upgrades, and 
combustor upgrades have the potential to reduce GHG emissions by a 
significant amount. In addition, one turbine manufacturer stated that 
existing combustion turbines can achieve the largest efficiency 
improvements by upgrading existing compressors with more advanced 
compressor technologies, potentially improving the combustion turbine's 
efficiency by an additional margin. See 80 FR 64620.
    In addition to upgrades to the combustion turbine, the operator of 
a NGCC unit may have the opportunity to improve the efficiency of the 
heat recovery steam generator and steam cycle using retrofit 
technologies that may reduce the GHG emissions by 1.5 to 3 percent. 
These include: (1) Steam path upgrades that can minimize aerodynamic 
and steam leakage losses; (2) replacement of the existing high-pressure 
turbine stages with state-of-the-art stages capable of extracting more 
energy from the same steam supply; and (3) replacement of low-pressure 
turbine stages with larger diameter components that extract additional 
energy and that reduce velocities, wear, and corrosion.
    In the ANPRM, EPA requested comment on the broad availability and 
applicability of any HRIs for natural gas combustion turbine EGUs. EPA 
also solicited comment on the Agency's previous determination in the 
CPP that the available GHG emission reduction opportunities would 
likely provide only small overall GHG reductions as compared to those 
from HRIs at existing coal-fired EGUs. See 80 FR 64756.
    Several commenters suggested that there are significant 
opportunities for emission reductions via HRIs at natural gas combined 
cycle EGUs while many other commenters contended that any such emission 
reductions would be minimal and too expensive. Still, other commenters 
noted that operational changes--such as lower capacity factor or 
fluctuations in load (cycling)--affect the heat rate and make it 
difficult to accurately gauge the availability of HRI opportunities for 
NGCC EGUs.
    However, while numerous comments suggested that there are available 
HRI opportunities at existing NGCC EGUs, no commenters provided 
specific information on the availability, applicability, or cost of HRI 
opportunities for NGCC units--nor did any commenters provide any 
information on the magnitude of expected heat rate reductions.
    To assess potential HRI of existing NGCC EGUs, EPA looked at 11 
years of historical gross heat rate data from 2007 to 2017 for existing 
NGCC EGUs that reported both heat input and gross electricity output to 
the Agency in 2017. The Agency used the 2007 to 2016 data to calculate 
a ``benchmark'' heat rate for each unit. EPA evaluated the HRI 
potential using an approach that is similar to the method used to 
determine a unit-specific standard that was finalized for modified 
coal-fired EGUs. The Agency evaluated the HRI potential by comparing 
the 2017 national annual heat rate with the best annual heat rate in 
the years from 2007 to 2016 year. The HRI potential was calculated 
nationally and at each regional interconnection: East, West, and Texas. 
Nationally the HRI evaluation suggested an average HRI potential of 3.4 
percent.
    EPA also conducted a literature search and found some papers 
suggesting potential for improvement in the heat rate. The literature 
suggested that most HRIs would be accompanied by commensurate capacity 
increases.\28\ EPA takes comment on the estimates in this paper and is 
seeking any other information commenters have about the performance and 
cost of potential HRIs for turbines (Comment C-10). We also take 
comment on whether if EPA determined that HRIs in that range were 
available for similar costs, it would be appropriate for EPA to 
reconsider its determination that there are no HRIs that represent the 
BSER (Comment C-11).
---------------------------------------------------------------------------

    \28\ Phillips, J.; Levine, P.; ``Gas Turbine Performance Upgrade 
Options'', FERN Engineering Paper, available at http://www.fernengineering.com/pdf/gt_upgrade_options.pdf.
---------------------------------------------------------------------------

D. Other Considered Systems of GHG Emission Reductions

    EPA also considered other systems of GHG emission reductions that 
may be applied to affected EGUs but is not proposing that they should 
be part of the BSER for the reasons discussed below. EPA acknowledges 
that there may be other methods and technologies suitable for adoption 
at some specific sources, but states and sources are best suited to 
determine if those alternative measures and technologies are 
appropriate and/or allowable compliance measures.
1. Carbon Capture and Storage (CCS) \29\
    EPA has previously determined that CCS (or partial CCS) should not 
be a part of the BSER for existing fossil fuel-fired EGUs because it 
was significantly more expensive than alternative options for reducing 
emissions and may not be a viable option for many individual 
facilities. See 80 FR 64756. Even assuming that CAA section 111(d) may 
be used to project technological

[[Page 44762]]

advances, EPA must balance innovative technologies against their 
economic, energy, nonair health and environmental impacts. EPA 
continues to believe that neither CCS nor partial CCS are technologies 
that can be considered the BSER for existing fossil fuel-fired EGUs. 
However, if there is any new information regarding the availability, 
applicability, costs, or technical feasibility of CCS technologies, 
commenters are encouraged to provide that information to EPA (Comment 
C-12).
---------------------------------------------------------------------------

    \29\ CCS is sometimes referred to as Carbon Capture and 
Sequestration. It is also sometimes referred to as CCUS or Carbon 
Capture Utilization and Storage (or Sequestration), where the 
captured CO2 is utilized in some useful way and/or 
permanently stored (for example, in conjunction with enhanced oil 
recovery). In this document, we consider these terms to be 
interchangeable and for convenience will exclusively use the term 
CCS.
---------------------------------------------------------------------------

    Similarly, EPA considered whether CCS or partial CCS should be the 
BSER for natural gas-fired stationary combustion turbines and have 
determined that, currently, the technology is exorbitantly expensive, 
has not been adequately demonstrated, and would not be available for a 
large number of existing sources. Similar technologies--such as use of 
the novel Allam Cycle \30\--are, while seemingly promising, still in 
the early demonstration phase.
---------------------------------------------------------------------------

    \30\ https://www.netpower.com/.
---------------------------------------------------------------------------

2. Fuel Co-Firing
    EPA has previously determined that co-firing of alternative fuels 
(biomass or natural gas) in coal-fired utility boilers is not part of 
BSER for existing fossil fuel-fired sources due to cost and feasibility 
considerations. See 80 FR 64756. Although some fuel co-firing methods 
are technically feasible for some affected sources, there are factors 
and considerations that prevent its inclusion as BSER. In general, fuel 
use opportunities are dependent upon many regional considerations and 
characteristics (e.g., access to biomass, or natural gas pipeline 
infrastructure limitations), that prevent its adoption as BSER on a 
national level (whereas nearly all sources can or have implemented some 
form of heat rate improvement measures). Another important factor is 
cost, and broader application of fuel co-firing methods has been shown 
to be costly. While this proposal does not include fuel co-firing 
methods as BSER, EPA proposes that they be allowed as compliance 
options that states may consider (see Section VI). EPA solicits 
comment, nevertheless, on whether co-firing methods should be included 
among the list of BSER candidate technologies for states to evaluate 
when establishing a standard of performance for each affected source in 
their jurisdiction.
a. Natural Gas Co-Firing
    Coal-fired power plants typically use natural gas or other clean 
fuel (such as low sulfur fuel oil) for start-up operations and, if 
needed, to maintain the unit in ``warm stand-by.'' Some plants co-fire 
natural gas simultaneously with coal--either directly as a combustion 
fuel or in configuration referred to as natural gas reburn, which is 
used for NOx control. During periods of natural gas co-firing, an EGU's 
CO2 emission rate is reduced as natural gas is a less carbon 
intensive fuel than coal. For example, at 10 percent natural gas co-
firing, the net emissions rate (lb/MWh-net) of a typical unit would 
decrease by approximately 4 percent. On the other hand, co-firing can 
negatively impact a unit's efficiency due to the high hydrogen content 
of natural gas and the resulting production of water as a combustion 
by-product. And depending on the design of the boiler and extent of 
modifications, some boilers may be forced to de-rate (a reduction in 
generating capacity) in order to maintain steam temperatures at or 
within design limits, or for other technical reasons.
    In evaluating BSER technology options, CAA section 111(a)(1) 
directs EPA to take into account nonair quality health and 
environmental impacts, and energy requirements. EPA is unaware of any 
significant nonair quality health or environmental impacts associated 
with natural gas co-firing. However, in taking energy requirements into 
account, EPA notes that co-firing natural gas in coal-fired utility 
boilers is not the best, most efficient use of natural gas and, as 
noted above, can lead to inefficient operation of utility boilers. NGCC 
stationary combustion turbine units are much more efficient at using 
natural gas as a fuel for the production of electricity and it would 
not be an environmentally positive outcome for utilities and owner/
operators to redirect natural gas from the more efficient NGCC EGUs to 
the less efficient coal-fired EGUs in order to satisfy an emission 
standard at the coal-fired unit.
    Moreover, unlike coal, natural gas cannot be stored in quantities 
sufficient for sustained utilization on site. Accordingly, delivery of 
natural gas via pipeline is essential for using natural gas at coal-
fired EGUs. Many existing coal-fired plants, however, do not have 
access to natural gas transportation infrastructure and gaining access 
would be either infeasible (due to technical or timing considerations) 
or unreasonably costly.\31\ For plants that currently co-fire natural 
gas and have access to an existing natural gas pipeline, many may be 
capacity constrained (i.e., they are not able to greatly increase 
purchase volumes with the existing infrastructure). Accordingly, 
although natural gas fuel prices are currently low and some sources 
currently co-fire natural gas, on balance, there are notable challenges 
and concerns with instituting natural gas co-firing on a wide variety 
of units across the country. Therefore, EPA is not proposing that 
natural gas co-firing should be part of the BSER.
---------------------------------------------------------------------------

    \31\ In addition to new pipeline infrastructure, conversion to 
natural gas co-firing in a coal-fired boiler typically involves 
installation of new gas burners and supply piping, modifications to 
combustion air ducts and control dampers, and possibly modifications 
to the boiler's steam superheater, reheater, and economizer heating 
surfaces that transfer heat from the hot flue gas exiting the boiler 
furnace. The conversion may also involve modification and possible 
deactivation of some downstream air pollution emission control 
equipment.
---------------------------------------------------------------------------

b. Co-Firing Biomass
    The infrastructure, proximity and cost aspects of co-firing biomass 
at existing coal EGUs are similar in nature and concept to those of 
natural gas. While there are some existing coal-fired EGUs that 
currently co-fire with biomass fuel, those are in relatively close 
proximity to cost-effective biomass supplies; and, there are regional 
supply and demand dynamics at play. As with the other emission 
reduction measures discussed in this section, EPA expects that use of 
some types of biomass may be economically attractive for certain 
individual sources. However, on a broader scale, biomass co-firing is 
more expensive and/or less achievable than the measures determined to 
be part of the BSER. As such, EPA is not proposing that the use of 
biomass fuels is part of the BSER because too few individual sources 
will be able to employ that measure in a cost-reasonable manner.

VI. State Plan Development

A. Establishing Standards of Performance

1. Application of the BSER
    As discussed in Section III above, EPA has the authority to 
determine the BSER as part of regulations it promulgates pursuant to 
CAA section 111(d)(1) (providing that states shall submit plans to EPA 
establishing ``standards of performance'' for existing sources); see 
also CAA section 111(a)(1) (defining ``standard of performance'' with 
reference to the ``best system of emission reduction which . . . the 
Administrator determines has been adequately demonstrated''). For such 
regulations, EPA has traditionally promulgated emission guidelines 
governing the process for states to

[[Page 44763]]

submit plans which establish standards of performance which reflect the 
degree of emission limitation achievable through application of the 
BSER to each affected source within the state, in addition to the 
implementing regulations EPA initially promulgated in 1975 to set the 
general framework under which it would administer section 111(d). The 
implementing regulations that are also being proposed in this action 
(see Section VII below for a discussion on the proposed new 
implementing regulations) contain certain requirements for EPA in 
promulgating an emission guideline under section 111(d). One 
requirement of the new proposed implementing regulations (consistent 
with the previous implementing regulations and section 111(d) of the 
CAA) is that an EPA-promulgated emission guideline provide information 
on the degree of emission reduction which is achievable with each 
system, together with information on the costs, and nonair health and 
environmental effects, and energy requirements of applying each system 
to designated facilities.\32\ This means that EPA will provide, in 
addition to the BSER, information on the degree of emission reduction 
that is achievable when the BSER is applied. In the case of this 
proposed rulemaking and as described above in Section V, EPA is 
proposing that the BSER is HRI made at the unit level. To meet the 
requirements of the new proposed implementing regulations, EPA is 
proposing candidate technologies for HRI measures corresponding to a 
range of reductions and costs as information regarding the degree of 
emission reduction achievable through application of the BSER. Because 
affected EGUs in each state are different and the application of 
different HRI measures may take into account source-specific factors, 
EPA is providing expected ranges of HRIs. These ranges are shown in 
Table 1.
---------------------------------------------------------------------------

    \32\ This is consistent with the statutory definition of 
``standard of performance'' at CAA section 111(a)(1) (emphases 
added): ``a standard for emissions of air pollutants which reflects 
the degree of emission limitation achievable through the application 
of the best system of emission reduction which (taking into account 
the cost of achieving such reduction and any nonair quality health 
and environmental impact and energy requirements) the Administrator 
determines has been adequately demonstrated.''
---------------------------------------------------------------------------

    EPA expects that states can use the information that EPA provides 
on the degree of emission limitation in developing standards of 
performance for affected EGUs as part of establishing a standard of 
performance for inclusion in a state's plan pursuant to the 
requirements of section 111(d)(1). In this case, the ranges of HRIs are 
provided as guidance for states to use in evaluating the efficacy of 
implementing each measure identified as part of the BSER candidate 
technologies at each affected EGU. While the HRI potential range is 
provided as guidance for the states, the actual HRI performance for 
each of the candidate technologies will be unit-specific and will 
depend upon a range of unit-specific factors. The states will use the 
information provided by EPA as guidance, but will be expected to 
conduct unit-specific evaluations of HRI potential, technical 
feasibility, and applicability for each of the BSER candidate 
technologies. Once a state evaluates the HRIs identified as part of the 
BSER in establishing a standard of performance for a particular 
affected EGU, it is within the state's discretion to take certain 
factors concerning that source, such as remaining useful life, into 
consideration when determining how the standard of performance should 
be applied. The next section describes how states may derive a standard 
of performance reflecting the degree of emission limitation achievable 
through application of the BSER.
    Additionally, the new proposed implementing regulations require 
that an emission guideline identify information such as a timeline for 
compliance with standards of performance that reflect the application 
of the BSER. See proposed 40 CFR 60.22a. However, given the source-
specific nature of this proposed emission guideline and reasonably 
anticipated variation between standards established for sources within 
a state, EPA believes it more appropriate that a state establish 
tailored compliance deadlines for its sources based on the standard 
ultimately determined for each source. Accordingly, the EPA proposes to 
supersede this aspect of proposed 40 CFR 60.22a, as allowed under the 
applicability provision under proposed 60.20a, and allow for states to 
include appropriate compliance deadlines for sources based on the 
standards of performance determined as part of the state plan process.
    EPA is proposing, consistent with the new proposed implementing 
regulations (subpart Ba), that states will include custom compliance 
schedules for affected EGUs as part of their state plan. This is 
another area that states have latitude for taking into account unit 
specific factors. It should be noted however, that per the proposed new 
implementing regulations, if a state chooses to include a compliance 
schedule for a source that extends more than twenty-four months from 
the submittal of the state plan, the plan must also include legally 
enforceable increments of progress for that source (See proposed 40 CFR 
60.24a(d)(1)). The EPA solicits comment on whether states should 
determine source-specific compliance schedules under this emission 
guideline, or if a uniform compliance schedule is appropriate, and if 
so, what length of time is appropriate. (Comment C-13).
2. Determination of a Unit's Standard of Performance
    As described in other parts of this section, while EPA's role is to 
determine the BSER, section 111(d)(1) squarely places the 
responsibility of establishing a standard of performance for an 
existing source on the state as part of developing a state plan. EPA is 
proposing that once EPA determines the BSER, states are expected to 
evaluate each of the BSER HRI measures that EPA has determined 
represent BSER in establishing a standard of performance for each 
source within their jurisdiction. The states, in applying the standards 
of performance, may take into consideration, among other factors, the 
remaining useful life of the existing source to which the standard 
would apply (see Section VI.B.1 for further discussion on remaining 
useful life and other factors). The proposed BSER is a list of 
candidate technologies that are HRI measures, which states should 
evaluate, and potentially apply to existing sources as appropriate 
based upon the specific characteristics of those units. In general, EPA 
envisions that, under the proposed program, the states would set 
standards based on considerations most appropriate to individual 
sources or groups of sources (e.g., subcategories). These may include 
consideration of historical emission rates, effect of potential HRIs 
(informed by the information in EPA's candidate technologies described 
earlier in Section V), or changes in operation of the units, among 
other factors the state believes are relevant. As such, states have 
considerable flexibility in determining emission standards for units, 
as contemplated by the express statutory text.
    Several commenters on the ANPRM suggested that EPA should develop a 
default methodology for determining appropriate standards of 
performance that are consistent with the BSER. More specifically, 
commenters suggested that EPA should use a methodology that is similar 
to the one finalized for major modifications at coal-fired EGUs under 
the section 111(b) program--i.e., based on the use of historical heat 
rate or emissions data for the individual

[[Page 44764]]

source. Commenters also suggested that any approach covering all 
existing units should use at least ten years' worth of historical data 
and should be based on rolling averages for multiple year periods 
(e.g., the fourth highest three-year average during the historical 
look-back period). Other commenters suggested that the approach used 
for major modifications was too stringent to apply to all units. EPA 
understands that if the Agency were to provide a specific and 
presumptively-approvable methodology for establishing standards of 
performance, that approach would provide states with certainty in how 
to develop plans. EPA is not proposing a specific methodology or 
formula for establishing standards of performance for existing sources 
in this action. EPA believes that such a presumptive standard could be 
viewed as limiting a state's ability to deviate from the prescribed 
methodology and that the approach could ultimately be more limiting 
than helpful. While EPA is not proposing a presumptive formulaic 
approach in this action, the Agency is soliciting comment on approaches 
based on the use of historical heat rate or emissions data for the 
individual source (Comment C-14). The circumstances and considerations 
for establishing standards of performance under CAA 111(b) for affected 
sources that have undergone a modification (i.e., any physical change 
in or change in the method of operation that increases the hourly 
emissions of GHG) are not the same as the circumstances and 
considerations for states should take into account in establishing 
standards of performance under these proposed emission guidelines, but 
there are certainly parallels and similarities.
    As mentioned earlier, states may take into consideration other 
factors, including remaining useful life, when applying unit-specific 
standards of performance. Consideration of these factors may result in 
the application of the standard of performance in a less stringent 
manner than would otherwise be suggested by strict implementation of 
the BSER technologies. This topic is discussed in detail in Section 
VI.B.
    As previously described, this proposal seeks to clarify the 
Agency's and states' roles under section 111(d). The statute is clear 
that EPA determines the BSER, and states submit plans that establish 
standards of performance for existing sources that, under the 
definition of ``standard of performance in CAA section 111(a)(1), 
reflect the degree of emission limitation achievable though the 
application of the BSER. Consistent with the statute, EPA's proposed 
implementing regulations at 40 CFR 60.22a(b)(2) specify that an 
emission guideline must include information on the degree of emission 
reduction which is achievable, but does not require that EPA must 
provide a standard of performance that presumptively reflects such 
degree of emission reduction which is achievable through application of 
the BSER, as that is appropriately the states' role. EPA is proposing 
to clarify that the implementing regulations do not require EPA to 
provide a presumptive numerical standard as part of its emission 
guidelines and that the ranges of expected emission reductions that can 
be achieved in EPA's BSER determination adequately provide sufficient 
information to the states on the degree of emission limitation that 
will result from application of the BSER to existing sources to 
appropriately inform the states' exercise of their authority to develop 
plans under 111(d).
    Given that section 111(d)(1) requires states to submit plans that 
establish standards of performance for affected sources, EPA believes 
it is consistent with the spirit of cooperative federalism to provide 
information sufficient to assist states in the development of state 
plans, which in turn will provide both states and sources with 
regulatory certainty via a plan that is approvable under section 
111(d)(2) and applicable regulations. As mentioned above, EPA is 
proposing to provide information regarding ranges of expected 
reductions associated with the various HRIs identified as the BSER, 
which will assist states in establishing appropriate standards of 
performance for affected EGUs. EPA proposes to determine providing such 
information is consistent with both the implementing regulations at 40 
CFR 60.22(b) and CAA section 111(d) regarding the roles of states and 
EPA determining the degree of emission limitation achievable through 
application of the BSER.
    As described below in Section VI.B, under the statute, the proposed 
new implementing regulations, and these proposed emission guidelines, 
states have considerable flexibility in developing their plans and 
establishing and applying standards of performance to existing sources. 
One of the areas of flexibility described is in the standard setting 
process for EGUs. As part of this flexibility, EPA is proposing that 
states should have broad flexibility on whether and how the state 
chooses to group, sort, or subcategorize affected EGUs within the state 
to establish standards of performance. In evaluating affected EGUs, if 
a state finds that there is an overlap in circumstances around a group 
of EGUs, it might make sense to implement a uniform methodology for 
setting a standard of performance across that group. Another area of 
flexibility is explicitly provided in the statutory text of 111(d)(1) 
itself. The statute requires that EPA's regulations implementing 
section 111(d) 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.
3. Forms of Standards of Performance
    As described further in Section VII.C of this preamble, EPA is 
proposing a new implementing regulation for section 111(d) which 
includes a proposed definition of ``standard of performance that aligns 
with the statutory definition of the term under CAA section 111(a)(1). 
EPA is further proposing, as part of the new implementing regulations, 
that a specific emission guideline may contain provisions that 
supersede the applicability of the implementing regulations. In the 
context of these emission guidelines, EPA is proposing that an 
allowable emission rate (i.e., rate-based standard in, for example, lb 
CO2/MWh-gross) be the form of standard of performance that 
states would include in their state plans for affected EGUs. Primarily, 
an allowable emission rate most closely aligns to EPA's BSER 
determination for these emission guidelines. When HRIs are made at an 
EGU, by definition, the CO2 emission rate will decrease as 
described above in Section V.B. There is a natural correspondence 
between the BSER and an allowable emission rate as the standard of 
performance in this action. Secondly, EPA is proposing that state plans 
include only the one form of standard of performance (i.e., proposing 
only an allowable emission rate) to create continuity across states, 
prevent ambiguity, and to ensure as much simplicity as possible. 
However, EPA solicits comment on whether other forms of standards of 
performance should be allowed in state plans and whether a different 
form of standard should be the primary form that is authorized for 
state plans under a final emission guideline in response to this 
proposal (Comment C-15).
    EPA is proposing an allowable emission rate of CO2 as 
the form of the standard of performance because it creates the most 
straightforward system for states to determine standards and ensure 
compliance. This also creates a more streamlined evaluation for EPA to 
consider in state plan evaluation as there are fewer variables to 
consider (e.g., projections of utilization which

[[Page 44765]]

would be required if the standard of performance took a mass-based 
form).
4. Gross Versus Net Emission Standards
    EPA also requests comment on the merits of differentiating between 
gross and net heat rate (Comment C-16). This may be particularly 
important when considering the effects of part load operations (i.e., 
net heat rate would include inefficiencies of the air quality control 
system at a part load whereas gross heat rate would not). This will 
also be important in recognizing the improved efficiency obtained from 
upgrades to equipment that reduce the auxiliary power demand.

B. Flexibilities for States and Sources

    Once EPA determines the BSER, section 111(d)(1) of the CAA requires 
that ``each State shall submit to the Administrator a plan which (A) 
establishes standards of performance for any existing source [. . .], 
and (B) provides for the implementation and enforcement of such 
standards of performance.'' Section 111(d)(1) further requires EPA to 
``permit the State in applying a standard of performance to any 
particular source under a plan [. . .] to take into consideration, 
among other factors, the remaining useful life of the existing source 
to which such standard applies.''
    In light of the cooperative-federalist structure of section 111(d) 
and its express language requiring that EPA allow states to take into 
account source-specific factors when establishing standards of 
performance for existing sources, EPA believes it is appropriate in 
this proposal to provide considerable flexibility for states to set 
standards of performance for units and also allow states to have 
considerable latitude for implementing measures and standards for 
affected EGUs. A detailed discussion of the flexibility that states 
have in developing standards of performance is provided below in 
Section VI.B.1. States also have flexibility in the measures and 
processes that they put in place for affected EGUs to meet their 
compliance obligations. One of the examples of this is discussed in 
Section VI.B.2 on averaging and trading. As previously discussed, the 
BSER's candidate technologies affords states considerable flexibility 
to determine how to apply standards of performance to affected sources. 
Several commenters noted in the ANPRM that flexibility for States and 
affected sources should be part of any replacement rule, with States 
being able to choose from a wide variety of possible methods for 
developing a standard of performance, along with options for how to 
implement the standard through their state plans. Other commenters 
suggested that any flexible compliance opportunities provided should be 
directly linked to the determination of the BSER, such that increased 
compliance flexibility in the state's establishment of a standard of 
performance for an existing source can only be included to the extent 
that the flexibility is included as part of the BSER.
    Another important and distinctly different element of flexibility 
in this proposal is the availability of compliance options for affected 
sources in meeting their standards of performance. To the extent that a 
state develops a standard of performance for an affected source within 
its jurisdiction, the state is free to give the source flexibility to 
meet that standard of performance using either BSER technologies or 
some other non-BSER technology or strategy. In other words, an affected 
source may have broad discretion in meeting its standard of performance 
within the requirements of a state's plan. For example, there are 
technologies, methods, and/or fuels that can be adopted at the affected 
source to allow the source to comply with its standard of performance 
that were not determined to be the BSER, but which may be applicable 
and prudent for specific units to use to meet their compliance 
obligations. Examples of non-BSER technologies and fuels include HRI 
technologies that were not included as candidate technologies, CCS, and 
fuel co-firing (natural gas or certain biomass). In keeping with past 
programs that regulated affected sources using a standard of 
performance, EPA takes no position regarding whether there may be other 
methods or approaches to meeting such a standard, since there are 
likely various approaches to meeting the standard of performance that 
EPA is either unable to include as part of the BSER, or is unable to 
predict. EPA proposes that affected sources may use both BSER and non-
BSER measures to achieve compliance with their state plan obligations.
    To demonstrate that measures taken to meet compliance obligations 
for a source actually reduce its emission rate, EPA proposes that the 
measures should meet two criteria: (1) They are implemented at the 
source itself, and (2) they are measurable at the source of emissions 
using data, emissions monitoring equipment or other methods to 
demonstrate compliance, such that they can be easily monitored, 
reported and verified at a unit. There may be other technologies or 
compliance measures that meet these general criteria. EPA solicits 
comment on whether these two criteria are appropriate or not and why, 
and whether there may be compliance flexibilities that might meet the 
two proposed criteria (Comment C-17). This proposed rule is intended to 
generally allow compliance flexibility in state plans where 
appropriate, to the extent they contribute to meeting any particular 
standard of performance, consistent with the criteria. EPA is further 
soliciting comment on whether there are certain non-BSER measures that 
should be disallowed for compliance, and if so, under what criteria or 
rationale should measures be disallowed for compliance (Comment C-18).
    Section 111(d)(1)(B) additionally requires state plans to include 
measures that provide for the implementation and enforcement of 
standards of performance. EPA believes states can meet these 
requirements by including measures as described in Section VI.C of this 
proposal regarding state plan components, such as monitoring, 
reporting, and recordkeeping requirements. EPA solicits comments on 
what other implementation and enforcement measures may be necessary for 
states to meet the requirements of section 111(d)(1)(B) (Comment C-19). 
Additionally, as part of ensuring that regulatory obligations 
appropriately meet statutory requirements such as enforceability, EPA 
has historically and consistently required that obligations placed on 
sources be quantifiable, non-duplicative, permanent, verifiable, and 
enforceable. EPA is similarly proposing that standards of performance 
places on affected EGUs as part of a state plan be quantifiable, non-
duplicative, permanent, verifiable, and enforceable.
    The Agency specifically recognizes that some entities may be 
interested in using biomass as a compliance option for meeting the 
state determined emission standard.\33\ As with the other non-BSER 
measures discussed in this section, EPA expects that use of biomass may 
be economically attractive for certain individual sources even though 
on a broader scale it may be more expensive or less achievable than the 
measures determined to be part of the BSER (and therefore EPA is not 
proposing to determine that it should be included within the BSER, 
which is properly limited to measures likely to be cost-reasonable for 
a greater proportion

[[Page 44766]]

of existing sources than we believe biomass to be at this time).
---------------------------------------------------------------------------

    \33\ EPA believes that biomass co-firing can meet the two 
criteria above because the biomass can be burned at the source and 
there are different methods that can be used to monitor or calculate 
the amount of biogenic CO2 emissions associated with 
biomass use at a unit.
---------------------------------------------------------------------------

    Certain kinds of biomass, including that from managed forests, have 
the potential to offer a wide range of economic and environmental 
benefits, including carbon benefits. However, these benefits can 
typically only be realized if biomass feedstocks are sourced 
responsibly, which can include ensuring that forest biomass is not 
sourced from lands converted to non-forest uses. States that intend to 
propose the use of forest-derived biomass for compliance by affected 
units may refer to EPA's April 2018 statement on its intended treatment 
of biogenic CO2 emissions from stationary sources that use 
forest biomass for energy production.34 35 As discussed in 
the recent statement, EPA's policy is to treat biogenic CO2 
emissions resulting from the combustion of biomass from managed forests 
at stationary sources for energy production as carbon neutral.36 EPA 
will continue to evaluate the applicability of this policy of treating 
forest-biomass derived biogenic CO2 as carbon neutral based 
on relevant information, including data from interagency partners on 
updated trends in forest carbon stocks.
---------------------------------------------------------------------------

    \34\ https://www.epa.gov/sites/production/files/2018-04/documents/biomass_policy_statement_2018_04_23.pdf.
    \35\ This policy statement aligns with provisions in the 
Consolidated Appropriations Act, 2018, which calls for EPA, the 
Department of Energy and the Department of Agriculture to establish 
policies that, consistent with their missions, jointly ``reflect the 
carbon-neutrality of forest bioenergy and recognize biomass as a 
renewable energy source, provided the use of forest biomass for 
energy production does not cause conversion of forests to non-forest 
use.'' https://www.congress.gov/115/bills/hr1625/BILLS-115hr1625enr.pdf.
---------------------------------------------------------------------------

    EPA solicits comments on the inclusion of forest-derived biomass as 
a compliance option for affected units to meet state plan standards 
under this rule (Comment C-20). The Agency also solicits comment on the 
inclusion of non-forest biomass (e.g., agricultural, waste stream-
derived) for energy production as a compliance option, and what value 
to attribute to the biogenic CO2 emissions associated with 
non-forest biomass feedstocks (Comment C-21). EPA recognizes that CCS 
technology (described above in this section) could be applied in 
conjunction with biomass use.
1. State Discretion To Consider Remaining Useful Life and Other Factors 
in Setting Standards of Performance
    Section 111(d)(1) requires that EPA's regulations must permit 
states to take into account, among other factors, an affected source's 
remaining useful life when establishing an appropriate standard of 
performance. In other words, Congress explicitly envisioned under 
section 111(d)(1) that states could implement standards of performance 
that vary from EPA's emission guidelines under appropriate 
circumstances.
    Congress explicitly mentions consideration of remaining useful life 
in 111(d). Ultimately remaining useful life impacts cost. When EPA 
develops a BSER, EPA typically considers factors such as cost relative 
to assumptions about a typical unit. If the remaining useful life of a 
particular unit is less, that will generally increase the cost of 
control because the time to amortize capital costs is less. When 
congress mentions other factors, EPA believes that these are generally 
other factors that may substantially increase costs relative to a more 
typical unit.
    As such, EPA is proposing, as part of the proposed implementing 
regulations, to permit states to take into account remaining useful 
life, among other factors, in establishing a standard of performance 
for a particular affected source, consistent with section 111(d)(1)(B). 
EPA solicits comments on the manner in which states should be permitted 
to exercise their statutory authority to take into account remaining 
useful life and on what ``other factors'' might appropriately be 
besides remaining useful life (Comment C-22). As described in Section 
VII.F., EPA further proposes as part of the new implementing 
regulations that the following factors give meaning to section 
111(d)(1)(B):
     Unreasonable cost of control resulting from plant age, 
location, or basic process design;
     Physical impossibility of installing necessary control 
equipment; or
    Other factors specific to the facility (or class of facilities) 
that make application of a less stringent standard or final compliance 
time significantly more reasonable. Given that there are unique 
attributes and aspects of each affected source, there are important 
factors that influence decisions to invest in technologies to meet a 
potential performance standard. These include timing considerations 
like expected life of the source, payback period for investments, the 
timing of regulatory requirements, and other unit-specific criteria. 
The state may find that there are space or other physical barriers to 
implementing certain HRIs at specific units. Or the state may find that 
some heat rate improvement options are either not applicable or have 
already been implemented at certain units. EPA understands that many of 
these ``other factors'' that can affect the application of the BSER 
candidate technologies distill down to a consideration of cost. 
Applying a specific candidate technology at an affected EGU can be a 
unit-by-unit determination that weighs the value of both the cost of 
installation and the CO2 reductions. Accordingly, EPA 
proposes that these factors are the types that are specific to the 
facility (or class of facilities) that make a variance from the 
emission guideline significantly more reasonable, as allowed under 
proposed 40 CFR 60.24a(e)(3). EPA, therefore, proposes to allow states 
to take these factors into account in establishing a standard of 
performance for state plans in response to this emission guideline. EPA 
further solicits comments on what are other factors that states should 
be allowed to consider in establishing a standard of performance, per 
the proposed variance provision (Comment C-23).
    As previously described, EPA proposes that states that utilize the 
proposed variance provision in the new implementing regulations to 
establish a less stringent standard of performance for an affected EGU 
and/or a compliance schedule that is longer than that contemplated in 
EPA's final emission guideline must demonstrate as part of their state 
plan submission that such application of the provision meets the 
criteria described in the factors in Section VII.D. EPA also recognizes 
that for some sources, the criteria may result in determining that no 
measures in the candidate technologies are applicable. Two examples of 
this might be a unit with a very short remaining useful life or a unit 
that has already implemented all of the candidate technologies of the 
BSER. In cases such as these, a state should still establish a standard 
of performance. In the case of a unit with a short remaining useful 
life, EPA takes comment on what such a standard might look like 
(Comment C-24). For instance, a state could set a standard using both 
an emission rate and a compliance deadline to address this instance. 
The emission standard would only be applicable if a source did not shut 
down by the compliance deadline. In the case of an affected EGU that 
has already implemented all of the candidate technologies, EPA would 
expect that a state set a standard of performance that would reflect an 
emission rate that is at least as stringent as ``business as usual'' 
for that source without allowing for any backsliding on performance. 
EPA requests comment on these proposed treatments of a source that 
either has a short remaining useful

[[Page 44767]]

life or has already implemented all of the HRIs identified as the BSER.
    EPA is also generally soliciting comment on whether there are 
considerations in allowing states to utilize this proposed variance 
provision in the new implementing regulations in response to the final 
emission guideline, including the potential interaction of the 
compliance flexibilities proposed in this proposal with utilization of 
the provision (Comment C-25). For example, could states authorize 
trading as a compliance mechanism for affected EGUs and additionally 
invoke this provision, or would utilizing both trading and this 
provision in establishing standards in a state plan potentially result 
in such standards going beyond what section 111(d) permits (i.e., would 
allowing for both trading and a variance with respect to the same 
standard result in a standard that is impermissibly less stringent than 
what application of the BSER in conjunction with invocation of this 
provision would result in)? EPA welcomes comments on the legality and 
appropriateness of utilizing this provision generally, and in the 
context of specific compliance flexibilities that states may employ in 
developing their plans (Comment C-26).
    Another consideration for states in determining a standard of 
performance with consideration to unique aspects at an affected EGU is 
the interaction between BSER and NSR. EPA is aware that the prospect of 
triggering NSR, and its associated permitting requirements, may have 
discouraged sources from implementing some heat rate improvements 
previously. In Section VIII of this preamble, EPA discusses proposed 
changes to alleviate NSR burdens for EGUs undertaking heat rate 
improvements. The proposed action on NSR would ultimately impact the 
level of reductions reflected in the standard of performance that a 
state establishes for its sources. In considering each of the candidate 
technologies, EPA believes it is appropriate for states to consider the 
potential that the application of HRI may trigger NSR for some sources, 
and associated NSR requirements could ultimately impact the cost of HRI 
and the way the state applies standards to an affected EGU. EPA 
solicits comment on any factors that may play a role in a state setting 
a standard of performance with consideration to NSR (Comment C-27).
2. Averaging and Trading
    EPA solicits comment on the question of whether CAA section 111(d) 
authorizes states to include averaging and trading between existing 
sources in the plans they submit to meet the requirements of a final 
emission guideline (Comment C-28). Section 111(d)(1) provides that 
states shall submit a plan which (A) establishes standards of 
performance for any existing source of certain air pollutants to which 
a 111(b) standard would apply if they were new sources, and (B) 
provides for the implementation and enforcement of such standards of 
performance. EPA's regulations under section 111(d) must permit the 
state, in applying a standard of performance to any particular existing 
source under a state plan, to consider, among other factors, the 
remaining useful life of that source.
    To be clear, this section discusses averaging in the context of 
averaging across a facility and across multiple existing sources. For a 
discussion on EPA allowing individual EGU emissions averaging over a 
period of time, see Section VI.C.
    EPA is proposing to allow states to incorporate, as a part of their 
plan, emissions averaging among EGUs across a single facility. The 
Agency's determination of the BSER is predicated on measures that can 
be implemented at the facility level and averaging across a facility is 
consistent with the proposed BSER. EPA is proposing that averaging at a 
facility only be applicable to affected EGUs (i.e. coal-fired steam 
EGUs) for several reasons. First, if averaging could include non-
affected EGUs, this might not result in real reductions, but simply 
result in averaging with lower-emitting emitting fossil-fuel-fired EGUs 
such as NGCC units that would have been operating anyway. Further, even 
if it did result in generation shifting to lower emitting units it is 
contrary to the intention of the rule which is to focus on reducing the 
rate at coal-fired EGUs when they run, not to reduce the amount they 
run. Second, EPA is currently considering whether NGCC units should 
become affected EGUs. How NGCC units fit into an averaging program will 
be determined if a determination is made that they are affected EGUs in 
this program. Third, EPA is proposing that facility-wide averaging only 
apply to affected EGUs because it would mirror the BSER determination 
for this rule. The EPA solicits comment on whether this type of 
facility-wide averaging of affected EGUs is appropriate and whether 
there should be other types of considerations involved (Comment C-29). 
EPA is also taking comment on the possibility of averaging affected 
EGUs with non-affected EGUs within a facility in the limited case when 
they represent incremental new non-emitting capacity (Comment C-30). 
This would be consistent with a compliance option such as integrated 
solar.
    Notwithstanding EPA's discussion above, EPA believes that there are 
both legal and practical concerns may weigh against the inclusion of 
averaging and trading between existing sources in state plans at any 
level more broad than averaging between sources across a particular 
facility. First, EPA is concerned that averaging and trading across 
affected sources (or between affected sources and non-affected sources, 
e.g., wind turbines) would be inconsistent with our proposed 
interpretation of the BSER as limited to measures that apply at and to 
an individual source. Because state plans must establish standards of 
performance--which by definition ``reflect . . . the application of the 
[BSER],'' CAA section 111(a)(1)--implementation and enforcement of such 
standards should correspond with the approach used to set the standard 
in the first place. Applying a different analytical approach to 
standard-setting may result in asymmetrical regulation (for example, a 
state's implementation measures might result in a more stringent 
standard than could otherwise be derived from application of the 
BSER).\37\
---------------------------------------------------------------------------

    \37\ While CAA section 116 allows for states to adopt more 
stringent state laws, and provides that the CAA does not preempt 
such state laws, it does not provide that those more stringent 
standards are federalized.
---------------------------------------------------------------------------

    Second, EPA believes that if section 111(d) authorized states to 
include trading and averaging between sources in their plans, the 
express provision under 111(d)(1) authorizing states to consider 
existing sources' remaining useful life and other factors when 
establishing and applying standards of performance could be viewed as 
superfluous. Once a state takes into consideration a source's remaining 
useful life and other factors (e.g., unreasonable cost of control 
resulting from plant age, location, or basic process design; physical 
impossibility of installing necessary control equipment; whether the 
source has already undertaken some of the measures encompassed in the 
BSER; or other factors), then additional compliance flexibilities may 
not be required or otherwise appropriate. Indeed, averaging and trading 
by themselves would appear to eliminate the need to take into 
consideration a source's remaining useful life: If a source cannot meet 
a performance standard (or if it is impractical or inadvisable to 
require that source to do so), but if the state, in its plan, is 
authorized to permit that

[[Page 44768]]

source to average or otherwise obtain credits for its performance with 
other sources' performance, there may have been no need for Congress to 
specifically require EPA to permit states to conduct a remaining-
useful-life analysis. Moreover, the source-focused language in 
111(d)(1) both generally weighs in favor of EPA's proposed 
interpretation of the BSER as limited to source-specific measures, and 
specifically weighs against interpreting section 111(d) to authorize 
state plans to include averaging and trading.
    Third, multiple practical concerns regarding emissions averaging 
and trading between sources inform EPA's concerns regarding inclusion 
of those mechanisms in state plans under section 111(d) and its 
solicitation of comment on this issue. These concerns include the 
relative complexity of development and implementation of a state plan 
that includes averaging or trading, as well as the difficulty in 
ensuring robust compliance with standards of performance by means of 
averaging or trading. Trading programs necessitate developing adequate 
means of evaluation, monitoring, and verification (EM&V) to ensure that 
standards of performance are actually complied with, and these 
programmatic aspects increase the burden on states in developing a 
satisfactory state plan, and on sources in demonstrating compliance. 
Additionally, either a mass-based or rate-based trading program 
potentially brings into question of whether the state has established 
standards of performance that appropriately reflect the BSER. Under a 
trading program, a single source could potentially shut down or reduce 
utilization to such an extent that its reduced or eliminated operation 
generates adequate compliance instruments for a state's remaining 
sources to meet their standards of performance without implementing any 
additional measures at any other source. This compliance strategy might 
undermine EPA's BSER, which EPA is proposing to determine as a menu of 
heat rate improvements. It would also undermine the purpose of section 
111 in a broader sense. The section is directed toward the improvement 
of performance of new sources, and, through section 111(d)'s specific 
procedures, of existing sources. It is not, under EPA's proposed 
interpretation of section 111 (and contrary to the interpretation 
underlying the CPP), directed toward the aggregate emissions of an 
industrial sector as a whole, at either the state or national level. 
Adopting an interpretation of section 111(d) that could lead to relying 
on the shutdown or reduced operation of one or a small handful of 
sources in order to cap or limit the source category's aggregate 
emissions, while not resulting in the improved performance of any other 
source, may be contrary to the structure and purpose of section 111 as 
a whole and section 111(d) specifically.
    However, EPA recognizes that there are significant benefits of 
averaging and trading across affected sources and is interested in 
whether emissions averaging could be a way to provide flexibility while 
still focusing on a core tenet of the BSER for this rule: Reducing 
emissions per MWH of coal-fired generation. Since averaging 
traditionally focuses only on the emission rate during hours of 
operation, it focuses on encouraging lowering emissions per MW 
generated and not on encouraging generation shifting away from the 
affected source category. The EPA welcomes comment on whether there is 
a way to allow trading between affected EGUs across affected sources 
while not encouraging generation shifting (Comment C-31).
    EPA is soliciting comment on whether section 111(d) should be read 
not to authorize states to include trading and averaging between 
sources, EPA is also interested in affording flexibility to states and 
sources in meeting their respective obligations and solicits public 
comment on whether this proposed interpretation and conclusion is 
compatible with that goal. EPA is primarily interested in comments 
pertaining to whether averaging could and should be allowed for 
trading, and to what degree (i.e., averaging across a state, or 
trading) (Comment C-32). If a commenter believes that averaging across 
multiple affected sources should be allowed as part of a state's plan, 
EPA requests comment on how the averaging system should conceptually 
work (Comment C-33). EPA requests comment on how allowing averaging 
across multiple affected sources would or would not undermine the BSER 
determination (Comment C-34). If a commenter believes that trading 
should be allowed as part of a state's plan, EPA requests comment on 
what type of EM&V criteria should be included for the compliance 
instruments (Comment C-35). If a commenter believes that trading should 
be allowed as part of a state's plan, EPA requests comment on whether 
sources should be allowed to bank compliance instruments (Comment C-
36). If a commenter believes that averaging across multiple affected 
sources should be allowed as part of a state's plan, EPA requests 
comment on what mechanisms states would need to employ to ensure 
compliance is maintained and tracked for purposes of providing for the 
implementation and enforcement of the standards of performance (Comment 
C-37). If a commenter believes that averaging across multiple affected 
sources should be allowed as part of a state's plan, EPA requests 
comment on which and/or if technology should be limited in the 
averaging program (Comment C-38). If a commenter believes that 
averaging across multiple affected sources should be allowed as part of 
a state's plan, EPA requests comment on whether affected EGUs across 
state lines could be able to average and what measures state plans 
should include to provide for the implementation and enforcement of 
such multi-state averaging (Comment C-39). EPA further requests comment 
on the issues of statutory interpretation laid forth above, whether 
they are appropriate interpretations of section 111(d) specifically and 
section 111 generally, in terms of the provision's text, structure, and 
purpose (Comment C-40). EPA additionally solicits comment on whether 
such averaging, trading, or ``bubbling'' compliance flexibilities as 
are available under other sections of title I of the CAA suggest that 
such flexibilities should be afforded under state plans under section 
111(d) (Comment C-41).

C. Submission of State Plans

    Section 111(d)(1) of the Clean Air Act requires that in addition to 
establishing standards of performance for affected sources, such plans 
must also provide for the implementation and enforcement of such 
standards. As described in Section VII, EPA is proposing new 
implementing regulations for section 111(d), which in part carry over a 
number of the same provisions currently present in the existing 
implementing regulations under 40 CFR part 60, subpart B. EPA is 
proposing that these provisions apply for states to meet the 
requirement that state plans include implementation and enforcement 
measures. EPA requests comment on whether these provisions are 
appropriate to apply for purposes of meeting obligations under a final 
rule in response to this proposal, or whether other implementation or 
enforcement measures should be required (Comment C-42).
    Additionally, EPA is proposing that states must include appropriate 
monitoring, reporting, and recordkeeping requirements to ensure that 
state plans adequately provide for the implementation and enforcement 
of standards of performance. Each state will have the flexibility to 
design a

[[Page 44769]]

monitoring program for assessing compliance with the standards of 
performance identified in the plan. Most potentially affected coal-
fired EGUs already continuously monitor CO2 emissions, heat 
input, and gross electric output and report hourly data to EPA under 40 
CFR part 75. Accordingly, if a state plan establishes a standard of 
performance for a unit's CO2 emissions rate (e.g., lb/MWh), 
EPA proposes that states may elect to use data collected by EPA under 
40 CFR part 75 to meet the required monitoring, reporting, and 
recordkeeping requirements under this emission guideline.
    EPA also notes that states have it within their discretion to 
establish averaging times for affected EGUs. Averaging the emission 
rate of an affected EGU over different time periods may have different 
effects on the demonstration of compliance for an EGU to the state. EPA 
solicits comment on whether there should be any bounds or consideration 
to the averaging times that states are allowed to consider (Comment C-
43).
    EPA is further proposing to apply generally the proposed new 
implementing regulations for timing, process and required components 
for state plan submissions and implementation for state plans required 
under for affected EGUs. The new implementing regulations are described 
in detail in Section VII. In addition to application of the 
implementing regulations to state plans in response to a final emission 
guideline under this proposal, EPA is also proposing that state plans 
be comprehensively submitted electronically through an EPA provided 
platform. EPA solicits comment on whether electronic submittals are 
appropriate and less burdensome to states (Comment C-44) and whether 
this should be the sole means of submitting state plans (Comment C-45). 
EPA believes that electronic submittals will ease the burden of state 
plan submittals for both states and EPA.
    In section 60.5740a of the regulatory text for this proposal, there 
is description and list of what a state plan must include. EPA solicits 
comment on whether this list is comprehensive to submit a state plan 
(Comment C-46).

VII. Proposed New Implementing Regulations for Section 111(d) Emission 
Guidelines

    Distinct from EPA's proposed emission guidelines for the regulation 
of GHGs for existing affected EGUs, EPA is also proposing to promulgate 
new regulations to implement section 111(d) regulations. As previously 
described, the current implementing regulations at 40 CFR part 60, 
subpart B were promulgated in 1975 [See 40 FR 53346.]. Section 
111(d)(1) of the CAA explicitly requires that EPA establish regulations 
similar to those under section 110 of the CAA to establish a procedure 
for states to submit plans to EPA. The implementing regulations have 
not been significantly revised since their original promulgation in 
1975. Notably, the implementing regulations do not reflect section 
111(d) in its current form as amended by Congress in 1977, and do not 
reflect section 110 in its current form as amended by Congress in 1990. 
Accordingly, EPA believes that certain portions of the implementing 
regulations do not appropriately align with section 111(d), contrary to 
that provision's mandate that EPA's regulations be ``similar'' to the 
provisions under section 110. Therefore, EPA is proposing to promulgate 
new implementing regulations that are in accordance with the statute in 
its current form. As previously discussed, agencies have the ability to 
revisit prior decisions, and EPA believes it is appropriate to do so 
here in light of the potential mismatch between certain provisions of 
the implementing regulations and the statute.\38\
---------------------------------------------------------------------------

    \38\ The authority to reconsider prior decisions exists in part 
because 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). 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 (DC Cir. 2017).
---------------------------------------------------------------------------

    EPA is proposing to largely carry over the current implementing 
regulations in 40 CFR part 60, subpart B to a new subpart that will be 
applicable to EPA's emission guidelines and state plans or federal 
plans associated with such emission guidelines, both those contemplated 
in this proposal and for any others that may be published or 
promulgated either concurrently or subsequent to final promulgation of 
the new implementing regulations. For purposes of regulatory certainty, 
EPA believes it is appropriate to apply these new implementing 
regulations prospectively, and retain the existing implementing 
regulations as applicable to section 111(d) emission guidelines and 
associated state plans that were promulgated previously. Additionally, 
the existing implementing regulations at 40 CFR part 60, subpart B are 
applicable to regulations promulgated under CAA section 129, and 
associated state plans. EPA intends to retain the applicability of the 
existing implementing regulations with respect to rules and state plans 
associated with section 129, and the proposed new implementing 
regulations are intended to apply only to section 111(d) regulations 
and associated state plans issued solely under the authority of section 
111(d). EPA requests comments on this proposed applicability of both 
the existing and new implementing regulations (Comment C-47).
    EPA is aware that there are a number of cases where state plan 
submittal and review processes are still ongoing for existing 111(d) 
emission guidelines. Because EPA is proposing changes to the timing 
requirements to more closely align 111(d) with both general SIP 
submittal timing requirements and because of the realities of how long 
these actions take, EPA is proposing to apply the changes to timing 
requirements to both emission guidelines published after the new 
implementing regulations are finalized, and to all ongoing emission 
guidelines already published under section 111(d). EPA is soliciting 
comment on the proposed timing requirements for prospective emission 
guidelines under the new implementing regulations and the alignment of 
ongoing emission guidelines by amending their respective regulatory 
text to incorporate the new timing requirements. (Comment C-48). EPA is 
proposing to apply the timing changes to all ongoing 111(d) regulations 
for the same reasons that EPA is changing the timing requirements 
prospectively. Based on years of experience with working with states to 
develop SIPs under section 110, EPA believes that given the comparable 
amount of work, effort, coordination with sources, and the time 
required to develop state plans that more time is necessary for the 
process. Giving states three years to develop state plans is more 
appropriate than the nine months provided for under the existing 
implementing regulations considering the workload. These practical 
considerations regarding the time needed for state plan development are 
also applicable and true for recent emission guidelines where the state 
plan submittal and review process are still ongoing.
    For those provisions that are being carried over from the existing 
implementing regulations into the new implementing regulations, EPA 
believes the placement of those provisions under a new subpart is a 
ministerial action that does not require reopening the substance of 
those provisions for notice and comment. EPA is not intending to 
substantively change those provisions from their original promulgation, 
and continues to rely on the record under

[[Page 44770]]

which they were promulgated. Therefore, EPA is not soliciting comment 
on the following provisions, which remain substantively the same from 
their original promulgation: 40 CFR 60.21a(a)-(d), (g)-(j) 
(Definitions); 60.22a(a), 60.22a(b)(1)-(3), (b)(5), (c) (Publication of 
emission guidelines); 60.23a(a)-(c), (d)(3)-(5), (e)-(h) (Adoption and 
submittal of State plans; public hearings); 60.24a(a)-(d), (f) 
(Standards of performance and compliance schedules); 60.25a (Emission 
inventories, source surveillance, reports); 60.26a (Legal authority); 
60.27a(a), (e)-(f) (Actions by the Administrator); 60.28a(b) (Plan 
revisions by the State); 60.29a (Plan revisions by the Administrator).
    EPA is also sensitive to potential confusion over whether these new 
implementing regulations would apply to an emission guideline 
previously promulgated or to state plans associated with a prior 
emission guideline, so EPA is proposing that the new implementing 
regulations are applicable only to emission guidelines and associated 
plans developed after promulgation of this regulation, including the 
emission guideline being proposed as part of this action for GHGs and 
existing affected EGUs. EPA solicits comment on this proposed 
applicability of the new implementing regulations (Comment C-49).
    While EPA is carrying over a number of requirements from the 
existing implementing regulations, EPA is proposing specific changes to 
better align the regulations with the statute. These changes are 
reflected in the proposed regulatory text for this action, and EPA 
solicits comments on both the substance of these changes and the 
proposed regulatory text (Comment C-50). These changes include:
     An explicit provision allowing a specific emission 
guideline to supersede the requirements of the new implementing 
regulations;
     Changes to the definition of ``emission guideline'';
     Updated timing requirements for the submission of state 
plans;
     Updated timing requirements for EPA's action on state 
plans;
     Updated timing requirements for EPA's promulgation of a 
federal plan;
     Updated timing requirement for when increments of progress 
must be included as part of a state plan;
     Completeness criteria and a process for determining 
completeness of state plan submissions similar to CAA section 110(k)(1) 
and (2);
     Updated definition replacing ``emission standard'' with 
``standard of performance;''
     Usage of the internet to satisfy certain public hearing 
requirements;
     No longer making a distinction between public health-based 
and welfare-based pollutants in an emission guideline; and,
     Updating the variance provision to be consistent with CAA 
section 111(d)(1)(B).
    EPA is proposing to include a provision in the new implementing 
regulations that expressly allows for any emission guideline to 
supersede the applicability of the implementing regulations as 
appropriate. EPA cannot foresee all of the unique circumstances and 
factors associated with a particular future emission guideline, and 
therefore different requirements may be necessary for a particular 
111(d) rulemaking that EPA cannot envision at this time. The proposed 
provision is parallel to one contained in the 40 CFR part 63 General 
Provisions implementing section 112 of the CAA. EPA solicits comments 
on the inclusion of such provision as part of the implementing 
regulations for section 111(d) (Comment C-51).
    Because EPA is updating the implementing regulations and many of 
the provisions from the existing implementing regulations are being 
carried over, EPA wants to be clear and transparent with regard to the 
changes that are being made to the implementing regulations. As such, 
EPA is providing Table 4 that summarizes the changes being made. EPA 
also has included in the docket for this action a red-line-strike-out 
of the changes that are being proposed.

       Table 4--Summary of Changes to the Implementing Regulations
------------------------------------------------------------------------
                                              Existing implementing
 New implementing regulations--subpart    regulations--subpart B for all
   Ba for all future 111(d)  emission     previously  promulgated 111(d)
               guidelines                      emission guidelines
------------------------------------------------------------------------
Explicit authority for a new 111(d)      No explicit authority.
 emission guideline requirement to
 supersede these implementing
 regulations.
Use of term ``guideline document'';      Use of term ``emission
 does not require EPA to provide a        guideline''; arguably required
 presumptive emission standard.           EPA to provide a presumptive
                                          emission standard.
Use of term ``standard of performance''  Use of term ``emission
                                          standard''.
``Standard of performance'' allows       ``Emission standard'' allows
 states to include design, equipment,     states to prescribe equipment
 work practice, or operational            specifications when EPA
 standards when EPA determines it's not   determines it's clearly
 feasible to prescribe or enforce a       impracticable to establish an
 standard pf performance, consistent      emission standard.
 with the requirements of CAA section
 111(h).
State submission timing: 3 years from    State submission timing: 9
 promulgation of a final emission         months from promulgation of a
 guideline.                               final emission guideline.
EPA action on state plan submission      EPA action on state plan
 timing: 12 months after determination    submission timing: 4 months
 of completeness.                         after submittal deadline.
Timing for EPA promulgation of a         Timing for EPA promulgation of
 federal plan, as appropriate: 2 years    a federal plan, as
 after finding of failure to submit a     appropriate: 6 months after
 complete plan, or disapproval of state   submittal deadline.
 plan.
Increments of progress are required if   Increments of progress are
 compliance schedule for a state plan     required if compliance
 is longer than 24 months after the       schedule for a state plan is
 plan is due.                             longer than 12 months after
                                          the plan is due.
Completeness criteria and process for    No previous discussion.
 state plan submittals.
Usage of the internet to satisfy         No previous discussion.
 certain public hearing requirements.
No distinction made in treatment         Different provisions for health-
 between health-based and welfare-based   based and welfare-based
 pollutants; variance provision           pollutants; state plans must
 available regardless of type of          be as stringent as EPA's
 pollutant.                               emission guideline for health-
                                          based pollutants unless
                                          variance provision is invoked.
------------------------------------------------------------------------


[[Page 44771]]

A. Changes to the Definition of ``Emission Guideline''

    The existing implementation regulations under 40 CFR 60.21(e) 
contain a definition of ``emission guideline'', defining it as a 
guideline which reflects the degree of emission reduction achievable 
through the application of the best system of emission reduction which 
(taking into account the cost of such reduction) the Administrator has 
determined has been adequately demonstrated for designated facilities. 
This definition additionally references that an emission guideline may 
be set forth in 40 CFR part 60, subpart C or a ``final guideline 
document'' published under 40 CFR 60.22(a). While the implementing 
regulations do not define the term ``final guideline document,'' 40 CFR 
60.22 generally contains a number of requirements pertaining to the 
contents of guideline documents, which are intended to provide 
information for the development of state plans. See 40 CFR 60.22(b). 
The preambles for both the proposed and final existing implementing 
regulations suggest that an ``emission guideline'' would be a guideline 
provided by EPA that presumptively reflects the degree of emission 
limitation achievable by the BSER. EPA believes it is important to at 
least provide information on such degree of emission limitation in 
order to guide states in their establishment of standards of 
performance as required under CAA section 111(d). However, EPA does not 
believe anything in CAA section 111(a)(1) or section 111(d) compels EPA 
to provide a presumptive emission standard that reflects the degree of 
emission limitation achievable by application of the BSER. Accordingly, 
as part of the new implementing regulations, EPA proposes to re-define 
``emission guideline'' as a final guideline document published under 
Sec.  60.22a(a), which includes information on the degree of emission 
reduction achievable through the application of the best system of 
emission reduction which (taking into account the cost of such 
reduction and any nonair quality health and environmental impact and 
energy requirements) EPA has determined has been adequately 
demonstrated for designated facilities.

B. Updates to Timing Requirements

    The timing requirements in the existing implementing regulations 
for state plan submissions, EPA's action on state plan submissions and 
EPA's promulgation of federal plans generally track the timing 
requirements for SIPs and federal implementation plans (FIPs) under the 
1970 version of the Clean Air Act. Congress revised these SIP/FIP 
timing requirements in section 110 as part of the 1990 Clean Air Act 
amendments. EPA proposes to accordingly update the timing requirements 
regarding state and federal plans under section 111(d) to be consistent 
with the current timing requirements for SIPs and FIPs under section 
110. The existing implementing regulations at 40 CFR 60.23(a)(1) 
requires state plans to be submitted to EPA within nine months after 
publication of a final emission guideline, unless otherwise specified 
in an emission guideline. EPA is proposing, as part of new implementing 
regulations, to provide states with three years after the notice of the 
availability of the final emission guideline to adopt and submit a 
state plan to EPA. Because of the amount of work, effort, and time 
required for developing state plans that include unit-specific 
standards, and implementation and enforcement measures for such 
standards, EPA believes that extending the submission date of state 
plans from nine months to three years is appropriate. Because states 
have considerable flexibility in implementing section 111(d), this 
timing also allows states to interact and work with the Agency in the 
development of state plan and minimize the chances of unexpected issues 
arising that could slow down eventual approval of state plans. EPA 
solicits comment on generally providing states with three years after 
the publication of the final emission guidelines, and solicits comment 
on any other timeframes that may be appropriate for submission of state 
plans given the flexibilities EPA intends to provide through its 
emission guidelines (Comment C-52). EPA also proposes to give itself 
discretion to determine in a specific emission guideline that a shorter 
time period for the submission of state plans particular to that 
emission guideline is appropriate. Such authority is consistent with 
CAA section 110(a)(1)'s grant of authority to the Administrator to 
determine that a period shorter than three years is appropriate for the 
submission of particular SIPs implementing the NAAQS.
    Following submission of state plans, EPA will review plan 
submittals to determine whether they are ``satisfactory'' as per CAA 
section 111(d)(2)(A). Given the flexibilities section 111(d) and 
emission guidelines generally accord to states, and EPA's prior 
experience on reviewing and acting on SIPs under section 110, EPA is 
proposing to extend the period for EPA review and approval or 
disapproval of plans from the four-month period provided in EPA 
implementing regulations to a twelve-month period after a determination 
of completeness (either affirmatively by EPA or by operation of law, 
see below for EPA's proposal on completeness) as part of the new 
implanting regulations. This timeline will provide adequate time for 
EPA to review plans and follow notice-and-comment rulemaking procedures 
to ensure an opportunity for public comment on EPA's proposed action on 
a state plan. EPA solicits comment on extending the timing of EPA's 
action on a state plan from 4 months of when a plan is due to 12 months 
from determination that a state plan submission is complete (Comment C-
53).
    EPA additionally proposes to extend the timing from six months in 
the existing implementing regulations to two years, as part of new 
implementing regulations, for EPA to promulgate a federal plan for 
states that fail to submit an approvable state plan in response to a 
final emission guideline. This two-year timeline is consistent with the 
FIP deadline under section 110(c) of the CAA. EPA solicits comment on 
change in timing for EPA to promulgate a federal plan from six months 
to two years (Comment C-54). EPA solicits comment on extending deadline 
for promulgating a final (i.e., after appropriate notice and comment) 
federal plan for a state to two years after either (1) EPA finds that a 
state has failed to submit a complete plan, or (2) EPA disapproves a 
state plan submission (Comment C-55).

C. Compliance Deadlines

    The existing implementing regulations require that any compliance 
schedule for state plans extending more than 12 months from the date 
required for submittal of the plan must include legally enforceable 
increments of progress to achieve compliance for each designated 
facility or category of facilities. 40 CFR 60.24(e)(1). However, as 
described in section VII.B, the EPA is proposing certain updates to the 
timing requirements for the submission of, and action on, state plans. 
Consequently, it follows that the requirement for increments of 
progress should also be updated in order to align with the proposed new 
timelines. Given that the EPA is proposing a period of up to 18 months 
for its action on state plans (i.e. 12 months from the determination 
that a state plan submission is complete, which could occur up to six 
months after receipt of the state plan), EPA

[[Page 44772]]

believes it is appropriate that the requirement for increments of 
progress should attach to plans that contain compliance periods that 
are longer than the period provided for EPA's review of such plans. 
This way, sources subject to a plan have more certainty that their 
regulatory compliance obligations would not change between the period 
between when a state plan is due and when EPA acts on a plan. 
Accordingly, EPA proposes that increments of progress will be included 
for state plans that contain compliance schedules longer than 24 months 
from the date when state plans are due for a particular emission 
guideline. EPA solicits comments on whether this 24-month component, or 
some other period of time, is appropriate as a trigger for requiring 
increments of progress as part of a plan's compliance schedule.

D. Completeness Criteria

    Similar to requirements regarding determinations of completeness 
under section 110(k)(1), EPA is proposing completeness criteria that 
provide the Agency with a means to determine whether a state plan 
submission includes the minimum elements necessary for EPA to act on 
the submission. EPA would determine completeness simply by comparing 
the state's submission against these completeness criteria. In the case 
of SIPs under CAA section 110(k)(1), EPA promulgated completeness 
criteria in 1990 at Appendix V to 40 CFR part 51 (55 FR 5830; February 
16, 1990). EPA proposes to adopt criteria similar to the criteria set 
out at section 2.0 of Appendix V for determining the completeness of 
submissions under CAA section 111(d).
    EPA notes that the addition of completeness criteria in the 
framework regulations does not alter any of the submission requirements 
states already have under any applicable emission guideline. The 
completeness criteria proposed by this action are those that would 
generally apply to all plan submissions under section 111(d), but 
specific emission guidelines may supplement these general criteria with 
additional requirements.
    The completeness criteria that EPA is proposing in this action can 
be grouped into administrative materials and technical support. For 
administrative materials, the completeness criteria mirror criteria for 
SIP submissions because the two programs have similar administrative 
processes. Under these criteria, the submittal must include the 
following:
    (1) A formal letter of submittal from the Governor or the 
Governor's designee requesting EPA approval of the plan or revision 
thereof.
    (2) Evidence that the state has adopted the plan in the state code 
or body of regulations. That evidence must include the date of adoption 
or final issuance as well as the effective date of the plan, if 
different from the adoption/issuance date.
    (3) Evidence that the state has the necessary legal authority under 
state law to adopt and implement the plan.
    (4) A copy of the official state regulation(s) or document(s) 
submitted for approval and incorporated by reference into the plan, 
signed, stamped and dated by the appropriate state official indicating 
that they are fully adopted and enforceable by the state. The effective 
date of the regulation or document must, whenever possible, be 
indicated in the document itself. The state's electronic copy must be 
an exact duplicate of the hard copy. For revisions to the approved 
plan, the submission must indicate the changes made to the approved 
plan by redline/strikethrough.
    (5) Evidence that the state followed all of the procedural 
requirements of the state's laws and constitution in conducting and 
completing the adoption/issuance of the plan.
    (6) Evidence that public notice was given of the plan or plan 
revisions with procedures consistent with the requirements of 40 CFR 
60.23, including the date of publication of such notice.
    (7) Certification that public hearing(s) were held in accordance 
with the information provided in the public notice and the state's laws 
and constitution, if applicable and consistent with the public hearing 
requirements in 40 CFR 60.23.
    (8) Compilation of public comments and the state's response 
thereto.
    The technical support required for all plans must include each of 
the following:
    (1) Description of the plan approach and geographic scope.
    (2) Identification of each designated facility; identification of 
emission standards for each designated facility; and monitoring, 
recordkeeping, and reporting requirements that will determine 
compliance by each designated facility.
    (3) Identification of compliance schedules and/or increments of 
progress.
    (4) Demonstration that the state plan submission is projected to 
achieve emissions performance under the applicable emission guidelines.
    (5) Documentation of state recordkeeping and reporting requirements 
to determine the performance of the plan as a whole.
    (6) Demonstration that each emission standard is quantifiable, non-
duplicative, permanent, verifiable, and enforceable.
    EPA intends that these criteria be generally applicable to all CAA 
section 111(d) plans submitted on or after final new implementing 
regulations are promulgated, with the proviso that specific emission 
guidelines may provide otherwise.
    Consistent with the requirements of CAA section 110(k)(1)(B) for 
SIPs, EPA is proposing to determine whether a state plan is complete 
(i.e., meets the completeness criteria) no later than 6 months after 
the date, if any, by which a state is required to submit the plan. EPA 
further proposes that any plan or plan revision that a State submits to 
EPA, and that has not been determined by EPA by the date 6 months after 
receipt of the submission to have failed to meet the minimum 
completeness criteria, shall on that date be deemed by operation of law 
to be a complete state plan. Then, as previously discussed, EPA is 
relatedly proposing to act on a state plan submission within 12 months 
after determining a plan is complete, either through an affirmative 
determination or by operation of law.
    When plan submissions do not contain the minimum elements, EPA is 
proposing to find that a state has failed to submit a complete plan 
through the same process as finding a state has made no submission at 
all. Specifically, EPA would notify the state that its submission is 
incomplete and therefore, that it has not submitted a required plan, 
and EPA would also publish a finding of failure to submit in the 
Federal Register, which triggers EPA's obligation to promulgate a 
federal plan for the state. This determination that a submission is 
incomplete and the state has failed to submit a plan is ministerial in 
nature and requires no exercise of discretion or judgment on the 
Agency's part, nor does it reflect a judgment on the eventual 
approvability of the submitted portions of the plan.

E. Standard of Performance

    As previously described, the implementing regulations were 
promulgated in 1975 and effectuated the 1970 version of the Clean Air 
Act as at it existed at that time. The 1970 version of section 111(d) 
required state plans to include ``emission standards'' for existing 
sources, and consequently the implementing regulations refer to this 
term. However, as part of the 1977 amendments to the CAA, Congress 
replaced the term ``emission standard'' in section 111(d) with 
``standard of performance.'' EPA has not since

[[Page 44773]]

revised the implementing regulations to reflect this change in 
terminology. For clarity's sake and to better track with statutory 
requirements, EPA is proposing to include a definition of ``standards 
of performance'' as part of the new implementing regulations, and to 
consistently refer to this term as appropriate within those regulations 
in lieu of referring to an ``emission standard.'' Additionally, the 
current definition of ``emission standard'' in the implementing 
regulations is incomplete and requires clean-up regardless. For 
example, the definition encompasses equipment standards, which is an 
alternative form of standard provided for in CAA section 111(h) under 
certain circumstances. However, section 111(h) provides for other forms 
of alternative standards, such as work practice standards, which are 
not covered by the existing regulatory definition of ``emission 
standard.'' Furthermore, the definition of ``emission standard'' 
encompasses allowance systems, a reference that was added as part of 
EPA's Clean Air Mercury Rule. 70 FR 28605. This rule was vacated by the 
D.C. Circuit, and therefore this added component to the definition of 
``emission standard'' had no legal effect because of the court's 
vacatur. Consistent with the court's opinion, EPA signaled its intent 
to remove this reference as part of its Mercury Air Toxics rule. 77 FR 
9304. However, in the final regulatory text of that rulemaking, EPA did 
not take action removing this reference, and it remains as a vestigial 
artifact.
    For these reasons, EPA is proposing to replace the existing 
definition of ``emission standard'' with a definition of ``standard of 
performance'' that tracks with the definition provided for under CAA 
section 111(a)(1). This means a standard of performance for existing 
sources would be defined as a standard for emissions or air pollutants 
which reflects the degree of emission limitation achievable through the 
application by the state of the best system of emission reduction which 
(taking into account the cost of achieving such reduction and any 
nonair quality health and environmental impact and energy requirements) 
the Administrator determines has been adequately demonstrated. EPA is 
further proposing to incorporate into a definition of standard of 
performance CAA section 111(h)'s allowance for design, equipment, work 
practice, or operational standards as alternative standards of 
performance under the statutorily prescribed circumstances. Currently, 
the existing implanting regulations allow for state plans to prescribe 
equipment specifications when emission rates are ``clearly 
impracticable'' as determined by EPA. CAA section 111(h)(1) by contrast 
allows for alternative standards such as equipment standards to be 
promulgated when standards of performance are ``not feasible to 
prescribe or enforce,'' as those terms are defined under CAA section 
111(h)(2). Given the potential discrepancy between the conditions under 
which alternative standards may be established based on the different 
terminology used by the statute and existing implementing regulations, 
EPA proposes to use the ``not feasible to prescribe or enforce'' 
language as the condition for the new implementing regulations under 
which alternative standards may be established.
    EPA solicits comment on all of these means of tracking and 
incorporating the section 111(a)(1) and 111(h) for purposes of a 
regulatory definition of ``standard of performance,'' and requests 
comment on any other considerations for such definition (Comment C-56).

F. Variance

    EPA believes that the existing implementing regulations' 
distinction between public health-based and welfare-based pollutants is 
not a distinction unambiguously required under section 111(d) or any 
other applicable provision of the statute. EPA does not believe the 
nature of the pollutant in terms of its impacts on health and/or 
welfare impact the manner in which it is regulated under this 
provision. Particularly, 60.24(c) requires that for health-based 
pollutants, a state's standards of performance must be of equivalent 
stringency to EPA's emission guidelines. However, section 111(d)(1)(B) 
requires that EPA's regulations must permit states to take into 
account, among other factors, an affected source's remaining useful 
life when establishing an appropriate standard of performance. In other 
words, Congress explicitly envisioned under section 111(d)(1)(B) that 
states could implement standards of performance that vary from EPA's 
emission guidelines under appropriate circumstances. Notably, the 
implementing regulations at 40 CFR 60.24(f) contain a variance 
provision that allow for states to also apply less stringent standards 
on sources under certain circumstances. However, the variance provision 
attaches to the distinction between health-based and welfare-based 
pollutants, and is available to the states only under EPA's discretion. 
The variance provision was also promulgated prior to Congress's 
addition of the requirement in section 111(d)(1)(B) that EPA permit 
states to take into account remaining useful life and other factors, 
and the terms of the regulatory provision and statutory provision do 
not match one another, meaning that the variance provision may not 
account for all of the factors envisioned under section 111(d)(1)(B). 
Given all of these factors, EPA is proposing to not make a distinction 
between health-based and welfare-based pollutants and attach 
requirements contingent upon this distinction as part of the new 
implementing regulations. EPA is also proposing a new variance 
provision to permit states to take into account remaining useful life, 
among other factors, in establishing a standard of performance for a 
particular affected source, consistent with section 111(d)(1)(B).
    Given that there are unique attributes and aspects of each affected 
source, these other factors may be ones that influence decisions to 
invest in technologies to meet a potential performance standard. Such 
other factors may include timing considerations like expected life of 
the source, payback period for investments, the timing of regulatory 
requirements, and other unit-specific criteria. EPA solicits comments 
on how a new variance provision can permit states to take into account 
remaining useful life and other factors, and what other factors might 
appropriately be (Comment C-57). EPA is also soliciting comment on 
whether the factors outlined in the existing variance provision at 40 
CFR 60.24(f) are appropriate to carry over to a new variance provision 
if they adequately give meaning to the requirements of section 
111(d)(1)(B) (Comment C-58). Those factors are:
     Unreasonable cost of control resulting from plant age, 
location, or basic process design;
     Physical impossibility of installing necessary control 
equipment; or
     Other factors specific to the facility (or class of 
facilities) that make application of a less stringent standard or final 
compliance time significantly more reasonable.

VIII. New Source Review Permitting of HRIs

A. What is New Source Review?

    The NSR program is a preconstruction permitting program that 
requires stationary sources of air pollution to obtain permits prior to 
beginning construction. The NSR program applies both to new 
construction and to modifications of existing sources. New construction 
and modifications of

[[Page 44774]]

stationary sources that emit or increase emissions of ``regulated NSR 
pollutants'' \39\ at or above certain thresholds defined in either the 
CAA or the NSR regulations are subject to major NSR requirements, while 
smaller emitting sources and modifications may be subject to minor NSR 
requirements.\40\ A pollutant is a ``regulated NSR pollutant'' if it 
meets at least one of four requirements, which are, in general, any 
pollutant for which EPA has promulgated a NAAQS or a NSPS, certain 
ozone depleting substances, and ``[a]ny pollutant that otherwise is 
subject to regulation under the Act.'' See, e.g., 40 CFR 52.21(b)(50). 
For purposes of NSR, hazardous air pollutants are excluded. Id.
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    \39\ 40 CFR 51.165(a)(1)(xxxvii), 40 CFR 52.21(b)(50).
    \40\ The one exception to this approach is for GHG. Regardless 
of the GHG emissions resulting from construction of a new source or 
modification, the source will not be required to obtain a major NSR 
permit unless the emissions of another regulated NSR pollutant equal 
or exceed the major NSR threshold. 80 FR 50199 (August 19, 2015); 
Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2015).
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    NSR permits for major sources emitting pollutants for which the 
area is classified as attainment or unclassifiable, and for other 
pollutants regulated under the CAA, are referred to as prevention of 
significant deterioration (PSD) permits. NSR permits for major sources 
emitting pollutants for which the area is in nonattainment are referred 
to as nonattainment NSR (NNSR) permits. The pollutant(s) at issue and 
the air quality designation of the area where the facility is located 
or proposed to be built determine the specific permitting 
requirements.\41\ Among other requirements, the CAA requires sources 
subject to PSD to meet emission limits based on Best Available Control 
Technology (BACT) as specified by section 165(a)(4), and the CAA 
requires sources subject to NNSR to meet the Lowest Achievable 
Emissions Rate (LAER) pursuant to section 173(a)(2). These technology 
requirements for major NSR permits are not predetermined by a rule or 
state plan, but are case-by-case determinations made by the permitting 
authority.\42\ Other requirements to obtain a major NSR permit vary 
depending on whether the source needs a PSD or an NNSR permit.
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    \41\ PSD applies on a regulated NSR pollutant-by-regulated NSR 
pollutant basis. The PSD requirements do not apply to regulated NSR 
pollutants for which the area is designated as nonattainment. NNSR 
could only be applicable with regard to a source's emissions of 
criteria pollutants, as those are the only pollutants with respect 
to which areas are designated as attainment or nonattainment.
    \42\ The term `best available control technology' means an 
emission limitation . . . which the permitting authority, on a case 
by case basis, taking into account energy, environmental, and 
economic impacts and other costs, determines is achievable for such 
facility . . .'' 42 U.S.C. 7479(3); see e.g., supra Section III.C; 
PSD and Title V Permitting Guidance for Greenhouse Gases (Mar. 
2011), available at https://www.epa.gov/sites/production/files/2015-07/documents/ghgguid.pdf.
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    The test to determine whether a source is subject to major NSR 
differs for new stationary sources and for modifications to existing 
stationary sources. A new source is subject to major NSR permitting 
requirements if its potential to emit (PTE) any regulated NSR pollutant 
equals or exceeds the statutory emission threshold. For sources in 
attainment areas, the major source threshold is either 100 or 250 tons 
per year, depending on the type of source.\43\ The major source 
threshold for sources in nonattainment areas is generally 100 tons per 
year, although lower thresholds apply to sources located in areas 
classified at higher levels of nonattainment.
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    \43\ The NSR major source and major modification emission 
thresholds are expressed in short tons (i.e., 2000 lbs.).
---------------------------------------------------------------------------

    A modification at an existing major source is subject to major NSR 
permitting requirements when it is a ``major modification,'' which 
occurs when a source undertakes a physical change or change in method 
of operation (i.e., a ``project'') \44\ that would result in both (1) a 
significant emissions increase from all emission units that are part of 
the project, and (2) a significant net emissions increase from the 
source, which is determined by a source-wide analysis that considers 
creditable emission increases and decreases occurring at the source as 
a result of other projects over a 5-year contemporaneous period. See, 
e.g., 40 CFR 52.21(b)(2)(i). For this analysis, the NSR regulations 
define emissions rates that are ``significant'' for each NSR pollutant. 
See, e.g., 40 CFR 52.21(b)(23). In calculating the emissions increase 
that will result from a proposed project, existing NSR regulations 
require a comparison of the ``projected actual emissions'' (PAE) to the 
``baseline actual emissions'' (BAE). The PAE is currently defined as 
the maximum annual rate that the modified unit is projected to emit a 
pollutant in any one of the 5 years (or 10 years if the design capacity 
increases) after the project, excluding any increase in emissions that 
(1) is unrelated to the project, and (2) could have been accommodated 
during the baseline period (commonly referred to as the ``demand growth 
exclusion''). See, e.g., 40 CFR 52.21(b)(41). For electric utility 
steam generating units (EUSGU), the BAE is defined as the average 
annual rate of actual emissions during any 24-month period within the 
last 5 years. See, e.g., 40 CFR 52.21(b)(48)(i). For non-EUSGUs, the 
BAE is defined the same as for EUSGUs, except that the 24-month period 
can be within the last 10 years. See, e.g., 40 CFR 
52.21(b)(48)(ii).\45\
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    \44\ The NSR regulations expressly exempt certain activities 
from being considered a physical change or change in method of 
operation, including routine maintenance, repair and replacement, 
increases in hours of operation or production rate, and change in 
ownership. See, e.g., 40 CFR 52.21(b)(2)(iii).
    \45\ While we are discussing federal regulations, a state or 
local permitting authority may have different regulations to define 
NSR applicability if approved by EPA into its implementation plan.
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    As noted above, new stationary sources and modifications of 
stationary sources that do not require a major NSR permit may instead 
require a minor NSR permit prior to construction. Minor NSR permits are 
primarily issued by state and local air agencies. Minor NSR 
requirements are approved into an implementation plan in order to 
achieve and maintain national ambient air quality standards (NAAQS). 
See CAA section 110(a)(2)(C).\46\ The Act, EPA regulations and EPA 
guidance each specify minor NSR requirements, although the requirements 
are not as prescriptive as those covering the major NSR program. This 
reduced specificity affords agencies flexibility in designing their 
minor NSR programs. Since the minor NSR program deals with smaller 
sources and smaller increases in air pollution, the control 
requirements that are identified for a minor NSR permit tend to be less 
stringent than a BACT or LAER requirement for a major NSR permit. In 
addition, the time to process a permit for a minor NSR source or a 
minor modification is generally faster than for a major NSR permit, due 
to having fewer requirements.
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    \46\ EPA's regulations at 40 CFR 51.160-51.169 apply to state 
permitting programs; however, these provisions cover both major and 
minor sources. The requirements that apply to strictly minor sources 
are limited to sections 51.160-51.164. In addition, in 2011 EPA 
created the Indian country minor NSR permitting program, which 
authorizes EPA regional offices to issue minor source permits on 
tribal lands. These regulations are located at 40 CFR 49.101-49.104 
and 49.151-49.164.
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B. Interaction of NSR and the ACE Rule

    Since emission guidelines that are established pursuant to CAA 
section 111(d) apply to units at existing sources, the way in which the 
NSR programs treat modifications of existing sources is implicated by 
implementation of a CAA section 111(d) program. Specifically, in 
complying with the emission guidelines, a state agency may develop

[[Page 44775]]

a CAA section 111(d) plan that results in an affected source 
undertaking a physical or operational change. As explained above, under 
the NSR program undertaking a physical or operational change may 
require that the source obtain a preconstruction permit for the 
proposed change, with the type of NSR permit depending on the amount of 
the emissions increase resulting from the change and the air quality at 
the location of the source. Thus, a source that is adding equipment or 
otherwise making changes to its facility, on either its own volition or 
to comply with a national or state level requirement, will typically 
need some type of NSR permit prior to making such changes to its 
facility. EPA sought to exempt environmentally beneficially pollution 
control projects from NSR requirements in a 2002 rule that codified 
longstanding EPA policy, but this rule was struck down in court. New 
York v. EPA, 413 F.3d 3, 40-42 (DC Cir. 2005) (New York I).
    With respect to the proposed action, should it be promulgated, 
states will be called upon to develop a section 111(d) plan that 
evaluates BSER technologies for each of their EGU sources and assigns 
emission reduction compliance obligations to their affected EGUs. 
Assuming the promulgated action adopts the same form as this proposal, 
the state may require a source with an affected EGU to achieve a HRI of 
a specified percentage. As described in Section VI.B of this preamble, 
a HRI project is designed to lower the heat rate of the EGU, which 
correlates to the unit consuming less fuel per kWh and emitting lower 
amounts of CO2 (and other air pollutants) per kWh generated 
as compared to a less efficient unit. Along with this increase in 
energy efficiency, the EGU which undergoes the HRI project will 
typically experience greater unit availability and reliability, all of 
which contribute to lower operating costs. EGUs that operate at lower 
costs are generally preferred in the dispatch order by the system 
operator over units that have higher operational costs,\47\ and EPA's 
regulatory impact analysis (RIA) for this action (located in the 
docket) shows that improving an EGU's heat rate will lead to increased 
generation due to its improved efficiency and relative economics. As 
the EGU increases its generation, to the extent the EGU operates beyond 
its historical levels by a meaningful amount, it could result in an 
increase in emissions on an annual basis, as calculated pursuant to the 
current NSR regulations. Specifically, if a source is undertaking a HRI 
project and its future emissions (i.e., PAE) are projected to increase 
above its historical emissions (i.e., BAE) in an amount greater than 
the relevant ``significant'' level, the source could be required to 
obtain a major NSR permit for the modification.
---------------------------------------------------------------------------

    \47\ See, e.g., Comments of Florida Municipal Elec Association 
on the U.S. Environmental Protection Agency's ANPRM entitled, 
``State Guidelines for Greenhouse Gas Emissions from Existing 
Electric Utility Generating Units,'' 82 FR 61507 (December 28, 2017) 
at 11 (EPA-HQ-OAR-2017-0545-0155); see also https://www.eia.gov/todayinenergy/detail.php?id=7590.
---------------------------------------------------------------------------

    Thus, it is possible that a source undertaking a HRI project at its 
EGU would project, or actually experience, an increase in operation of 
its EGU and a corresponding increase in annual emissions. This would 
require the source, at a minimum, to conduct an analysis to determine 
whether the project by itself is projected to lead to a significant 
emissions increase (at step one of the two-step analysis that 
determines whether a project constitutes a ``major modification''). If 
so, the source would have to conduct a netting analysis to determine 
whether there is also a significant net increase when contemporaneous 
increases and decreases from other projects are considered (step two of 
that analysis). If both of these types of increases would be projected 
to occur, this could result in the source being subject to additional 
pollutant control requirements (e.g., BACT or LAER), in addition to the 
substantial extra time and cost of applying for a major NSR permit 
prior to undertaking the HRI project. Such could be the consequence 
despite the fact that the project would lower the EGU's output-based 
emissions rate for its air pollutants, and despite the fact that the 
resulting effect on the dispatch order could yield an emission 
reduction from a system-wide standpoint.
    Similarly, over the years, some stakeholders have asserted that the 
NSR rules discourage companies from exercising the discretion to 
undertake energy efficiency improvement projects, which they assert 
results in less environmentally protective outcomes from a system-wide 
standpoint. Stakeholders have claimed that triggering major NSR 
permitting requirements can increase the costs of beneficial plant 
improvement projects, like HRIs, and often contribute to a company's 
decision to forego the projects. For instance, a commenter on the CPP 
proposal stated that ``many coal-fired plants may refrain from making 
improvements based on the financial risk associated with potentially 
triggering a New Source Review, which may result in the requirement to 
invest in additional emissions controls . . . . [T]he [permitting] 
requirements could increase costs of potential heat rate improvements 
and therefore are a potential impediment which should be recognized in 
the rule's calculations.'' \48\
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    \48\ Electric Power Research Institute comments U.S. 
Environmental Protection Agency's Proposed Rule ``Carbon Pollution 
Emissions Guidelines for Existing Stationary Sources: Electric 
Utility Generating Units,'' 79 FR 34830 (June 18, 2014) at 12-13 
(EPA-HQ-OAR-2013-0602-21697).
---------------------------------------------------------------------------

    In promulgating the CPP, EPA noted that these stakeholders 
expressed concerns of the potential NSR permitting effects from a state 
implementing the rule, stating ``[w]hile there may be instances in 
which an NSR permit would be required, we expect those situations to be 
few . . . states have considerable flexibility in selecting varied 
measures as they develop their plans to meet the goals of the emission 
guidelines. One of these flexibilities is the ability of the state to 
establish emission standards in their CAA section 111(d) plans in such 
a way so that their affected sources, in complying with those 
standards, in fact would not have emissions increases that trigger NSR. 
To achieve this, the state would need to conduct an analysis consistent 
with the NSR regulatory requirements that supports its determination 
that as long as affected sources comply with the emission standards in 
their CAA section 111(d) plan, the source's emissions would not 
increase in a way that trigger NSR requirements.'' 80 FR 64920 (October 
23, 2015). The CPP also explained that sources can voluntarily take 
enforceable limits on hours of operation, in the form of a synthetic 
minor source limitation, in order to avoid triggering major NSR 
requirements that would otherwise apply to the source. 80 FR 64781, 
64920.
    However, these concerns regarding the applicability of NSR take on 
even greater significance and may not be as easily avoided in the 
context of this proposed rule, which constrains the compliance options 
available in the CPP to within-the-fenceline measures and may therefore 
more directly result in individual sources making HRIs.
    Individuals within the academic community have examined the NSR 
interplay with making efficiency gains at existing coal plants. A 2014 
report projected that 80 percent of non-retiring coal-fired units have 
emissions rates for NOX and SO2 at levels that 
exceed those typically required under NSR and concluded that the units 
would have to install additional controls for NOX or sulfur 
dioxide (SO2) if these HRI projects triggered the 
applicability of

[[Page 44776]]

NSR.\49\ For these units then, the potential requirement to undertake a 
HRI to satisfy 111(d) may result in substantial time, effort, and money 
to comply with the requirements of major NSR. In addition, the 
potential need to permit so many of the projects being required under a 
111(d) plan could substantially increase the burden for permit agencies 
in processing permit applications. To help reduce the effect this may 
have on the effective and prompt implementation of a revised CAA 
section 111(d) standard for EGUs, EPA is proposing revisions to the NSR 
regulations in this action.
---------------------------------------------------------------------------

    \49\ Sarah K. Adair, David C. Hoppock, Jonas J. Monast (from 
Duke University's Nicholas Institute for Environmental Policy 
Solutions and School of Law, ``New Source Review and coal plant 
efficiency gains: How new and forthcoming air regulations affect 
outcomes''; Elsevier, Energy Policy 70 (2014), 183-192.
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C. ANPRM Solicitation and Comments Received

    Through the ANPRM, EPA took comment on the topic of how the NSR 
program overlays with emission guidelines established under CAA section 
111(d). EPA specifically acknowledged the concerns raised previously by 
stakeholders regarding the potential for a source to make energy 
efficient improvements that could trigger major NSR requirements. 
Furthermore, as EPA did in the CPP, EPA described current approaches 
available within the NSR program to avoid triggering NSR requirements. 
These include the ability for a source to obtain a synthetic minor 
source limitation, which restricts its hours of operation and its 
emissions below major NSR levels, and the Plantwide Applicability Limit 
(PAL), which allows a source to operate within a source-wide emissions 
cap to avoid triggering NSR for changes.
    The ANPRM solicited input on possible actions that EPA can take to 
harmonize and streamline the NSR applicability or the NSR permitting 
processes for an amended rule. EPA requested comment on ways to 
minimize the impact of the NSR program on the implementation of a 
performance standard for EGU sources under CAA section 111(d), 
specifically asking ``[w]hat rule or policy changes or flexibilities 
can EPA provide as part of the NSR program that would enable EGUs to 
implement projects required under a CAA section 111(d) plan and not 
trigger major NSR permitting while maintaining environmental 
protections?'' 82 FR 61519 (Dec. 28, 2017).
    Several ANPRM commenters reiterated concerns that were raised on 
the CPP proposal regarding the NSR program--specifically that, if an 
air agency, as part of its plan to comply with emission guidelines 
established pursuant to CAA section 111(d), requires an affected source 
to make modifications (e.g., HRI projects), it could potentially 
trigger major NSR requirements. Some commenters alleged that the NSR 
program unfairly treats sources that are undertaking changes to become 
more energy efficient by requiring a costly and time consuming 
permitting burden. As expressed by one industry representative, ``EGUs 
engaging in HRI projects can face NSR pre-construction permitting 
requirements consisting of, at a minimum, costly, detailed analyses and 
permitting delays. In some cases, this has resulted in costly and 
protracted litigation, and expensive new emission control requirements, 
both of which result in substantial time delays for these projects. 
These concerns remain should unit operators pursue HRI upgrades . . . 
that could trigger NSR in an effort to comply with . . . revised CAA 
section 111(d) GHG emissions guidelines.'' \50\ Another commenter noted 
that the major NSR permitting process ``is time and resource 
intensive'' and, including pre-permit application work, ``can take as 
long as 3 years or longer.'' \51\ The same commenter noted that ``[the] 
uncertainty of permit timing can hinder investment decisions as much as 
the actual permit schedule delays.'' \52\ Some commenters indicated 
that the current flexibilities offered within the NSR program are not 
sufficient to avoid placing a significant permitting burden on EGUs and 
permitting agencies, which could result in substantial delays during 
the planned implementation stage.\53\ To avoid such outcomes, a number 
of commenters suggested that EPA undertake actions to clarify or change 
the NSR regulations, including, for example, revising the NSR 
modification applicability to be based on pounds per kilowatt-hour (lb/
kW-h) \54\ or rejecting as BSER any project that would result in 
triggering NSR.\55\
---------------------------------------------------------------------------

    \50\ Edison Electric Institute comments on the U.S. 
Environmental Protection Agency's ANPRM entitled, ``State Guidelines 
for Greenhouse Gas Emissions from Existing Electric Utility 
Generating Units,'' 82 FR 61507 (December 28, 2017) at 22 (EPA-HQ-
OAR-2017-0545-0221).
    \51\ General Electric Company (GE) comments on the U.S. 
Environmental Protection Agency's ANPRM entitled, ``State Guidelines 
for Greenhouse Gas Emissions from Existing Electric Utility 
Generating Units,'' 82 FR 61507 (December 28, 2017) at 29-30 (EPA-
HQ-OAR-2017-0545-0271).
    \52\ Id. at 30.
    \53\ See, e.g., Ohio Environmental Protection Agency comments on 
the U.S. Environmental Protection Agency's ANPRM entitled, ``State 
Guidelines for Greenhouse Gas Emissions from Existing Electric 
Utility Generating Units,'' 82 FR 61507 (December 28, 2017) at 9, 32 
(EPA-HQ-OAR-2017-0545-0246).
    \54\ GE comments, supra note at 33.
    \55\ Indiana Municipal Power Agency comments on the U.S. 
Environmental Protection Agency's ANPRM entitled, ``State Guidelines 
for Greenhouse Gas Emissions from Existing Electric Utility 
Generating Units,'' 82 FR 61507 (December 28, 2017) at 3 (EPA-HQ-
OAR-2017-0545-0204).
---------------------------------------------------------------------------

    However, other commenters disagreed. For instance, the Natural 
Resources Defense Council (NRDC) suggested that changes to the NSR 
program ``are unwarranted.'' \56\ They added that EPA needs to remain 
in the boundary of the controlling judicial decisions in considering 
what approaches could be used to reduce the number of existing sources 
that will be subject to NSR permitting while crafting CAA section 
111(d) plans. NRDC focused the basis of many of its concerns on the 
court's opinion in New York v. EPA, 443 F.3d 880 (D.C. Cir. 2006) (New 
York II), which vacated EPA's attempt to more clearly define ``routine 
maintenance, repair, and replacement'' (RMRR) projects that are exempt 
from major NSR by EPA's rules. NRDC also referenced the following 
observation from an earlier decision by the same court that vacated the 
``pollution control project exclusion'' that EPA finalized in 2002: 
``Absent clear congressional delegation, however, EPA lacks authority 
to create an exemption from NSR by administrative rule.'' \57\
---------------------------------------------------------------------------

    \56\ Natural Resources Defense Council comments on the U.S. 
Environmental Protection Agency's ANPRM entitled, ``State Guidelines 
for Greenhouse Gas Emissions from Existing Electric Utility 
Generating Units,'' 82 FR 61507 (December 28, 2017) at 14-17 (EPA-
HQ-OAR-2017-0545-0358).
    \57\ New York v. EPA, 413 F.3d 3, 41 (D.C. Cir. 2005) (New York 
I) (citing Sierra Club v. EPA, 129 F.3d 137, 140 (D.C. Cir. 1997)).
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D. Proposing NSR Changes for Improved ACE Implementation

1. Overview
    EPA acknowledges the NSR program may have unintended consequences 
for implementation of this emission guidelines for GHG emissions from 
existing EGUs. Based on the comments received on the ANPRM and EPA's 
experience with the NSR program generally, EPA recognizes the potential 
for triggering major NSR permitting when sources undertake HRI 
projects. EPA further recognizes that the prospect of a protracted 
permitting process and a possible requirement to install pollution 
control equipment at the emissions unit can create a disincentive for 
sources to voluntarily make energy efficiency

[[Page 44777]]

improvements. Many of these concerns with the NSR program were raised 
nearly two decades ago, and formed the cornerstone of EPA's initiative 
in the early 2000's to reform the NSR program.\58\
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    \58\ In May 2001, President Bush's National Energy Policy 
Development Group issued findings and key recommendations for a 
National Energy Policy. This document included numerous 
recommendations for action, including a recommendation that the EPA 
Administrator, in consultation with the Secretary of Energy and 
other relevant agencies, review NSR regulations, including 
administrative interpretation and implementation. The recommendation 
requested that EPA issue a report to the President on the impact of 
the regulations on investment in new utility and refinery generation 
capacity, energy efficiency, and environmental protection. The 
report to the President was issued on June 13, 2002, and is 
available at https://www.epa.gov/nsr/new-source-review-report-president. In the report to the President, EPA concluded ``[as] 
applied to existing power plants and refineries . . . the NSR 
program has impeded or resulted in the cancellation of projects 
which would maintain and improve reliability, efficiency and safety 
of existing energy capacity. Such discouragement results in lost 
capacity, as well as lost opportunities to improve energy efficiency 
and reduce air pollution.'' New Source Review Report to the 
President at 3.
---------------------------------------------------------------------------

    But this dynamic takes on a new character in the context of a 
regulation that may result in a source undertaking a HRI or another 
project to meet a standard of performance as determined by the state. 
When a state's 111(d) plan requires an EGU to comply with a standard of 
performance, sources cannot choose to forego a project in an effort to 
avoid NSR permitting as they could with improvement projects they were 
otherwise considering. Despite recent actions by EPA to streamline the 
NSR program, the reality remains that a source that undertakes a HRI 
project may trigger major NSR under the current NSR applicability test 
when required to undertake a HRI project as part of a state's 111(d) 
plan. As has been noted by commenters on the ANPRM, this can require 
the source to undertake significant planning and analysis with the 
process to receive a preconstruction permit, sometimes taking 3 or more 
years. This added time and cost to sources and the associated burden on 
permitting agencies could hinder the effective and prompt 
implementation of state 111(d) plans.
    In this context, our approach in the CPP of encouraging agencies to 
minimize the triggering of major NSR for their affected EGUs by 
conducting emissions analyses as part of their CAA section 111(d) plan 
development does not appear to be a sufficient solution. While EPA 
supports states having the primary authority to implement the air 
programs, state agencies should not be burdened with having to 
determine a ``work around'' for the NSR program requirements in 
developing their plans to implement the emission guidelines for 
affected EGUs. The responsibility of ensuring that emission guidelines 
under 111(d) are clearly articulated and easily implementable rests 
squarely with EPA. Thus, EPA addressing the time delays and costs that 
can result from NSR requirements could be one tool for helping ensure 
the successful implementation of a national program for controlling GHG 
emissions from existing EGUs.
    It is important for a state that is developing a CAA section 111(d) 
plan to completely understand the full costs being imposed on their 
affected sources in order for the state to make informed decisions in 
applying a standard of performance to each of their existing sources 
(much like a state would consider, among other factors, the remaining 
useful life of each source). However, EPA has historically not 
considered the costs of complying with other CAA programs, like NSR, 
when determining BSER for a source category under section 111. This was 
in part because, for many years, EPA applied a policy of excluding 
pollution control projects from NSR. But, as noted earlier in this 
section, EPA's attempt to codify such a policy in the NSR regulations 
was struck down by the D.C. Circuit in 2005. Since that decision, EPA 
has not written a significant number of rules under section 111, and 
the rules that EPA has written have not presented a need to consider 
this question. However, due to the nature of the electric utility 
industry and the types of candidate control measures being considered 
in this proposal, it may be appropriate to consider NSR compliance 
costs in this instance. Specifically, the BSER measures chosen in this 
rule may result in a source undertaking a physical change that 
significantly increases its annual emissions and triggers major NSR 
permitting requirements such that permitting costs are unavoidable. 
However, due to the case-specific analysis required to determine NSR 
applicability, it would likely be difficult for a state to adequately 
predict and quantify the effect of a HRI on an EGU's operational costs, 
change in dispatch order, and other variables that would factor into 
whether the source needs a major NSR permit or, perhaps, a minor NSR 
permit. In addition, even if a state can reasonably predict an EGU's 
emissions increase resulting from a HRI project such that it can expect 
the source will need a major NSR permit, it would likely be difficult 
to predict the expected permitting costs since the emission control and 
other permitting requirements are case-by-case determinations and can 
therefore vary significantly due to a number of factors, including how 
well the source is already controlled, the emissions from nearby 
sources and their contribution to air quality concerns, whether the 
source is located in an attainment or nonattainment area, and the 
potential for the air permit to trigger other requirements (e.g., 
Endangered Species Act, National Historic Preservation Act). In some 
cases, a source triggering major NSR may be required to conduct 
extensive modeling and install additional pollution controls for non-
GHG pollutants. Thus, the case-by-case nature of the NSR program can 
lead to uncertainty for a state that is creating its 111(d) plan and 
wanting to ensure that the plan fully appreciates the projected 
compliance costs for its affected EGUs.
    EPA is, therefore, inviting comment on whether it is appropriate to 
consider the costs of NSR compliance in the BSER analysis under section 
111(d), assuming that triggering NSR cannot otherwise be avoided 
through actions by the source or through revisions to the NSR 
regulations that are proposed by EPA in this rule or if EPA does not 
finalize revisions to the NSR regulations (Comment C-59). In addition, 
EPA solicits comment on how a state or local permitting agency may 
estimate or project the cost for the source to comply with any NSR 
requirements that may flow from a selected BSER, and on how the 
potential for delays because of an influx of NSR permit applications 
may be accounted for in setting an implementation schedule for 111(d) 
plans (Comment C-60).
    Recognizing that EPA issuing this 111(d) rule would mean that a 
source may no longer be in a position to forego a HRI project due to 
unwanted permitting costs, EPA has continued to look for ways to reduce 
the costs of NSR requirements, while being mindful of the requirements 
of the CAA and the court decisions on prior NSR reform rules that were 
referenced by some commenters. In this light, EPA believes that a past 
option for revising the NSR regulation that EPA has considered may 
warrant further consideration to address this concern. In 2005 and 
2007, EPA previously proposed adopting an hourly emissions rate test 
for NSR applicability for EGUs. While this rulemaking was never 
completed, EPA believes that it warrants a fresh look in a new context 
here where NSR program flexibility takes on added significance as a 
means to facilitate the HRI projects that are expected to be undertaken 
should the proposed ACE rule be finalized. This same idea was also 
raised by a few

[[Page 44778]]

commenters on the ANPRM.\59\ Thus, EPA is soliciting comment on whether 
a narrower range of options for implementing an hourly emissions test 
for NSR for EGUs would both help promote energy efficiency and the 
effectiveness of implementing the ACE rule, while at the same time 
being consistent with the NSR provisions in CAA and past judicial 
decisions interpreting those provisions (Comment C-61).
---------------------------------------------------------------------------

    \59\ See, e.g., Arizona Public Service Company comments on the 
U.S. Environmental Protection Agency's ANPRM entitled, ``State 
Guidelines for Greenhouse Gas Emissions from Existing Electric 
Utility Generating Units,'' 82 FR 61507 (Dec. 28, 2017) at 6 (EPA-
HQ-OAR-2017-0545-0286);Unions for Jobs & Environmental Progress 
comments on the U.S. Environmental Protection Agency's ANPRM 
entitled, ``State Guidelines for Greenhouse Gas Emissions from 
Existing Electric Utility Generating Units,'' 82 FR 61507 (Dec. 28, 
2017) at 14-17 (EPA-HQ-OAR-2017-0545-0162).
---------------------------------------------------------------------------

2. The 2007 Supplemental Rule Proposal
    In 2007, EPA proposed to revise the NSR provisions to include an 
NSR applicability test for EGUs that is based on maximum hourly 
emissions. 72 FR 26202 (May 8, 2007). The 2007 proposed action was a 
``supplemental'' notice of proposed rulemaking (SNPRM), because the 
2007 proposal followed an earlier action by EPA that proposed a more 
limited form of the hourly emissions test for NSR applicability. 70 FR 
61081 (October 20, 2005) (NPRM). These proposals followed EPA's NSR 
regulatory reform efforts of 2002 and 2003, when EPA promulgated final 
regulations that implemented several of the recommendations in the New 
Source Review Report to the President.\60\ Those earlier regulatory 
actions, however, left the NSR provisions for electric utilities 
largely unchanged.
---------------------------------------------------------------------------

    \60\ See supra note.
---------------------------------------------------------------------------

    The 2007 SNPRM requested comment on two basic options, and various 
alternatives within each of the two options, for changing the test for 
determining an emissions increase from an EGU undergoing a physical or 
operational change. The proposal included emissions test alternatives 
based on an EGU's maximum achieved hourly emissions rate--applying 
either a ``statistical approach'' or a ``one-in-5-year baseline 
approach''--and an EGU's maximum achievable hourly emissions rate, 
which mirrored the NSPS modification applicability test. While EPA did 
not propose rule amendments in the 2005 NPRM, in 2007 EPA proposed to 
amend 40 CFR part 51 to include a new provision at Sec.  51.167, which 
largely mirrored the NSPS modification provisions in Sec.  60.2 and 
Sec.  60.14. The 2007 SNPRM provided EPA's legal and policy basis for 
incorporating an hourly emissions increase test within the NSR program 
for EGUs.
    For the proposed maximum achieved hourly test alternatives, an EGU 
owner/operator would determine whether an emissions increase would 
occur by comparing the pre-change maximum actual hourly emissions rate 
to a projection of the post-change maximum actual hourly emissions 
rate. In establishing the baseline, both alternatives considered the 
unit's actual performance during the 5-year period immediately 
preceding the physical or operational change. For the one-in-5-year 
baseline approach, the emissions rate would be computed based on what 
the unit actually achieved for any single hour within the 5-year period 
immediately before the physical or operational change. For the 
statistical approach, the owner/operative would analyze continuous 
emission monitoring system (CEMS) or predictive emission monitoring 
system (PEMS) data from the 5 years preceding the physical or 
operational change to determine the maximum actual pollutant emissions 
rate. The statistical approach would utilize actual recorded data from 
periods of representative operation to calculate the maximum actual 
emissions rate associated with the pre-change maximum actual operating 
capacity in the past 5 years.
    The purpose behind developing the statistical approach was to 
address concerns from comments received on the 2005 NPRM ``that maximum 
achievable emissions could differ from maximum achieved emissions for a 
given EGU for any given period as a result of factors independent of 
the physical or operational change, including variability of the sulfur 
content in the coal being burned.'' 72 FR 26219 (May 8, 2007). In the 
2007 SNPRM, EPA acknowledged that the highest hourly emissions do not 
always occur at the point of highest capacity utilization, due to 
fluctuations in process and control equipment operation, as well as in 
fuel content and firing method. The proposed statistical procedure 
would consequently ensure that the maximum achieved hourly emissions 
test identified the maximum hourly pollutant emissions value. 
Specifically, the statistical procedure would estimate the highest 
value (99.9 percentage level) in the period represented by the data set 
compiled from hourly average CEMS or PEMS measured emission rates and 
corresponding heat input data. EPA asserted that this approach would 
mitigate some of the uncertainty associated with trying to identify the 
highest hourly emissions rate at the highest capacity utilization. EPA 
asserted then that ``over a period that is representative of normal 
operations, in general the maximum achievable and maximum achieved 
hourly emissions test would lead to substantially equivalent results.'' 
72 FR 26220.
    For the proposed maximum achievable hourly test alternatives, the 
major NSR regulations would apply at an EGU if a physical or 
operational change results in any increase above the maximum hourly 
emissions achievable at that unit during the 5 years prior to the 
change. Pre-change and post-change hourly emissions rates would be 
determined according to the NSPS provisions in Sec.  60.14(b). Hourly 
emission increases would be determined using emission factors, material 
balances, continuous monitor data, or manual emission tests.
    In the 2007 SNPRM, EPA argued that a maximum hourly emissions test 
would simplify major NSR applicability determinations and 
implementation. EPA contended that ``the achieved and achievable 
[hourly emissions] tests eliminate the burden of projecting future 
emissions and distinguishing between emissions increases caused by the 
change from those due solely to demand growth, because any increase in 
the emissions under the hourly emissions tests would logically be 
attributed to the change. Both the achieved and achievable tests reduce 
recordkeeping and reporting burdens on sources because compliance will 
no longer rely on synthesizing emissions data into rolling average 
emissions.'' 72 FR 26206 (May 8, 2007).
    While the 2005 action had proposed to replace the current NSR 
annual emissions increase test with an hourly test, the 2007 action 
proposed the same option as well as an option to retain the annual 
emissions test along with an hourly test. For the combined hourly and 
annual emissions option, if a change would not increase the hourly 
emissions of the EGU, major NSR would not apply; however, if hourly 
emissions would increase after the change, then projected annual 
emissions would be reviewed using the existing NSR applicability test. 
The 2007 SNPRM expressed a preference for this combined applicability 
option.
    In the 2007 SNPRM, the proposed changes to the NSR emissions test 
were in part justified by the substantial EGU emission reductions from 
other air programs enacted since 1980 and the capped emissions 
approaches used for

[[Page 44779]]

SO2 and nitrogen oxides (NOX) since the CAA 
Amendment of 1990. The analyses conducted for that 2007 SNPRM concluded 
that, by 2020, more EGUs would install controls than they would in 
complying with a number of emission cap-based EPA rules that were in 
play at the time (i.e., Clean Air Interstate Rule, Clean Air Mercury 
Rule, and Clean Air Visibility Rule). The analysis maintained that the 
hourly emissions test would allow units to operate more hours each 
year, and the more hours a unit operates, the more it will control 
emissions to remain under the emission caps. It concluded that there 
would be essentially no changes in national emissions of SO2 
and NOX by coal-fired power plants, and essentially no 
impact on county-level emissions or local air quality.
    These 2005 and 2007 proposed rules were neither finalized nor 
withdrawn by EPA. The rulemaking docket for these actions is EPA-HQ-
OAR-2005-0163.
3. Legal Basis for Using Hourly Emission Rates To Identify Increases in 
Emissions
    The 2007 SNPRM followed EPA's NPRM from 2005 that would have 
replaced the NSR program's annual emissions test with an hourly test. 
The proposed regulatory approach taken in 2005 was based on the 
decision in United States v. Duke Energy Corp., 411 F.3d 539 (4th Cir. 
2005), in which the court held that the NSPS and NSR programs must have 
a uniform emissions test. There, in the context of an NSR enforcement 
case, the meaning of the CAA's definition of ``modification,'' and the 
proper interpretation of the provisions of the NSR regulations (as 
promulgated in 1980) that spoke to how an ``emissions increase'' was to 
be determined were at issue. The Fourth Circuit held that the CAA 
requires that those NSR regulations ``conform'' to their NSPS 
counterpart. 411 F.3d at 548. According to the Fourth Circuit, because 
Congress had relied on a cross-reference to CAA section 111(a)(4)'s 
definition of ``modification'' (i.e., the original NSPS definition) to 
define ``modification'' for purposes of the NSR program, this created 
an ``effectively irrebuttable presumption'' that the two definitions 
must be the same.'' Id. at 550.
    The case then went to the Supreme Court, and the Supreme Court 
disagreed. In Environmental Defense v. Duke Energy Corporation, 549 
U.S. 561 (2007), the Supreme Court held that there was ``no effectively 
irrebuttable presumption that the same defined term in different 
provisions of the same statute must be interpreted identically. Context 
counts.'' 549 U.S. at 575-76 (internal citation and quotation marks 
omitted). Moving beyond the procedural question of whether the Fourth 
Circuit had applied the proper tools of statutory construction, the 
Court also engaged the underlying substantive question, finding that 
``[n]othing in the text or the legislative history'' suggests that 
Congress intended to require that the programs be tied together and 
thereby ``eliminat[e] the customary agency discretion to resolve 
questions about a statutory definition by looking to the surroundings 
of the defined term.'' Id. at 576.
    Of particular significance here, the Supreme Court also addressed 
the possibility that the two regulatory programs could be read together 
as set and subset, such than an NSPS-type modification was a 
prerequisite to an NSR-type modification--i.e., that ``before a project 
can become a `major modification' under the PSD regulations, it must 
meet the definition of `modification' under the NSPS regulations.'' 549 
U.S. at 581 n.8. This reading ``sounds right,'' the Court opined,'' but 
then observed that, in its view, the NSPS and NSR regulations as they 
were then written did not support such a reading. Id. Although the 
Court had no occasion to address whether the Clean Air Act allows, 
rather than directs, EPA to define ``modification'' the same way in 
both the NSPS and NSR programs, EPA believes that the answer is clearly 
yes. The Court does generally ``presume that the same term has the same 
meaning when it occurs here and there in a single statute,'' 549 U.S. 
at 575, and, as Justice Thomas pointed out in his concurrence, in the 
case of the CAA's definition of ``modification,'' Congress's use of a 
cross-reference ``carries more meaning than mere repetition of the same 
word in a different statutory context.'' Id. at 583 (Thomas, J., 
concurring).\61\
---------------------------------------------------------------------------

    \61\ To this point, as Justice Thomas explains, the majority's 
analysis of the relationship between the NSR and NSPS programs is 
dicta, because the NSR regulations, as then written, could not be 
permissibly read to mean the same as the NSPS regulations, and CAA 
section 307(b) prohibits review of the NSR regulations in the 
context of an enforcement action. Duke Energy, 549 U.S. at 582 
(Thomas, J. concurring) (explaining that Justice Thomas joins only 
Part III.B of the majority opinion).
---------------------------------------------------------------------------

    In the 2007 SNPRM, EPA argued that the Supreme Court decision left 
room for EPA to revise the regulations when it has a rational basis for 
doing so. 72 FR 26202, 26204 (May 8, 2007); see also Environmental 
Defense v. Duke Energy Corp., 549 U.S. 561, 576 (2007) (``EPA's 
construction [of the definition of modification] need do no more than 
fall within the limits of what is reasonable, as set by the Act's 
common definition.'') EPA also argued that a maximum hourly emissions 
test for NSR is an appropriate exercise of EPA's discretion citing 
Chevron U.S.A., Inc. v. NRDC, Inc. 467 U.S. 37,865 (1984). Chevron 
provides that when a statute is silent or ambiguous with respect to a 
specific issue, the relevant inquiry for a reviewing court is whether 
the Agency's interpretation of the statutory provision is permissible. 
In this case, the Clean Air Act is silent on how to determine whether a 
physical change or change in method of operation ``increases the amount 
of any air pollutant emitted.'' 42 U.S.C. 7411(a)(4); New York I, 413 
F.3d at 22 (``[T]he CAA . . . is silent on how to calculate such 
`increases' in emissions.''). Accordingly, EPA has broad discretion to 
propose a reasonable method by which to calculate the ``amount'' of an 
emissions ``increase'' for purposes of NSR applicability.
    In the 2007 action, EPA also explained how an applicability test 
based on maximum achievable hourly emissions is, in fact, a test based 
on actual emissions. The reason is that, as a practical matter, ``for 
most, if not all EGUs, the hourly rate at which the unit is actually 
able to emit is substantively equivalent to that unit's historical 
maximum hourly emissions. That is, most, if not all EGUs will operate 
at their maximum actual physical and operational capacity at some point 
in a 5-year period. In general, the highest emissions occur during the 
period of highest utilization. As a result, both the maximum achievable 
and maximum achieved hourly emissions increase tests allow an EGU to 
utilize all of its existing capacity, and in this aspect the hourly 
rate at which the unit is actually able to emit is substantively 
equivalent under both tests.'' 72 FR 26219 (May 8, 2007).
    Thus, EPA considered the approaches proposed in the 2007 SNPRM to 
be consistent with the D.C. Circuit precedent which held that the 2002 
NSR Reform Rule's ``Clean Unit'' provision was beyond EPA's authority 
because Congress intended to apply NSR to increases in actual 
emissions, even though the decision deferred to EPA on the method for 
calculating baseline emissions. Compare New York I, 413 F.3d at 40 with 
id. at 20. In New York I, the D.C. Circuit found that the ``Clean 
Unit'' provision was unlawful because it ``measures `increases' in 
terms of Clean Unit status instead of actual emissions.'' 413 F.3d at 
39. In defense of the provision, EPA had asserted that the CAA is 
``silent'' as to whether an emissions increase ``must be measured in 
terms of actual emissions, potential

[[Page 44780]]

emissions, or some other currency,'' and that EPA was therefore owed 
deference to interpret what type of ``increases'' are relevant for the 
modification analysis. Id. The D.C. Circuit, however, disagreed. The 
court found that section 111(a)(4)'s reference to ``the amount of any 
air pollutant emitted by [the] source plainly refers to actual 
emissions'' and cannot encompass potential emissions. Id. at 40 
(emphases in original). According to the court, ``the plain language of 
the CAA indicates that Congress intended to apply NSR to changes that 
increase actual emissions instead of potential or allowable 
emissions.'' Id.
    At the same time, the D.C. Circuit affirmed that EPA has wide 
discretion to interpret the definition of ``modification'' within these 
bounds. The court rejected challenges brought to the 2002 NSR Reform 
Rule's then-new baseline period provision, finding that ``[i]n enacting 
the NSR program, Congress did not specify how to calculate `increases' 
in emissions,'' with the result that it was left to EPA ``to fill that 
gap while balancing the economic and environmental goals of the 
statute.'' 413 F.3d at 27. Because the CAA is ``silent on how to 
calculate . . . `increases' in emissions'' for purposes of determining 
``modification,'' the court said, id. at 22, EPA has discretion to give 
meaning to that term by adopting a baseline period that `` `represents 
a reasonable accommodation of' '' the Agency's environmental, economic, 
and administrative concerns. Id. at 23 (quoting Chevron, 467 U.S. at 
845). The D.C. Circuit went on to say that ``[d]ifferent 
interpretations of the term `increases' may have different 
environmental and economic consequences,'' and in ``administering the 
NSR program and filling in the gaps left by Congress, EPA has the 
authority to choose an interpretation that balances those 
consequences.'' Id. at 23-24. The court added that this choice may be 
informed by both EPA's ``extensive experience and expertise'' in this 
technical and complex regulatory program and by the ``incumbent 
administration's view of wise policy.'' Id at 24.
    As for NRDC's argument in comments on the ANPRM that narrowing the 
scope of projects subject to NSR requirements would be contrary to the 
D.C. Circuit's New York II decision, EPA notes that what was before the 
court in that case was an effort by EPA to further define what type of 
projects are considered RMRR and thus excluded from the types of 
``physical change[s] in, or change[s] in the method of operation of'' a 
source that may trigger NSR. New York II, 443 F.3d at 883. While the 
case focused on the ``physical change'' criterion of ``modification,'' 
the court's decision does provide some guidance on EPA's discretion to 
interpret ``emissions increase.'' The court in New York II found that 
the Equipment Replacement Rule, as promulgated in 2003, violated the 
CAA because its bright-line RMRR test, which took into account the 
value of the particular components being replaced, was inconsistent 
with CAA section 111(a)'s broad applicability to ``any physical 
change'' that results in increased emissions, subject to only de 
minimis exclusions. Id. at 890. But in so finding, the D.C. Circuit 
contrasted what it found to be the clear meaning of ``any physical 
change'' with ``Congress's use of the word `increase,' '' which 
``necessitated further definition regarding rate and measurement for 
the term to have any contextual meaning.'' Id. at 888-889. Accordingly, 
contrary to NRDC's assertions, New York II confirms the finding in New 
York I that, other than requiring that they be measured in terms of 
actual emissions, the CAA leaves to EPA the discretion to determine how 
emission increases will be defined for the purposes of NSR 
modification.
4. This Proposal
    Consistent with our policy goal of encouraging efficient use of 
existing energy capacity and managing the burden on states of 
developing and implementing their CAA section 111(d) plans, EPA is 
proposing to amend the NSR regulations to include an hourly emissions 
increase test for EGUs. These proposed changes could be one tool that 
states may use to help ensure the efficient and effective 
implementation of their 111(d) plans.\62\
---------------------------------------------------------------------------

    \62\ As noted above, EPA is inviting comment regarding whether, 
if we do not address NSR permitting burden with this proposal, we 
should provide a mechanism for state and local permitting agencies 
to consider the costs and delays associated with NSR permitting. See 
Section VIII.C.1 of this preamble.
---------------------------------------------------------------------------

    EPA is proposing some of the same alternatives for an hourly 
emissions test that EPA proposed in 2007. The 2007 SNPRM solicited 
comment on 12 alternatives, but EPA is narrowing the number of 
alternatives for this revised proposal and solicitation of comment. In 
this case, EPA is proposing only alternatives in which the hourly test 
is paired with the current NSR annual emissions test (i.e., Option 1 in 
the 2007 SNPRM) and only the alternatives that have an input-based 
format (i.e., Alternatives 1, 3, and 5 in the 2007 SNPRM). Table 1 
reflects the three alternatives being proposed in this action, and how 
they fit within the structure of the proposed combined annual and 
hourly emissions test for NSR applicability.
---------------------------------------------------------------------------

    \63\ For clarity, this table lists all of the steps in the NSR 
major modification applicability determination under the three 
alternatives being proposed in this action. This current action does 
not propose to change any of the current NSR applicability steps 
besides inserting Step 2.

   Table 5--Proposed Major NSR Applicability for an Existing EGU \63\
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Step 1: Physical Change or Change in the Method of Operation.
Step 2: Hourly Emissions Increase Test.
     Alternative 1--Maximum achieved hourly emissions;
     statistical approach; input basis.
     Alternative 2--Maximum achieved hourly emissions; one-in-5-
     year baseline; input basis.
     Alternative 3--Maximum achievable hourly emissions; input
     basis.
Step 3: Significant Emissions Increase Determined Using the Actual-to-
 Projected-Actual Emissions Test as in the Current NSR Rules.
Step 4: Significant Net Emissions Increase as in the Current NSR Rules.
------------------------------------------------------------------------

    Thus, under this proposed approach, the major NSR program would 
include a four-step applicability process (with the second step 
inserted as proposed, while retaining the other steps): (1) A physical 
change or change in the method of operation as in the current major NSR 
regulations; (2) an hourly emissions increase test (either maximum 
achieved hourly emissions rate or maximum achievable hourly emissions 
rate, each on an input-basis (lb/hr)); (3) a significant emissions 
increase as in the current major NSR regulations; and (4) a significant 
net emissions increase as in the current major NSR regulations. For a 
major modification to occur, under Step 1, a physical change or change 
in the method of operation must occur. If there is a physical change or 
change in

[[Page 44781]]

method of operation, under Step 2, that change must result in an hourly 
emissions increase at the existing EGU. If a post-change hourly 
emissions increase is projected, a source must then proceed to 
determine whether there is also a significant emissions increase and a 
significant net emissions increase. In such cases, under Step 3, the 
owner/operator would determine whether an emissions increase would 
occur using the actual-to-projected-actual annual emissions test as 
provided in the current regulations. There would be no conversion from 
annual to hourly emissions. Finally, in Step 4, as in the current 
regulations, if a significant emissions increase is projected to occur, 
the source would still not be subject to major NSR unless there was a 
determination that a significant net emissions increase would occur.
    This proposed approach would not alter the provisions in the 
current major NSR regulations pertaining to a significant emissions 
increase and a significant net emissions increase. Therefore, the NSR 
regulations would retain the definitions of net emissions increase, 
significant, projected actual emissions, and baseline actual emissions. 
See 40 CFR 51.166(b)(3), 51.166(b)(23), 51.166(b)(40), 
51.166(b)(47).\64\ The regulations would also retain all provisions in 
the current regulations that refer to major modifications, including, 
but not limited to, those in 40 CFR 51.166(a)(7)(i) through (iii), 
(b)(9), (b)(12), (b)(14)(ii), (b)(15), (b)(18), (i)(1) through (9), 
(j)(1) through (4), (m)(1) through (3), (p)(1) through (7), (r)(1) 
through (7), and (s)(1) through (4).\65\
---------------------------------------------------------------------------

    \64\ Analogous provisions are found in 40 CFR 51.165, 52.21, and 
appendix S to 40 CFR part 51.
    \65\ Analogous provisions are found in 40 CFR 51.165, 52.21, and 
appendix S to 40 CFR part 51.
---------------------------------------------------------------------------

    To incorporate the four-step modification provisions, EPA is 
proposing to add two new sections to the major NSR program rules. The 
first, 40 CFR 51.167, would specify that State Implementation Plans may 
include a new Step 2 for major NSR applicability at existing EGUs, 
including those for both attainment and nonattainment areas. The 
second, 40 CFR 52.25, would contain the requirements for major NSR 
applicability for existing EGUs where EPA is the reviewing authority or 
EPA has delegated our authority to a state or local air permitting 
agency. EPA is also proposing to make the same changes where necessary 
to conform the general provisions in parts 51 and 52 to the 
requirements of the major NSR program, such as in the definition of 
modification in 40 CFR 52.01. The new sections at Sec.  51.167 and 
Sec.  52.25 will be separate and distinct from the other NSR provisions 
and this will allow our rules to apply this new proposed Step 2 to EGUs 
while keeping the current distinction in our NSR rules that applies 
different applicability requirements for EUSGUs and non-EUSGUs that are 
not EGUs.
    While EPA is proposing that this NSR hourly emissions test would 
apply to all EGUs, as defined in 40 CFR 51.124(q), EPA is soliciting 
comment on whether to confine the applicability of the hourly test to a 
smaller subset of the power sector, such as only the affected EGUs that 
are making modifications to comply with their state's standards of 
performance pursuant to these section 111(d) emissions guidelines 
(i.e., pursuant to this document's proposed provisions at Sec.  
60.5775a and Sec.  60.5780a) (Comment C-62). In addition, while the 
2007 SNPRM solicited comment on whether such a test should be limited 
to the geographic areas covered by several of EPA's rules at the time, 
because the ACE rule would potentially affect EGUs in all of the 
contiguous U.S., EPA is proposing in this action to not limit its 
applicability to specific geographic areas. We are specifically 
proposing that it would apply to EGUs in all areas of the United 
States. Finally, although the 2007 SNPRM requested comment on whether 
the proposed NSR hourly emissions test should be limited to increases 
of SO2 and NOX emissions (due to the analysis 
that supported the 2007 SNPRM), EPA is proposing in this action that 
the NSR hourly emissions test would apply to all regulated NSR 
pollutants because the candidate technologies being considered under 
this proposal may affect annual emissions of not only GHGs but of all 
pollutants from the power sector (and because EPA is not relying on the 
previous proposal's analysis that focused on SO2 and 
NOX emissions). EPA solicits comment on these approaches to 
applicability for the proposed NSR hourly emission increase test.
    Recognizing that existing case law dictates that the phrase 
``increases the amount of any air pollutant'' in CAA section 111(a)(4) 
refers to increases in actual emissions for NSR purposes, in 2007 EPA 
argued that an hourly achievable test is equivalent to a measure of 
actual emissions because ``for most, if not all EGUs, the hourly rate 
at which the unit is actually able to emit is substantively equivalent 
to that unit's historical maximum hourly emissions.'' 72 FR 26219 (May 
8, 2007). EPA is taking comment on this prior assertion and whether 
recent changes to the energy sector may have rendered it invalid 
(Comment C-63). EPA is also asking for comment on whether if, 
practically speaking, maximum achieved and maximum achievable hourly 
rates are equivalent for most if not all EGUs, EPA has the flexibility 
under the CAA to implement an hourly achievable emissions test for NSR 
(Comment C-64).
    As noted in the preceding section, EPA's proposal in 2007 to adopt 
an hourly emissions increase test for NSR included an analysis 
demonstrating that (1) the proposed regulations would not have an undue 
adverse impact on local air quality, and (2) increases in the hours of 
operation at EGUs, to the extent they may increase under a maximum 
hourly rate test for NSR, would not notably increase national 
SO2, NOx, PM2.5, VOC, or CO emissions from the 
power sector. The analysis in 2007 concluded that the more efficiently 
and the more cost-effectively an EGU operates, the more likely it is to 
install controls due to other EPA air regulations. While time has 
passed since the analyses in the 2007 SNPRM were conducted, the 
analysis conducted for the ACE rule similarly reflects that, for 
scenarios that include varying levels and costs of efficiency 
improvements (reflecting, in part, the proposed changes to NSR in this 
action), total national emissions of CO2 and other 
pollutants will essentially stay the same or be slightly reduced when 
compared with a CPP repeal. While it is possible that some individual 
units may experience an increase in annual emissions due to increases 
in operation, it is very difficult to project with confidence at which 
of the units this would actually occur. This is partly due to the 
framework of the current NSR annual emissions test, which considers a 
number of source-specific variables--including operational history of 
the unit, projected emissions that may be exempted due to demand 
growth, other units competing for dispatch, and availability of 
creditable emission decreases at the facility--that could result in the 
source ultimately not being subject to major NSR. Consequently, the 
analysis conducted for the ACE rule estimates the cost and benefits of 
the different scenarios in a categorical sense and does not attempt to 
identify the particular sources at which major NSR permitting may be 
required absent the type of revisions to the NSR regulations proposed 
here or incorporate a specific cost for NSR permitting within any of 
the scenarios. This is due in part to limitations in the feasibility of 
such analysis and in part to the structure of

[[Page 44782]]

section 111(d) and the state-plan development phase which would follow 
a finalization of this proposed rule. EPA requests comment on the 
concern about the potential emission increases as part of the proposed 
NSR changes that some stakeholders have raised (Comment C-65).
    While recognizing that fewer sources will trigger major NSR under 
an hourly emissions increase, we note that even if a source undertaking 
a heat rate improvement is not subject to major NSR requirements, it 
will often require a minor NSR permit from its permitting agency. As 
noted in Section VIII.A of this preamble, the minor NSR program applies 
to new and modified sources that are not subject to major NSR 
permitting. The purpose of a minor NSR program is, along with major 
NSR, to ensure that sources of air emissions are properly regulated so 
that the NAAQS are attained and protected. For example, under EPA's 
tribal minor NSR program, the reviewing authority (i.e., EPA or a 
delegated Tribe) must ensure that the NAAQS are protected through the 
permitting process. The reviewing authority has the option to require 
an air quality impact analysis for individual permits if they deem it 
necessary based on air quality concerns.\66\ All minor NSR permits 
require a public notice process and the permit may potentially require 
the installation of air pollution controls based on an assessment by 
the permitting authority.
---------------------------------------------------------------------------

    \66\ 40 CFR 49.154(d). We note that many state (and local) minor 
NSR permitting programs have similar methods for ensuring that the 
NAAQS are protected.
---------------------------------------------------------------------------

    Furthermore, states use measures contained in their State 
Implementation Plan (SIP) to ensure that local air quality impacts are 
addressed or minimized to the extent possible. A SIP may include (1) 
state-adopted control measures which consist of either regulations or 
source-specific requirements (e.g., orders and consent decrees); (2) 
state-submitted ``non-regulatory'' components (e.g., maintenance plans 
and attainment demonstrations); and (3) additional requirements 
promulgated by EPA to satisfy a mandatory requirement in Section 110 or 
Part D of the CAA.
    Supplementing the Agency's legal and policy rationale provided in 
the 2007 SNPRM, EPA is taking comment on an important factor that EPA 
believes supports for moving forward with the addition of an NSR hourly 
emissions test for EGUs: EPA is now proposing a rule that could result 
in sources being required to perform HRIs (as determined by their state 
111(d) plans) rather than sources independently deciding to do them 
(Comment C-66). EPA believes this added factor of the 111(d) GHG 
emission guidelines for EGUs directing sources to consider HRIs when 
complying with their state plans may make the case for adopting an NSR 
hourly emissions test for EGUs more compelling. EPA requests comment on 
the extent to which EPA should allow the adoption of an NSR hourly 
emissions test for EGUs in light of EPA's decision to issue these 
proposed emission guidelines for the power sector (Comment C-67).
    EPA is also taking comment on other ways to minimize or eliminate 
any adverse impact that NSR may have on implementing section 111(d) 
plans for EGUs (Comment C-68). Specifically, have there been court 
decisions since New York I and New York II that can be read to afford 
EPA more flexibility with respect to its reading of the definition of 
``modification'' in the context of the NSR program?
    For example, when EPA undertook the challenge of applying the PSD 
program to GHGs, the Supreme Court pointed to several instances where 
EPA had permissibly narrowed the scope of the general CAA definition of 
``air pollutant'' based on the surrounding context of provisions within 
which the term is used, including the NSR program. UARG v. EPA, 134 
S.Ct. 2427, 2439-41 (2014). Based in part on this observation, the 
Court rejected EPA's strict interpretation that the term ``air 
pollutant'' must apply to greenhouse gases in the context of the 
definition of ``major emitting facility'' in section 169(1) of the Act 
in spite of the Agency's recognition that such a reading would 
dramatically expand the reach of the PSD program to smaller scale 
construction that Congress had never intended to cover. Id. at 2442. In 
a like manner, does EPA have more flexibility with regard to its 
interpretation of the definition of ``modification'' in the context of 
the PSD program than the D.C. Circuit has previously recognized? Where 
the D.C. Circuit's reading of the definition of ``modification'' in the 
PSD context would produce results that frustrates Congressional 
objectives in the CAA section 111 programs, does the reasoning of the 
Supreme Court in UARG supply a basis for EPA to develop a narrower form 
of a pollution control project exclusion from NSR?
    The requirements of the CAA section 111 program were intended to 
work in harmony with NSR and other provisions of the Act. The 
complementary relationship of the programs is evident from the 
statutory requirements. Both programs are intended to protect air 
quality from stationary sources of pollution, and they rely on many of 
the same CAA provisions and definitions--namely, the programs' 
framework for existing sources are both rooted in the same definition 
for ``modification.'' In addition, there are instances in which the CAA 
cross links the programs such that a requirement from one program bears 
an influence on the other program. For example, in accordance with CAA 
section 169(3), an applicable standard of performance under NSPS 
establishes the minimum level of stringency for BACT for a source 
getting a PSD permit. Similarly, LAER must reflect an emission rate 
that is does not exceed the allowable emission rate under any 
applicable NSPS. CAA section 171(3). Thus, the NSPS program sets the 
minimum performance standards for new stationary sources as part of 
program to ensure air quality is protected, and NSR authorizes the 
construction or modification of sources of air pollution, taking into 
account the NSPS as it examines what the source needs to do to control 
its emissions in order to adequately protect or improve air quality.
    Thus, EPA believes the two programs are intended to complement--not 
conflict with--each other. However, because changes considered under 
111(d) plans could result in a source triggering NSR under the current 
NSR rules and increasing the costs to the point that undertaking HRI 
are less financially feasible for some sources, can EPA apply the 
reasoning of UARG to read the definition of ``modification'' in this 
context to afford more flexibility to exempt sources from NSR 
requirements when they are compelled to make changes by an NSPS 
(Comment C-69)?
5. State Adoption
    As the hourly emissions test for NSR would be one tool for 
implementing the ACE rule, EPA expects that some states may determine 
that they do not need or desire to change the NSR applicability 
requirements for EGUs. Consequently, EPA does not intend the NSR hourly 
emissions test to be a mandatory element of state programs (as EPA had 
proposed in 2007). EPA is proposing for this action that states would 
have the discretion to decide whether to incorporate the NSR hourly 
emissions test for EGUs into their rules. However, state and local 
permitting authorities that are issuing permits on behalf of EPA under 
a delegation agreement will be required to apply the NSR hourly 
emissions test for EGUs, since they would follow the Federal NSR 
program provided in 40 CFR part 52 (which would be amended to include 
section

[[Page 44783]]

52.25). EPA solicits comment on allowing states this flexibility to 
adopt the proposed NSR rule changes and on any other considerations 
with respect to state (or local/district agency) adoption and 
implementation of the proposed NSR changes (Comment C-70).
6. Severability
    Although EPA proposes to finalize these NSR revisions as part of an 
integrated action with the rest of this proposal, EPA views the 
revisions to the definition of BSER, revisions to the implementing 
regulations, and emission guideline proposed in this proposal as 
appropriate policies in their own right and on their own terms. EPA 
intends that the NSR revisions, if finalized, would be severable from 
the other provisions on judicial review. EPA solicits comment on 
whether it would be appropriate to finalize the NSR revisions as a 
separate action from the remainder of the proposal (Comment C-71).
7. Submitting Comments
    Please submit all comments on this NSR section docket established 
for this rulemaking (Docket ID number EPA-HQ-OAR-2017-0355). To the 
extent that you previously commented on the October 20, 2005 NPRM and/
or May 8, 2007 SNPRM and desire for your comments to be considered for 
this proposed action, please resubmit them.

IX. Impacts

A. What are the air impacts?

    In the Regulatory Impact Analysis (RIA) for this proposed 
rulemaking, the Agency provides a full benefit cost analysis of four 
illustrative scenarios. The four illustrative scenarios include a 
scenario modeling the full repeal of the CPP (which can also be 
conceptualized as the legal state of affairs as of the date of this 
proposal, given the Supreme Court stay of the CPP) and three policy 
scenarios modeling heat rate improvements (HRI) at coal-fired EGUs. 
Throughout the RIA, these three illustrative policy scenarios are 
compared against a base case, which includes the CPP. By analyzing 
against the CPP, the reader can understand the combined impact of the 
CPP repeal and proposed ACE rule. Inclusion of a no CPP case allows for 
an understanding of the repeal alone and also allows the reader to 
evaluate the impact of the policy cases against a no CPP scenario. The 
RIA assumes a mass-based implementation of the CPP for existing 
affected sources, and does not assume interstate trading. The three 
illustrative policy scenarios represent potential outcomes of state 
determinations of standards of performance, and compliance with those 
standards by affected coal-fired EGUs. These policy scenarios 
illustrate the analysis of the world without the CPP, the world with 
this proposal, and the difference in the effects of this proposal and 
those of the CPP.
    The illustrative policy scenarios model different levels and costs 
of HRIs applied uniformly at all affected coal-fired EGUs in the 
contiguous U.S. beginning in 2025. EPA has identified the BSER to be 
HRI. Each of these illustrative scenarios assumes that the affected 
sources are no longer subject to the state plan requirements of the CPP 
(i.e., the mass-based requirements assumed for CPP implementation in 
the base case for the RIA). The cost, suitability, and potential 
improvement for any of these HRI technologies is dependent on a range 
of unit-specific factors such as the size, age, fuel use, and the 
operating and maintenance history of the unit. As such, the HRI 
potential can vary significantly from unit to unit. EPA does not have 
sufficient information to assess HRI potential on a unit-by-unit basis. 
To avoid the impression that EPA can sufficiently distinguish likely 
standards of performance across individual affected units and their 
compliance strategies, this analysis assumes different HRI levels and 
costs are applied uniformly to affected coal-fired EGUs under each of 
three illustrative policy scenarios:
    The first illustrative scenario, 2 Percent HRI at $50/kW, 
represents a policy case that reflects modest improvements in HRI 
absent any revisions to NSR requirements. For many years, industry has 
indicated to the Agency that many sources have not implemented certain 
HRI projects because the burdensome costs of NSR cause such projects to 
not be viable. Thus, absent NSR reform, HRI at affected units might be 
expected to be modest. Based on numerous studies and statistical 
analysis, the Agency believes that the HRI potential for coal-fired 
EGUs will, on average, range from one to three percent at a cost of $30 
to $60 per kilowatt (kW) of EGU generating capacity. The Agency 
believes that this scenario (2 percent HRI at $50/kW) reasonably 
represents that range of HRI and cost.
    The second illustrative scenario, 4.5 Percent HRI at $50/kW, 
represents a policy case that includes benefits from the proposed 
revisions to NSR, with the HRI modeled at a low cost. As mentioned 
earlier, the Agency is proposing revisions to the NSR program that will 
provide owners and operators of existing EGUs greater ability to make 
efficiency improvements without triggering the provisions of NSR. This 
scenario is informative in that it represents the ability of all coal-
fired EGUs to obtain greater improvements in heat rate because of NSR 
reform at the $50/kW cost identified earlier. EPA believes this higher 
heat rate improvement potential is possible because without NSR a 
greater number of units may have the opportunity to make cost effective 
heat rate improvements such as steam turbine upgrades that have the 
potential to offer greater heat rate improvement opportunities.
    The third illustrative scenario, 4.5 Percent HRI at $100/kW, 
represents a policy case that includes the benefits from the proposed 
revisions to NSR, with the HRI modeled at a higher cost. This scenario 
is informative in that it represents the ability of a typical coal-
fired EGU to obtain greater improvements in heat rate because of NSR 
reform but at a much higher cost ($100/kW) than the $50/kW cost 
identified earlier. Particularly for lower capacity units or those with 
limited remaining useful life, this could ultimately translate into HRI 
projects with costs beyond what most states might determine to be 
reasonable.
    Combined, the 4.5 percent HRI at $50/kW scenario and the 4.5 
percent HRI at $100/kW scenario represent a range of potential costs 
for the proposed policy option that couples HRI with NSR reform. 
Modeling this at $50/kW and $100/kW provides a sensitivity analysis on 
the cost of the proposed policy including NSR reform. The $50/kW cost 
represents an optimistic bounding where NSR reform unleashes 
significant new opportunity for low-cost heat rate improvements. The 
$100/kW cost scenario, while informative, represents a high-end bound 
that could overstate potential because, particularly for lower capacity 
factor units and those with limited remaining useful life, these would 
represent project costs that states would likely find to be 
unreasonable.
    The Agency understands that there may be interest in comparing the 
three illustrative policy scenarios against an alternative baseline 
that does not include the CPP. For those interested in comparing the 
potential impacts of the policy scenarios in a world without the CPP, 
results from the three illustrative policy scenarios may be compared 
against an alternative baseline results from the illustrative No CPP 
scenario. The presentation of an alternative baseline is consistent 
with Circular A-4, which states, ``When more than one

[[Page 44784]]

baseline is reasonable and the choice of baseline will significantly 
affect estimated benefits and costs, you should consider measuring 
benefits and costs against alternative baselines'' \67\ In addition, 
the full suite of model outputs and additional comparisons tables are 
available in the rulemaking docket.
---------------------------------------------------------------------------

    \67\ Office of Management and Budget (OMB), 2003, Circular A-4, 
https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.
---------------------------------------------------------------------------

    EPA evaluates the potential regulatory impacts of the illustrative 
No CPP scenario and the three illustrative policy scenarios using the 
present value (PV) of costs, benefits, and net benefits, calculated for 
the years 2023-2037 from the perspective of 2016, using both a three 
percent and seven percent beginning-of-period discount rate. In 
addition, the Agency presents the assessment of costs, benefits, and 
net benefits for specific snapshot years, consistent with historic 
practice. In the RIA, the regulatory impacts are evaluated for the 
specific years of 2025, 2030, and 2035.
    Emissions are projected to be higher under the three illustrative 
policy scenarios and the illustrative No CPP scenario than under the 
base case, as the base case includes the CPP. Table 6 shows projected 
emission increases relative to the base case for CO2, 
SO2 and NOX from the electricity sector. Table 7 
shows the same emissions change information, except relative to the No 
CPP alternative baseline.

   Table 6--Projected CO2, SO2, and NOX Electricity Sector Emission Increases, Relative to the Base Case (CPP)
                                                   (2025-2035)
----------------------------------------------------------------------------------------------------------------
                                                                   CO2 (million    SO2 (thousand   NOX (thousand
                                                                    short tons)     short tons)     short tons)
 
----------------------------------------------------------------------------------------------------------------
                                                     No CPP
----------------------------------------------------------------------------------------------------------------
2025............................................................              50              36              32
2030............................................................              74              60              47
2035............................................................              66              44              43
----------------------------------------------------------------------------------------------------------------
                                                2% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................              37              35              24
2030............................................................              61              53              39
2035............................................................              55              34              39
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................              32              40              21
2030............................................................              60              53              39
2035............................................................              59              43              43
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $100/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................              20              32              14
2030............................................................              47              45              32
2035............................................................              44              29              33
----------------------------------------------------------------------------------------------------------------


  Table 7--Projected CO2, SO2, and NOX Electricity Sector Emission Changes, Relative to the No CPP Alternative
                                                    Baseline
                                                   [2025-2035]
----------------------------------------------------------------------------------------------------------------
                                                                   CO2 (million    SO2 (thousand   NOX (thousand
                                                                    short tons)     short tons)     short tons)
 
----------------------------------------------------------------------------------------------------------------
                                                 Base Case (CPP)
----------------------------------------------------------------------------------------------------------------
2025............................................................             -50             -36             -32
2030............................................................             -74             -60             -47
2035............................................................             -66             -44             -43
----------------------------------------------------------------------------------------------------------------
                                                2% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................             -13               0              -8
2030............................................................             -13              -7              -8
2035............................................................             -11             -11              -5
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................             -18               4             -11
2030............................................................             -14              -7              -8
2035............................................................              -7              -1              -1
----------------------------------------------------------------------------------------------------------------

[[Page 44785]]

 
                                               4.5% HRI at $100/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................             -30              -3             -18
2030............................................................             -27             -15             -15
2035............................................................             -22             -16             -11
----------------------------------------------------------------------------------------------------------------

The emissions changes in these tables do not account for changes in 
hazardous air pollutants (HAPs) that may occur as a result of this 
rule. For projected impacts on mercury emissions, please see Chapter 3 
of the RIA for this proposed rulemaking.

B. What are the energy impacts?

    The proposed actions have energy market implications. Overall, the 
analysis to support this proposed rule indicates that there are 
important power sector impacts that are worth noting, although they are 
relatively small compared to other EPA air regulatory actions for EGUs. 
The estimated impacts reflect EPA's illustrative analysis of the 
proposed rule, which applies various levels of heat rate improvements 
to affected sources in order to ascertain how they might respond, in 
order to capture the potential systemwide economic and energy impacts 
of the requirements. States are afforded considerable flexibility in 
this proposed rule, and thus the impacts could be different, to the 
extent states make different choices.
    Table 8 presents a variety of energy market impacts for 2025, 2030, 
and 2035 for the four illustrative scenarios, relative to the base 
case, which includes the CPP.

                 Table 8--Summary of Certain Energy Market Impacts, Relative to Base Case (CPP)
                                                [Percent change]
----------------------------------------------------------------------------------------------------------------
                                                                     2025 (%)        2030 (%)        2035 (%)
----------------------------------------------------------------------------------------------------------------
                                                     No CPP
----------------------------------------------------------------------------------------------------------------
Retail electricity prices.......................................            -0.5            -0.4            -0.1
Average price of coal delivered to the power sector.............            -0.1            -0.2            -0.4
Coal production for power sector use............................             6.1             9.2             9.5
Price of natural gas delivered to power sector..................            -1.1            -0.3             0.1
Price of average Henry Hub (spot)...............................            -1.4            -0.8            -0.2
Natural gas use for electricity generation......................            -1.5            -1.5            -0.9
----------------------------------------------------------------------------------------------------------------
                                                2% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
Retail electricity prices.......................................            -0.3            -0.2            -0.1
Average price of coal delivered to the power sector.............             0.2            -0.1            -0.4
Coal production for power sector use............................             5.5             8.0             8.4
Price of natural gas delivered to power sector..................            -1.1            -0.9            -0.4
Price of average Henry Hub (spot)...............................            -1.4            -1.3            -0.6
Natural gas use for electricity generation......................            -2.5            -1.7            -1.1
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
Retail electricity prices.......................................            -0.5            -0.4            -0.2
Average price of coal delivered to the power sector.............             0.7             0.6             0.3
Coal production for power sector use............................             5.8             8.6             9.5
Price of natural gas delivered to power sector..................            -1.4            -1.1            -0.7
Price of average Henry Hub (spot)...............................            -1.7            -1.6            -1.0
Natural gas use for electricity generation......................            -3.4            -2.5            -1.9
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $100/kW
----------------------------------------------------------------------------------------------------------------
Retail electricity prices.......................................            -0.2             0.0             0.0
Average price of coal delivered to the power sector.............             0.5             0.3            -0.1
Coal production for power sector use............................             4.5             7.1             7.4
Price of natural gas delivered to power sector..................            -1.3            -1.1            -0.7
Price of average Henry Hub (spot)...............................            -1.6            -1.6            -1.0
Natural gas use for electricity generation......................            -3.4            -2.3            -1.6
----------------------------------------------------------------------------------------------------------------


[[Page 44786]]

    Energy market impacts are discussed more extensively in the RIA 
found in the rulemaking docket.

C. What are the compliance costs?

    The power industry's ``compliance costs'' are represented in this 
analysis as the change in electric power generation costs between the 
base case and illustrative scenarios, including the cost of monitoring, 
reporting, and recordkeeping (MR&R). In simple terms, these costs are 
an estimate of the increased power industry expenditures required to 
implement the HRI required by the proposed rule, minus the sectoral 
cost of complying with the CPP assumed in the base case.
    The compliance assumptions--and, therefore, the projected 
compliance costs--set forth in this analysis are illustrative in nature 
and do not represent the plans that states may ultimately pursue. The 
illustrative compliance scenarios are designed to reflect, to the 
extent possible, the scope and nature of the proposed guidelines. 
However, there is considerable uncertainty with regards to the precise 
measure that states will adopt to meet the proposed requirements, 
because there are considerable flexibilities afforded to the states in 
developing their state plans.
    Table 9 presents the annualized compliance costs of the three 
illustrative policy scenarios and the illustrative No CPP scenario. In 
this table, and throughout the RIA for this proposed rulemaking, 
negative costs indicate avoided costs relative to the base case (which 
includes the CPP), and positive costs indicate an increase in projected 
compliance costs, relative to the base case. As shown in Table 9, the 
Agency estimates that there are avoided costs under three out of the 
four illustrative scenarios. Table 7 shows the same compliance cost 
information, except relative to the No CPP alternative baseline.

                             Table 9--Compliance Costs, Relative to Base Case (CPP)
                                               [Billions of 2016$]
----------------------------------------------------------------------------------------------------------------
                                                                  2% HRI at $50/    4.5% HRI at     4.5% HRI at
                                                    CPP repeal          kW            $50/kW          $100/kW
----------------------------------------------------------------------------------------------------------------
2025............................................           (0.7)             0.0           (0.6)             0.5
2030............................................           (0.7)           (0.2)           (1.0)             0.2
2035............................................           (0.4)             0.1           (0.6)             0.5
----------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate that, on net, the illustrative scenario avoids costs relative to the base case
  with the CPP. Compliance costs equal the projected change in total power sector generating costs, plus the
  costs of monitoring, reporting, and recordkeeping.


                     Table 10--Compliance Costs, Relative to the No CPP Alternative Baseline
                                               [Billions of 2016$]
----------------------------------------------------------------------------------------------------------------
                                                                  2% HRI at $50/    4.5% HRI at     4.5% HRI at
                                                                        kW            $50/kW          $100/kW
----------------------------------------------------------------------------------------------------------------
2025............................................................             0.7             0.1             1.3
2030............................................................             0.5           (0.2)             0.9
2035............................................................             0.5           (0.2)             0.8
----------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate that, on net, the illustrative scenario reduces costs relative to the No CPP
  alternative baseline. Compliance costs equal the projected change in total power sector generating costs, plus
  the costs of monitoring, reporting, and recordkeeping.

    Due to a number of changes in the electricity sector since the CPP 
was finalized, as documented in the October 2017 RIA conducted for the 
proposed CPP repeal and Chapter 3 of the RIA for this action, the 
sector has become less carbon intensive over the past several years, 
and the trend is projected to continue. These changes and trends are 
reflected in the modeling used for this analysis. As such, achieving 
the emissions levels required under CPP requires less effort and 
expense, relative to a scenario without the CPP, and the estimated 
compliance costs are significantly lower than what was estimated in the 
final CPP RIA. More detailed cost estimates are available in the RIA 
included in the rulemaking docket.

D. What are the economic and employment impacts?

    Environmental regulation may affect groups of workers differently, 
as changes in abatement and other compliance activities cause labor and 
other resources to shift. An employment impact analysis describes the 
characteristics of groups of workers potentially affected by a 
regulation, as well as labor market conditions in affected occupations, 
industries, and geographic areas. Market and employment impacts of this 
proposed action are discussed more extensively in Chapter 5 of the RIA 
for this proposed rulemaking.

E. What are the benefits of the proposed action?

    EPA reports the impact on climate benefits from changes in 
CO2 and the impact on health benefits attributable to 
changes in SO2, NOX and PM2.5 
emissions. EPA refers to the climate benefits as ``targeted pollutant 
benefits'' as they reflect the direct benefits of reducing 
CO2, and to the ancillary health benefits as ``co-benefits'' 
as they are not benefits from reducing the targeted pollutant. To 
estimate the climate benefits associated with changes in CO2 
emissions, EPA applies a measure of the domestic social cost of carbon 
(SC-CO2). 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 the RIA for this proposed rulemaking focus on the 
direct impacts of climate change that are anticipated to occur within 
U.S. borders.
    The estimated health co-benefits are the monetized value of the 
forgone human health benefits among populations exposed to changes in 
PM2.5 and ozone. This rule is expected to alter the 
emissions of SO2 and NOX emissions, which will in 
turn affect the level of PM2.5 and ozone in the atmosphere. 
Using photochemical modeling, EPA predicted the change in the annual 
average PM2.5 and summer

[[Page 44787]]

season ozone across the U.S. for the years 2025, 2030 and 2035. EPA 
next quantified the human health impacts and economic value of these 
changes in air quality using the environmental Benefits Mapping and 
Analysis Program--Community Edition. EPA quantified effects using 
concentration-response parameters detailed in the RIA and that are 
consistent with those employed by the Agency in the PM NAAQS and Ozone 
NAAQS RIAs (U.S. EPA, 2012; 2015). In these tables, negative values 
represent forgone benefits and positive benefits represent realized 
benefits.
[GRAPHIC] [TIFF OMITTED] TP31AU18.001


[[Page 44788]]


[GRAPHIC] [TIFF OMITTED] TP31AU18.002


[[Page 44789]]


[GRAPHIC] [TIFF OMITTED] TP31AU18.003

    Table 14 reports the combined domestic climate benefits and 
ancillary health co-benefits attributable to changes in SO2 
and NOX emissions estimated for 3 percent and 7 percent 
discount rates in the years 2025, 2030 and 2035, in 2016 dollars. This 
table reports the air pollution effects calculated using 
PM2.5 log-linear no threshold concentration-response 
functions that quantify risk associated with the full range of 
PM2.5 exposures experienced by the population (U.S. EPA, 
2009; U.S. EPA, 2011; NRC, 2002).
    In this table, negative benefits indicate forgone benefits, 
relative to the base case, which includes the CPP. As all benefit 
estimates in this table are negative values, this indicates that the 
Agency estimates there to be forgone climate benefits and forgone 
ancillary health co-benefits under all four illustrative scenarios in 
the years and discount rates analyzed relative to the base case.

[[Page 44790]]



                                                                    Table 14--Monetized Benefits, Relative to Base Case (CPP)
                                                                                       [billions of 2016$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Values calculated using 3% discount rate                                       Values calculated using 7% discount rate
                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Domestic                                                                        Domestic
                                        climate      Ancillary health co-benefits           Total benefits              climate      Ancillary health co-benefits          Total benefits
                                       benefits                                                                        benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             No CPP
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025..............................           (0.3)  (2.8) to (6.6)................  (3.2) to (7.0)................           (0.1)  (2.6) to (6.1)...............  (2.7) to (6.1)
2030..............................           (0.5)  (4.9) to (11.4)...............  (5.4) to (11.9)...............           (0.1)  (4.5) to (10.5)..............  (4.6) to (10.6)
2035..............................           (0.5)  (3.8) to (8.8)................  (4.3) to (9.3)................           (0.1)  (3.5) to (8.1)...............  (3.6) to (8.2)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        2% HRI at $50/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025..............................           (0.2)  (2.6) to (5.9)................  (2.8) to (6.2)................           (0.0)  (2.4) to (5.4)...............  (2.4) to (5.5)
2030..............................           (0.4)  (4.5) to (10.6)...............  (4.9) to (11.0)...............           (0.1)  (4.1) to (9.8)...............  (4.2) to (9.9)
2035..............................           (0.4)  (3.0) to (7.0)................  (3.4) to (7.4)................           (0.1)  (2.7) to (6.5)...............  (2.8) to (6.6)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       4.5% HRI at $50/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025..............................           (0.2)  (2.7) to (6.2)................  (2.9) to (6.4)................           (0.0)  (2.5) to (5.7)...............  (2.5) to (5.7)
2030..............................           (0.4)  (4.2) to (9.8)................  (4.6) to (10.2)...............           (0.1)  (3.9) to (9.0)...............  (3.9) to (9.1)
2035..............................           (0.5)  (4.0) to (9.3)................  (4.4) to (9.8)................           (0.1)  (3.7) to (8.6)...............  (3.7) to (8.7)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       4.5% HRI at $100/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025..............................           (0.1)  (2.1) to (4.9)................  (2.3) to (5.0)................           (0.0)  (2.0) to (4.4)...............  (2.0) to (4.4)
2030..............................           (0.3)  (3.6) to (8.2)................  (3.9) to (8.6)................           (0.1)  (3.3) to (7.6)...............  (3.3) to (7.6)
2035..............................           (0.3)  (2.6) to (6.0)................  (2.9) to (6.3)................           (0.1)  (2.4) to (5.5)...............  (2.4) to (5.6)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Negative benefit values indicate forgone benefits relative to the base case, which includes the CPP. All estimates are rounded to one decimal point, so figures may not sum due to
  independent rounding. Climate benefits reflect the value of domestic impacts from CO2 emissions changes. The ancillary health co-benefits reflect the sum of the PM2.5 and ozone benefits from
  changes in electricity sector SO2, NOX, and PM2.5 emissions and reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith et al. (2009) to Lepeule et
  al. (2012) with Jerrett et al. (2009)) using a log-linear no threshold model.

    In general, EPA is more confident in the size of the risks 
estimated from simulated PM2.5 concentrations that coincide 
with the bulk of the observed PM concentrations in the epidemiological 
studies that are used to estimate the benefits. Likewise, EPA is less 
confident in the risk EPA estimates from simulated PM2.5 
concentrations that fall below the bulk of the observed data in these 
studies.\68\ Furthermore, when setting the 2012 PM NAAQS, the 
Administrator also acknowledged greater uncertainty in specifying the 
``magnitude and significance'' of PM-related health risks at PM 
concentrations below the NAAQS. As noted in the preamble to the 2012 PM 
NAAQS final rule, ``EPA concludes that it is not appropriate to place 
as much confidence in the magnitude and significance of the 
associations over the lower percentiles of the distribution in each 
study as at and around the long-term mean concentration.'' (78 FR 3154, 
January 15, 2013). In general, we are more confident in the size of the 
risks we estimate from simulated PM2.5 concentrations that 
coincide with the bulk of the observed PM concentrations in the 
epidemiological studies that are used to estimate the benefits. 
Likewise, we are less confident in the risk we estimate from simulated 
PM2.5 concentrations that fall below the bulk of the 
observed data in these studies.
---------------------------------------------------------------------------

    \68\ The Federal Register notice for the 2012 PM NAAQS indicates 
that ``[i]n considering this additional population level 
information, the Administrator recognizes that, in general, the 
confidence in the magnitude and significance of an association 
identified in a study is strongest at and around the long-term mean 
concentration for the air quality distribution, as this represents 
the part of the distribution in which the data in any given study 
are generally most concentrated. She also recognizes that the degree 
of confidence decreases as one moves towards the lower part of the 
distribution.''
---------------------------------------------------------------------------

    To give readers insight to the distribution of estimated forgone 
benefits displayed in Table 14, EPA also reports the PM benefits 
according to alternative concentration cut-points and concentration-
response parameters. The percentage of estimated PM2.5-
related deaths occurring below the lowest measured levels (LML) of the 
two long-term epidemiological studies EPA uses to estimate risk varies 
between 16 percent (Krewski et al. 2009) and 79 percent (Lepeule et al. 
2012). The percentage of estimated premature deaths occurring above the 
LML and below the NAAQS ranges between 84 percent (Krewski et al. 2009) 
and 21 percent (Lepeule et al. 2012). Less than 1% of the estimated 
premature deaths occur above the annual mean PM2.5 NAAQS of 
12 [micro]g/m\3\.
    Monetized co-benefits estimates shown here do not include several 
important benefit categories, such as direct exposure to 
SO2, NOX and hazardous air pollutants including 
mercury and hydrogen chloride. Although EPA does not have sufficient 
information or modeling available to provide monetized estimates of 
changes in exposure to these pollutants for this rule, EPA includes a 
qualitative assessment of these unquantified benefits in the RIA. For 
more information on the benefits analysis, please refer to the RIA for 
this rule, which is available in the rulemaking docket.

X. Statutory and Executive Order Reviews

    Additional information about these Statutory 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 action that was

[[Page 44791]]

submitted to the OMB for review. Any changes made in response to OMB 
recommendations have been documented in the docket. EPA prepared an 
analysis of the compliance cost, benefit, and net benefit impacts 
associated with this action in the analysis years of 2025, 2030, and 
2035. This analysis, which is contained in the Regulatory Impact 
Analysis (RIA) for this proposed rulemaking, is consistent with 
Executive Order 12866 and is available in the rulemaking docket.
    In the RIA for this proposed rulemaking, the Agency presents full 
benefit cost analysis of four illustrative scenarios. The four 
illustrative scenarios include a scenario modeling the full repeal of 
the CPP and three policy scenarios modeling heat rate improvements 
(HRI) at coal-fired EGUs. Throughout the RIA, these three illustrative 
policy scenarios are compared against a base case, which includes the 
CPP. By analyzing against the CPP, the reader can understand the 
combined impact of a CPP repeal and proposed ACE rule. Inclusion of a 
No CPP case allows for an understanding of the repeal alone and also 
allows the reader to evaluate the impact of the policy cases against a 
No CPP scenario. The RIA assumes a mass-based implementation of the CPP 
for existing affected sources, and does not assume interstate trading. 
The three illustrative policy scenarios represent potential outcomes of 
state determinations of standards of performance, and compliance with 
those standards by affected coal-fired EGUs.
    The Agency understands that there may be interest in comparing the 
three illustrative policy scenarios against a scenario that does not 
include the CPP. For those interested in comparing the potential 
impacts of policy scenarios in a world without the CPP, results from 
the three illustrative policy scenarios may be compared against results 
from the illustrative No CPP scenario. We provide information here on 
compliance costs, emissions impacts and present value net benefits 
compared to the No CPP alternative baseline. In addition, the Executive 
Summary and Chapter 3 of the RIA compares the three illustrative policy 
scenarios to the scenario of a full CPP repeal. Also, the full suite of 
model outputs is available in the rulemaking docket.
    The three illustrative policy scenarios model different levels and 
costs of HRIs applied uniformly at all affected coal-fired EGUs in the 
contiguous U.S. beginning in 2025. EPA has identified the BSER to be 
HRI. Each of these illustrative scenarios assumes that the affected 
sources are no longer subject to the state plan requirements of the CPP 
(i.e., the mass-based requirements assumed for CPP implementation in 
the base case for the RIA). The cost, suitability, and potential 
improvement for any of these HRI technologies is dependent on a range 
of unit-specific factors such as the size, age, fuel use, and the 
operating and maintenance history of the unit. As such, the HRI 
potential can vary significantly from unit to unit. EPA does not have 
sufficient information to assess HRI potential on a unit-by-unit basis.
    To avoid the impression that EPA can sufficiently distinguish 
likely standards of performance across individual affected units and 
their compliance strategies, this analysis assumes different HRI levels 
and costs are applied uniformly to affected coal-fired EGUs under each 
of three illustrative policy scenarios.
    The first illustrative scenario, 2 Percent HRI at $50/kW, 
represents a policy case that reflects modest improvements in HRI 
absent any revisions to NSR requirements. For many years, industry has 
indicated to the Agency that many sources have not implemented certain 
HRI projects because the burdensome costs of NSR cause such projects to 
not be viable. Thus, absent NSR reform, HRI at affected units might be 
expected to be modest. Based on numerous studies and statistical 
analysis, the Agency believes that the HRI potential for coal-fired 
EGUs will, on average, range from one to three percent at a cost of $30 
to $60 per kilowatt (kW) of EGU generating capacity. The Agency 
believes that this scenario (2 percent HRI at $50/kW) reasonably 
represents that range of HRI and cost.
    The second illustrative scenario, 4.5 Percent HRI at $50/kW, 
represents a policy case that includes benefits from the proposed 
revisions to NSR, with the HRI modeled at a low cost. As mentioned 
earlier, the Agency is proposing revisions to the NSR program that will 
provide owners and operators of existing EGUs greater ability to make 
efficiency improvements without triggering provisions of NSR. This 
scenario is informative in that it represents the ability of all coal-
fired EGUs to obtain greater improvements in heat rate because of NSR 
reform at the $50/kW cost identified earlier. EPA believes this higher 
heat rate improvement potential is possible because without NSR a 
greater number of units may have the opportunity to make cost effective 
heat rate improvements such as turbine upgrades that have the potential 
to offer greater heat rate improvement opportunities.
    The third illustrative scenario, 4.5 Percent HRI at $100/kW, 
represents a policy case that includes the benefits from the proposed 
revisions to NSR, with the HRI modeled at a higher cost. This scenario 
is informative in that it represents the ability of a typical coal-
fired EGUs to obtain greater improvements in heat rate because of NSR 
reform but at a much higher cost ($100/kW) than the $50/kW cost 
identified earlier. Particularly for lower capacity units or those with 
limited remaining useful life, this could ultimately translate into HRI 
projects with costs beyond what most states might determine to be 
reasonable.
    Combined, the 4.5 percent HRI at $50/kW scenario and the 4.5 
percent HRI at $100/kW scenario represent a range of potential costs 
for the proposed policy option that couples HRI with NSR reform. 
Modeling this at $50/kW and $100/kW provides a sensitivity analysis on 
the cost of the proposed policy including NSR reform. The $50/kW cost 
represents an optimistic bounding where NSR reform unleashes 
significant new opportunity for low-cost heat rate improvements. The 
$100/kW cost scenario, while informative, represents a high-end bound 
that could overstate potential because, particularly for lower capacity 
factor units and those with limited remaining useful life, these would 
represent project costs that states would likely find to be 
unreasonable.
    We evaluate the potential regulatory impacts of the illustrative No 
CPP scenario and the three illustrative policy scenarios using the 
present value (PV) of costs, benefits, and net benefits, calculated for 
the years 2023-2037 from the perspective of 2016, using both a three 
percent and seven percent beginning-of-period discount rate. In 
addition, the Agency presents the assessment of costs, benefits, and 
net benefits for specific snapshot years, consistent with historic 
practice. In the RIA, the regulatory impacts are evaluated for the 
specific years of 2025, 2030, and 2035.
    The power industry's ``compliance costs'' are represented in this 
analysis as the change in electric power generation costs between the 
base case and illustrative scenarios, including the cost of monitoring, 
reporting, and recordkeeping (MR&R). In simple terms, these costs are 
an estimate of the increased power industry expenditures required to 
implement the HRI required by the proposed rule, minus the sectoral 
cost of complying with the CPP assumed in the base case.
    The compliance assumptions--and, therefore, the projected 
compliance costs--set forth in this analysis are

[[Page 44792]]

illustrative in nature and do not represent the plans that states may 
ultimately pursue. The illustrative compliance scenarios are designed 
to reflect, to the extent possible, the scope and nature of the 
proposed guidelines. However, there is considerable uncertainty with 
regards to the precise measure that states will adopt to meet the 
proposed requirements, because there are considerable flexibilities 
afforded to the states in developing their state plans.
    EPA reports the impact on climate benefits from changes in 
CO2 and the impact on health benefits attributable to 
changes in SO2, NOX and PM2.5 
emissions. We refer to the climate benefits as ``targeted pollutant 
benefits'' as they reflect the direct benefits of reducing 
CO2, and to the ancillary health benefits as ``co-benefits'' 
as they are not benefits from reducing the targeted pollutant. To 
estimate the climate benefits associated with changes in CO2 
emissions, we apply a measure of the domestic social cost of carbon 
(SC-CO2). 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 the RIA for this proposed rulemaking focus on the 
direct impacts of climate change that are anticipated to occur within 
U.S. borders.
    The health co-benefits estimates represent the monetized value of 
the forgone human health benefits among populations exposed to changes 
in PM2.5 and ozone. This rule is expected to alter the 
emissions of SO2, NOX, and PM2.5 
emissions, which will in turn affect the level of PM2.5 and 
ozone in the atmosphere. Using photochemical modeling, we predicted the 
change in the annual average PM2.5 and summer season ozone 
across the U.S. for the years 2025, 2030 and 2035. We next quantified 
the human health impacts and economic value of these changes in air 
quality using the environmental Benefits Mapping and Analysis Program--
Community Edition. We quantified effects using concentration-response 
parameters detailed in the RIA and that are consistent with those 
employed by the Agency in the PM NAAQS and Ozone NAAQS RIAs (U.S. EPA, 
2012; 2015).
    In general, we are more confident in the size of the risks we 
estimate from simulated PM2.5 concentrations that coincide 
with the bulk of the observed PM concentrations in the epidemiological 
studies that are used to estimate the benefits. Likewise, we are less 
confident in the risk we estimate from simulated PM2.5 
concentrations that fall below the bulk of the observed data in these 
studies.\69\
---------------------------------------------------------------------------

    \69\ The Federal Register notice for the 2012 PM NAAQS indicates 
that ``[i]n considering this additional population level 
information, the Administrator recognizes that, in general, the 
confidence in the magnitude and significance of an association 
identified in a study is strongest at and around the long-term mean 
concentration for the air quality distribution, as this represents 
the part of the distribution in which the data in any given study 
are generally most concentrated. She also recognizes that the degree 
of confidence decreases as one moves towards the lower part of the 
distribution.''
---------------------------------------------------------------------------

    Furthermore, when setting the 2012 PM NAAQS, the Administrator also 
acknowledged greater uncertainty in specifying the ``magnitude and 
significance'' of PM-related health risks at PM concentrations below 
the NAAQS. As noted in the preamble to the 2012 PM NAAQS final rule, 
``EPA concludes that it is not appropriate to place as much confidence 
in the magnitude and significance of the associations over the lower 
percentiles of the distribution in each study as at and around the 
long-term mean concentration.'' (78 FR 3154, 15 January 2013). In 
general, we are more confident in the size of the risks we estimate 
from simulated PM2.5 concentrations that coincide with the 
bulk of the observed PM concentrations in the epidemiological studies 
that are used to estimate the benefits. Likewise, we are less confident 
in the risk we estimate from simulated PM2.5 concentrations 
that fall below the bulk of the observed data in these studies.
    To give readers insight to the distribution of estimated forgone 
benefits displayed in Table 14, EPA also reports the PM benefits 
according to alternative concentration cut-points and concentration-
response parameters. To give readers insight to the uncertainty in the 
estimated forgone PM2.5 mortality benefits occurring at 
lower ambient levels, we also report the PM benefits according to 
alternative concentration cut-points and concentration-response 
parameters. The percentage of estimated PM2.5-related deaths 
occurring below the lowest measured levels (LML) of the two long-term 
epidemiological studies we use to estimate risk varies between 16 
percent (Krewski et al. 2009) and 79 percent (Lepeule et al. 2012). The 
percentage of estimated premature deaths occurring above the LML and 
below the NAAQS ranges between 84 percent (Krewski et al. 2009) and 21 
percent (Lepeule et al. 2012). Less than 1% of the estimated premature 
deaths occur above the annual mean PM2.5 NAAQS of 12 
[micro]g/m\3\.
    Monetized co-benefits estimates shown here do not include several 
important benefit categories, such as direct exposure to 
SO2, NOX and hazardous air pollutants including 
mercury and hydrogen chloride. Although we do not have sufficient 
information or modeling available to provide monetized estimates of 
changes in exposure to these pollutants for this rule, we include a 
qualitative assessment of these unquantified benefits in the RIA. For 
more information on the benefits analysis, please refer to the RIA for 
this rule, which is available in the rulemaking docket.
    In the decision-making process it is useful to consider the change 
in benefits due to the targeted pollutant relative to the costs. 
Therefore, in Chapter 6 of the RIA for this proposed rulemaking we 
present a comparison of the benefits from the targeted pollutant--
CO2--with the compliance costs. Excluded from this 
comparison are the benefits from changes in PM2.5 and ozone 
concentrations from changes in SO2, NOX and 
PM2.5 emissions that are projected to accompany changes in 
CO2 emissions.
    Table 15 presents the present value (PV) and equivalent annualized 
value (EAV) of the estimated costs, benefits, and net benefits 
associated with the targeted pollutant, CO2, for the 
timeframe of 2023-2037, relative to the base case, which includes the 
CPP. The EAV represents an even-flow of figures over the timeframe of 
2023-2037 that would yield an equivalent present value. The EAV is 
identical for each year of the analysis, in contrast to the year-
specific estimates presented earlier for the snapshot years of 2025, 
2030, and 2035.
    In Table 15, and all net benefit tables, negative costs indicate 
avoided costs, negative benefits indicate forgone benefits, and 
negative net benefits indicate forgone net benefits.

[[Page 44793]]



 Table 15--Present Value and Equivalent Annualized Value of Compliance Costs, Climate Benefits, and Net Benefits
Associated With Targeted Pollutant (CO2), Relative to Base Case (CPP), 3 and 7 Percent Discount Rates, 2023-2037
                                               [Billions of 2016$]
----------------------------------------------------------------------------------------------------------------
                                            Costs            Domestic climate benefits   Net benefits associated
                                 ------------------------------------------------------     with the targeted
                                                                                             pollutant (CO2)
                                       3%           7%            3%           7%      -------------------------
                                                                                             3%           7%
----------------------------------------------------------------------------------------------------------------
                                                  Present Value
----------------------------------------------------------------------------------------------------------------
No CPP..........................        (5.2)        (3.1)         (3.9)        (0.4)           1.2          2.7
2% HRI at $50/kW................        (0.4)        (0.3)         (3.2)        (0.3)         (2.8)        (0.1)
4.5% HRI at $50/kW..............        (6.4)        (3.7)         (3.2)        (0.3)           3.2          3.4
4.5% HRI at $100/kW.............          3.0          1.7         (2.4)        (0.2)         (5.4)        (2.0)
----------------------------------------------------------------------------------------------------------------
                                           Equivalent Annualized Value
----------------------------------------------------------------------------------------------------------------
No CPP..........................        (0.4)        (0.3)         (0.3)        (0.0)           0.1          0.3
2% HRI at $50/kW................        (0.0)        (0.0)         (0.3)        (0.0)         (0.2)        (0.0)
4.5% HRI at $50/kW..............        (0.5)        (0.4)         (0.3)        (0.0)           0.3          0.4
4.5% HRI at $100/kW.............          0.3          0.2         (0.2)        (0.0)         (0.5)        (0.2)
----------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net
  benefits indicate forgone net benefits. All estimates are rounded to one decimal point, so figures may not sum
  due to independent rounding. Climate benefits reflect the value of domestic impacts from CO2 emissions
  changes. This table does not include estimates of ancillary health co-benefits from changes in electricity
  sector SO2 and NOX emissions.

Table 16 presents the costs, benefits, and net benefits associated with 
the targeted pollutant for specific years, rather than as a PV or EAV 
as found in Table 18.

    Table 16--Compliance Costs, Climate Benefits, and Net Benefits Associated With Targeted Pollutant (CO2),
                Relative to Base Case (CPP), 3 and 7 Percent Discount Rates, 2025, 2030, and 2035
                                               [Billions of 2016$]
----------------------------------------------------------------------------------------------------------------
                                            Costs            Domestic climate benefits   Net benefits associated
                                 ------------------------------------------------------     with the targeted
                                                                                             pollutant (CO2)
                                       3%           7%            3%           7%      -------------------------
                                                                                             3%           7%
----------------------------------------------------------------------------------------------------------------
                                                     No CPP
----------------------------------------------------------------------------------------------------------------
2025............................        (0.7)        (0.7)         (0.3)        (0.1)           0.4          0.7
2030............................        (0.7)        (0.7)         (0.5)        (0.1)           0.2          0.6
2035............................        (0.4)        (0.4)         (0.5)        (0.1)         (0.1)          0.3
----------------------------------------------------------------------------------------------------------------
                                                2% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................          0.0          0.0         (0.2)        (0.0)         (0.3)        (0.1)
2030............................        (0.2)        (0.2)         (0.4)        (0.1)         (0.2)          0.2
2035............................          0.1          0.1         (0.4)        (0.1)         (0.6)        (0.2)
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $50/kW
----------------------------------------------------------------------------------------------------------------
2025............................        (0.6)        (0.6)         (0.2)        (0.0)           0.4          0.6
2030............................        (1.0)        (1.0)         (0.4)        (0.1)           0.5          0.9
2035............................        (0.6)        (0.6)         (0.5)        (0.1)           0.2          0.5
----------------------------------------------------------------------------------------------------------------
                                               4.5% HRI at $100/kW
----------------------------------------------------------------------------------------------------------------
2025............................          0.5          0.5         (0.1)        (0.0)         (0.7)        (0.5)
2030............................          0.2          0.2         (0.3)        (0.1)         (0.5)        (0.2)
2035............................          0.5          0.5         (0.3)        (0.1)         (0.8)        (0.5)
----------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net
  benefits indicate forgone net benefits. All estimates are rounded to one decimal point, so figures may not sum
  due to independent rounding. Climate benefits reflect the value of domestic impacts from CO2 emissions
  changes. This table does not include estimates of ancillary health co-benefits from changes in electricity
  sector SO2 and NOX emissions.


[[Page 44794]]

Table 17 presents the present value (PV) and equivalent annualized 
value (EAV) of the estimated costs, benefits, and net benefits 
associated with the targeted pollutant, CO2, for the timeframe of 2023-
2037, relative to the No CPP alternative baseline.

 Table 17--Present Value and Equivalent Annualized Value of Compliance Costs, Climate Benefits, and Net Benefits
 Associated With Targeted Pollutant (CO2), Relative to the No CPP Alternative Baseline, 3 and 7 Percent Discount
                                                Rates, 2023-2037
                                               [Billions of 2016$]
----------------------------------------------------------------------------------------------------------------
                                            Costs            Domestic climate benefits   Net benefits associated
                                 ------------------------------------------------------     with the targeted
                                                                                             pollutant (CO2)
                                       3%           7%            3%           7%      -------------------------
                                                                                             3%           7%
----------------------------------------------------------------------------------------------------------------
                                                  Present Value
----------------------------------------------------------------------------------------------------------------
2% HRI at $50/kW................          4.8          2.8           0.8          0.1         (4.1)        (2.8)
4.5% HRI at $50/kW..............        (1.2)        (0.6)           0.7          0.1           2.0          0.7
4.5% HRI at $100/kW.............          8.2          4.8           1.6          0.2         (6.6)        (4.7)
----------------------------------------------------------------------------------------------------------------
                                           Equivalent Annualized Value
----------------------------------------------------------------------------------------------------------------
2% HRI at $50/kW................          0.4          0.3           0.1          0.0         (0.3)        (0.3)
4.5% HRI at $50/kW..............        (0.1)        (0.1)           0.1          0.0           0.2          0.1
4.5% HRI at $100/kW.............          0.7          0.5           0.1          0.0         (0.6)        (0.5)
----------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net
  benefits indicate forgone net benefits. All estimates are rounded to one decimal point, so figures may not sum
  due to independent rounding. Climate benefits reflect the value of domestic impacts from CO2 emissions
  changes. This table does not include estimates of ancillary health co-benefits from changes in electricity
  sector SO2 and NOX emissions.

Table 18 and Table 19 provide the estimated costs, benefits, and net 
benefits, inclusive of the ancillary health-co benefits and relative to 
the base case (CPP). Table 18 presents the PV and EAV estimates, and 
Table 19 presents the estimates for the specific years of 2025, 2030, 
and 2035.

      Table 18--Present Value and Equivalent Annualized Value of Compliance Costs, Total Benefits, and Net Benefits, Relative to Base Case (CPP), 3 and 7 Percent Discount Rates, 2023-2037
                                                                                       [Billions of 2016$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Costs                                        Benefits                                                       Net benefits
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                          3%           7%                      3%                               7%                              3%                              7%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Present Value
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
No CPP.............................        (5.2)        (3.1)   (37.2) to (81.5)...............  (17.9) to (41.3)...............  (32.0) to (76.3)..............  (14.8) to (38.2)
2% HRI at $50/kW...................        (0.4)        (0.3)   (32.7) to (72.4)...............  (15.9) to (36.9)...............  (32.3) to (72.0)..............  (15.7) to (36.7)
4.5% HRI at $50/kW.................        (6.4)        (3.7)   (34.3) to (75.2)...............  (16.6) to (39.4)...............  (27.9) to (68.8)..............  (12.8) to (35.6)
4.5% HRI at $100/kW................          3.0          1.7   (27.2) to (60.2)...............  (13.9) to (31.9)...............  (30.2) to (63.2)..............  (15.6) to (33.7)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Equivalent Annualized Value
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
No CPP.............................        (0.4)        (0.3)   (3.1) to (6.8).................  (2.0) to (4.5).................  (2.7) to (6.4)................  (1.6) to (4.2)
2% HRI at $50/kW...................        (0.0)        (0.0)   (2.7) to (6.1).................  (1.7) to (4.1).................  (2.7) to (6.0)................  (1.7) to (4.0)
4.5% HRI at $50/kW.................        (0.5)        (0.4)   (2.9) to (6.3).................  (1.8) to (4.3).................  (2.3) to (5.8)................  (1.4) to (3.9)
4.5% HRI at $100/kW................          0.3          0.2   (2.3) to (5.0).................  (1.5) to (3.5).................  (2.5) to (5.3)................  (1.7) to (3.7)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net benefits indicate forgone net benefits. All estimates are rounded to one decimal
  point, so figures may not sum due to independent rounding. Total benefits include both climate benefits and ancillary health co-benefits. Climate benefits reflect the value of domestic
  impacts from CO2 emissions changes. The ancillary health co-benefits reflect the sum of the PM2.5 and ozone benefits from changes in electricity sector SO2, NOX and PM2.5 emissions and
  reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith et al. (2009) to Lepeule et al. (2012) with Jerrett et al. (2009)). PM premature mortality
  benefits estimated using a log-linear no-threshold model.


[[Page 44795]]


                         Table 19--Compliance Costs, Total Benefits, and Net Benefits, Relative to Base Case (CPP), 3 and 7 Percent Discount Rates, 2025, 2030, and 2035
                                                                                       [Billions of 2016$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Costs                                        Benefits                                                       Net benefits
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                          3%           7%                      3%                               7%                              3%                              7%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             No CPP
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025...............................        (0.7)        (0.7)   (3.2) to (7.0).................  (2.7) to (6.1).................  (2.4) to (6.2)................  (1.9) to (5.4)
2030...............................        (0.7)        (0.7)   (5.4) to (11.9)................  (4.6) to (10.6)................  (4.7) to (11.2)...............  (3.8) to (9.8)
2035...............................        (0.4)        (0.4)   (4.3) to (9.3).................  (3.6) to (8.2).................  (3.9) to (8.9)................  (3.2) to (7.8)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        2% HRI at $50/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025...............................          0.0          0.0   (2.8) to (6.2).................  (2.4) to (5.5).................  (2.8) to (6.2)................  (2.4) to (5.5)
2030...............................        (0.2)        (0.2)   (4.9) to (11.0)................  (4.2) to (9.9).................  (4.7) to (10.8)...............  (3.9) to (9.7)
2035...............................          0.1          0.1   (3.4) to (7.4).................  (2.8) to (6.6).................  (3.5) to (7.6)................  (3.0) to (6.7)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       4.5% HRI at $50/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025...............................        (0.6)        (0.6)   (2.9) to (6.4).................  (2.5) to (5.7).................  (2.3) to (5.8)................  (1.9) to (5.1)
2030...............................        (1.0)        (1.0)   (4.6) to (10.2)................  (3.9) to (9.1).................  (3.7) to (9.2)................  (3.0) to (8.1)
2035...............................        (0.6)        (0.6)   (4.4) to (9.8).................  (3.7) to (8.7).................  (3.8) to (9.2)................  (3.1) to (8.1)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       4.5% HRI at $100/kW
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2025...............................          0.5          0.5   (2.3) to (5.0).................  (2.0) to (4.4).................  (2.8) to (5.5)................  (2.5) to (5.0)
2030...............................          0.2          0.2   (3.9) to (8.6).................  (3.3) to (7.6).................  (4.1) to (8.7)................  (3.5) to (7.8)
2035...............................          0.5          0.5   (2.9) to (6.3).................  (2.4) to (5.6).................  (3.4) to (6.8)................  (2.9) to (6.0)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net benefits indicate forgone net benefits. All estimates are rounded to one decimal
  point, so figures may not sum due to independent rounding. Total benefits include both climate benefits and ancillary health co-benefits. Climate benefits reflect the value of domestic
  impacts from CO2 emissions changes. The ancillary health co-benefits reflect the sum of the PM2.5 and ozone benefits from changes in electricity sector SO2, NOX and PM2.5 emissions and
  reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith et al. (2009) to Lepeule et al. (2012) with Zanobetti & Schwartz. (2008)). PM premature
  mortality benefits estimated using a log-linear no-threshold model.

Table 20 provides the estimated costs, benefits, and net benefits, 
inclusive of the ancillary health-co benefits and relative to the No 
CPP alternative baseline.

Table 20--Present Value and Equivalent Annualized Value of Compliance Costs, Total Benefits, and Net Benefits, Relative to the No CPP Alternative Baseline, 3 and 7 Percent Discount Rates, 2023-
                                                                                              2037
                                                                                       [Billions of 2016$]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Costs                                        Benefits                                                       Net benefits
                                    ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                          3%           7%                      3%                               7%                              3%                              7%
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                          Present Value
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2% HRI at $50/kW...................          4.8          2.8   4.5 to 9.2.....................  2.0 to 4.3.....................  (0.3) to 4.3..................  (0.9) to 1.5
4.5% HRI at $50/kW.................        (1.2)        (0.6)   2.9 to 6.3.....................  1.4 to 1.9.....................  4.1 to 7.5....................  2.0 to 2.6
4.5% HRI at $100/kW................          8.2          4.8   10.0 to 21.3...................  4.1 to 9.4.....................  1.8 to 13.2...................  (0.8) to 4.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Equivalent Annualized Value
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2% HRI at $50/kW...................          0.4          0.3   0.4 to 0.8.....................  0.2 to 0.5.....................  (0.0) to 0.4..................  (0.1) to 0.2
4.5% HRI at $50/kW.................        (0.1)        (0.1)   0.2 to 0.5.....................  0.1 to 0.2.....................  0.3 to 0.6....................  0.2 to 0.3
4.5% HRI at $100/kW................          0.7          0.5   0.8 to 1.8.....................  0.4 to 1.0.....................  0.1 to 1.1....................  (0.1) to 0.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Negative costs indicate avoided costs, negative benefits indicate forgone benefits, and negative net benefits indicate forgone net benefits. All estimates are rounded to one decimal
  point, so figures may not sum due to independent rounding. Total benefits include both climate benefits and ancillary health co-benefits. Climate benefits reflect the value of domestic
  impacts from CO2 emissions changes. The ancillary health co-benefits reflect the sum of the PM2.5 and ozone benefits from changes in electricity sector SO2, NOX and PM2.5 emissions and
  reflect the range based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith et al. (2009) to Lepeule et al. (2012) with Jerrett et al. (2009)). PM premature mortality
  benefits estimated using a log-linear no-threshold model.

    Throughout the RIA for this proposed rulemaking, EPA examines a 
number of sources of uncertainty, both quantitatively and 
qualitatively, on benefits and costs. Some of these elements are 
evaluated using probabilistic techniques. For other elements, where the 
underlying likelihoods of certain outcomes are unknown, we use scenario 
analysis to evaluate their potential effect on the benefits and costs 
of this proposed

[[Page 44796]]

rulemaking. We summarize key elements of our analysis of uncertainty 
here:
     The extent to which all coal-fired EGUs will improve heat 
rates under this proposal, on average;
     The cost to improve heat rates at all affected coal-fired 
EGUs nationally;
     Uncertainty in monetizing climate-related benefits; and,
     Uncertainty in the estimated health impacts attributable 
to changes in particulate matter.
    In the RIA for this proposed rulemaking, EPA also summarize other 
potential sources of benefits and costs that may result from this 
proposed rule that have not been quantified or monetized.

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

    This action is expected to be an Executive Order 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)

    The information collection activities in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the PRA. The Information Collection Request (ICR) document 
that EPA prepared has been assigned EPA ICR number 2503.03. You can 
find a copy of the ICR in the docket for this rule, and it is briefly 
summarized here.
    The information collection requirements are based on the 
recordkeeping and reporting burden associated with developing, 
implementing, and enforcing a state plan to limit CO2 
emissions from existing sources in the power sector. These 
recordkeeping and reporting requirements are specifically authorized by 
CAA section 114 (42 U.S.C. 7414). All information submitted to EPA 
pursuant to the recordkeeping and reporting requirements for which a 
claim of confidentiality is made is safeguarded according to Agency 
policies set forth in 40 CFR part 2, subpart Ba.
    Respondents/affected entities: 48.
    Respondent's obligation to respond: EPA expects state plan 
submissions from the 43 contiguous states and negative declarations 
from Vermont, California, Maine, Idaho, and Rhode Island.
    Frequency of response: Yearly.
    Total estimated burden: 192,640 hours (per year). Burden is defined 
at 5 CFR 1320.3(b).
    Total estimated cost: $21,500 annualized capital or operation & 
maintenance costs.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.
    Submit your comments on the Agency's need for this information, the 
accuracy of the provided burden estimates and any suggested methods for 
minimizing respondent burden to EPA using the docket identified at the 
beginning of this rule (Comment C-72). You may also send your ICR-
related comments to OMB's Office of Information and Regulatory Affairs 
via email to [email protected], Attention: Desk Officer for 
EPA. Since OMB is required to make a decision concerning the ICR 
between 30 and 60 days after receipt, OMB must receive comments no 
later than October 1, 2018. EPA will respond to any ICR-related 
comments in the final rule.

D. Regulatory Flexibility Act (RFA)

    After considering the economic impacts of this proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. The proposed 
rule will not impose any requirements on small entities. Specifically, 
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 state 
requirements that could potentially impact small entities. Our analysis 
in the accompanying RIA is consistent with the analysis of the 
analogous situation arising when 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 NAAQS themselves impose 
no regulations upon small entities).
    Nevertheless, EPA is aware that there is substantial interest in 
the proposed rule among small entities (municipal and rural electric 
cooperatives) and we invite comments on all aspects of the proposal and 
its impacts, including potential impacts on small entities (Comment C-
73).

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain a federal mandate that may result in 
expenditures of $100 million or more for state, local and tribal 
governments, in the aggregate or the private sector in any one year. 
Specifically, the emission guidelines proposed under CAA section 111(d) 
do not impose any direct compliance requirements on regulated entities, 
apart from the requirement for states to develop state plans. The 
burden for states to develop state plans in the three-year period 
following promulgation of the rule was estimated and is listed in 
Section IX.C above, but this burden is estimated to be below $100 
million in any one year. Thus, this proposed rule is not subject to the 
requirements of section 203 or section 205 of the Unfunded Mandates 
Reform Act (UMRA).
    This proposed rule is also not subject to the requirements of 
section 203 of UMRA because, as described in 2 U.S.C. 1531-38, it 
contains no regulatory requirements that might 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

    Under Executive Order 13132, EPA may not issue an action that has 
federalism implications, that imposes substantial direct compliance 
costs and that is not required by statute unless the federal government 
provides the funds necessary to pay the direct compliance costs 
incurred by state and local governments, or EPA consults with state and 
local officials early in the process of developing the proposed action.
    EPA has concluded that this action may have federalism implications 
because it might impose substantial direct compliance costs on state or 
local governments, and the federal government will not provide the 
funds necessary to pay those costs. The development of state plans will 
entail many hours of staff time to develop and coordinate programs for 
compliance with the proposed rule, as well as time to work with state 
legislatures as appropriate, and develop a plan submittal.
    In the spirit of Executive Order 13132, and consistent with EPA's 
policy to promote communications between EPA and state and local 
governments, EPA specifically solicits comment on this

[[Page 44797]]

proposed action from state and local officials (Comment C-74).

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 would not impose substantial direct 
compliance costs on tribal governments that have affected EGUs located 
in their area of Indian country. Tribes are not required to develop 
plans to implement the guidelines under CAA section 111(d) for affected 
EGUs. EPA notes that this proposal does not directly impose specific 
requirements on EGU sources, including those located in Indian country, 
but before developing any standards for sources on tribal land, EPA 
would consult with leaders from affected tribes. This proposed action 
also will not have substantial direct effects 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 EPA Policy on Consultation and Coordination with 
Indian Tribes, EPA will engage in consultation with tribal officials 
during the development of this action.

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

    This proposed action is subject to Executive Order 13045 because it 
is an economically significant regulatory action as defined by 
Executive Order 12866. The CPP, as discussed in the RIA,\70\ was 
anticipated to reduce emissions of PM2.5 and ozone, and some 
of the benefits of reducing these pollutants would have accrued to 
children. While the proposed ACE rule does not project to achieve 
reductions at the level of the CPP, EPA believes that this proposal 
will achieve CO2 emission reductions resulting from 
implementation of these proposed guidelines, as well as ozone and 
PM2.5 emission reductions as a co-benefit, and will further 
improve children's health as discussed in the RIA.
---------------------------------------------------------------------------

    \70\ See Chapter 5, ``Economic and Employment Impacts'', of the 
RIA.
---------------------------------------------------------------------------

    Moreover, this proposed action does not affect the level of public 
health and environmental protection already being provided by existing 
NAAQS, including ozone and PM2.5, 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.

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

    This proposed action, which is a significant regulatory energy 
action under Executive Order 12866, is likely to have a significant 
effect on the supply, distribution, or use of energy. Specifically, EPA 
estimated in the RIA that the proposed rule could result in up to a 3 
percent reduction in natural gas use in the power sector (or more than 
a 25 MM MCF reduction in production on an annual basis).
    The energy impacts EPA estimates from the proposed rule may be 
under- or over-estimates of the true energy impacts associated with 
this action. For example, some states are likely to pursue emissions 
reduction strategies independent of EPA action.

J. National Technology Transfer and Advancement Act (NTTAA)

    This proposed rulemaking does not involve technical standards. EPA 
welcomes comments on this aspect of the proposed rulemaking and 
specifically invites the public to identify potentially-applicable 
voluntary consensus standards and to explain why such standards should 
be used in this action (Comment C-75).

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

    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, as discussed in the RIA,\71\ was 
anticipated to reduce emissions of PM2.5 and ozone, and some 
of the benefits of reducing these pollutants would have accrued to 
minority populations, low-income populations and/or indigenous peoples. 
While this proposal does not project to achieve reductions at the level 
of the CPP, EPA believes that this proposal will achieve CO2 
emission reductions resulting from implementation of these proposed 
guidelines, as well as ozone and PM2.5 emission reductions 
as a co-benefit, and will further improve children's health as 
discussed in the RIA.
---------------------------------------------------------------------------

    \71\ See Chapter 5, ``Economic and Employment Impacts,'' of the 
RIA.
---------------------------------------------------------------------------

    Moreover, this proposed action does not affect the level of public 
health and environmental protection already being provided by existing 
NAAQS, including ozone and PM2.5, 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.

XI. Statutory Authority

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

List of Subjects

40 CFR Part 51

    Environmental protection, Intergovernmental relations, Reporting 
and recordkeeping requirements.

40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Reporting and recordkeeping 
requirements.

40 CFR Part 60

    Environmental protection, Administrative practice and procedure, 
Incorporation by reference, Intergovernmental relations, Reporting and 
recordkeeping requirements.

    Dated: August 20, 2018.
Andrew R. Wheeler,
Acting Administrator.

    For the reasons stated in the preamble, EPA proposes to amend 40 
CFR parts 51, 52, and 60 as set forth below:

PART 51--REQUIREMENTS FOR PREPARATION, ADOPTION, AND SUBMITTAL OF 
IMPLEMENTATION PLANS

0
1. The authority citation for part 51 continues to read as follows:


[[Page 44798]]


    Authority: 23 U.S.C. 101; 42 U.S.C. 7401-7671q.

Subpart I--Review of New Sources and Modifications

0
2. Add Sec.  51.167 to read as follows:


Sec.  51.167  Preliminary major NSR applicability test for electric 
generating units (EGUs).

    (a) What is the purpose of this section? State Implementation Plans 
(SIP) may incorporate the requirements in paragraphs (b) through (h) of 
this section for determining whether a change to an electric generating 
unit (EGU), as defined in Sec.  51.124(q), is a modification for 
purposes of major NSR applicability. Deviations from these provisions 
will be approved only if the State demonstrates that the submitted 
provisions are at least as stringent in all respects as the 
corresponding provisions in paragraphs (b) through (h) of this section.
    (b) Am I subject to this section? You must meet the requirements of 
this section if your State incorporates these provisions in its SIP, 
and you own or operate an EGU that is located at a major stationary 
source, and you plan to make a change to the EGU.
    (c) What happens if a change to my EGU is determined to be a 
modification according to the procedures of this section? If the change 
to your EGU is a modification according to the procedures of this 
section, you must determine whether the change is a major modification 
according to the procedures of the major NSR program that applies in 
the area in which your EGU is located. That is, you must evaluate your 
modification according to the requirements set out in the applicable 
regulations approved pursuant to Sec.  51.165 or Sec.  51.166 depending 
on the regulated NSR pollutants emitted and the attainment status of 
the area in which your EGU is located for those pollutants. Section 
51.165 sets out the requirements for State nonattainment major NSR 
programs, while Sec.  51.166 sets out the requirements for State PSD 
programs.
    (d) What is the process for determining if a change to an EGU is a 
modification? The two-step process set out in paragraphs (d)(1) and (2) 
of this section is used to determine (before beginning actual 
construction) whether a change to an EGU located at a major stationary 
source is a modification. Regardless of any preconstruction 
projections, a modification has occurred if a change satisfies both 
steps in the process.
    (1) Step 1. Is the change a physical change in, or change in the 
method of operation of, the EGU? (See paragraph (e) of this section for 
a list of actions that are not physical or operational changes.) If so, 
go on to Step 2 (paragraph (d)(2) of this section).
    (2) Step 2. Will the physical or operational change to the EGU 
increase the amount of any regulated NSR pollutant emitted into the 
atmosphere by the source (as determined according to paragraph (f) of 
this section) or result in the emissions of any regulated NSR 
pollutant(s) into the atmosphere that the source did not previously 
emit? If so, the change is a modification.
    (e) What types of actions are not physical changes or changes in 
the method of operation? (Step 1) For purposes of this section, a 
physical change or change in the method of operation shall not include:
    (1) Routine maintenance, repair, and replacement;
    (2) Use of an alternative fuel or raw material by reason of an 
order under sections 2(a) and (b) of the Energy Supply and 
Environmental Coordination Act of 1974 (or any superseding legislation) 
or by reason of a natural gas curtailment plan pursuant to the Federal 
Power Act;
    (3) Use of an alternative fuel by reason of an order or rule under 
section 125 of the Act;
    (4) Use of an alternative fuel at a steam generating unit to the 
extent that the fuel is generated from municipal solid waste;
    (5) Use of an alternative fuel or raw material by a stationary 
source which the source is approved to use under any permit issued 
under 40 CFR 52.21 or under regulations approved pursuant to Sec.  
51.165 or Sec.  51.166, or which:
    (i) For purposes of evaluating attainment pollutants, the source 
was capable of accommodating before January 6, 1975, unless such change 
would be prohibited under any federally enforceable permit condition 
which was established after January 6, 1975 pursuant to 40 CFR 52.21 or 
under regulations approved pursuant to subpart I of this part; or
    (ii) For purposes of evaluating nonattainment pollutants, the 
source was capable of accommodating before December 21, 1976, unless 
such change would be prohibited under any federally enforceable permit 
condition which was established after December 21, 1976 pursuant to 40 
CFR 52.21 or under regulations approved pursuant to subpart I of this 
part;
    (6) An increase in the hours of operation or in the production 
rate, unless such change is prohibited under any federally enforceable 
permit condition which was established after January 6, 1975 (for 
purposes of evaluating attainment pollutants) or after December 21, 
1976 (for purposes of evaluating nonattainment pollutants) pursuant to 
40 CFR 52.21 or regulations approved pursuant to subpart I of this 
part;
    (7) Any change in ownership at a stationary source;
    (8) The installation, operation, cessation, or removal of a 
temporary clean coal technology demonstration project, provided that 
the project complies with:
    (i) The State Implementation Plan for the State in which the 
project is located; and
    (ii) Other requirements necessary to attain and maintain the 
national ambient air quality standard during the project and after it 
is terminated;
    (9) For purposes of evaluating attainment pollutants, the 
installation or operation of a permanent clean coal technology 
demonstration project that constitutes repowering, provided that the 
project does not result in an increase in the potential to emit of any 
regulated pollutant emitted by the unit. This exemption shall apply on 
a pollutant-by-pollutant basis; or
    (10) For purposes of evaluating attainment pollutants, the 
reactivation of a very clean coal-fired EGU.
    (f) How do I determine if there is an emissions increase? (Step 2) 
You must determine if the physical or operational change to your EGU 
increases the amount of any regulated NSR pollutant emitted to the 
atmosphere using the method in paragraph (f)(1) of this section, 
subject to the limitations in paragraph (f)(2) of this section. If the 
physical or operational change to your EGU increases the amount of any 
regulated NSR pollutant emitted into the atmosphere or results in the 
emission of any regulated NSR pollutant(s) into the atmosphere that 
your EGU did not previously emit, the change is a modification as 
defined in paragraph (h)(2) of this section.
    Alternative 1 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant for 
which you have hourly average CEMS or PEMS emissions data with 
corresponding fuel heat input data, compare the pre-change maximum 
actual hourly emissions rate in pounds per hour (lb/hr) to a projection 
of the post-change maximum actual hourly emissions rate in lb/hr, 
subject to the provisions in paragraphs (f)(1)(i) through (iii) of this 
section.
    (i) Pre-change emissions. Determine the pre-change maximum actual 
hourly emissions rate as follows:
    (A) Select a period of 365 consecutive days within the 5-year 
period

[[Page 44799]]

immediately preceding when you begin actual construction of the 
physical or operational change. Compile a data set (for example, in a 
spreadsheet) with the hourly average CEMS or PEMS (as applicable) 
measured emissions rates and corresponding heat input data for all of 
the hours of operation for that 365-day period for the pollutant of 
interest.
    (B) Delete any unacceptable hourly data from this 365-day period in 
accordance with the data limitations in paragraph (f)(2) of this 
section.
    (C) Extract the hourly data for the 10 percent of the remaining 
data set corresponding to the highest heat input rates for the selected 
period. This step may be facilitated by sorting the data set for the 
remaining operating hours from the lowest to the highest heat input 
rates.
    (D) Calculate the average emissions rate from the extracted (i.e., 
highest 10 percent heat input rates) data set, using Equation 1:
[GRAPHIC] [TIFF OMITTED] TP31AU18.004

Where:

x = average emissions rate, lb/hr;
n = number of emissions rate values; and
xi = ith emissions rate value, lb/hr.

    (E) Calculate the standard deviation of the data set using Equation 
2:
[GRAPHIC] [TIFF OMITTED] TP31AU18.005

Where:

s = standard deviation of the data set.

    (F) Calculate the Upper Tolerance Limit of the data set using 
Equation 3:
[GRAPHIC] [TIFF OMITTED] TP31AU18.006

Where:

UTL = Upper Tolerance Limit of the data set;
Z1-p = 3.090, Z score for the 99.9 percentage of 
interval; and
Z1-q = 2.326, Z score for the 99 percent confidence 
level.

    (G) Use the UTL calculated in paragraph (f)(1)(i)(F) of this 
section as the pre-change maximum actual hourly emissions rate.
    (ii) Post-change emissions--preconstruction projections. For each 
regulated NSR pollutant, you must project the maximum emissions rate 
that your EGU will actually achieve in any 1 hour in the 5 years 
following the date the EGU resumes regular operation after the physical 
or operational change. An emissions increase results from the physical 
or operational change if this projected maximum actual hourly emissions 
rate exceeds the pre-change maximum actual hourly emissions rate.
    (iii) Post-change emissions-actually achieved. Regardless of any 
preconstruction projections, an emissions increase has occurred if the 
hourly emissions rate actually achieved in the 5 years after the change 
exceeds the pre-change maximum actual hourly emissions rate.
    Alternative 2 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant, 
compare the pre-change maximum actual hourly emissions rate in pounds 
per hour (lb/hr) to a projection of the post-change maximum actual 
hourly emissions rate in lb/hr, subject to the provisions in paragraphs 
(f)(1)(i) through (iv) of this section.
    (i) Pre-change emissions--general procedures. The pre-change 
maximum actual hourly emissions rate for the pollutant is the highest 
emissions rate (lb/hr) actually achieved by the EGU for 1 hour at any 
time during the 5-year period immediately preceding when you begin 
actual construction of the physical or operational change.
    (ii) Pre-change emissions--data sources. You must determine the 
highest pre-change hourly emissions rate for each regulated NSR 
pollutant using the best data available to you. Use the highest 
available source of data in the following hierarchy, unless your 
reviewing authority has determined that a data source lower in the 
hierarchy will provide better data for your EGU:
    (A) Continuous emissions monitoring system (CEMS).

[[Page 44800]]

    (B) Approved predictive emissions monitoring system (PEMS).
    (C) Emission tests/emission factor specific to the EGU to be 
changed.
    (D) Material balance calculations.
    (E) Published emission factor.
    (iii) Post-change emissions--preconstruction projections. For each 
regulated NSR pollutant, you must project the maximum emissions rate 
that your EGU will actually achieve in any 1 hour in the 5 years 
following the date the EGU resumes regular operation after the physical 
or operational change. An emissions increase results from the physical 
or operational change if this projected maximum actual hourly emissions 
rate exceeds the pre-change maximum actual hourly emissions rate.
    (iv) Post-change emissions--actually achieved. Regardless of any 
preconstruction projections, an emissions increase has occurred if the 
hourly emissions rate actually achieved in the 5 years after the change 
exceeds the pre-change maximum actual hourly emissions rate.
    Alternative 3 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant, 
compare the maximum achievable hourly emissions rate before the 
physical or operational change to the maximum achievable hourly 
emissions rate after the change. Determine these maximum achievable 
hourly emissions rates according to Sec.  [thinsp]60.14(b) of this 
chapter. No physical change, or change in the method of operation, at 
an existing EGU shall be treated as a modification for the purposes of 
this section provided that such change does not increase the maximum 
hourly emissions of any regulated NSR pollutant above the maximum 
hourly emissions achievable at that unit during the 5 years prior to 
the change.
    (2) Data limitations for maximum emissions rates. For purposes of 
determining pre-change and post-change maximum emissions rates under 
paragraph (f)(1) of this section, the following limitations apply to 
the types of data that you may use:
    (i) Data limitations for Alternatives 1-2. (A) You must not use 
emissions rate data associated with startups, shutdowns, or 
malfunctions of your EGU, as defined by applicable regulation(s) or 
permit term(s), or malfunctions of an associated air pollution control 
device. A malfunction means any sudden, infrequent, and not reasonably 
preventable failure of the EGU or the air pollution control equipment 
to operate in a normal or usual manner.
    (B) You must not use continuous emissions monitoring system (CEMS) 
or predictive emissions monitoring system (PEMS) data recorded during 
monitoring system out-of-control periods. Out-of-control periods 
include those during which the monitoring system fails to meet quality 
assurance criteria (for example, periods of system breakdown, repair, 
calibration checks, or zero and span adjustments) established by 
regulation, by permit, or in an approved quality assurance plan.
    (C) You must not use emissions rate data from periods of 
noncompliance when your EGU was operating above an emission limitation 
that was legally enforceable at the time the data were collected.
    (D) You must not use data from any period for which the information 
is inadequate for determining emissions rates, including information 
related to the limitations in paragraphs (f)(2)(i)(A) through (C) of 
this section.
    (ii) Data limitations for Alternative 3. (A) You must not use 
emissions rate data associated with startups, shutdowns, or 
malfunctions of your EGU, as defined by applicable regulation(s) or 
permit term(s), or malfunctions of an associated air pollution control 
device. A malfunction means any sudden, infrequent, and not reasonably 
preventable failure of the EGU or the air pollution control equipment 
to operate in a normal or usual manner.
    (B) You must not use continuous emissions monitoring system (CEMS) 
or predictive emissions monitoring system (PEMS) data recorded during 
monitoring system out-of-control periods. Out-of-control periods 
include those during which the monitoring system fails to meet quality 
assurance criteria (for example, periods of system breakdown, repair, 
calibration checks, or zero and span adjustments) established by 
regulation, by permit, or in an approved quality assurance plan.
    (C) You must not use data from any period for which the information 
is inadequate for determining emissions rates, including information 
related to the limitations in paragraphs (f)(2)(ii)(A) and (B) of this 
section.
    (g) What are my requirements for recordkeeping? You must maintain a 
file of all information related to determinations that you make under 
this section of whether a change to an EGU is a modification, subject 
to the following provisions:
    (1) The file must include, but is not limited to, the following 
information recorded in permanent form suitable for inspection:
    (i) Continuous monitoring system, monitoring device, and 
performance testing measurements;
    (ii) All continuous monitoring system performance evaluations;
    (iii) All continuous monitoring system or monitoring device 
calibration checks;
    (iv) All adjustments and maintenance performed on these systems or 
devices; and
    (v) All other information relevant to any determination made under 
this section of whether a change to an EGU is a modification.
    (2) You must retain the file until the later of:
    (i) The date 5 years following the date the EGU resumes regular 
operation after the physical or operational change; and
    (ii) The date 5 years following the date of such measurements, 
maintenance, reports, and records.
    (h) What definitions apply under this section? The definitions of 
terms in Sec.  51.124(q) apply. Terms used in this section have the 
meaning accorded them under Sec.  51.165(a)(1) or Sec.  51.166(b), as 
appropriate. Terms not defined here or in Sec.  51.165(a)(1) or Sec.  
51.166(b) (as appropriate) have the meaning accorded them under the 
applicable requirements of the Clean Air Act.

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
3. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--General Provisions

0
4. Add Sec.  52.25 to read as follows:


Sec.  52.25   Preliminary major NSR applicability test for electric 
generating units (EGUs).

    (a) What is the purpose of this section? The provisions of this 
section are applicable to any State implementation plan which has been 
disapproved with respect to prevention of significant deterioration of 
air quality in any portion of any State where the existing air quality 
is better than the national ambient air quality standards. Specific 
disapprovals are listed where applicable, in subparts B through DDD and 
FFF of this part. The provisions of this section have been incorporated 
by reference into the applicable implementation plans for various 
States, as provided in subparts B through DDD and FFF of this part. 
Where this section is so incorporated, the provisions shall also be 
applicable to all lands owned by the Federal Government and Indian 
Reservations located in such State. No disapproval with respect to a 
State's failure to prevent significant deterioration of air quality 
shall invalidate or otherwise affect the

[[Page 44801]]

obligations of States, emission sources, or other persons with respect 
to all portions of plans approved or promulgated under this part.
    (b) Am I subject to this section? You must meet the requirements of 
this section if you own or operate an EGU that is located at a major 
stationary source, and you plan to make a change to the EGU.
    (c) What happens if a change to my EGU is determined to be a 
modification according to the procedures of this section? If the change 
to your electric generating unit (EGU), as defined in Sec.  51.124(q) 
of this chapter, is a modification according to the procedures of this 
section, you must determine whether the change is a major modification 
according to the procedures of the major NSR program that applies in 
the area in which your EGU is located. That is, you must evaluate your 
modification according to the requirements set out in the applicable 
regulations approved pursuant to Sec.  52.21.
    (d) What is the process for determining if a change to an EGU is a 
modification? The two-step process set out in paragraphs (d)(1) and (2) 
of this section is used to determine (before beginning actual 
construction) whether a change to an EGU located at a major stationary 
source is a modification. Regardless of any preconstruction 
projections, a modification has occurred if a change satisfies both 
steps in the process.
    (1) Step 1. Is the change a physical change in, or change in the 
method of operation of, the EGU? (See paragraph (e) of this section for 
a list of actions that are not physical or operational changes.) If so, 
go on to Step 2 (paragraph (d)(2) of this section).
    (2) Step 2. Will the physical or operational change to the EGU 
increase the amount of any regulated NSR pollutant emitted into the 
atmosphere by the source (as determined according to paragraph (f) of 
this section) or result in the emissions of any regulated NSR 
pollutant(s) into the atmosphere that the source did not previously 
emit? If so, the change is a modification.
    (e) What types of actions are not physical changes or changes in 
the method of operation? (Step 1) For purposes of this section, a 
physical change or change in the method of operation shall not include:
    (1) Routine maintenance, repair, and replacement;
    (2) Use of an alternative fuel or raw material by reason of an 
order under sections 2(a) and (b) of the Energy Supply and 
Environmental Coordination Act of 1974 (or any superseding legislation) 
or by reason of a natural gas curtailment plan pursuant to the Federal 
Power Act;
    (3) Use of an alternative fuel by reason of an order or rule under 
section 125 of the Act;
    (4) Use of an alternative fuel at a steam generating unit to the 
extent that the fuel is generated from municipal solid waste;
    (5) Use of an alternative fuel or raw material by a stationary 
source which the source is approved to use under any permit issued 
under 40 CFR 52.21 or under regulations approved pursuant to Sec.  
51.166 of this chapter, or which the source was capable of 
accommodating before January 6, 1975, unless such change would be 
prohibited under any federally enforceable permit condition which was 
established after January 6, 1975 pursuant to 40 CFR 52.21 or under 
regulations approved pursuant to 40 CFR part 51, subpart I; or
    (6) An increase in the hours of operation or in the production 
rate, unless such change is prohibited under any federally enforceable 
permit condition which was established after January 6, 1975 pursuant 
to 40 CFR 52.21 or regulations approved pursuant to 40 CFR part 51, 
subpart I;
    (7) Any change in ownership at a stationary source;
    (8) The installation, operation, cessation, or removal of a 
temporary clean coal technology demonstration project, provided that 
the project complies with:
    (i) The State Implementation Plan for the State in which the 
project is located; and
    (ii) Other requirements necessary to attain and maintain the 
national ambient air quality standard during the project and after it 
is terminated;
    (9) For purposes of evaluating attainment pollutants, the 
installation or operation of a permanent clean coal technology 
demonstration project that constitutes repowering, provided that the 
project does not result in an increase in the potential to emit of any 
regulated pollutant emitted by the unit. This exemption shall apply on 
a pollutant-by-pollutant basis; or
    (10) For purposes of evaluating attainment pollutants, the 
reactivation of a very clean coal-fired EGU.
    (f) How do I determine if there is an emissions increase? (Step 2) 
You must determine if the physical or operational change to your EGU 
increases the amount of any regulated NSR pollutant emitted to the 
atmosphere using the method in paragraph (f)(1) of this section, 
subject to the limitations in paragraph (f)(2) of this section. If the 
physical or operational change to your EGU increases the amount of any 
regulated NSR pollutant emitted into the atmosphere or results in the 
emission of any regulated NSR pollutant(s) into the atmosphere that 
your EGU did not previously emit, the change is a modification as 
defined in paragraph (h)(2) of this section.
    Alternative 1 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant for 
which you have hourly average CEMS or PEMS emissions data with 
corresponding fuel heat input data, compare the pre-change maximum 
actual hourly emissions rate in pounds per hour (lb/hr) to a projection 
of the post-change maximum actual hourly emissions rate in lb/hr, 
subject to the provisions in paragraphs (f)(1)(i) through (iii) of this 
section.
    (i) Pre-change emissions. Determine the pre-change maximum actual 
hourly emissions rate as follows:
    (A) Select a period of 365 consecutive days within the 5-year 
period immediately preceding when you begin actual construction of the 
physical or operational change. Compile a data set (for example, in a 
spreadsheet) with the hourly average CEMS or PEMS (as applicable) 
measured emissions rates and corresponding heat input data for all of 
the hours of operation for that 365-day period for the pollutant of 
interest.
    (B) Delete any unacceptable hourly data from this 365-day period in 
accordance with the data limitations in paragraph (f)(2) of this 
section.
    (C) Extract the hourly data for the 10 percent of the remaining 
data set corresponding to the highest heat input rates for the selected 
period. This step may be facilitated by sorting the data set for the 
remaining operating hours from the lowest to the highest heat input 
rates.
    (D) Calculate the average emissions rate from the extracted (i.e., 
highest 10 percent heat input rates) data set, using Equation 1:

[[Page 44802]]

[GRAPHIC] [TIFF OMITTED] TP31AU18.007

Where:

x = average emissions rate, lb/hr;
n = number of emissions rate values; and
xi = ith emissions rate value, lb/hr.

    (E) Calculate the standard deviation of the data set using Equation 
2:
[GRAPHIC] [TIFF OMITTED] TP31AU18.008

Where:

s = standard deviation of the data set.

    (F) Calculate the Upper Tolerance Limit of the data set using 
Equation 3:
[GRAPHIC] [TIFF OMITTED] TP31AU18.009

Where:

UTL = Upper Tolerance Limit of the data set;
Z1-p = 3.090, Z score for the 99.9 percentage of 
interval; and
Z1-q = 2.326, Z score for the 99 percent confidence 
level.

    (G) Use the UTL calculated in paragraph (f)(1)(i)(F) of this 
section as the pre-change maximum actual hourly emissions rate.
    (ii) Post-change emissions--preconstruction projections. For each 
regulated NSR pollutant, you must project the maximum emissions rate 
that your EGU will actually achieve in any 1 hour in the 5 years 
following the date the EGU resumes regular operation after the physical 
or operational change. An emissions increase results from the physical 
or operational change if this projected maximum actual hourly emissions 
rate exceeds the pre-change maximum actual hourly emissions rate.
    (iii) Post-change emissions--actually achieved. Regardless of any 
preconstruction projections, an emissions increase has occurred if the 
hourly emissions rate actually achieved in the 5 years after the change 
exceeds the pre-change maximum actual hourly emissions rate.
    Alternative 2 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant, 
compare the pre-change maximum actual hourly emissions rate in pounds 
per hour (lb/hr) to a projection of the post-change maximum actual 
hourly emissions rate in lb/hr, subject to the provisions in paragraphs 
(f)(1)(i) through (iv) of this section.
    (i) Pre-change emissions--general procedures. The pre-change 
maximum actual hourly emissions rate for the pollutant is the highest 
emissions rate (lb/hr) actually achieved by the EGU for 1 hour at any 
time during the 5-year period immediately preceding when you begin 
actual construction of the physical or operational change.
    (ii) Pre-change emissions--data sources. You must determine the 
highest pre-change hourly emissions rate for each regulated NSR 
pollutant using the best data available to you. Use the highest 
available source of data in the following hierarchy, unless your 
reviewing authority has determined that a data source lower in the 
hierarchy will provide better data for your EGU:
    (A) Continuous emissions monitoring system (CEMS).
    (B) Approved predictive emissions monitoring system (PEMS).
    (C) Emission tests/emission factor specific to the EGU to be 
changed.
    (D) Material balance calculations.
    (E) Published emission factor.
    (iii) Post-change emissions--preconstruction projections. For each 
regulated NSR pollutant, you must project the maximum emissions rate 
that your EGU will actually achieve in any 1 hour in the 5 years 
following the date the EGU resumes regular operation after the physical 
or operational change. An emissions increase results from the physical 
or operational change if this projected maximum actual hourly emissions 
rate exceeds the pre-change maximum actual hourly emissions rate.
    (iv) Post-change emissions--actually achieved. Regardless of any 
preconstruction projections, an emissions increase has occurred if the 
hourly emissions rate actually achieved in the 5 years after the change 
exceeds the pre-change maximum actual hourly emissions rate.
    Alternative 3 for paragraph (f)(1):
    (1) Emissions increase test. For each regulated NSR pollutant, 
compare the maximum achievable hourly emissions rate before the 
physical or operational change to the maximum achievable hourly 
emissions rate after the change. Determine these maximum achievable

[[Page 44803]]

hourly emissions rates according to Sec.  [thinsp]60.14(b) of this 
chapter. No physical change, or change in the method of operation, at 
an existing EGU shall be treated as a modification for the purposes of 
this section provided that such change does not increase the maximum 
hourly emissions of any regulated NSR pollutant above the maximum 
hourly emissions achievable at that unit during the 5 years prior to 
the change.
    (2) Data limitations for maximum emissions rates. For purposes of 
determining pre-change and post-change maximum emissions rates under 
paragraph (f)(1) of this section, the following limitations apply to 
the types of data that you may use:
    (i) Data limitations for Alternatives 1-2. (A) You must not use 
emissions rate data associated with startups, shutdowns, or 
malfunctions of your EGU, as defined by applicable regulation(s) or 
permit term(s), or malfunctions of an associated air pollution control 
device. A malfunction means any sudden, infrequent, and not reasonably 
preventable failure of the EGU or the air pollution control equipment 
to operate in a normal or usual manner.
    (B) You must not use continuous emissions monitoring system (CEMS) 
or predictive emissions monitoring system (PEMS) data recorded during 
monitoring system out-of-control periods. Out-of-control periods 
include those during which the monitoring system fails to meet quality 
assurance criteria (for example, periods of system breakdown, repair, 
calibration checks, or zero and span adjustments) established by 
regulation, by permit, or in an approved quality assurance plan.
    (C) You must not use emissions rate data from periods of 
noncompliance when your EGU was operating above an emission limitation 
that was legally enforceable at the time the data were collected.
    (D) You must not use data from any period for which the information 
is inadequate for determining emissions rates, including information 
related to the limitations in paragraphs (f)(2)(i)(A) through (C) of 
this section.
    (ii) Data limitations for Alternative 3. (A) You must not use 
emissions rate data associated with startups, shutdowns, or 
malfunctions of your EGU, as defined by applicable regulation(s) or 
permit term(s), or malfunctions of an associated air pollution control 
device. A malfunction means any sudden, infrequent, and not reasonably 
preventable failure of the EGU or the air pollution control equipment 
to operate in a normal or usual manner.
    (B) You must not use continuous emissions monitoring system (CEMS) 
or predictive emissions monitoring system (PEMS) data recorded during 
monitoring system out-of-control periods. Out-of-control periods 
include those during which the monitoring system fails to meet quality 
assurance criteria (for example, periods of system breakdown, repair, 
calibration checks, or zero and span adjustments) established by 
regulation, by permit, or in an approved quality assurance plan.
    (C) You must not use data from any period for which the information 
is inadequate for determining emissions rates, including information 
related to the limitations in paragraphs (f)(2)(ii)(A) and (B) of this 
section.
    (g) What are my requirements for recordkeeping? You must maintain a 
file of all information related to determinations that you make under 
this section of whether a change to an EGU is a modification, subject 
to the following provisions:
    (1) The file must include, but is not limited to, the following 
information recorded in permanent form suitable for inspection:
    (i) Continuous monitoring system, monitoring device, and 
performance testing measurements;
    (ii) All continuous monitoring system performance evaluations;
    (iii) All continuous monitoring system or monitoring device 
calibration checks;
    (iv) All adjustments and maintenance performed on these systems or 
devices; and
    (v) All other information relevant to any determination made under 
this section of whether a change to an EGU is a modification.
    (2) You must retain the file until the later of:
    (i) The date 5 years following the date the EGU resumes regular 
operation after the physical or operational change; and
    (ii) The date 5 years following the date of such measurements, 
maintenance, reports, and records.
    (h) What definitions apply under this section? The definitions of 
terms in Sec.  51.124(q) of this chapter apply. Terms used in this 
section have the meaning accorded them under Sec.  52.21. Terms not 
defined here or in Sec.  52.21 have the meaning accorded them under the 
applicable requirements of the Clean Air Act.

PART 60--STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES

0
5. The authority citation for part 60 continues to read as follows:

    Authority:  42 U.S.C. 7401 et seq.

0
6. Add subpart Ba to read as follows:
Subpart Ba--Adoption and Submittal of State Plans for Designated 
Facilities
Sec.
60.20a Applicability.
60.21a Definitions.
60.22a Publication of emission guidelines.
60.23a Adoption and submittal of State plans; public hearings.
60.24a Standards of performance and compliance schedules.
60.25a Emission inventories, source surveillance, reports.
60.26a Legal authority.
60.27a Actions by the Administrator.
60.28a Plan revisions by the State.
60.29a Plan revisions by the Administrator.

Subpart Ba--Adoption and Submittal of State Plans for Designated 
Facilities


Sec.  60.20a   Applicability.

    (a) The provisions of this subpart apply to States upon publication 
of a final emission guideline under Sec.  60.22a(a), if such final 
guideline is published after [date of publication of final rule in the 
Federal Register].
    (1) Each emission guideline promulgated under this part is subject 
to the requirements of this subpart, except that each emission 
guideline may include specific provisions in addition to or that 
supersede requirements of this subpart. Each emission guideline must 
identify explicitly any provision of this subpart that is superseded.
    (2) Terms used throughout this part are defined in Sec.  60.21a or 
in the Clean Air Act (Act) as amended in 1990, except that emission 
guidelines promulgated as individual subparts of this part may include 
specific definitions in addition to or that supersede definitions in 
Sec.  60.21a.
    (b) No standard of performance or other requirement established 
under this part shall be interpreted, construed, or applied to diminish 
or replace the requirements of a more stringent emission limitation or 
other applicable requirement established by the Administrator pursuant 
to other authority of the Act (section 112, Part C or D, or any other 
authority of the Act), or a standard issued under State authority. The 
Administrator may specify in a specific standard under this part that 
facilities subject to other provisions under the Act need only comply 
with the provisions of that standard.


Sec.  60.21a   Definitions.

    Terms used but not defined in this subpart shall have the meaning 
given them in the Act and in subpart A:
    (a) Designated pollutant means any air pollutant, the emissions of 
which are

[[Page 44804]]

subject to a standard of performance for new stationary sources, but 
for which air quality criteria have not been issued and that is not 
included on a list published under section 108(a) or section 112(b) of 
the Act.
    (b) Designated facility means any existing facility (see Sec.  
60.2a(aa)) which emits a designated pollutant and which would be 
subject to a standard of performance for that pollutant if the existing 
facility were an affected facility (see Sec.  60.2a(e)).
    (c) Plan means a plan under section 111(d) of the Act which 
establishes standards of performance for designated pollutants from 
designated facilities and provides for the implementation and 
enforcement of such standards of performance.
    (d) Applicable plan means the plan, or most recent revision 
thereof, which has been approved under Sec.  60.27a(b) or promulgated 
under Sec.  60.27a(d).
    (e) Emission guideline means a final guideline document published 
under Sec.  60.22a(a), which includes information on the degree of 
emission reduction achievable through the application of the best 
system of emission reduction which (taking into account the cost of 
such reduction and any nonair quality health and environmental impact 
and energy requirements) the Administrator has determined has been 
adequately demonstrated for designated facilities.
    (f) Standard of performance means a standard for emissions of air 
pollutants which reflects the degree of emission limitation achievable 
through the application of the best system of emission reduction which 
(taking into account the cost of achieving such reduction and any 
nonair quality health and environmental impact and energy requirements) 
the Administrator determines has been adequately demonstrated, 
including, but not limited to,a legally enforceable regulation setting 
forth an allowable rate or limit of emissions into the atmosphere, or 
prescribing a design, equipment, work practice, or operational 
standard, or combination thereof.
    (g) Compliance schedule means a legally enforceable schedule 
specifying a date or dates by which a source or category of sources 
must comply with specific standards of performance contained in a plan 
or with any increments of progress to achieve such compliance.
    (h) Increments of progress means steps to achieve compliance which 
must be taken by an owner or operator of a designated facility, 
including:
    (1) Submittal of a final control plan for the designated facility 
to the appropriate air pollution control agency;
    (2) Awarding of contracts for emission control systems or for 
process modifications, or issuance of orders for the purchase of 
component parts to accomplish emission control or process modification;
    (3) Initiation of on-site construction or installation of emission 
control equipment or process change;
    (4) Completion of on-site construction or installation of emission 
control equipment or process change; and
    (5) Final compliance.
    (i) Region means an air quality control region designated under 
section 107 of the Act and described in part 81 of this chapter.
    (j) Local agency means any local governmental agency.


Sec.  60.22a   Publication of emission guidelines.

    (a) Concurrently upon or after proposal of standards of performance 
for the control of a designated pollutant from affected facilities, the 
Administrator will publish a draft emission guideline containing 
information pertinent to control of the designated pollutant from 
designated facilities. Notice of the availability of the draft emission 
guideline will be published in the Federal Register and public comments 
on its contents will be invited. After consideration of public 
comments, a final emission guideline will be published and notice of 
its availability will be published in the Federal Register.
    (b) Emission guidelines published under this section will provide 
information for the development of State plans, such as:
    (1) A description of systems of emission reduction which, in the 
judgment of the Administrator, have been adequately demonstrated.
    (2) Information on the degree of emission reduction which is 
achievable with each system, together with information on the costs, 
nonair quality health environmental effects, and energy requirements of 
applying each system to designated facilities.
    (3) Incremental periods of time normally expected to be necessary 
for the design, installation, and startup of identified control 
systems.
    (4) An emission guideline that reflects the application of the best 
system of emission reduction (considering the cost of such achieving 
reduction and any nonair quality health and environmental impact and 
energy requirements) that has been adequately demonstrated for 
designated facilities, and the time within which compliance with 
standards of performance can be achieved. The Administrator may specify 
different emission guidelines or compliance times or both for different 
sizes, types, and classes of designated facilities when costs of 
control, physical limitations, geographical location, or similar 
factors make subcategorization appropriate.
    (5) Such other available information as the Administrator 
determines may contribute to the formulation of State plans.


Sec.  60.23a   Adoption and submittal of State plans; public hearings.

    (a)(1) Unless otherwise specified in the applicable subpart, within 
three years after notice of the availability of a final emission 
guideline is published under Sec.  60.22a(a), each State shall adopt 
and submit to the Administrator, in accordance with Sec.  60.4, a plan 
for the control of the designated pollutant to which the emission 
guideline applies.
    (2) At any time, each State may adopt and submit to the 
Administrator any plan revision necessary to meet the requirements of 
this subpart or an applicable subpart of this part.
    (b) If no designated facility is located within a State, the State 
shall submit a letter of certification to that effect to the 
Administrator within the time specified in paragraph (a) of this 
section. Such certification shall exempt the State from the 
requirements of this subpart for that designated pollutant.
    (c) The State shall, prior to the adoption of any plan or revision 
thereof, conduct one or more public hearings within the State on such 
plan or plan revision.
    (d) Any hearing required by paragraph (c) of this section shall be 
held only after reasonable notice. Notice shall be given at least 30 
days prior to the date of such hearing and shall include:
    (1) Notification to the public by prominently advertising the date, 
time, and place of such hearing in each region affected. This 
requirement may be satisfied by advertisement on the internet;
    (2) Availability, at the time of public announcement, of each 
proposed plan or revision thereof for public inspection in at least one 
location in each region to which it will apply. This requirement may be 
satisfied by posting each proposed plan or revision on the internet;
    (3) Notification to the Administrator;
    (4) Notification to each local air pollution control agency in each 
region to which the plan or revision will apply; and

[[Page 44805]]

    (5) In the case of an interstate region, notification to any other 
State included in the region.
    (e) The State may cancel the public hearing through a method it 
identifies if no request for a public hearing is received during the 30 
day notification period under subsection (d) and the original notice 
announcing the 30 day notification period states that if no request for 
a public hearing is received the hearing will be cancelled; identifies 
the method and time for announcing that the hearing has been cancelled; 
and provides a contact phone number for the public to call to find out 
if the hearing has been cancelled.
    (f) The State shall prepare and retain, for a minimum of 2 years, a 
record of each hearing for inspection by any interested party. The 
record shall contain, as a minimum, a list of witnesses together with 
the text of each presentation.
    (g) The State shall submit with the plan or revision:
    (1) Certification that each hearing required by paragraph (c) of 
this section was held in accordance with the notice required by 
paragraph (d) of this section; and
    (2) A list of witnesses and their organizational affiliations, if 
any, appearing at the hearing and a brief written summary of each 
presentation or written submission.
    (h) Upon written application by a State agency (through the 
appropriate Regional Office), the Administrator may approve State 
procedures designed to insure public participation in the matters for 
which hearings are required and public notification of the opportunity 
to participate if, in the judgment of the Administrator, the 
procedures, although different from the requirements of this subpart, 
in fact provide for adequate notice to and participation of the public. 
The Administrator may impose such conditions on his approval as he 
deems necessary. Procedures approved under this section shall be deemed 
to satisfy the requirements of this subpart regarding procedures for 
public hearings.


Sec.  60.24a  Standards of performance and compliance schedules.

    (a) Each plan shall include standards of performance and compliance 
schedules.
    (b) Standards of performance shall either be based on allowable 
rate or limit of emissions, except when it is not feasible to prescribe 
or enforce a standard of performance. The EPA shall identify such cases 
in the emission guidelines issued under Sec.  60.22a. Where standards 
of performance prescribing design, equipment, work practice, or 
operational standard, or combination thereof are established, the plan 
shall, to the degree possible, set forth the emission reductions 
achievable by implementation of such standards, and may permit 
compliance by the use of equipment determined by the State to be 
equivalent to that prescribed.
    (1) Test methods and procedures for determining compliance with the 
standards of performance shall be specified in the plan. Methods other 
than those specified in appendix A to this part or an applicable 
subpart of this part may be specified in the plan if shown to be 
equivalent or alternative methods as defined in Sec.  60.2(t) and (u).
    (2) Standards of performance shall apply to all designated 
facilities within the State. A plan may contain standards of 
performance adopted by local jurisdictions provided that the standards 
are enforceable by the State.
    (c) Except as provided in paragraph (e) of this section, standards 
of performance shall be no less stringent than the corresponding 
emission guideline(s) specified in subpart C of this part, and final 
compliance shall be required as expeditiously as practicable, but no 
later than the compliance times specified in an applicable subpart of 
this part.
    (d)(1) Any compliance schedule extending more than 24 months from 
the date required for submittal of the plan must include legally 
enforceable increments of progress to achieve compliance for each 
designated facility or category of facilities. Unless otherwise 
specified in the applicable subpart, increments of progress must 
include, where practicable, each increment of progress specified in 
Sec.  60.21a(h) and must include such additional increments of progress 
as may be necessary to permit close and effective supervision of 
progress toward final compliance.
    (2) A plan may provide that compliance schedules for individual 
sources or categories of sources will be formulated after plan 
submittal. Any such schedule shall be the subject of a public hearing 
held according to Sec.  60.23a and shall be submitted to the 
Administrator within 60 days after the date of adoption of the schedule 
but in no case later than the date prescribed for submittal of the 
first semiannual report required by Sec.  60.25a(e).
    (e) In applying a standard of performance to a particular source, 
the State may take into consideration factors, such as the remaining 
useful life of such source, provided that the State demonstrates with 
respect to each such facility (or class of such facilities):
    (1) Unreasonable cost of control resulting from plant age, 
location, or basic process design;
    (2) Physical impossibility of installing necessary control 
equipment; or
    (3) Other factors specific to the facility (or class of facilities) 
that make application of a less stringent standard or final compliance 
time significantly more reasonable.
    (f) Nothing in this subpart shall be construed to preclude any 
State or political subdivision thereof from adopting or enforcing:
    (1) Standards of performance more stringent than emission 
guidelines specified in subpart C of this part or in applicable 
emission guidelines; or
    (2) Compliance schedules requiring final compliance at earlier 
times than those specified in subpart C or in applicable emission 
guidelines.


Sec.  60.25a   Emission inventories, source surveillance, reports.

    (a) Each plan shall include an inventory of all designated 
facilities, including emission data for the designated pollutants and 
information related to emissions as specified in appendix D to this 
part. Such data shall be summarized in the plan, and emission rates of 
designated pollutants from designated facilities shall be correlated 
with applicable standards of performance. As used in this subpart, 
``correlated'' means presented in such a manner as to show the 
relationship between measured or estimated amounts of emissions and the 
amounts of such emissions allowable under applicable standards of 
performance.
    (b) Each plan shall provide for monitoring the status of compliance 
with applicable standards of performance. Each plan shall, as a 
minimum, provide for:
    (1) Legally enforceable procedures for requiring owners or 
operators of designated facilities to maintain records and periodically 
report to the State information on the nature and amount of emissions 
from such facilities, and/or such other information as may be necessary 
to enable the State to determine whether such facilities are in 
compliance with applicable portions of the plan. Submission of 
electronic documents shall comply with the requirements of 40 CFR part 
3--(Electronic reporting).
    (2) Periodic inspection and, when applicable, testing of designated 
facilities.
    (c) Each plan shall provide that information obtained by the State 
under paragraph (b) of this section shall be

[[Page 44806]]

correlated with applicable standards of performance (see Sec.  
60.25a(a)) and made available to the general public.
    (d) The provisions referred to in paragraphs (b) and (c) of this 
section shall be specifically identified. Copies of such provisions 
shall be submitted with the plan unless:
    (1) They have been approved as portions of a preceding plan 
submitted under this subpart or as portions of an implementation plan 
submitted under section 110 of the Act, and
    (2) The State demonstrates:
    (i) That the provisions are applicable to the designated 
pollutant(s) for which the plan is submitted, and
    (ii) That the requirements of Sec.  60.26a are met.
    (e) The State shall submit reports on progress in plan enforcement 
to the Administrator on an annual (calendar year) basis, commencing 
with the first full report period after approval of a plan or after 
promulgation of a plan by the Administrator. Information required under 
this paragraph must be included in the annual report required by Sec.  
51.321 of this chapter.
    (f) Each progress report shall include:
    (1) Enforcement actions initiated against designated facilities 
during the reporting period, under any standard of performance or 
compliance schedule of the plan.
    (2) Identification of the achievement of any increment of progress 
required by the applicable plan during the reporting period.
    (3) Identification of designated facilities that have ceased 
operation during the reporting period.
    (4) Submission of emission inventory data as described in paragraph 
(a) of this section for designated facilities that were not in 
operation at the time of plan development but began operation during 
the reporting period.
    (5) Submission of additional data as necessary to update the 
information submitted under paragraph (a) of this section or in 
previous progress reports.
    (6) Submission of copies of technical reports on all performance 
testing on designated facilities conducted under paragraph (b)(2) of 
this section, complete with concurrently recorded process data.


Sec.  60.26a   Legal authority.

    (a) Each plan shall show that the State has legal authority to 
carry out the plan, including authority to:
    (1) Adopt standards of performance and compliance schedules 
applicable to designated facilities.
    (2) Enforce applicable laws, regulations, standards, and compliance 
schedules, and seek injunctive relief.
    (3) Obtain information necessary to determine whether designated 
facilities are in compliance with applicable laws, regulations, 
standards, and compliance schedules, including authority to require 
recordkeeping and to make inspections and conduct tests of designated 
facilities.
    (4) Require owners or operators of designated facilities to 
install, maintain, and use emission monitoring devices and to make 
periodic reports to the State on the nature and amounts of emissions 
from such facilities; also authority for the State to make such data 
available to the public as reported and as correlated with applicable 
standards of performance.
    (b) The provisions of law or regulations which the State determines 
provide the authorities required by this section shall be specifically 
identified. Copies of such laws or regulations shall be submitted with 
the plan unless:
    (1) They have been approved as portions of a preceding plan 
submitted under this subpart or as portions of an implementation plan 
submitted under section 110 of the Act, and
    (2) The State demonstrates that the laws or regulations are 
applicable to the designated pollutant(s) for which the plan is 
submitted.
    (c) The plan shall show that the legal authorities specified in 
this section are available to the State at the time of submission of 
the plan. Legal authority adequate to meet the requirements of 
paragraphs (a)(3) and (4) of this section may be delegated to the State 
under section 114 of the Act.
    (d) A State governmental agency other than the State air pollution 
control agency may be assigned responsibility for carrying out a 
portion of a plan if the plan demonstrates to the Administrator's 
satisfaction that the State governmental agency has the legal authority 
necessary to carry out that portion of the plan.
    (e) The State may authorize a local agency to carry out a plan, or 
portion thereof, within the local agency's jurisdiction if the plan 
demonstrates to the Administrator's satisfaction that the local agency 
has the legal authority necessary to implement the plan or portion 
thereof, and that the authorization does not relieve the State of 
responsibility under the Act for carrying out the plan or portion 
thereof.


Sec.  60.27a   Actions by the Administrator.

    (a) The Administrator may, whenever he determines necessary, 
shorten the period for submission of any plan or plan revision or 
portion thereof.
    (b) After determination that a plan or plan revision is complete 
per the requirements of paragraph (g) of this section, the 
Administrator will take action on the plan or revision. The 
Administrator will, within twelve months of finding that a plan or plan 
revision is complete, approve or disapprove such plan or revision or 
each portion thereof.
    (c) The Administrator will propose to promulgate, through notice 
and comment rulemaking, a federal plan, or portion thereof, for a State 
if:
    (1) The Administrator finds that a State fails to submit a required 
complete plan or complete plan revision within the time prescribed; or
    (2) The Administrator disapproves the required State plan or plan 
revision or any portion thereof, as unsatisfactory because the 
applicable requirements of this subpart or an applicable subpart under 
this part have not been met.
    (d) The Administrator will, at any time within two years after the 
finding of failure to submit a complete plan or disapproval described 
under paragraph (c) of this section, promulgate a final federal plan 
unless, prior to such promulgation, the State has adopted and submitted 
a plan or plan revision which the Administrator determines to be 
approvable.
    (e)(1) Except as provided in paragraph (e)(2) of this section, a 
federal plan promulgated by the Administrator under this section will 
prescribe standards of performance of the same stringency as the 
corresponding emission guideline(s) specified in the final emission 
guideline published under Sec.  60.22a(a) and will require compliance 
with such standards as expeditiously as practicable but no later than 
the times specified in the emission guideline.
    (2) Upon application by the owner or operator of a designated 
facility to which regulations proposed and promulgated under this 
section will apply, the Administrator may provide for the application 
of less stringent standards of performance or longer compliance 
schedules than those otherwise required by this section in accordance 
with the criteria specified in Sec.  60.24a(f).
    (f) Prior to promulgation of a federal plan under paragraph (d) of 
this section, the Administrator will provide the opportunity for at 
least one public hearing in either:
    (1) Each State that failed to hold a public hearing as required by 
Sec.  60.23a(c); or
    (2) Washington, DC or an alternate location specified in the 
Federal Register.
    (g) Each plan or plan revision that is submitted to the 
Administrator shall be

[[Page 44807]]

reviewed for completeness as described in paragraphs (g)(1) through 
(g)(3) of this section.
    (1) General. Within 60 days of the Administrator's receipt of a 
state submission, but no later than 6 months after the date, if any, by 
which a State is required to submit the plan or revision, the 
Administrator shall determine whether the minimum criteria for 
completeness have been met. Any plan or plan revision that a State 
submits to the EPA, and that has not been determined by the EPA by the 
date 6 months after receipt of the submission to have failed to meet 
the minimum criteria, shall on that date be deemed by operation of law 
to meet such minimum criteria. Where the Administrator determines that 
a plan submission does not meet the minimum criteria of this paragraph, 
the State will be treated as not having made the submission and the 
requirements of this section regarding promulgation of a federal plan 
shall apply.
    (2) Administrative criteria. In order to be deemed complete, a 
State plan must contain each of the following administrative criteria:
    (i) A formal letter of submittal from the Governor or her designee 
requesting EPA approval of the plan or revision thereof;
    (ii) Evidence that the State has adopted the plan in the state code 
or body of regulations. That evidence must include the date of adoption 
or final issuance as well as the effective date of the plan, if 
different from the adoption/issuance date;
    (iii) Evidence that the State has the necessary legal authority 
under state law to adopt and implement the plan;
    (iv) A copy of the actual regulation, or document submitted for 
approval and incorporation by reference into the plan. The submittal 
must be a copy of the official state regulation or document signed, 
stamped and dated by the appropriate state official indicating that it 
is fully enforceable by the State. The effective date of the regulation 
or document must, whenever possible, be indicated in the document 
itself. The State's electronic copy must be an exact duplicate of the 
hard copy. For revisions to the approved plan, the submittal must 
indicate the changes made (for example, by redline/strikethrough) to 
the approved plan;
    (v) Evidence that the State followed all of the procedural 
requirements of the state's laws and constitution in conducting and 
completing the adoption and issuance of the plan;
    (vi) Evidence that public notice was given of the proposed change 
with procedures consistent with the requirements of Sec.  60.23, 
including the date of publication of such notice;
    (vii) Certification that public hearing(s) were held in accordance 
with the information provided in the public notice and the State's laws 
and constitution, if applicable and consistent with the public hearing 
requirements in Sec.  60.23;
    (viii) Compilation of public comments and the State's response 
thereto; and
    (ix) Such other criteria for completeness as may be specified by 
the Administrator under the applicable emission guidelines.
    (3) Technical criteria. In order to be deemed complete, a State 
plan must contain each of the following technical criteria:
    (i) Description of the plan approach and geographic scope;
    (ii) Identification of each affected source, identification of 
emission standards for the affected sources, and monitoring, 
recordkeeping and reporting requirements that will determine compliance 
by each affected source;
    (iii) Identification of compliance schedules and/or increments of 
progress;
    (iv) Demonstration that the State plan submittal is projected to 
achieve emissions performance under the applicable emission guidelines;
    (v) Documentation of state recordkeeping and reporting requirements 
to determine the performance of the plan as a whole; and
    (vi) Demonstration that each emission standard is quantifiable, 
non-duplicative, permanent, verifiable, and enforceable.


Sec.  60.28a   Plan revisions by the State.

    (a) Plan revisions shall be submitted to the Administrator within 
12 months, or shorter if required by the Administrator, after notice of 
the availability of a final revised emission guideline is published 
under Sec.  60.22a, in accordance with the procedures and requirements 
applicable to development and submission of the original plan.
    (b) A revision of a plan, or any portion thereof, shall not be 
considered part of an applicable plan until approved by the 
Administrator in accordance with this subpart.


Sec.  60.29a   Plan revisions by the Administrator.

    After notice and opportunity for public hearing in each affected 
State, the Administrator may revise any provision of an applicable 
federal plan if:
    (a) The provision was promulgated by the Administrator, and
    (b) The plan, as revised, will be consistent with the Act and with 
the requirements of this subpart.
0
7. Add subpart UUUUa to read as follows:
Subpart--UUUUa Emission Guidelines for Greenhouse Gas Emissions and 
Compliance Times for Electric Utility Generating Units

Introduction

Sec.
60.5700a What is the purpose of this subpart?
60.5705a Which pollutants are regulated by this subpart?
60.5710a Am I affected by this subpart?
60.5715a What is the review and approval process for my plan?
60.5720a What if I do not submit a plan or my plan is not 
approvable?
60.5725a In lieu of a State plan submittal, are there other 
acceptable option(s) for a State to meet its CAA section 111(d) 
obligations?
60.5730a Is there an approval process for a negative declaration 
letter?

State Plan Requirements

60.5735a What must I include in my federally enforceable State plan?
60.5740a What must I include in my plan submittal?
60.5745a What are the timing requirements for submitting my plan?
60.5750a What schedules, performance periods, and compliance periods 
must I include in my plan?
60.5755a What standards of performance must I include in my plan?
60.5760a What is the procedure for revising my plan?
60.5765a What must I do to meet my plan obligations?

Applicablity of Plans to Affected EGUs

60.5770a Does this subpart directly affect EGU owners or operators 
in my State?
60.5775a What affected EGUs must I address in my State plan?
60.5780a What EGUs are excluded from being affected EGUs?
60.5785a What applicable monitoring, recordkeeping, and reporting 
requirements do I need to include in my plan for affected EGUs?

Recordkeeping and Reporting Requirements

60.5790a What are my recordkeeping requirements?
60.5795a What are my reporting and notification requirements?
60.5800a How do I submit information required by these Emission 
Guidelines to the EPA?

Definitions

60.5805a What definitions apply to this subpart?

[[Page 44808]]

Subpart--UUUUa Emission Guidelines for Greenhouse Gas Emissions and 
Compliance Times for Electric Utility Generating Units

Introduction


Sec.  60.5700a   What is the purpose of this subpart?

    This subpart establishes emission guidelines and approval criteria 
for State plans that establish standards of performance limiting 
greenhouse gas (GHG) emissions from an affected steam generating unit. 
An affected steam generating unit for the purposes of this subpart, is 
referred to as an affected EGU. These emission guidelines are developed 
in accordance with section 111(d) of the Clean Air Act and subpart Ba 
of this part. To the extent any requirement of this subpart is 
inconsistent with the requirements of subparts A or subpart Ba of this 
part, the requirements of this subpart will apply.


Sec.  60.5705a   Which pollutants are regulated by this subpart?

    (a) The pollutants regulated by this subpart are greenhouse gases. 
The emission guidelines for greenhouse gases established in this 
subpart are heat rate improvements which target achieving lower carbon 
dioxide (CO2) emission rates at affected EGUs.
    (b) PSD and Title V thresholds for greenhouse gases are set out in 
this paragraph (b).
    (1) For the purposes of Sec.  51.166(b)(49)(ii), with respect to 
GHG emissions from facilities, the ``pollutant that is subject to the 
standard promulgated under section 111 of the Act'' shall be considered 
to be the pollutant that otherwise is subject to regulation under the 
Act as defined in Sec.  51.166(b)(48) and in any State Implementation 
Plan (SIP) approved by the EPA that is interpreted to incorporate, or 
specifically incorporates, Sec.  51.166(b)(48) of this chapter.
    (2) For the purposes of Sec.  52.21(b)(50)(ii), with respect to GHG 
emissions from facilities regulated in the plan, the ``pollutant that 
is subject to the standard promulgated under section 111 of the Act'' 
shall be considered to be the pollutant that otherwise is subject to 
regulation under the Act as defined in Sec.  52.21(b)(49) of this 
chapter.
    (3) For the purposes of Sec.  70.2 of this chapter, with respect to 
greenhouse gas emissions from facilities regulated in the plan, the 
``pollutant that is subject to any standard promulgated under section 
111 of the Act'' shall be considered to be the pollutant that otherwise 
is ``subject to regulation'' as defined in Sec.  70.2 of this chapter.
    (4) For the purposes of Sec.  71.2, with respect to greenhouse gas 
emissions from facilities regulated in the plan, the ``pollutant that 
is subject to any standard promulgated under section 111 of the Act'' 
shall be considered to be the pollutant that otherwise is ``subject to 
regulation'' as defined in Sec.  71.2 of this chapter.


Sec.  60.5710a   Am I affected by this subpart?

    If you are the Governor of a State in the contiguous United States 
with one or more affected EGUs that commenced construction on or before 
August 31, 2018, you are subject to this action and you must submit a 
State plan to the U.S. Environmental Protection Agency (EPA) that 
implements the emission guidelines contained in this subpart. If you 
are the Governor of a State in the United States with no affected EGUs 
for which construction commenced on or before August 31, 2018, in your 
State, you must submit a negative declaration letter in place of the 
State plan.


Sec.  60.5715a   What is the review and approval process for my plan?

    The EPA will review your plan according to Sec.  60.27a to approve 
or disapprove such plan or revision or each portion thereof.


Sec.  60.5720a   What if I do not submit a plan or my plan is not 
approvable?

    (a) If you do not submit an approvable plan the EPA will develop a 
Federal plan for your State according to Sec.  60.27a. The Federal plan 
will implement the emission guidelines contained in this subpart. 
Owners and operators of affected EGUs not covered by an approved plan 
must comply with a Federal plan implemented by the EPA for the State.
    (b) After a Federal plan has been implemented in your State, it 
will be withdrawn when your State submits, and the EPA approves, a 
plan.


Sec.  60.5725a   In lieu of a State plan submittal, are there other 
acceptable option(s) for a State to meet its CAA section 111(d) 
obligations?

    A State may meet its CAA section 111(d) obligations only by 
submitting a State plan submittal or a negative declaration letter (if 
applicable).


Sec.  60.5730a   Is there an approval process for a negative 
declaration letter?

    The EPA has no formal review process for negative declaration 
letters. Once your negative declaration letter has been received, the 
EPA will place a copy in the public docket and publish a notice in the 
Federal Register. If, at a later date, an affected EGU for which 
construction commenced on or before August 31, 2018 is found in your 
State, you will be found to have failed to submit a final plan as 
required, and a Federal plan implementing the emission guidelines 
contained in this subpart, when promulgated by the EPA, will apply to 
that affected EGU until you submit, and the EPA approves, a final State 
plan.

State Plan Requirements


Sec.  60.5735a   What must I include in my federally enforceable State 
plan?

    (a) You must include the components described in paragraphs (a)(1) 
through (4) of this section in your plan submittal. The final plan must 
meet the requirements of, and include the information required under, 
Sec.  60.5740a.
    (1) Identification of affected EGUs. Consistent with Sec.  
60.25a(a), you must identify the affected EGUs covered by your plan and 
all affected EGUs in your State that meet the applicability criteria in 
Sec.  60.5775a. In addition, you must include an inventory of 
CO2 emissions from the affected EGUs during the most recent 
calendar year for which data is available prior to the submission of 
the plan.
    (2) Standards of performance. You must provide a standard of 
performance for each affected EGU according to Sec.  60.5755a and 
compliance periods for each standard of performance according to Sec.  
60.5750a. In establishing a standard of performance, the state must 
evaluate all of the heat rate improvements described in Sec.  60.5740a.
    (3) Identification of applicable monitoring, reporting, and 
recordkeeping requirements for each affected EGU. You must include in 
your plan all applicable monitoring, reporting and recordkeeping 
requirements for each affected EGU and the requirements must be 
consistent with or no less stringent than the requirements specified in 
Sec.  60.5785a.
    (4) State reporting. Your plan must include a description of the 
process, contents, and schedule for State reporting to the EPA about 
plan implementation and progress, including information required under 
Sec.  60.5795a.
    (b) You must follow the requirements of subpart Ba of this part and 
demonstrate that they were met in your State plan.


Sec.  60.5740a   What must I include in my plan submittal?

    (a) In addition to the components of the plan listed in Sec.  
60.5735a, a state plan submittal to the EPA must include the 
information in paragraphs (a)(1) through (8) of this section. This 
information must be submitted to the EPA as part of your plan submittal 
but

[[Page 44809]]

will not be codified as part of the federally enforceable plan upon 
approval by EPA.
    (1) You must include a summary of how you determined each standard 
of performance for each affected EGU according to Sec.  60.5755a(a). 
You must include in the summary an evaluation of the applicability of 
each of the following heat rate improvements to each affected EGU:
    (i) Neural network/intelligent sootblowers
    (ii) Boiler feed pumps
    (iii) Air heater and duct leakage control
    (iv) Variable frequency drives
    (v) Blade path upgrades for steam turbines
    (vi) Redesign or replacement of economizer
    (vii) Improved operating and maintenance practices
    (2) In applying a standard of performance, if you consider 
remaining useful life and other factors for an affected EGU as provided 
in Sec.  60.24a(e), you must include a summary of the application of 
the relevant factors in deriving a standard of performance.
    (3) You must include a demonstration that each affected EGU's 
standard of performance is quantifiable, non-duplicative, permanent, 
verifiable, and enforceable according to Sec.  60.5755a.
    (4) Your plan demonstration, if applicable, must include the 
information listed in paragraphs (a)(4)(i) through (v) of this section 
as applicable.
    (i) A summary of each affected EGU's anticipated future operation 
characteristics, including:
    (A) Annual generation;
    (B) CO2 emissions;
    (C) Fuel use, fuel prices (when applicable), fuel carbon content;
    (D) Fixed and variable operations and maintenance costs (when 
applicable);
    (E) Heat rates; and
    (F) Electric generation capacity and capacity factors.
    (ii) A timeline for implementation of EGU-specific actions (if 
applicable).
    (iii) All wholesale electricity prices.
    (iv) A time period of analysis, which must extend through at least 
2035.
    (v) A demonstration that each standard of performance included in 
your plan meets the requirements of Sec.  60.5755a.
    (5) Your plan submittal must include a timeline with all the 
programmatic milestone steps the State intends to take between the time 
of the State plan submittal and [date three years after the notice of 
availability of a final emission guideline is published in the Federal 
Register] to ensure the plan is effective as of [date plan takes 
effect].
    (6) Your plan submittal must adequately demonstrate that your State 
has the legal authority (e.g., through regulations or legislation) and 
funding to implement and enforce each component of the State plan 
submittal, including federally enforceable standards of performance for 
affected EGUs.
    (7) Your plan submittal must include certification that a hearing 
required under Sec.  60.23a(c)on the State plan was held, a list of 
witnesses and their organizational affiliations, if any, appearing at 
the hearing, and a brief written summary of each presentation or 
written submission, pursuant to the requirements of Sec.  60.27a(f).
    (8) Your plan submittal must include supporting material for your 
plan including:
    (i) Materials demonstrating the State's legal authority to 
implement and enforce each component of its plan, including standards 
of performance, pursuant to the requirements of Sec.  60.27a(f) and 
Sec.  60.5740a(a)(6);
    (ii) Materials supporting calculations for affected EGU's standards 
of performance according to Sec.  60.5755a; and
    (iii) Any other materials necessary to support evaluation of the 
plan by the EPA.
    (b) You must submit your final plan to the EPA electronically 
according to Sec.  60.5800a.


Sec.  60.5745a   What are the timing requirements for submitting my 
plan?

    You must submit a plan with the information required under Sec.  
60.5740a by [date three years after the notice of availability of a 
final emission guideline is published in the Federal Register].


Sec.  60.5750a   What schedules, performance periods, and compliance 
periods must I include in my plan?

    The standards of performance for affected EGUs regulated under the 
plan must include compliance periods. Any compliance period extending 
more than 24 months from the date required for submittal of the plan 
must include legally enforceable increments of progress to achieve 
compliance for each designated facility or category of facilities.


Sec.  60.5755a   What standards of performance must I include in my 
plan?

    (a) You must set a standard of performance for each affected EGU 
within the state.
    (1) The standard of performance must be an emission performance 
rate relating mass of CO2 emitted per unit of energy (e.g. 
pounds of CO2 emitted per MWh).
    (2) In establishing any standard of performance, you must consider 
the applicability of each of the heat rate improvements included in 
Sec.  60.5740a(1) to the affected EGU.
    (i) In applying a standard of performance to any affected EGU, you 
may consider the source-specific factors included in Sec.  60.24(e).
    (ii) If you consider source-specific factors to apply a standard of 
performance, you must include a demonstration in your plan submission 
for how you considered such factors.
    (b) Standards of performance for affected EGUs included under your 
plan must be demonstrated to be quantifiable, verifiable, non-
duplicative, permanent, and enforceable with respect to each affected 
EGU. The plan submittal must include the methods by which each standard 
of performance meets each of the requirements in paragraphs (c) through 
(f) of this section.
    (c) An affected EGU's standard of performance is quantifiable if it 
can be reliably measured in a manner that can be replicated.
    (d) An affected EGU's standard of performance is verifiable if 
adequate monitoring, recordkeeping and reporting requirements are in 
place to enable the State and the Administrator to independently 
evaluate, measure, and verify compliance with the standard of 
performance.
    (e) An affected EGU's standard of performance is permanent if the 
standard of performance must be met for each compliance period, unless 
it is replaced by another standard of performance in an approved plan 
revision.
    (f) An affected EGU's standard of performance is enforceable if:
    (1) A technically accurate limitation or requirement and the time 
period for the limitation or requirement are specified;
    (2) Compliance requirements are clearly defined;
    (3) The affected EGU responsible for compliance and liable for 
violations can be identified;
    (4) Each compliance activity or measure is enforceable as a 
practical matter; and
    (5) The Administrator, the State, and third parties maintain the 
ability to enforce against violations (including if an affected EGU 
does not meet its standard of performance based on its emissions) and 
secure appropriate corrective actions, in the case of the Administrator 
pursuant to CAA sections 113(a)-(h), in the case of a State, pursuant 
to its plan, State law or CAA section 304, as applicable, and in the

[[Page 44810]]

case of third parties, pursuant to CAA section 304.


Sec.  60.5760a   What is the procedure for revising my plan?

    EPA-approved plans can be revised only with approval by the 
Administrator. The Administrator will approve a plan revision if it is 
satisfactory with respect to the applicable requirements of this 
subpart and any applicable requirements of subpart Ba of this part, 
including the requirements in Sec.  60.5740a. If one (or more) of the 
elements of the plan set in Sec.  60.5735a require revision, a request 
must be submitted to the Administrator indicating the proposed 
revisions to the plan to ensure the CO2 emission performance 
are met.


Sec.  60.5765a   What must I do to meet my plan obligations?

    To meet your plan obligations, you must demonstrate that your 
affected EGUs are complying with their standards of performance as 
specified in Sec.  60.5755a.

Applicability of Plans to Affected EGUs


Sec.  60.5770a   Does this subpart directly affect EGU owners or 
operators in my State?

    (a) This subpart does not directly affect EGU owners or operators 
in your State. However, affected EGU owners or operators must comply 
with the plan that a State develops to implement the emission 
guidelines contained in this subpart.
    (b) If a State does not submit a plan to implement and enforce the 
emission guidelines contained in this subpart by [date three years 
after the notice of availability of a final emission guideline is 
published in the Federal Register], or the date that EPA disapproves a 
final plan, the EPA will implement and enforce a Federal plan, as 
provided in Sec.  60.27a(c), applicable to each affected EGU within the 
State that commenced construction on or before January 8, 2014.


Sec.  60.5775a   What affected EGUs must I address in my State plan?

    (a) The EGUs that must be addressed by your plan are any affected 
EGU that commenced construction on or before August 31, 2018.
    (b) An affected EGU is a steam generating unit that meets the 
relevant applicability conditions specified in paragraph (b)(1) through 
(2), as applicable, of this section except as provided in Sec.  
60.5780a.
    (1) Serves a generator connected to a utility power distribution 
system with a nameplate capacity greater than 25 MW-net (i.e., capable 
of selling greater than 25 MW of electricity);
    (2) Has a base load rating (i.e., design heat input capacity) 
greater than 260 GJ/hr (250 MMBtu/hr) heat input of fossil fuel (either 
alone or in combination with any other fuel).


Sec.  60.5780a   What EGUs are excluded from being affected EGUs?

    (a) An EGU that is excluded from being an affected EGU is:
    (1) An EGU that is subject to subpart TTTT of this part as a result 
of commencing construction, reconstruction or modification after the 
subpart TTTT applicability date;
    (2) A steam generating unit that is, and always has been, subject 
to a federally enforceable permit limiting annual net-electric sales to 
one-third or less of its potential electric output, or 219,000 MWh or 
less;
    (3) A stationary combustion turbine that meets the definition of 
either a combined cycle or combined heat and power combustion turbine;
    (4) An IGCC unit;
    (5) A non-fossil unit (i.e., a unit that is capable of combusting 
50 percent or more non-fossil fuel) that has always limited the use of 
fossil fuels to 10 percent or less of the annual capacity factor or is 
subject to a federally enforceable permit limiting fossil fuel use to 
10 percent or less of the annual capacity factor;
    (6) An EGU that is a combined heat and power unit that has always 
limited, or is subject to a federally enforceable permit limiting, 
annual net-electric sales to a utility distribution system to no more 
than the greater of either 219,000 MWh or the product of the design 
efficiency and the potential electric output;
    (7) An EGU that serves a generator along with other steam 
generating unit(s), IGCC(s), or stationary combustion turbine(s) where 
the effective generation capacity (determined based on a prorated 
output of the base load rating of each steam generating unit, IGCC, or 
stationary combustion turbine) is 25 MW or less;
    (8) An EGU that is a municipal waste combustor unit that is subject 
to subpart Eb of this part; or
    (9) An EGU that is a commercial or industrial solid waste 
incineration unit that is subject to subpart CCCC of this part.
    (b) [Reserved]


Sec.  60.5785a   What applicable monitoring, recordkeeping, and 
reporting requirements do I need to include in my plan for affected 
EGUs?

    (a) Your plan must include monitoring, recordkeeping, and reporting 
requirements for affected EGUs. To satisfy this requirement, you have 
the option of either:
    (1) Specifying that sources must report emission and electricity 
generation data according to part 75 of this chapter; or
    (2) Describing an alternative monitoring, recordkeeping, and 
reporting program that includes specifications for the following 
program elements:
    (i) Monitoring plans that specify the monitoring methods, systems, 
and formulas that will be used to measure CO2 emissions;
    (ii) Monitoring methods to continuously and accurately measure all 
CO2 emissions, CO2 emission rates, and other data 
necessary to determine compliance or assure data quality;
    (iii) Quality assurance test requirements to ensure monitoring 
systems provide reliable and accurate data for assessing and verifying 
compliance;
    (iv) Recordkeeping requirements;
    (v) Electronic reporting procedures and systems; and
    (vi) Data validation procedures for ensuring data are complete and 
calculated consistent with program rules, including procedures for 
determining substitute data in instances where required data would 
otherwise be incomplete.
    (b) [Reserved]

Recordkeeping and Reporting Requirements


Sec.  60.5790a   What are my recordkeeping requirements?

    (a) You must keep records of all information relied upon in support 
of any demonstration of plan components, plan requirements, supporting 
documentation, and the status of meeting the plan requirements defined 
in the plan for each interim step and the interim period. After [date 
plan takes effect], States must keep records of all information relied 
upon in support of any continued demonstration that the final 
CO2 emission performance rates or CO2 emissions 
goals are being achieved.
    (b) You must keep records of all data submitted by the owner or 
operator of each affected EGU that is used to determine compliance with 
each affected EGU emissions standard or requirements in an approved 
State plan, consistent with the affected EGU requirements listed in 
Sec.  60.5785a.
    (c) If your State has a requirement for all hourly CO2 
emissions and net generation information to be used to calculate 
compliance with an annual emissions standard for affected EGUs,

[[Page 44811]]

any information that is submitted by the owners or operators of 
affected EGUs to the EPA electronically pursuant to requirements in 
Part 75 meets the recordkeeping requirement of this section and you are 
not required to keep records of information that would be in duplicate 
of paragraph (b) of this section.
    (d) You must keep records at a minimum for 5 years from the date 
the record is used to determine compliance with a standard of 
performance or plan requirement. Each record must be in a form suitable 
and readily available for expeditious review.


Sec.  60.5795a   What are my reporting and notification requirements?

    You must submit an annual report as required under Sec.  60.25a(e) 
and (f).


Sec.  60.5800a   How do I submit information required by these Emission 
Guidelines to the EPA?

    (a) You must submit to the EPA the information required by the 
emission guidelines in this subpart following the procedures in 
paragraphs (b) through (e) of this section.
    (b) All negative declarations, State plan submittals, supporting 
materials that are part of a State plan submittal, any plan revisions, 
and all State reports required to be submitted to the EPA by the State 
plan must be reported through EPA's State Plan Electronic Collection 
System (SPeCS). SPeCS is a web accessible electronic system accessed at 
the EPA's Central Data Exchange (CDX) (http://www.epa.gov/cdx/). States 
who claim that a State plan submittal or supporting documentation 
includes confidential business information (CBI) must submit that 
information on a compact disc, flash drive, or other commonly used 
electronic storage media to the EPA. The electronic media must be 
clearly marked as CBI and mailed to U.S. EPA/OAQPS/CORE CBI Office, 
Attention: State and Local Programs Group, MD C539-01, 4930 Old Page 
Rd., Durham, NC 27703.
    (c) Only a submittal by the Governor or the Governor's designee by 
an electronic submission through SPeCS shall be considered an official 
submittal to the EPA under this subpart. If the Governor wishes to 
designate another responsible official the authority to submit a State 
plan, the EPA must be notified via letter from the Governor prior to 
the [date three years after the notice of availability of a final 
emission guideline is published in the Federal Register], deadline for 
plan submittal so that the official will have the ability to submit a 
plan in the SPeCS. If the Governor has previously delegated authority 
to make CAA submittals on the Governor's behalf, a State may submit 
documentation of the delegation in lieu of a letter from the Governor. 
The letter or documentation must identify the designee to whom 
authority is being designated and must include the name and contact 
information for the designee and also identify the State plan preparers 
who will need access to SPeCS. A State may also submit the names of the 
State plan preparers via a separate letter prior to the designation 
letter from the Governor in order to expedite the State plan 
administrative process. Required contact information for the designee 
and preparers includes the person's title, organization, and email 
address.
    (d) The submission of the information by the authorized official 
must be in a non-editable format. In addition to the non-editable 
version all plan components designated as federally enforceable must 
also be submitted in an editable version.
    (e) You must provide the EPA with non-editable and editable copies 
of any submitted revision to existing approved federally enforceable 
plan components. The editable copy of any such submitted plan revision 
must indicate the changes made at the State level, if any, to the 
existing approved federally enforceable plan components, using a 
mechanism such as redline/strikethrough. These changes are not part of 
the State plan until formal approval by EPA.

Definitions


Sec.  60.5805a   What definitions apply to this subpart?

    As used in this subpart, all terms not defined herein will have the 
meaning given them in the Clean Air Act and in subparts TTTT, A 
(General Provisions) and subpart Ba of this part.
    Affected electric generating unit or Affected EGU means a steam 
generating unit that meets the relevant applicability conditions in 
section Sec.  60.5775a, except as provided in Sec.  60.5780a.
    Air heater means a device that recovers heat from the flue gas for 
use in pre-heating the incoming combustion air and potentially for 
other uses such as coal drying.
    Annual capacity factor means the ratio between the actual heat 
input to an EGU during a calendar year and the potential heat input to 
the EGU had it been operated for 8,760 hours during a calendar year at 
the base load rating.
    Base load rating means the maximum amount of heat input (fuel) that 
an EGU can combust on a steady-state basis, as determined by the 
physical design and characteristics of the EGU at ISO conditions.
    Boiler feed pump (or boiler feedwater pump) means a device used to 
pump feedwater into a steam boiler at an EGU. The water may be either 
freshly supplied or returning condensate produced from condensing steam 
produced by the boiler.
    CO2 emission rate means for an affected EGU, the reported 
CO2 emission rate of an affected EGU used by an affected EGU 
to demonstrate compliance with its CO2 standard of 
performance.
    Combined heat and power unit or CHP unit, (also known as 
``cogeneration'') means an electric generating unit that uses a steam-
generating unit or stationary combustion turbine to simultaneously 
produce both electric (or mechanical) and useful thermal output from 
the same primary energy source.
    Compliance period means a discrete time period for an affected EGU 
to comply with a standard of performance.
    Economizer means a heat exchange device used to capture waste heat 
from boiler flue gas which is then used to heat the boiler feedwater.
    Fossil fuel means natural gas, petroleum, coal, and any form of 
solid fuel, liquid fuel, or gaseous fuel derived from such material to 
create useful heat.
    Integrated gasification combined cycle facility or IGCC means a 
combined cycle facility that is designed to burn fuels containing 50 
percent (by heat input) or more solid-derived fuel not meeting the 
definition of natural gas plus any integrated equipment that provides 
electricity or useful thermal output to either the affected facility or 
auxiliary equipment. The Administrator may waive the 50 percent solid-
derived fuel requirement during periods of the gasification system 
construction, startup and commissioning, shutdown, or repair. No solid 
fuel is directly burned in the unit during operation.
    Intelligent sootblower means an automated system that use process 
measurements to monitor the heat transfer performance and strategically 
allocate steam to specific areas to remove ash buildup at a steam 
generating unit.
    ISO conditions means 288 Kelvin (15 [deg]C), 60 percent relative 
humidity and 101.3 kilopascals pressure.
    Nameplate capacity means, starting from the initial installation, 
the maximum electrical generating output that a generator, prime mover, 
or other electric power production equipment under specific conditions 
designated by the manufacturer is capable of producing (in MWe, rounded 
to the

[[Page 44812]]

nearest tenth) on a steady-state basis and during continuous operation 
(when not restricted by seasonal or other deratings) as of such 
installation as specified by the manufacturer of the equipment, or 
starting from the completion of any subsequent physical change 
resulting in an increase in the maximum electrical generating output 
that the equipment is capable of producing on a steady-state basis and 
during continuous operation (when not restricted by seasonal or other 
deratings), such increased maximum amount (in MWe, rounded to the 
nearest tenth) as of such completion as specified by the person 
conducting the physical change.
    Natural gas means a fluid mixture of hydrocarbons (e.g., methane, 
ethane, or propane), composed of at least 70 percent methane by volume 
or that has a gross calorific value between 35 and 41 megajoules (MJ) 
per dry standard cubic meter (950 and 1,100 Btu per dry standard cubic 
foot), that maintains a gaseous State under ISO conditions. In 
addition, natural gas contains 20.0 grains or less of total sulfur per 
100 standard cubic feet. Finally, natural gas does not include the 
following gaseous fuels: landfill gas, digester gas, refinery gas, sour 
gas, blast furnace gas, coal-derived gas, producer gas, coke oven gas, 
or any gaseous fuel produced in a process which might result in highly 
variable sulfur content or heating value.
    Net electric output means the amount of gross generation the 
generator(s) produce (including, but not limited to, output from steam 
turbine(s), combustion turbine(s), and gas expander(s)), as measured at 
the generator terminals, less the electricity used to operate the plant 
(i.e., auxiliary loads); such uses include fuel handling equipment, 
pumps, fans, pollution control equipment, other electricity needs, and 
transformer losses as measured at the transmission side of the step up 
transformer (e.g., the point of sale).
    Net energy output means:
    (1) The net electric or mechanical output from the affected 
facility, plus 100 percent of the useful thermal output measured 
relative to SATP conditions that is not used to generate additional 
electric or mechanical output or to enhance the performance of the unit 
(e.g., steam delivered to an industrial process for a heating 
application).
    (2) For combined heat and power facilities where at least 20.0 
percent of the total gross or net energy output consists of electric or 
direct mechanical output and at least 20.0 percent of the total gross 
or net energy output consists of useful thermal output on a 12-
operating month rolling average basis, the net electric or mechanical 
output from the affected EGU divided by 0.95, plus 100 percent of the 
useful thermal output; (e.g., steam delivered to an industrial process 
for a heating application).
    Neural network means a computer model that can be used to optimize 
combustion conditions, steam temperatures, and air pollution at steam 
generating unit.
    Programmatic milestone means the implementation of measures 
necessary for plan progress, including specific dates associated with 
such implementation. Prior to [date plan takes effect], programmatic 
milestones are applicable to all state plan approaches and measures.
    Standard ambient temperature and pressure (SATP) conditions means 
298.15 Kelvin (25 [deg]C, 77 [deg]F)) and 100.0 kilopascals (14.504 
psi, 0.987 atm) pressure. The enthalpy of water at SATP conditions is 
50 Btu/lb.
    State agent means an entity acting on behalf of the State, with the 
legal authority of the State.
    Stationary combustion turbine means all equipment, including but 
not limited to the turbine engine, the fuel, air, lubrication and 
exhaust gas systems, control systems (except emissions control 
equipment), heat recovery system, fuel compressor, heater, and/or pump, 
post-combustion emissions control technology, and any ancillary 
components and sub-components comprising any simple cycle stationary 
combustion turbine, any combined cycle combustion turbine, and any 
combined heat and power combustion turbine based system plus any 
integrated equipment that provides electricity or useful thermal output 
to the combustion turbine engine, heat recovery system or auxiliary 
equipment. Stationary means that the combustion turbine is not self-
propelled or intended to be propelled while performing its function. It 
may, however, be mounted on a vehicle for portability. If a stationary 
combustion turbine burns any solid fuel directly it is considered a 
steam generating unit.
    Steam generating unit means any furnace, boiler, or other device 
used for combusting fuel and producing steam (nuclear steam generators 
are not included) plus any integrated equipment that provides 
electricity or useful thermal output to the affected facility or 
auxiliary equipment.
    Useful thermal output means the thermal energy made available for 
use in any heating application (e.g., steam delivered to an industrial 
process for a heating application, including thermal cooling 
applications) that is not used for electric generation, mechanical 
output at the affected EGU, to directly enhance the performance of the 
affected EGU (e.g., economizer output is not useful thermal output, but 
thermal energy used to reduce fuel moisture is considered useful 
thermal output), or to supply energy to a pollution control device at 
the affected EGU. Useful thermal output for affected EGU(s) with no 
condensate return (or other thermal energy input to the affected 
EGU(s)) or where measuring the energy in the condensate (or other 
thermal energy input to the affected EGU(s)) would not meaningfully 
impact the emission rate calculation is measured against the energy in 
the thermal output at SATP conditions. Affected EGU(s) with meaningful 
energy in the condensate return (or other thermal energy input to the 
affected EGU) must measure the energy in the condensate and subtract 
that energy relative to SATP conditions from the measured thermal 
output.
    Valid data means quality-assured data generated by continuous 
monitoring systems that are installed, operated, and maintained 
according to part 75 of this chapter. For CEMS, the initial 
certification requirements in Sec.  75.20 of this chapter and appendix 
A to part 75 of this chapter must be met before quality-assured data 
are reported under this subpart; for on-going quality assurance, the 
daily, quarterly, and semiannual/annual test requirements in sections 
2.1, 2.2, and 2.3 of appendix B to part 75 of this chapter must be met 
and the data validation criteria in sections 2.1.5, 2.2.3, and 2.3.2 of 
appendix B to part 75 of this chapter apply. For fuel flow meters, the 
initial certification requirements in section 2.1.5 of appendix D to 
part 75 of this chapter must be met before quality-assured data are 
reported under this subpart (except for qualifying commercial billing 
meters under section 2.1.4.2 of appendix D), and for on-going quality 
assurance, the provisions in section 2.1.6 of appendix D to part 75 of 
this chapter apply (except for qualifying commercial billing meters).

[[Page 44813]]

    Variable frequency drive means an adjustable-speed drive used on 
induced draft fans and boiler feed pumps to control motor speed and 
torque by varying motor input frequency and voltage.
    Waste-to-Energy means a process or unit (e.g., solid waste 
incineration unit) that recovers energy from the conversion or 
combustion of waste stream materials, such as municipal solid waste, to 
generate electricity and /or heat.

[FR Doc. 2018-18755 Filed 8-30-18; 8:45 am]
BILLING CODE 6560-50-P