[Federal Register Volume 82, Number 198 (Monday, October 16, 2017)]
[Proposed Rules]
[Pages 48035-48049]
[FR Doc No: 2017-22349]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 60

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

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

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

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

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

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

FOR FURTHER INFORMATION CONTACT: Mr. Peter Tsirigotis, Sector Policies
and Programs Division (D205-01), U.S. Environmental Protection Agency,
Research Triangle Park, NC 27711; telephone number:<PHONE_NUMBER>;
email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Submitting CBI. Do not submit information
that you consider to be CBI electronically through http://www.regulations.gov or email. Send or deliver information identified as
CBI to only the following address: OAQPS Document Control Officer (Room
C404-02), Environmental Protection Agency, Research Triangle Park,
North Carolina 27711; Attn: Docket ID No. EPA-HQ-OAR-2017-0355.
    Clearly mark the part or all of the information that you claim to
be CBI. For CBI information in a disk or CD-ROM that you mail to the
EPA, mark the outside of the disk or CD-ROM as CBI and then identify
electronically within the disk or CD-ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. If you submit a CD-ROM or disk that
does not contain CBI, mark the outside of the disk or CD-ROM clearly
that it does not contain CBI. Information marked as CBI will not be
disclosed except in accordance with procedures set forth in 40 Code of
Federal Regulations (CFR) part 2.
    Acronyms and Abbreviations. A number of acronyms and abbreviations
are used in this preamble. While this may not be an exhaustive list, to
ease the reading of this preamble and for reference purposes, the
following terms and acronyms are defined:

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

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

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

I. Executive Summary

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

system of emission reduction'' (BSER) under certain circumstances.
Notwithstanding the CPP, all of the EPA's other CAA section 111
regulations are based on a BSER consisting of technological or
operational measures that can be applied to or at a single source.\1\
The CPP departed from this practice by instead setting carbon dioxide
(CO2) emission guidelines for existing power plants that can
only realistically be effected by measures that cannot be employed to,
for, or at a particular source. Instead, the CPP encompassed measures
that would generally require power generators to change their energy
portfolios through generation-shifting (rather than better equipping or
operating their existing plants), including through the creation or
subsidization of significant amounts of generation from power sources
entirely outside the regulated source categories, such as solar and
wind energy. This raised substantial concerns that the CPP would
necessitate changes to a state's energy policy, such as a grid-wide
shift from coal-fired to natural gas-fired generation, and from fossil
fuel-fired generation to renewable generation.
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    \1\ This is true not only for all of the handful of existing CAA
section 111(d) regulations issued prior to the CPP, but also of the
much larger set of new source performance standards issued under CAA
section 111(b), which are predicated on the same key statutory term
``best system of emission reduction.''
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    Executive Order 13783 directs the EPA to determine whether the CPP
exceeds the bounds of the authority delegated to the Agency by
Congress. See Executive Order 13783, Sections 1(e) and 4(c). In the
course of this review, the EPA is reconsidering the legal
interpretation underlying the CPP and is proposing to interpret the
phrase ``best system of emission reduction'' in a way that is
consistent with the Agency's historical practice of determining a BSER
by considering only measures that can be applied to or at the source.
As discussed in more detail below, under the interpretation proposed
here, the CPP exceeds the bounds of the statute. Consistent with this
proposed interpretation, we propose to repeal the CPP and rescind the
accompanying legal memoranda.

II. Background

A. The CPP

    The EPA promulgated the CPP under section 111 of the CAA. 42 U.S.C.
7411. Clean Air Act section 111(b) authorizes the EPA to issue
nationally applicable new source performance standards limiting air
pollution from ``new sources'' in source categories that cause or
contribute to air pollution that may reasonably be anticipated to
endanger public health or welfare. Id. Sec.  7411(b)(1). In 2015, the
EPA issued such a rule for CO2 emissions from certain new
fossil fuel-fired power plants \2\ in light of the Agency's assessment
``that [greenhouse gases] endanger public health, now and in the
future.'' Standards of Performance for Greenhouse Gas Emissions from
New, Modified, and Reconstructed Stationary Sources: Electric
Generating Units, 80 FR 64510, 64518 (October 23, 2015) (New Source
Rule); see also Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act, 74 FR 66496
(December 15, 2009).\3\ Under certain circumstances, when the EPA
issues a CAA section 111(b) standard, the EPA must then prescribe CAA
section 111(d) regulations under which each state must submit a plan to
establish standards for existing sources in the same category. 42
U.S.C. 7411(d)(1). The EPA relied on that authority to issue the CPP,
which, for the first time, required states to submit plans specifically
designed to limit CO2 emissions from certain fossil fuel-
fired power plants.
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    \2\ The rule identified ``[f]ossil fuel-fired EGUs'' as ``by far
the largest emitters of [greenhouse gases] among stationary sources
in the U.S., primarily in the form of CO2.'' 80 FR 64510,
64522 (October 23, 2015).
    \3\ The substance of the 2009 Endangerment Finding is not at
issue in this proposed rulemaking, and we are not soliciting comment
on the EPA's assessment of the impacts of GHGs with this proposal.
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    The CPP established emission guidelines for states to follow in
limiting CO2 emissions from those plants. These emission
guidelines included nationally uniform CO2 emission
performance rates for two subcategories of existing fossil fuel-fired
power plants: Electric utility steam generating units and stationary
combustion turbines. See 80 FR 64707.
    In the CPP, the EPA determined that the BSER for CO2
emissions from existing fossil fuel-fired power plants was the
combination of emission rate improvements and limitations on overall
emissions by affected power plants that can be accomplished through a
combination of three sets of measures, which the EPA called ``building
blocks'':
    1. Improving heat rate at affected coal-fired steam generating
units;
    2. Substituting increased generation from lower-emitting existing
natural gas combined cycle units for decreased generation from higher-
emitting affected steam generating units; and
    3. Substituting increased generation from new zero-emitting
renewable energy generating capacity for decreased generation from
affected fossil fuel-fired generating units. Id. at 64707.
    While building block 1 constituted measures that could be applied
directly to a source--that is, integrated into its design or
operation--building blocks 2 and 3 employed measures that departed from
this traditional, source-specific approach to regulation and that were
expressly designed to shift the balance of coal-, gas-, and renewable-
generated power at the grid-wide level, subjecting these building
blocks to claims that they constituted energy, rather than
environmental, policy.
    That the CPP depends on the employment of measures that cannot be
applied at and to an individual source is evident from its treatment of
coal-fired power plants. The rule established performance standards for
coal-fired plants assuming a uniform emissions rate well below that
which could be met by existing units through any retrofit technology of
reasonable cost available at the time. This means that, in order to
comply, many owners or operators of existing coal-fired units were
expected to shift generation from such units to gas-fired units or to
renewable generation. Similarly, the rule contemplated that gas-fired
units would shift generation to renewable generation. The rule,
therefore, is formulated in reliance on and anticipation of actions
taken across the electric grid, rather than actions taken at and
applied to individual units.

B. Judicial Challenge to the CPP

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

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

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

    On March 28, 2017, President Trump issued Executive Order 13783,
which affirms the ``national interest to promote clean and safe
development of our Nation's vast energy resources, while at the same
time avoiding regulatory burdens that unnecessarily encumber energy
production, constrain economic growth, and prevent job creation.'' See
Executive Order 13783, Section 1(a). The Executive Order directs all
executive departments and agencies, including the EPA, to ``immediately
review existing regulations that potentially burden the development or
use of domestically produced energy resources and appropriately
suspend, revise, or rescind those that unduly burden the development of
domestic energy resources beyond the degree necessary to protect the
public interest or otherwise comply with the law.'' Id. Section 1(c).
The Executive Order further affirms that it is ``the policy of the
United States that necessary and appropriate environmental regulations
comply with the law.'' Id. Section 1(e). Moreover, the Executive Order
specifically directs the EPA to review and initiate reconsideration
proceedings to ``suspend, revise, or rescind'' the CPP, ``as
appropriate and consistent with law.'' Id. Section 4(a)-(c). (The
Executive Order also directs the EPA to undertake this process of
review and reconsideration with regard to the New Source Rule issued
under CAA section 111(b), which was a condition precedent to the
promulgation of the CPP.)
    In a document signed the same day as Executive Order 13783, and
published in the Federal Register at 82 FR 16329 (April 4, 2017), the
EPA announced that, consistent with the Executive Order, it was
initiating its review of the CPP and providing notice of forthcoming
proposed rulemakings consistent with the Executive Order.\4\
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    \4\ The EPA also withdrew the proposed federal plan and model
trading rules, proposed amendments to certain regulations under 40
CFR subpart B implementing CAA section 111(d), and proposed rule
regarding the Clean Energy Incentive Plan. 82 FR 16144 (April 3,
2017).
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    The EPA has concluded its initial review of the CPP, as directed by
Executive Order 13783. That review raised substantial concerns that the
CPP is not consistent with the policy articulated in Section 1 of the
Executive Order. See Executive Order 13783, Section 4(a). For example,
numerous states, regulated entities and other stakeholders warned that
the CPP threatened to impose massive costs on the power sector and
consumers; invaded traditional areas of state regulation over the mix
of energy generation within their borders; departed radically from
prior regulatory practice and longstanding reading of the statute; and
did not adequately ensure the national interest in affordable, reliable
electricity, including from coal generation. See id. Section 1(b).
    In the course of the EPA's review of the CPP, the Agency also
reconsidered its interpretation of CAA section 111, and it is on that
basis that the Agency now proposes to repeal the CPP. Section 1 of the
Executive Order recognizes that the EPA should, ``to the extent
permitted by law, . . . take appropriate actions to promote clean air
and clean water for the American people, while also respecting the
proper roles of Congress and the States concerning these matters in our
constitutional republic.'' Id. Section 1(d). As discussed below, the
EPA proposes to determine that the CPP is not within Congress's grant
of authority to the Agency under the governing statute. It is not in
the interests of the EPA, or in accord with its mission of
environmental protection consistent with the rule of law, to expend its
resources along the path of implementing a rule, receiving and passing
judgment on state plans, or promulgating federal plans in furtherance
of a policy that is not within the bounds of our statutory authority.
    The EPA is proposing to repeal the CPP in its entirety. The EPA
proposes to take this action because it proposes to determine that the
rule exceeds its authority under the statute, that those portions of
the rule which arguably do not exceed its authority are not severable
and separately implementable, and that it is not appropriate for a rule
that exceeds statutory authority--especially a rule of this magnitude
and with this level of impact on areas of traditional state regulatory
authority--to remain in existence pending a potential, successive
rulemaking process. Specifically, the performance standards that the
CPP established for existing sources were predicated on a combined use
of the three ``building blocks'' described above. Because, under the
interpretation proposed here, the second and third ``building blocks''
exceed the EPA's authority under CAA section 111, and because, as the
EPA determined when it issued the CPP, the first ``building block,'' as
designed, could not stand on its own if the other ``building blocks''
were repealed, any potential future rule that regulates GHG emissions
from existing EGUs under CAA section 111(d) must begin with a
fundamental reevaluation of appropriate and authorized control measures
and recalculation of performance standards.
    The EPA's mission is to ``protect and enhance the quality of the
Nation's air resources,'' 42 U.S.C. 7401(b)(1), but the Agency must do
so within the authority delegated to it by Congress. To that end, ``[a]
primary goal'' of the CAA ``is to encourage or otherwise promote
reasonable Federal, State, and local governmental actions, consistent
with the provisions of [the CAA] . . . .'' 42 U.S.C. 7401(c) (emphases
added). Where the EPA's regulations exceed the Agency's statutory
authority, it is appropriate for the Agency to correct that error and
consider what statutory tools are duly available to it, to ensure that
its regulations are effective, enforceable, administrable, and grounded
in valid authority. Accordingly, the EPA continues to consider whether
it should issue another CAA section 111(d) rule addressing GHG
emissions from existing EGUs and, if so, what would be the appropriate
form and scope of that rule. See, e.g., API v. EPA, 52 F.3d 1113, 1119
(D.C. Cir. 1995) (``It is axiomatic that an administrative agency's
power to promulgate legislative regulations is limited to the authority
delegated by Congress'') (internal citations omitted); see also
Michigan v. EPA, 268 F.3d 1075 (D.C. Cir. 2001) (same). The EPA is
engaged in the process of considering the scope of such a rule, and is
intending to issue an ANPRM in the near future to solicit information
on systems of emission reduction that are in accord with the legal
interpretation proposed in this notice (i.e., those that are applicable
to and at an individual source), as well as information on compliance
measures and state planning requirements. This notice does not solicit
comment on such issues, which will be open for comment in the ANPRM.

III. Basis for Proposed Repeal of the CPP

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

interpretation is finalized, the CPP would be repealed.\5\
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    \5\ Under the EPA's proposal, the Agency lacks authority to
consider measures other than those that apply at, to, and for a
particular source when determining the BSER. Because the CPP is in
large part premised on such measures, if the proposed interpretation
is finalized, the CPP would be repealed. Although on-site efficiency
measures may be considered in a future CAA section 111 standard, as
explained in the CPP, building block 1, as analyzed, cannot stand on
its own. 80 FR 64758 n.444; see also id. at 64658 (discussing
severability of the building blocks). As noted above, the EPA is not
taking comment on on-site efficiency measures with this proposal.
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    The EPA's ability to revisit existing regulations is well-grounded
in the law. Specifically, the EPA has inherent authority to reconsider,
repeal, or revise past decisions to the extent permitted by law so long
as the Agency provides a reasoned explanation. The CAA complements the
EPA's inherent authority to reconsider prior rulemakings by providing
the Agency with broad authority to prescribe regulations as necessary.
42 U.S.C. 760l(a). The authority to reconsider prior decisions exists
in part because the EPA's interpretations of statutes it administers
``[are not] instantly carved in stone,'' but must be evaluated ``on a
continuing basis.'' Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837,
863-64 (1984). This is true when, as is the case here, review is
undertaken ``in response to . . . a change in administrations.''
National Cable & Telecommunications Ass'n v. Brand X Internet Services,
545 U.S. 967, 981 (2005). Indeed, ``[a]gencies obviously have broad
discretion to reconsider a regulation at any time.'' Clean Air Council
v. Pruitt, 862 F.3d 1, 8-9 (D.C. Cir. 2017).
    After reconsidering the statutory text, context, and legislative
history, and in consideration of the EPA's historical practice under
CAA section 111 as reflected in its other existing CAA section 111
regulations, the Agency proposes to return to a reading of CAA section
111(a)(1) (and its constituent term, ``best system of emission
reduction'') as being limited to emission reduction measures that can
be applied to or at an individual stationary source. That is, such
measures must be based on a physical or operational change to a
building, structure, facility, or installation at that source, rather
than measures that the source's owner or operator can implement on
behalf of the source at another location. The EPA believes that this is
the best construction of CAA section 111(a)(1), as explained in detail
below, for several reasons. First, it accords with the meaning and
application of relevant terms and phrases in CAA section 111 as they
are used in other, related sections of the CAA. Second, it aligns with
the Congressional intent underlying CAA section 111 as informed by
relevant legislative history. Third, it aligns with the EPA's prior
understanding of CAA section 111 as reflected in the Agency's prior
regulatory actions.\6\ Fourth, it avoids illogical results when
considered in light of other provisions of the statute. Finally, it
avoids a policy shift of great significance for the relationship
between the federal government and the states and avoids conflict with
other federal legislation and interference with the separate role and
jurisdiction of another federal agency, where there is inadequate
indication that Congress intended to authorize the EPA to take actions
leading to those results.
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    \6\ As noted above, the EPA's prior understanding of this
statutory section and its key term ``best system of emission
reduction'' is reflected not only in the handful of existing CAA
section 111(d) rules that predated the CPP, but also in the much
larger set of new-source rules under CAA section 111(b).
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A. Statutory Text

    The phrase ``system of emission reduction'' provides the starting
point for developing performance standards under CAA section 111. An
expansive interpretation of the phrase ``system of emission reduction''
would yield a greater universe of measures that could be considered to
establish emission limits; conversely, a narrower reading would have
the opposite effect. See 80 FR 64720 (explaining that the ``first
step'' is to ``identify `system[s] of emission reduction' that have
been `adequately demonstrated' for a particular category.'').\7\ Thus,
the phrase's scope correlates directly with the breadth of the
Administrator's discretion in determining what system is the best for
purposes of establishing the degree of emission limitation to be
reflected in a standard of performance. See 42 U.S.C. 7411(a)(1)
(``[t]he term `standard of performance' means a standard for emissions
of air pollutants which reflects the degree of emission limitation
achievable through the application of the [BSER]'').
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    \7\ Historically, this step is referred to as a ``technology
review,'' and leads to a level of control ``commonly referred to as
best demonstrated technology (BDT).'' See Oil and Natural Gas
Sector: New Source Performance Standards and National Emission
Standards for Hazardous Air Pollutants Review, 76 FR 52738, 52741
(August 23, 2011); Regulating Greenhouse Gas Emissions Under the
Clean Air Act, 73 FR 44354, 44486 (July 30, 2008).
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    Though not further defined in the CAA, the phrase ``system of
emission reduction'' cannot be read in isolation. In promulgating the
CPP, the EPA explained that the phrase carries important limitations.
Id. at 64762. Specifically, the EPA reasoned that ``because the `degree
of emission limitation' must be `achievable through the application of
the best system of emission reduction' (emphasis added), the `system of
emission reduction' must be limited to a set of measures that work
together to reduce emissions that are implementable by the sources
themselves.'' Id. ``As a practical matter,'' the EPA continued, ``the
`source' includes the `owner or operator' of any building, structure,
facility, or installation for which a standard of performance is
applicable.'' Id. ``Thus, a `system of emission reduction' for purposes
of CAA section 111(d) means a set of measures that source owners or
operators can implement to achieve an emission limitation applicable to
their existing source.'' Id. In reaching this conclusion, the EPA noted
that ``the terms `implement' and `apply' are used interchangeably.''
See Legal Memorandum at 84 n.175. Here, contrary to the conclusion in
the CPP, the EPA is proposing to interpret the phrase ``through the
application of the best system of emission reduction'' as requiring
that the BSER be something that can be applied to or at the source and
not something that the source's owner or operator can implement on
behalf of the source at another location. Interpreting the statute as
carrying this additional limiting principle ensures conformity with the
statutory context and congressional intent.
    The EPA's proposed interpretation is also guided by CAA section
111(d)'s direction that standards be established ``for any existing
source,'' (emphasis added) and not for other sources or entities. See
also 42 U.S.C. 7401(a)(3) (finding that ``air pollution control at its
source is the primary responsibility of States and local governments'')
(emphasis added). Further, the ``for any existing source'' phrasing in
CAA section 111(d) mirrors the ``for new sources'' phrasing in the
first sentence of section 111(b)(1)(B). In other words, as applied to
both new source standards and existing source standards promulgated
under CAA section 111, if standards must be set for individual sources,
it is reasonable to expect that such standards would be predicated on
measures that can be applied to or at those same individual sources.
    Adopting a source-oriented reading of ``through the application of
the best system of emission reduction'' also keeps CAA section 111 in
line with other CAA standard-setting provisions. The term
``application'' is used throughout the statute in many different
contexts. But under the CAA's standard-setting provisions, it signals a
physical

or operational change to a source--for example, maximum achievable
control technology (MACT) is developed ``through application of
measures, processes, methods, systems or techniques including, but not
limited to, measures which--(A) reduce the volume of, or eliminate
emissions of, such pollutants through process changes, substitution of
materials or other modifications, (B) enclose systems or processes to
eliminate emissions, (C) collect, capture or treat such pollutants when
released from a process, stack, storage or fugitive emissions point,
(D) are design, equipment, work practice, or operational standards . .
. , or (E) are a combination of the above;'' \8\ best available control
technology (BACT) is developed ``through application of production
processes and available methods, systems, and techniques, including
fuel cleaning, clean fuels, or treatment or innovative fuel combustion
techniques for control;'' \9\ and motor vehicle and engine standards
reflect the ``application of technology,'' \10\ and the ``application
of the requisite control measures'' to specific sources.\11\ In short,
the term suggests that--while a source's owner or operator indeed
implements each of these measures--the measures should be applied to
the source itself (i.e., from the perspective of the source and not its
owner or operator).
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    \8\ 42 U.S.C. 7412(d)(2).
    \9\ 42 U.S.C. 7479(e).
    \10\ 42 U.S.C. 7521(a)(3)(A)(i) (applying technology available
by model year for mobile sources).
    \11\ 42 U.S.C. 7521(a)(3)(D) (concerning rebuilding practices of
heavy-duty engines).
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B. Legislative History

    Even if the term ``application'' did not denote a source-oriented
``system of emission reduction,'' the term ``system'' too is
historically rooted in a physical or operational change to the source
itself. As discussed in the CPP, CAA section 111(a)(1)--particularly
the phrase ``system of emission reduction''--evolved from a joint
conference between committees of the House and Senate during the 1970
CAA Amendments. 80 FR 64763-64. The underlying House bill provided that
new sources must be ``designed and equipped'' to control emissions
using ``available technology.'' H.R. Rep. No. 91-1146 (June 3, 1970),
1970 CAA Legis. Hist. at 900; see also H.R. 17255, 5, 1970 CAA Legis.
Hist. at 922. The Senate bill provided that standards of performance
reflect achievable limits ``through application of the latest available
control technology, processes, operating methods, or other
alternatives.'' S. 4358, 6, 1970 CAA Legis. Hist. at 555. Though the
Senate's formulation is broader than the House bill, ``other
alternatives'' should be interpreted ejusdem generis (of the same kind,
class, or nature) with the preceding control techniques. ``Control
technology,'' ``processes,'' and ``operating methods'' are properly
read to denote measures applied at or to, and implementable at the
level of, the individual source--and ``other alternatives'' should be
read in the same fashion. Thus, the emission-reduction measures
contemplated by the Senate also targeted a physical or operational
change to the source itself. In short, both bills were premised on
physical or operational changes that would be applied to a source, and
there is no indication that the enacted phrase ``system of emission
reduction'' was intended to expand the scope of CAA section 111 to
authorize the EPA to determine that the BSER encompasses measures that
extend beyond-the-source itself.\12\
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    \12\ ``System'' appears in a few places in the 1970 CAA
Amendments. Most notably, Congress used the term throughout Title
II, which sheds light on what Congress may have understood
``system'' to mean at the time. Specifically, section 202 of the CAA
provided that ``[s]uch standards shall be applicable to such
vehicles and engines for their useful life . . . whether such
vehicles and engines are designed as complete systems or incorporate
devices to prevent or control such pollution.'' H.R. Rep. No. 91-
1783 (December 17, 1970), 1970 CAA Legis. Hist. at 166. See also,
e.g., section 203, id. at 170 (``for the purpose of permitting
modifications to the emission control device or system of such
vehicle''); section 206, id. (``The Administrator shall test any
emission control system incorporated in a motor vehicle or motor
vehicle engine'' and ``the Administrator shall issue a verification
of compliance with emission standards for such system when
incorporated in vehicles''). In each of these instances, the word
``system'' appears to be more expansive than a discrete emission
control device, but is nonetheless a vital part of the source: The
vehicle or vehicle engine. It is evident, therefore, that Congress
associated the word ``system'' with phrases that correspond with a
source-specific scope. In CAA section 111, the word ``system'' as
used within the phrase ``best system of emission reduction'' and its
relevance in setting standards of performance, which are themselves
established ``for new sources'' and ``for any existing source,''
similarly suggest that a ``system of emission reduction'' is applied
to or at the source.
---------------------------------------------------------------------------

    The 1977 CAA Amendments do not undermine this understanding.
Congress added the word ``technological'' to ``system of emission
reduction'' in order to ``upgrade'' standards of performance ``to
require the use of the best technological system'' and ``preclude the
use of low-sulfur coal alone as a means of compliance.'' \13\ H.R. Rep.
No. 95-654 (August 3, 1977), 1977 CAA Legis. Hist. at 510. Thus, as
explained in the House report, the addition of the word
``technological'' was intended to prohibit sole reliance on a
particular control technique from being considered the BSER. It was not
an indication that CAA section 111 previously authorized beyond-the-
source controls. The question of whether a control technique or
emission reduction system is or is not ``technological'' is a distinct
question from whether it applies at and is limited to the level of the
individual source.
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    \13\ In the CPP, the EPA explained that Congress added
``precombustion cleaning or treatment of fuels'' to CAA section 111
because it recognized that even technological ``systems of emission
reduction'' could involve actions that were implemented on behalf of
the source and not merely applied to the source. 80 FR 64765; Legal
Memorandum at 87, 129. First, Congress added ``precombustion
cleaning or treatment of fuels'' to the definition of
``technological system of continuous emission reduction'' in CAA
section 111(a)(7) because Congress also redefined ``standard of
performance'' to require fossil fuel-fired power plants to achieve
``a percentage reduction in the emissions . . . which would have
resulted from the use of fuels which are not subject to treatment
prior to combustion.'' 1977 CAA Amendments, Public Law 95-95, 109,
91 Stat. 685, 700 (August 7, 1977). Second, precombustion cleaning
or treatment of fuels is integral to the operation of a regulated
source and does not necessarily occur off-site of an existing
source. And regardless of where these preparatory measures are
conducted, the use of the fuels is a measure applicable to and
performed at the level of, and at or within, the bounds of an
individual source. Finally, to the extent that fuel cleaning does
occur off-site, this demonstrates that Congress understood CAA
section 111 to be limited to source-specific measures unless
specific authorization was otherwise provided.
---------------------------------------------------------------------------

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

C. Prior Agency Practice

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

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

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

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

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

D. Statutory Context

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

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

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

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

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

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

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

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

E. Broader Policy Concerns

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

F. Proposed Rescission of Legal Memorandum

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

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

G. Conclusion

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

IV. Statutory and Executive Order Reviews

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

C. Paperwork Reduction Act (PRA)

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

D. Regulatory Flexibility Act (RFA)

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

NAAQS themselves impose no regulations upon small entities).

E. Unfunded Mandates Reform Act (UMRA)

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

F. Executive Order 13132: Federalism

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

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

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

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

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

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

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

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

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

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

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

V. Statutory Authority

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

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