[Federal Register Volume 79, Number 117 (Wednesday, June 18, 2014)]
[Proposed Rules]
[Pages 34959-34994]
[FR Doc No: 2014-13725]

Vol. 79

Wednesday,

No. 117

June 18, 2014

Part III

Environmental Protection Agency

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40 CFR Part 60

Carbon Pollution Standards for Modified and Reconstructed Stationary
Sources: Electric Utility Generating Units; Proposed Rules

Federal Register / Vol. 79 , No. 117 / Wednesday, June 18, 2014 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 60

[EPA-HQ-OAR-2013-0603; FRL 9910-00-OAR]
RIN 2060-AR88

Carbon Pollution Standards for Modified and Reconstructed
Stationary Sources: Electric Utility Generating Units

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing
standards of performance for emissions of greenhouse gases from
affected modified and reconstructed fossil fuel-fired electric utility
generating units. Specifically, the EPA is proposing standards to limit
emissions of carbon dioxide from affected modified and reconstructed
electric utility steam generating units and from natural gas-fired
stationary combustion turbines. This rule, as proposed, would continue
progress already underway to reduce carbon dioxide emissions from the
electric power sector in the United States.

DATES: Comments on the proposed standards. Comments on the proposed
standards must be received on or before October 16, 2014.
    Comments on the information collection request. Under the Paperwork
Reduction Act (PRA), since the Office of Management and Budget (OMB) is
required to make a decision concerning the information collection
request between 30 and 60 days after June 18, 2014, a comment to the
OMB is best assured of having its full effect if the OMB receives it by
July 18, 2014.
    Public Hearing. In a separate action in the Federal Register, the
EPA is proposing Clean Air Act (CAA) section 111(d) emission guidelines
for existing fossil fuel-fired electric utility generating units (EGUs)
and is announcing public hearings associated with that action. Because
of the interconnected nature of this proposed rulemaking with the
proposed Carbon Pollution Emission Guidelines for Existing Stationary
Sources: Electric Utility Generating Units, we will hold joint hearings
on both proposed rulemakings. Please consult the Federal Register
document proposing Emission Guidelines for Existing Sources for
information on public hearings for both actions. Additionally,
information for the joint public hearings will be posted on the
following Web sites: http://www2.epa.gov/carbon-pollution-standards and
http://www2.epa.gov/cleanpowerplan. If any dates, times or locations of
announced public hearings are changed for the proposed emission
guidelines, then the public hearing dates, times and locations for this
action will also change accordingly. If you would like to speak at the
public hearing(s), please register by following instructions provided
in the document for the emission guidelines proposed in the Federal
Register. Please note that written statements and supporting
information submitted during the comment period will be considered with
the same weight as oral comments and supporting information presented
at the public hearing(s).

ADDRESSES: Comments. Submit your comments, identified by Docket ID No.
EPA-HQ-OAR-2013-0603, by one of the following methods:
    At the Web site http://www.regulations.gov: Follow the instructions
for submitting comments.
    Email: Send your comments by electronic mail (email) to<EMAIL_ADDRESS>Attn: Docket ID No. EPA-HQ-OAR-2013-0603.
    Facsimile: Fax your comments to<PHONE_NUMBER>, Attn: Docket ID No.
EPA-HQ-OAR-2013-0603.
    Mail: Send your comments to the EPA Docket Center, U.S. EPA, Mail
Code 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460, Attn:
Docket ID No. EPA-HQ-OAR-2013-0603. Comments on the information
collection provisions should be mailed to the Office of Information and
Regulatory Affairs, OMB, Attn: Desk Officer for EPA, 725 17th St. NW.,
Washington, DC 20503.
    Hand Delivery or Courier: Deliver your comments to the EPA Docket
Center, William Jefferson Clinton Building West, Room 3334, 1301
Constitution Ave. NW., Washington, DC 20004, Attn: Docket ID No. EPA-
HQ-OAR-2013-0603. Such deliveries are accepted only during the Docket
Center's normal hours of operation (8:30 a.m. to 4:30 p.m., Monday
through Friday, excluding Federal holidays), and special arrangements
should be made for deliveries of boxed information.
    Instructions: All submissions must include the agency name and
docket ID number (EPA-HQ-OAR-2013-0603). The EPA's policy is to include
all comments received without change, including any personal
information provided, in the public docket, available online at http://www.regulations.gov, unless the comment includes information claimed to
be confidential business information (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. Send or deliver information identified as
CBI only to the following address: Roberto Morales, OAQPS Document
Control Officer (C404-02), Office of Air Quality Planning and
Standards, U.S. EPA, Research Triangle Park, NC 27711, Attention Docket
ID No. EPA-HQ-OAR-2013-0603. Clearly mark the information you claim to
be CBI. For CBI information on 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 you
claim as CBI. In addition to one complete version of the comment that
includes information claimed as CBI, you must submit a copy of the
comment that does not contain the information claimed as CBI for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2.
    The EPA requests that you also submit a separate copy of your
comments to the contact person identified below (see FOR FURTHER
INFORMATION CONTACT). If the comment includes information you consider
to be CBI or otherwise protected, you should send a copy of the comment
that does not contain the information claimed as CBI or otherwise
protected.
    The 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: 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. Publicly available docket materials are
available either electronically at http://www.regulations.gov or in
hard copy at the EPA Docket Center, William Jefferson Clinton Building
West, Room 3334, 1301 Constitution Ave. NW., Washington, DC 20004. The
Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding federal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>, and the telephone number for the Air
Docket is<PHONE_NUMBER>. Visit the EPA Docket Center homepage at
http://www.epa.gov/epahome/dockets.htm for additional information about
the EPA's public docket.
    In addition to being available in the docket, an electronic copy of
this proposed rule will be available on the World Wide Web (WWW).
Following signature, a copy of this proposed rule will be posted at the
following address: http://www2.epa.gov/carbon-pollution-standards.

FOR FURTHER INFORMATION CONTACT: Mr. Christian Fellner, Energy
Strategies Group, Sector Policies and Programs Division (D243-01), U.S.
EPA, Research Triangle Park, NC 27711; telephone number<PHONE_NUMBER>,
facsimile number<PHONE_NUMBER>; email address:
<EMAIL_ADDRESS>or Dr. Nick Hutson, Energy Strategies Group,
Sector Policies and Programs Division (D243-01), U.S. EPA, Research
Triangle Park, NC 27711; telephone number<PHONE_NUMBER>, facsimile
number<PHONE_NUMBER>; email address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:
    Acronyms. A number of acronyms and chemical symbols 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 as follows:

AEO Annual Energy Outlook
APPA American Public Power Association
BSER Best System of Emission Reduction
CAA Clean Air Act
CAP Climate Action Plan
CBI Confidential Business Information
CCS Carbon Capture and Storage (or Sequestration)
CFB Circulating Fluidized Bed
CH4 Methane
CHP Combined Heat and Power
CO2 Carbon Dioxide
DOE/NETL Department of Energy/National Energy Technology Laboratory
EGU Electric Utility Generating Unit
EO Executive Order
EPA Environmental Protection Agency
FB Fluidized Bed
FR Federal Register
GHG Greenhouse Gas
HFC Hydrofluorocarbon
HRSG Heat Recovery Steam Generator
ICR Information Collection Request
IGCC Integrated Gasification Combined Cycle
IPCC Intergovernmental Panel on Climate Change
lb CO2/MWh Pounds of CO2 per Megawatt-hour
lb CO2/MWh-net Pounds of CO2 per Megawatt-hour
on a net output basis
LCOE Levelized Cost of Electricity
MMBtu/h Million British Thermal Units per Hour
MPa Megapascal
MW Megawatt
MWe Megawatt Electrical
MWh Megawatt-hour
N2 Nitrogen Gas
N2O Nitrous Oxide
NOX Nitrogen Oxide
NAICS North American Industry Classification System
NGCC Natural Gas Combined Cycle
NGR Natural Gas Reburning
NRC National Research Council
NRECA National Rural Electric Cooperative Association
NSPS New Source Performance Standards
NTTAA National Technology Transfer and Advancement Act
OFA Overfire Air
OMB Office of Management and Budget
PC Pulverized Coal
PFC Perfluorocarbons
PM2.5 Particular Matter less than 2.5 micrometer in
diameter
PRA Paperwork Reduction Act
psi Pounds per square inch
psig Pounds per square inch-guage
RFA Regulatory Flexibility Act
RIA Regulatory Impact Analysis
SBA Small Business Administration
SCC Social cost of carbon
SCPC Supercritical pulverized coal
SF6 Sulfur Hexafluoride
SO2 Sulfur dioxide
Tg Teragram (one trillion (10\12\) grams)
TSD Technical Support Document
TTN Technology Transfer Network
UMRA Unfunded Mandates Reform Act of 1995
U.S. United States
USGCRP U.S. Global Change Research Program
VCS Voluntary Consensus Standard
WWW Worldwide Web

    Organization of This Document. The information presented in this
preamble is organized as follows:

I. General Information
    A. Executive Summary
    B. Overview
    C. Does this action apply to me?
II. Background
    A. Climate Change Impacts From GHG Emissions
    B. GHG Emissions From Fossil Fuel-Fired EGUs
    C. The Utility Power Sector
    D. Statutory Background
    E. Regulatory Background
    F. Stakeholder Outreach
    G. Modifications and Reconstructions
III. Proposed Requirements for Modified and Reconstructed Sources
    A. Applicability Requirements
    B. Emission Standards
    C. Startup, Shutdown and Malfunction Requirements
    D. Continuous Monitoring Requirements
    E. Emissions Performance Testing Requirements
    F. Continuous Compliance Requirements
    G. Notification, Recordkeeping and Reporting Requirements
IV. Rationale for Reliance on Rational Basis To Regulate GHG From
Fossil Fuel-Fired EGUs
    A. Rational Basis and Endangerment Finding
    B. Source Categories
V. Rationale for Applicability Requirements
VI. Rationale for Emission Standards for Reconstructed Fossil Fuel-
Fired Utility Boilers and IGCC Units
    A. Overview
    B. Identification of Best System of Emissions Reduction
    C. Determination of the Level of the Standard
    D. Compliance Period
VII. Rationale for Emission Standards for Modified Fossil Fuel-Fired
Utility Boilers and IGCC Units
    A. Introduction
    B. Identification of the Best System of Emission Reduction
    C. Determination of the Level of the Standard
    D. Compliance Period
VIII. Rationale for Emission Standards for Reconstructed Natural
Gas-Fired Stationary Combustion Turbines
    A. Identification of the Best System of Emission Reduction
    B. Determination of the Standards of Performance
IX. Rationale for Emission Standards for Modified Natural Gas-Fired
Stationary Combustion Turbines
    A. Identification of the Best System of Emission Reduction
    B. Determination of the Standards of Performance
X. Impacts of the Proposed Action
    A. What are the air impacts?
    B. What are the energy impacts?
    C. What are the compliance costs?
    D. How will this proposal contribute to climate change
protection?
    E. What are the economic and employment impacts?
    F. What are the benefits of the proposed standards?
XI. Statutory and Executive Order Reviews
    A. Executive Order 12866, Regulatory Planning and Review, and
Executive Order 13563, Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132, Federalism

    F. Executive Order 13175, Consultation and Coordination With
Indian Tribal Governments
    G. Executive Order 13045, Protection of Children From
Environmental Health Risks and Safety Risks
    H. Executive Order 13211, Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898, Federal Actions to Address
Environmental Justice in Minority Populations and Low-Income
Populations
XII. Statutory Authority

I. General Information

A. Executive Summary

1. Purpose of the Regulatory Action
    On June 25, 2013, in conjunction with the announcement of his
Climate Action Plan (CAP), President Obama issued a Presidential
Memorandum directing the EPA to issue a new proposal to address carbon
pollution from new power plants by September 30, 2013, and to issue
``standards, regulations, or guidelines, as appropriate, which address
carbon pollution from modified, reconstructed, and existing power
plants.'' Consistent with the Presidential Memorandum, on September 20,
2013, the Administrator signed proposed carbon pollution standards for
newly constructed fossil fuel-fired power plants. The proposal was
published on January 8, 2014 (79 FR 1430; January 2014 proposal).
Specifically, under the authority of CAA section 111(b), the EPA
proposed new source performance standards (NSPS) to limit emissions of
carbon dioxide (CO2) from newly constructed fossil fuel-
fired electric utility steam generating units (utility boilers and
integrated gasification combined cycle (IGCC) units) and newly
constructed natural gas-fired stationary combustion turbines.
    In this action, under the authority of CAA section 111(b), the EPA
is proposing standards of performance to limit emissions of
CO2 from modified and reconstructed fossil fuel-fired
electric utility steam generating units and natural gas-fired
stationary combustion turbines. Specifically, the EPA is proposing
standards of performance for: (1) Modified fossil fuel-fired utility
boilers and IGCC units, (2) modified natural gas-fired stationary
combustion turbines, (3) reconstructed fossil fuel-fired utility
boilers and IGCC units, and (4) reconstructed natural gas-fired
stationary combustion turbines. Consistent with the requirements of CAA
section 111(b), these proposed standards reflect the degree of emission
limitation achievable through the application of the best system of
emission reduction (BSER) that the EPA has determined has been
adequately demonstrated for each type of unit.
    In a separate action, under CAA section 111(d), the EPA is
proposing emission guidelines for states to use in developing plans to
limit CO2 emissions from existing fossil fuel-fired EGUs.
States must then submit plans to the EPA under timing set by that
action.
2. Summary of the Major Provisions
    The proposed standards for the affected modified and reconstructed
sources are summarized below in Table 1.

  Table 1--Summary of BSER and Proposed Standards for Affected Sources
------------------------------------------------------------------------
        Affected source                BSER               Standard
------------------------------------------------------------------------
Modified Utility Boilers and    Most efficient     Co-proposed
 IGCC Units.                     generation at      Alternative 1
                                 source            1. Source would be
                                 achievable         required to meet a
                                 through a          unit-specific
                                 combination of     emission limit
                                 best operating     determined by the
                                 practices and      unit's best
                                 equipment          historical annual
                                 upgrades.          CO2 emission rate
                                                    (from 2002 to the
                                                    date of the
                                                    modification) plus
                                                    an additional 2
                                                    percent emission
                                                    reduction; the
                                                    emission limit will
                                                    be no lower than:
                                                   a. 1,900 lb CO2/MWh-
                                                    net for sources with
                                                    heat input >2,000
                                                    MMBtu/h.
                                                   OR
                                                   b. 2,100 lb CO2/MWh-
                                                    net for sources with
                                                    heat input <=2,000
                                                    MMBtu/h.
Modified Utility Boilers and    Most efficient     Co-proposed
 IGCC Units.                     generation at      Alternative 2
                                 source            Source would be
                                 achievable         required to meet a
                                 through a          unit-specific
                                 combination of     emission limit
                                 best operating     dependent upon when
                                 practices and      the modification
                                 equipment          occurs.
                                 upgrades.
                                                   1. Sources that
                                                    modify prior to
                                                    becoming subject to
                                                    a CAA 111(d) plan
                                                    would be required to
                                                    meet a unit-specific
                                                    emission limit
                                                    determined by the
                                                    unit's best
                                                    historical annual
                                                    CO2 emission rate
                                                    (from 2002 to date
                                                    of the modification)
                                                    plus an additional 2
                                                    percent emission
                                                    reduction; the
                                                    emission limit will
                                                    be no lower than:
                                                   a. 1,900 lb CO2/MWh-
                                                    net for sources with
                                                    heat input >2,000
                                                    MMBtu/h.
                                                   OR
                                                   b. 2,100 lb CO2/MWh-
                                                    net for sources with
                                                    heat input <=2,000
                                                    MMBtu/h.
                                                   2. Sources that
                                                    modify after
                                                    becoming subject to
                                                    a CAA 111(d) plan
                                                    would be required to
                                                    meet a unit-specific
                                                    emission limit
                                                    determined by the
                                                    111(b) implementing
                                                    authority from the
                                                    results of an energy
                                                    efficiency
                                                    improvement audit.
Modified Natural Gas-Fired      Efficient NGCC     1. Sources with heat
 Stationary Combustion           technology.        input >850 MMBtu/h
 Turbines.                                          would be required to
                                                    meet an emission
                                                    limit of 1,000 lb
                                                    CO2/MWh-gross.
                                                   2. Sources with heat
                                                    input <=850 MMBtu/h
                                                    would be required to
                                                    meet an emission
                                                    limit of 1,100 lb
                                                    CO2/MWh-gross.
Reconstructed Utility Boilers   Most efficient     1. Sources with heat
 and IGCC Units.                 generating         input >2,000 MMBtu/h
                                 technology at      would be required to
                                 the affected       meet an emission
                                 source.            limit of 1,900 lb
                                                    CO2/MWh-net.
                                                   2. Sources with heat
                                                    input <=2,000 MMBtu/
                                                    h would be required
                                                    to meet an emission
                                                    limit of 2,100 lb
                                                    CO2/MWh-net.
Reconstructed Natural Gas-      Efficient NGCC     1. Sources with heat
 Fired Stationary Combustion     technology.        input >850 MMBtu/h
 Turbines.                                          would be required to
                                                    meet an emission
                                                    limit of 1,000 lb
                                                    CO2/MWh-gross.
                                                   2. Sources with heat
                                                    input <=850 MMBtu/h
                                                    would be required to
                                                    meet an emission
                                                    limit of 1,100 lb
                                                    CO2/MWh-gross.
------------------------------------------------------------------------

    For the reasons discussed in the ``Legal Memorandum'' \1\
supporting document in the docket for the rulemaking for CO2
emissions from existing EGUs under CAA section 111(d), all existing
sources that become modified or reconstructed sources and which are
subject to a CAA section 111(d) plan at the time of the modification or
reconstruction, will remain in the CAA section 111(d) plan and remain
subject to any applicable regulatory requirements in the plan, in
addition to being subject to regulatory requirements under CAA section
111(b).
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    \1\ The ``Legal Memorandum'' supporting document is available in
the rulemaking docket for the proposed emission guidelines for
existing source power plants, Docket ID: EPA-HQ-OAR-2013-0602.''
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    It should be noted that the EPA intends each standard of
performance proposed in this rulemaking to be severable from each other
standard of performance, such that if one or more of the standards of
performance were to be remanded or vacated in a court challenge, the
EPA intends for the other standards to remain in effect. The EPA also
intends each BSER determination or alternative determination, as
applicable, for modified utility boilers and IGCC units, and for
modified natural gas-fired stationary combustion turbines, to be
severable from each other BSER determination. In all of these cases,
the EPA believes that the standards of performance and associated best
systems of emission reduction operate independently of each other.\2\
The EPA also intends that the standards applicable to the units that
modify after the unit is subject to a 111(d) plan are severable and
that if those standards were over-turned, the standards applicable to
units that modify when they are not subject to a 111(d) plan would
apply to all modified sources, regardless of the timing of their
modification.
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    \2\ See K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 294 (1988)
(holding that a regulation was severable because the ``[t]he
severance and invalidation of [the subsection at issue would] not
impair the function of the statute as a whole, and there [was] no
indication that the regulation would not have been passed but for
its inclusion.'').
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    The EPA is proposing that the form of the standards for modified
and reconstructed natural gas-fired stationary combustion turbines be
consistent with the standards for newly constructed natural gas-fired
stationary combustion turbines proposed on January 8, 2014 (79 FR
1430). In that proposal, the EPA proposed standards for turbines on a
gross output basis, but also took comment on standards on a net output
basis. The EPA is similarly proposing standards on a gross output
basis, while soliciting comment on net output based standards, in
today's proposal for modified and reconstructed natural gas-fired
stationary combustion turbines. To the extent that the EPA finalizes
modified and reconstructed standards for stationary combustion turbines
that are consistent with the standards for newly constructed stationary
combustion turbines, the EPA intends to take the same approach with
regards to the use of net or gross output in both final actions.
3. Costs and Benefits
    As explained in the regulatory impact analysis (RIA) \3\ for this
proposed rule and further below, the EPA expects few units would
trigger either the modification or the reconstruction provisions that
we are proposing today. Because there have been a limited number of
units that have notified the EPA of NSPS modifications in the past, we
have conducted an illustrative analysis of the costs and benefits for a
representative modified unit. Based on the analysis, the EPA projects
that this proposed rule will result in potential CO2
emission changes, quantified benefits, and costs for a unit that is
subject to the modification provision. In this illustrative example,
based on a hypothetical 500 MW coal-fired unit, we estimate costs, net
of fuel savings, of $0.78 million to $4.5 million (2011$) and
CO2 reductions of 133,000 to 266,000 tons in 2025. The
climate benefits from reductions in CO2, combined with the
health co-benefits from reductions in sulfur dioxide (SO2),
nitrogen oxides (NOX), and fine particulate matter
(PM2.5), total $18 to $33 million (2011$) at a 3
percent discount rate for emission reductions in 2025 for the lowest
emission reduction scenario, and $35 to $65 million ($2011) at a 3
percent discount rate for emission reductions in 2025 for the highest
emission reduction scenario.\4\
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    \3\ The RIA for this proposal is presented as Chapter 9 of the
RIA for the companion rulemaking for proposed Emission Guidelines
for Greenhouse Gas Emissions from Existing Stationary Sources:
Electric Utility Generating Units.
    \4\ For purposes of this summary, we present climate benefits
from CO2 that were estimated using the model average
social cost of carbon (SCC) at a 3 percent discount rate. We
emphasize the importance and value of considering the full range of
SCC values, however, which include the model average at 2.5 and 5
percent, and the 95th percentile at 3 percent. Similarly, we
summarize the health co-benefits in this summary at a 3 percent
discount rate. We provide estimates based on additional discount
rates in the RIA.
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B. Overview

1. What authority is the EPA relying on to address power plant
CO2 emissions?
    The U.S. Supreme Court ruled, in Massachusetts v. EPA, that
greenhouse gases (GHGs) \5\ meet the definition of ``air pollutant'' in
the CAA,\6\ and premised its decision in AEP v. Connecticut \7\ that
the CAA displaced any federal common law right to compel reductions in
CO2 emissions from fossil fuel-fired power plants on its
view that CAA section 111 applies to GHG emissions.
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    \5\ Greenhouse gas pollution is the aggregate group of the
following gases: CO2, methane (CH4), nitrous
oxide (N2O), sulfur hexafluoride (SF6),
hydrofluorocarbons (HFCs), and perfluorocarbons (PFCs).
    \6\ 549 U.S. 497, 520 (2007).
    \7\ 131 S.Ct. 2527, 2537-38 (2011).
---------------------------------------------------------------------------

    Congress established requirements under section 111 of the 1970 CAA
to control air pollution from new stationary sources through NSPS.
Specifically, as explained in greater detail in section II below, CAA
section 111(b) authorizes the EPA to set ``standards of performance''
for new (including modified) stationary sources from listed source
categories to limit emissions of air pollutants to the environment, and
the EPA's implementing regulations provide that new sources include
reconstructed sources.\8\ Under CAA section 111(a)(1), the EPA must set
these standards at the level of emission reduction that reflects the
``best system of emission reduction . . . adequately demonstrated,''
taking into account technical feasibility, costs, and other factors.
---------------------------------------------------------------------------

    \8\ 40 CFR part 60 subpart A
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    For more than four decades, the EPA has used its authority under
CAA section 111 to set cost-effective emission standards that ensure
newly constructed, reconstructed and modified stationary sources use
the best performing technologies to limit emissions of harmful air
pollutants. In this proposal, the EPA is following the same well-
established interpretation and application of the law under CAA section
111 to address GHG emissions from modified and reconstructed fossil
fuel-fired electric steam generating units and natural gas-fired
stationary combustion turbines.
2. What sources would be regulated by the proposed standards?
    The proposed standards of performance would regulate GHG emissions
from modified and reconstructed (1) fossil fuel-fired electric steam
generating units--utility boilers and IGCC units--whose non-

GHG emissions are regulated under 40 CFR part 60, subpart Da, and (2)
natural gas-fired stationary combustion turbines, whose non-GHG
emissions are regulated under 40 CFR part 60, subpart KKKK. Natural
gas-fired stationary combustion turbines that supply less than one-
third of their potential electric output to the grid are not subject to
standards in today's proposal.
    The CAA and the EPA's implementing regulations define a
``modification,'' for purposes of NSPS applicability, as a physical or
operational change that increases the source's maximum achievable
hourly rate of emissions, with certain exceptions.\9\
---------------------------------------------------------------------------

    \9\ CAA Section 111(a)(4); 40 CFR 60.2, 60.14.
---------------------------------------------------------------------------

    Under the EPA's 1975 framework regulations covering CAA section 111
standards of performance, ``reconstruction'' means the replacement of
components of an existing facility to an extent that (1) the fixed
capital cost of the new components exceeds 50 percent of the fixed
capital cost that would be required to construct a comparable entirely
new facility, and (2) it is technologically and economically feasible
to meet the applicable standards.\10\
---------------------------------------------------------------------------

    \10\ 40 CFR 60.15(b).
---------------------------------------------------------------------------

3. Why is the EPA issuing this proposed rule?
    GHG pollution threatens the American public's health and welfare by
contributing to long-lasting changes in our climate system that can
have a range of negative effects on human health and the environment.
The impacts could include: Longer, more intense and more frequent heat
waves; more intense precipitation events and storm surges; less
precipitation and more prolonged droughts in the West and Southwest;
increased frequency and severity of short-term droughts in some other
U.S. regions; more fires and insect pest outbreaks in American forests,
especially in the West; and increased ground level ozone pollution,
otherwise known as smog, which has been linked to asthma and premature
death. Health risks from climate change are especially serious for
children, the elderly and those with heart and respiratory problems.
    Unlike most other air pollutants, GHGs may persist in the
atmosphere from decades to millennia, depending on the specific GHG.
This special characteristic makes it crucial to act now to limit GHG
emissions from fossil fuel-fired power plants, specifically emissions
of CO2, since they are the nation's largest sources of
carbon pollution.
    As previously noted, on June 25, 2013, President Obama issued a
Presidential Memorandum directing the EPA to address carbon pollution
from the power sector. As an initial step to limit carbon pollution
from power plants, on January 8, 2014, the EPA published a proposed
rule to limit GHG emissions from newly constructed fossil fuel-fired
electric steam generating units (utility boilers and IGCC units) and
newly constructed natural gas-fired stationary combustion turbines. The
EPA is now taking another step to limit carbon pollution in this
country by issuing a proposed rule to limit GHG emissions from modified
and reconstructed fossil fuel-fired electric steam generating units and
modified and reconstructed natural gas-fired stationary combustion
turbines.
    Although we expect that the modification and reconstruction
standards of performance in this rulemaking will apply to few sources--
since there have been a limited number in the past--these standards
serve another important purpose that may affect a larger number of
sources: Providing an incentive, and the information needed, for
existing sources to structure their actions to achieve their operating
and business goals without triggering the modification or
reconstruction standards. For example, the modification standard
encourages existing sources that undertake physical or operational
changes to do so in a manner that does not increase their emission
rate.
4. What is the EPA's approach to setting standards for modified and
reconstructed EGUs under CAA section 111(b)?
    CAA section 111(b) requires the EPA to establish standards of
performance that reflect the degree of emission limitation that is
achievable through the application of the ``best system of emission
reduction'' which (taking into account the cost of achieving such
reduction and any nonair quality health and environmental impact and
energy requirements) the EPA determines has been adequately
demonstrated. The text and legislative history of CAA section 111, as
well as relevant court decisions identify the factors for the EPA to
consider in making a BSER determination. They include, among others,
whether the system of emission reduction is technically feasible,
whether the costs of the system are reasonable, the amount of emissions
reductions that the system would generate, and whether the standard
would effectively promote further deployment or development of advanced
technologies. The case law addressing section 111 makes it clear that
the EPA has discretion in weighing these factors, and that as a result,
the EPA may weigh them differently for different types of sources or
air pollutants. See further discussion of this case law in section VI
below.
    For each of the standards being proposed in today's action, the EPA
considered a number of alternatives and evaluated them against the
factors.
    The BSER we are proposing for each category of affected sources and
the proposed standards of performance based on these BSER--as described
immediately below--are based on that evaluation, as discussed in
sections VI-IX below.
5. What are the BSER and the standard of performance for modified
fossil fuel-fired utility boilers and IGCC units?
    The EPA proposes that the BSER for modified fossil fuel-fired
boilers and IGCC units is each unit's own best potential performance
based on a combination of best operating practices and equipment
upgrades. Specifically, the EPA is proposing unit-specific emission
standards consistent with this BSER determination and is co-proposing
two alternative standards for modified utility steam generating units.
In the first co-proposed alternative, modified utility boilers and IGCC
units would be subject to a single emission standard. Specifically,
under the first co-proposed alternative, a modified source would be
required to meet a unit-specific emission limit determined by the
affected source's best demonstrated historical performance (in the
years from 2002 to the time of the modification) with an additional 2
percent emission reduction. The EPA has determined that this standard
can be met through a combination of best operating practices and
equipment upgrades. To account for facilities that have already
implemented best practices and equipment upgrades, the proposal also
specifies that modified facilities would not have to meet an emission
standard more stringent than the corresponding standard for
reconstructed EGUs. The EPA also solicits comment on whether, for units
that have become subject to a CAA section 111(d) plan, the period of
best historical performance should be the years from 2002 to the time
when the unit becomes subject to the CAA section 111(d) plan, rather
than to the time of the modification. This could address the concern
that sources that make improvements to their CO2 emission

rate as a result of a CAA section 111(d) plan would have lower baseline
emissions from which to calculate their required rate.
    It is our interpretation that, as we discuss in detail in the Legal
Memorandum,\11\ an existing source would continue to be subject to CAA
section 111(d) requirements after it becomes a modified source, whether
the modification occurs before or after the promulgation of a CAA
section 111(d) plan. Therefore EPA is co-proposing that modified
sources would be required to meet unit-specific emission standards that
would depend on the timing of the modification. Sources that modify
prior to becoming subject to a CAA section 111(d) plan would be
required to meet the same standard described in the first co-proposal--
that is, the modified source would be required to meet a unit-specific
emission limit determined by the affected source's best demonstrated
historical performance (in the years from 2002 to the time of the
modification) with an additional 2 percent emission reduction (based on
equipment upgrades). Sources that modify after becoming subject to a
CAA section 111(d) plan would be required to meet a unit-specific
emission limit that would be determined by the CAA section 111(d)
implementing authority and would be based on the source's expected
performance after implementation of identified unit-specific energy
efficiency improvement opportunities. The BSER and standards of
performance for modified fossil-fired electric utility steam generating
units are discussed further in section VII of this preamble.
---------------------------------------------------------------------------

    \11\ ``Legal Memorandum for Proposed Carbon Pollution Guidelines
for Existing Power Plants'' Technical Support Document available in
rulemaking docket ID: EPA-HQ-OAR-2013-0602.
---------------------------------------------------------------------------

6. What is the BSER and standard of performance for modified natural
gas-fired stationary combustion turbines?
    For modified natural gas-fired stationary combustion turbines, the
EPA is proposing standards of performance based on efficient Natural
Gas Combined Cycle (NGCC) technology as the BSER. The emission limits
proposed for these sources are 1,000 lb CO2/MWh-gross for
facilities with heat input ratings greater than 850 MMBtu/h, and 1,100
lb CO2/MWh-gross for facilities with heat input ratings of
850 MMBtu/h or less. For sources that are subject to a CAA section
111(d) plan, the EPA is also soliciting comment on whether the sources
should be allowed to elect, as an alternative to the otherwise
applicable numeric standard, to instead meet a unit-specific emission
standard that is determined by the CAA section 111(d) implementing
authority based on implementation of identified energy efficiency
improvement opportunities applicable to the source. This is discussed
further in section IX of this preamble.
7. What are BSER and the standard of performance for reconstructed
fossil fuel-fired utility boilers and IGCC units?
    For reconstructed utility boilers and IGCC units, the EPA is
proposing a standard of performance with BSER based on the most
efficient generating technology for these types of units (i.e.,
reconstructing the boiler to use higher steam, temperature and
pressure, even if the boiler was not originally designed to do so
\12\). The proposed emission limit for these sources is 1,900 lb
CO2/MWh-net for sources with a heat input rating of greater
than 2,000 MMBtu/h or 2,100 lb CO2/MWh-net for sources with
a heat input rating of 2,000 MMBtu/h or less. The difference in the
proposed standards for larger and smaller units is based on greater
availability of higher pressure/temperature steam turbines (e.g.
supercritical steam turbines) for larger units. The standards could
also be met through other technology options such as natural gas co-
firing. This is discussed further in section VI below.
---------------------------------------------------------------------------

    \12\ Steam with higher temperature and pressure has more thermal
energy which can be more efficiently converted to electrical energy.
---------------------------------------------------------------------------

    As discussed in the Legal Memorandum,\13\ a reconstruction would
have no effect on the applicability of an approved CAA section 111(d)
plan; thus, a source that is subject to requirements in a CAA section
111(d) plan would remain subject to those requirements.
---------------------------------------------------------------------------

    \13\ Legal Memorandum available in rulemaking docket ID: EPA-HQ-
OAR-2013-0602.
---------------------------------------------------------------------------

8. What are BSER and the standard of performance for reconstructed
natural gas-fired stationary combustion turbines?
    The EPA is proposing to find efficient NGCC technology to be the
BSER for reconstructed stationary combustion turbines. Therefore, the
EPA is proposing that larger units be required to meet a standard of
1,000 lb CO2/MWh-gross and that smaller units be required to
meet a standard of 1,100 lb CO2/MWh-gross. This is discussed
further in section VIII below.
    A reconstruction would have no effect on the applicability of an
approved CAA section 111(d) plan on the existing source; thus, a source
that is subject to requirements in a CAA section 111(d) plan would
remain subject to those requirements, even after reconstruction.
9. How is EPA proposing to codify the requirements?
    In the January 2014 proposal of carbon pollution standards for
newly constructed power plants (79 FR 1430), the EPA co-proposed two
options for codifying applicable requirements for covered sources.
Under the first option the EPA proposed to codify the standards of
performance for the respective sources within existing 40 CFR part 60
subparts so that applicable GHG standards for electric utility steam
generating units would be included in subpart Da and applicable GHG
standards for stationary combustion turbines would be included in
subpart KKKK. Under the second option, the EPA co-proposed to create a
new subpart TTTT and to include all GHG standards of performance for
covered sources in that newly created subpart.
    In this action for modified and reconstructed sources, the EPA co-
proposes the same two options for codifying the applicable standards.
For consistency, the EPA intends--when it takes final action on this
proposal and on the January 2014 proposal for newly constructed
sources, respectively--to codify the standards in the same way for the
sources addressed under the two proposals.
10. What is the organization and approach for this proposal?
    Section II of this preamble provides a brief summary of background
information on climate change impacts of GHG emissions, GHG emissions
from fossil-fuel fired EGUs, the utility power sector, the statutory
and regulatory background relevant to this rulemaking, and the EPA's
stakeholder outreach activities. Section II also contains additional
information on the regulatory and litigation history of CAA section
111.
    The specific proposed requirements for modified and reconstructed
sources are described in detail in section III of this preamble. The
rationale for reliance on a rational basis to regulate GHG emissions
from fossil fuel-fired EGUs and the rationale for the applicability
requirements in today's proposal are presented in sections IV and V of
this preamble, respectively. Sections VI through IX of this preamble
describe the rationale for each of the proposed emission standards,
including an explanation of the determination of the BSER for
reconstructed fossil fuel-fired utility boilers and IGCC units and
modified fossil fuel-fired utility boilers and IGCC units, as well as
for

reconstructed natural gas-fired stationary combustion turbines and
modified natural gas-fired stationary combustion turbines. Impacts of
the proposed action are described in section X of this preamble. A
discussion of statutory and executive order reviews is provided in
section XI of this preamble, and the statutory authority for this
action is provided in section XII of this preamble.
    It should be noted that this rulemaking overlaps in certain
respects with two other related rulemakings: The January 2014 proposed
rulemaking for CO2 emissions from newly constructed affected
EGUs, and the rulemaking for existing EGUs that the EPA is proposing at
the same time as the present rulemaking. In a number of places in this
preamble, the EPA cross-references parts of those two rulemakings.
However, each of these three rulemakings is independent of the other
two, and each has its own rulemaking docket. Accordingly, anyone who
wishes to comment on any aspect of this rulemaking, including anything
described by a cross-reference to one of the other two related
rulemakings, should make those comments on this rulemaking.

C. Does this action apply to me?

    The entities potentially affected by the proposed standards are
shown in Table 2 below.

                                    Table 2--Potentially Affected Entities a
----------------------------------------------------------------------------------------------------------------
                                                                                Examples of potentially affected
                           Category                               NAICS code                entities
----------------------------------------------------------------------------------------------------------------
Industry......................................................          221112  Fossil fuel electric power
                                                                                generating units.
Federal Government............................................      \b\ 221112  Fossil fuel electric power
                                                                                generating units owned by the
                                                                                federal government.
State/Local Government........................................      \b\ 221112  Fossil fuel electric power
                                                                                generating units owned by
                                                                                municipalities.
Tribal Government.............................................          921150  Fossil fuel electric power
                                                                                generating units in Indian
                                                                                Country.
----------------------------------------------------------------------------------------------------------------
\a\ Includes North American Industry Classification (NAICS) categories for source categories that own and
  operate electric power generating units (including boilers and stationary combined cycle combustion turbines).
\b\ Federal, state or local government-owned and operated establishments are classified according to the
  activity in which they are engaged.

    This table is not intended to be exhaustive, but rather to provide
a guide for readers regarding entities likely to be affected by this
proposed action. To determine whether your facility, company, business,
or organization, would be regulated by this proposed action, you should
examine the applicability criteria in 40 CFR 60.1. If you have any
questions regarding the applicability of this action to a particular
entity, consult either the air permitting authority for the entity or
your EPA regional representative as listed in 40 CFR 60.4 (General
Provisions).

II. Background

    In this section,\14\ we discuss climate change impacts from GHG
emissions, both on public health and public welfare, present
information about GHG emissions from fossil-fuel fired EGUs, describe
the utility power sector and summarize the statutory and regulatory
background relevant to this rulemaking. We close this section by
describing stakeholder outreach and a brief history of modifications
and reconstructions in the power sector.
---------------------------------------------------------------------------

    \14\ This background section is intended to provide the same or
very similar background information as provided in the companion
proposals for new sources (79 FR 1430) and existing sources (the CAA
section 111(d) proposal in today's Federal Register). Any minor
differences in phrasing between this proposal and the companion
proposals are not intended to state a substantive difference.
---------------------------------------------------------------------------

A. Climate Change Impacts From GHG Emissions

    In 2009, the EPA Administrator issued the document known as the
Endangerment Finding under CAA section 202(a)(1).\15\ In the
Endangerment Finding, which focused on public health and public welfare
impacts within the United States, the Administrator found that elevated
concentrations of GHGs in the atmosphere may reasonably be anticipated
to endanger public health and welfare of current and future
generations. We summarize these adverse effects on public health and
welfare briefly here.\16\
---------------------------------------------------------------------------

    \15\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act,'' 74 FR
66496 (December 15, 2009) (``Endangerment Finding'').
    \16\ The January 8, 2014, preamble to the proposed GHG standards
for new EGUs (79 FR 1430) and the RIA supporting that proposal
include a more detailed summary of the public health and welfare
impacts detailed in the 2009 Endangerment Finding, as well as a
discussion of the science supporting the EPA's conclusions regarding
the question of whether GHG endanger public health and welfare
including: (1) The process by which the Administrator reached the
Endangerment Finding in 2009; (2) the EPA's response in 2010 to ten
administrative petitions for reconsideration of the Endangerment
Finding (the Reconsideration Denial); and (3) the decision by the
United States Court of Appeals for the District of Columbia Circuit
in 2012 to uphold the Endangerment Finding and the Reconsideration
Denial.
---------------------------------------------------------------------------

1. Public Health Impacts Detailed in the 2009 Endangerment Finding \17\
---------------------------------------------------------------------------

    \17\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases under Section 202(a) of the Clean Air Act,'' 74 FR
66496 (Dec. 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Climate change caused by human emissions of GHGs threatens public
health in multiple ways. By raising average temperatures, climate
change increases the likelihood of heat waves, which are associated
with increased deaths and illnesses. While climate change also
increases the likelihood of reductions in cold-related mortality,
evidence indicates that the increases in heat mortality will be larger
than the decreases in cold mortality in the United States. Compared to
a future without climate change, climate change is expected to increase
ozone pollution over broad areas of the U.S., including in the largest
metropolitan areas with the worst ozone problems, and thereby increase
the risk of morbidity and mortality. Other public health threats also
stem from projected increases in intensity or frequency of extreme
weather associated with climate change, such as increased hurricane
intensity, increased frequency of intense storms, and heavy
precipitation. Increased coastal storms and storm surges due to rising
sea levels are expected to cause increased drownings and other health
impacts. Children, the elderly, and the poor are among the most
vulnerable to these climate-related health effects.
2. Public Welfare Impacts Detailed in the 2009 Endangerment Finding
\18\
---------------------------------------------------------------------------

    \18\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases under Section 202(a) of the Clean Air Act,'' 74 FR
66496 (Dec. 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Climate change caused by human emissions of GHGs also threatens
public welfare in multiple ways. Climate changes are expected to place
large areas of the country at serious risk of reduced water supplies,
increased water pollution, and increased occurrence of extreme events
such as floods and droughts. Coastal areas are expected to

face increased risks from storm and flooding damage to property, as
well as adverse impacts from rising sea level, such as land loss due to
inundation, erosion, wetland submergence and habitat loss. Climate
change is expected to result in an increase in peak electricity demand,
and extreme weather from climate change threatens energy,
transportation, and water resource infrastructure. Climate change may
exacerbate ongoing environmental pressures in certain settlements,
particularly in Alaskan indigenous communities. Climate change also is
very likely to fundamentally rearrange U.S. ecosystems over the 21st
century. Though some benefits may balance adverse effects on
agriculture and forestry in the next few decades, the body of evidence
points towards increasing risks of net adverse impacts on U.S. food
production, agriculture and forest productivity as temperature
continues to rise. These impacts are global and may exacerbate problems
outside the U.S. that raise humanitarian, trade, and national security
issues for the U.S.
3. New Scientific Assessments
    As outlined in Section VIII.A. of the 2009 Endangerment Finding,
the EPA's approach to providing the technical and scientific
information to inform the Administrator's judgment regarding the
question of whether GHGs endanger public health and welfare was to rely
primarily upon the recent, major assessments by the U.S. Global Change
Research Program (USGCRP), the Intergovernmental Panel on Climate
Change (IPCC), and the National Research Council (NRC) of the National
Academies. These assessments addressed the scientific issues that the
EPA was required to examine, were comprehensive in their coverage of
the GHG and climate change issues, and underwent rigorous and exacting
peer review by the expert community, as well as rigorous levels of U.S.
government review. Since the administrative record concerning the
Endangerment Finding closed following the EPA's 2010 Reconsideration
Denial, a number of such assessments have been released. These
assessments include the IPCC's 2012 ``Special Report on Managing the
Risks of Extreme Events and Disasters to Advance Climate Change
Adaptation'' (SREX) and the 2013-2014 Fifth Assessment Report (AR5),
the USGCRP's 2014 ``Climate Change Impacts in the United States''
(Climate Change Impacts), and the NRC's 2010 ``Ocean Acidification: A
National Strategy to Meet the Challenges of a Changing Ocean'' (Ocean
Acidification), 2011 ``Report on Climate Stabilization Targets:
Emissions, Concentrations, and Impacts over Decades to Millennia''
(Climate Stabilization Targets), 2011 ``National Security Implications
for U.S. Naval Forces'' (National Security Implications), 2011
``Understanding Earth's Deep Past: Lessons for Our Climate Future''
(Understanding Earth's Deep Past), 2012 ``Sea Level Rise for the Coasts
of California, Oregon, and Washington: Past, Present, and Future'',
2012 ``Climate and Social Stress: Implications for Security Analysis''
(Climate and Social Stress), and 2013 ``Abrupt Impacts of Climate
Change'' (Abrupt Impacts) assessments.
    The EPA has reviewed these new assessments and finds that the
improved understanding of the climate system they present strengthens
the case that GHGs endanger public health and welfare.
    In addition, these assessments highlight the urgency of the
situation as the concentration of CO2 in the atmosphere
continues to rise. Absent a reduction in emissions, a recent NRC
assessment projected that concentrations by the end of the century
would increase to levels that the Earth has not experienced for
millions of years.\19\ In fact, that assessment stated that ``the
magnitude and rate of the present greenhouse gas increase place the
climate system in what could be one of the most severe increases in
radiative forcing of the global climate system in Earth history.'' \20\
---------------------------------------------------------------------------

    \19\ National Research Council, Understanding Earth's Deep Past,
p. 1.
    \20\ Id., p.138.
---------------------------------------------------------------------------

    What this means, as stated in another NRC assessment, is that:

    Emissions of carbon dioxide from the burning of fossil fuels
have ushered in a new epoch where human activities will largely
determine the evolution of Earth's climate. Because carbon dioxide
in the atmosphere is long lived, it can effectively lock Earth and
future generations into a range of impacts, some of which could
become very severe. Therefore, emission reductions choices made
today matter in determining impacts experienced not just over the
next few decades, but in the coming centuries and millennia.\21\
---------------------------------------------------------------------------

    \21\ National Research Council, Climate Stabilization Targets,
p. 3.

    Moreover, due to the time-lags inherent in the Earth's climate, the
Climate Stabilization Targets assessment notes that the full warming
from any given concentration of CO2 reached will not be
realized for several centuries.
    The recently released USGCRP ``National Climate Assessment'' \22\
emphasizes that climate change is already happening now and it is
happening in the United States. The assessment documents the increases
in some extreme weather and climate events in recent decades, the
damage and disruption to infrastructure and agriculture, and projects
continued increases in impacts across a wide range of peoples, sectors,
and ecosystems.
---------------------------------------------------------------------------

    \22\ U.S. Global Change Research Program, Climate Change Impacts
in the United States: The Third National Climate Assessment, May
2014 Available at http://nca2014.globalchange.gov/.
---------------------------------------------------------------------------

    These assessments underscore the urgency of reducing emissions now:
Today's emissions will otherwise lead to raised atmospheric
concentrations for thousands of years, and raised Earth system
temperatures for even longer. Emission reductions today will benefit
the public health and public welfare of current and future generations.
    Finally, it should be noted that the concentration of
CO2 in the atmosphere continues to rise dramatically. In
2009, the year of the Endangerment Finding, the average concentration
of CO2 as measured on top of Mauna Loa was 387 parts per
million (ppm).\23\ The average concentration in 2013 was 396 ppm. And
the monthly concentration in April of 2014 was 401 ppm, the first time
a monthly average has exceeded 400 ppm since record keeping began at
Mauna Loa in 1958, and for at least the past 800,000 years according to
ice core records.\24\
---------------------------------------------------------------------------

    \23\ ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt.
    \24\ http://www.esrl.noaa.gov/gmd/ccgg/trends/.
---------------------------------------------------------------------------

B. GHG Emissions From Fossil Fuel-Fired EGUs

    Fossil fuel-fired EGUs are by far the largest emitters of GHGs,
primarily in the form of CO2, among stationary sources in
the U.S., and among fossil fuel-fired units, coal-fired units are by
far the largest emitters. This section describes the amounts of those
emissions and places those amounts in the context of the national
inventory of GHGs.
    The EPA prepares the official U.S. Inventory of Greenhouse Gas
Emissions and Sinks \25\ (the U.S. GHG Inventory) to comply with
commitments under the United Nations Framework Convention on Climate
Change (UNFCCC). This inventory, which includes recent trends, is
organized by industrial sectors. It provides the information in Table 3
below, which presents total U.S.

anthropogenic emissions and sinks \26\ of GHGs, including
CO2 emissions, for the years 1990, 2005 and 2012.
---------------------------------------------------------------------------

    \25\ ``Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2012'', Report EPA 430-R-14-003, United States Environmental
Protection Agency, April 15, 2014.
    \26\ Sinks are a physical unit or process that stores GHGs, such
as forests or underground or deep sea reservoirs of carbon dioxide.

             Table 3--U.S. GHG Emissions and Sinks by Sector
         [Teragram carbon dioxide equivalent (Tg CO2 Eq.)] \27\
------------------------------------------------------------------------
             Sector                  1990         2005          2012
------------------------------------------------------------------------
Energy.........................      5,260.1      6,243.5       5,498.9
Industrial Processes...........        316.1        334.9         334.4
Solvent and Other Product Use..          4.4          4.4           4.4
Agriculture....................        473.9        512.2         526.3
Land Use, Land-Use Change and           13.7         25.5          37.8
 Forestry......................
Waste..........................        165.0        133.2         124.0
                                ----------------------------------------
    Total Emissions............      6,233.2      7,253.8       6,525.6
Land Use, Land-Use Change and        (831.3)    (1,030.7)        (979.3)
 Forestry (Sinks)..............
                                ----------------------------------------
    Net Emissions (Sources and       5,402.1      6,223.1       5,546.3
     Sinks)....................
------------------------------------------------------------------------

    Total fossil energy-related CO2 emissions (including
both stationary and mobile sources) are the largest contributor to
total U.S. GHG emissions, representing 77.7 percent of total 2012 GHG
emissions.\28\ In 2012, fossil fuel combustion by the electric power
sector--entities that burn fossil fuel and whose primary business is
the generation of electricity--accounted for 38.7 percent of all
energy-related CO2 emissions.\29\ Table 4 below presents
total CO2 emissions from fossil fuel-fired EGUs, for years
1990, 2005 and 2012.
---------------------------------------------------------------------------

    \27\ From Table ES-4 of ``Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2012, Report EPA 430-R-14-003, United
States Environmental Protection Agency, April 15, 2014.
    \28\ From Table ES-2 ``Inventory of U.S. Greenhouse Gas
Emissions and Sinks: 1990-2012'', Report EPA 430-R-14-003, United
States Environmental Protection Agency, April 15, 2014.
    \29\ From Table 3-1 ``Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2012'', Report EPA 430-R-14-003, United States
Environmental Protection Agency, April 15, 2014.

     Table 4--U.S. GHG Emissions From Generation of Electricity From
                Combustion of Fossil Fuels (Tg CO2) \30\
------------------------------------------------------------------------
         GHG Emissions               1990         2005          2012
------------------------------------------------------------------------
Total CO2 from fossil fuel           1,820.8      2,402.1       2,022.7
 combustion EGUs...............
    --from coal................      1,547.6      1,983.8       1,511.2
    --from natural gas.........        175.3        318.8         492.2
    --from petroleum...........         97.5         99.2          18.8
------------------------------------------------------------------------

C. The Utility Power Sector
---------------------------------------------------------------------------

    \30\ From Table 3-5 ``Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2012'', Report EPA 430-R-14-003, United States
Environmental Protection Agency, April 15, 2014.
---------------------------------------------------------------------------

    Electricity in the United States is generated by a range of
sources--from power plants that use fossil fuels like coal, oil, and
natural gas, to non-fossil sources, such as nuclear, solar, wind and
hydroelectric power. In 2013, over 67 percent of power in the U.S. was
generated from the combustion of coal, natural gas, and other fossil
fuels, over 40 percent from coal and over 26 percent from natural
gas.\31\ In recent years, though, the proportion of new renewable
generation coming on line has increased dramatically. For instance,
over 38 percent of new generating capacity (over 5 GW out of 13.5 GW)
built in 2013 used renewable power generation technologies.\32\
---------------------------------------------------------------------------

    \31\ U.S. Energy Information Administration (EIA), ``Table 7.2b
Electricity Net Generation: Electric Power Sector Electric Power
Sector,'' data from April 2014 Monthly Energy Review, release date
April 25, 2014. Available at: http://www.eia.gov/totalenergy/data/browser/xls.cfm?tbl=T07.02B&freq=m.
    \32\ Based on Table 6.3 (New Utility Scale Generating Units by
Operating Company, Plant, Month, and Year) of the U.S. Energy
Information Administration (EIA) Electric Power Monthly, data for
December 2013, for the following renewable energy sources: Solar,
wind, hydro, geothermal, landfill gas, and biomass. Available at:
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_6_03.
---------------------------------------------------------------------------

    Natural gas-fired EGUs typically use one of two technologies: NGCC
or simple cycle combustion turbines. NGCC units first generate power
from a combustion turbine (the combustion cycle). The unused heat from
the combustion turbine is then routed to a heat recovery steam
generator (HRSG) that generates steam which is used to produce power
using a steam turbine (the steam cycle). Combining these generation
cycles increases the overall efficiency of the system. Simple cycle
combustion turbines use a single combustion turbine to produce
electricity (i.e., there is no heat recovery). The power output from
these simple cycle combustion turbines can be easily ramped up and down
making them ideal for ``peaking'' operations.
    Coal-fired utility boilers are primarily either pulverized coal
(PC) boilers or fluidized bed (FB) boilers. At a PC boiler, the coal is
crushed (pulverized) into a powder in order to increase its surface
area. The coal powder is then blown into a boiler and burned. In a
coal-fired boiler using FB combustion, the coal is burned in a layer of
heated particles suspended in flowing air.
    Power can also be generated using gasification technology. An IGCC
unit gasifies coal or petroleum coke to form a syngas composed of
carbon monoxide and hydrogen, which can be combusted in a combined
cycle system to generate power.

D. Statutory Background

    CAA section 111 authorizes the EPA to prescribe new source
performance standards (NSPS) applicable to certain new stationary
sources (including

modified and reconstructed sources).\33\ As a preliminary step to
regulation, the EPA must list categories of stationary sources that the
Administrator, in his or her judgment, finds ``cause[ ], or contribute[
] significantly to, air pollution which may reasonably be anticipated
to endanger public health or welfare.'' The EPA has listed and
regulated more than 60 stationary source categories under CAA section
111.\34\
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    \33\ CAA section 111(b)(1)(A).
    \34\ See generally 40 CFR part 60, subparts D-MMMM.
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    Once the EPA has listed a source category, the EPA proposes and
then promulgates ``standards of performance'' for ``new sources'' in
the category.\35\ A ``new source'' is ``any stationary source, the
construction or modification of which is commenced after,'' in general,
the date of the proposal.\36\ A modification is ``any physical change .
. . or change in the method of operation . . . which increases the
amount of any air pollutant emitted by such source or which results in
the emission of any air pollutant not previously emitted.'' \37\ The
EPA, through regulations, has determined that certain types of changes
are exempt from consideration as a modification.\38\
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    \35\ CAA section 111(b)(1)(B).
    \36\ CAA section 111(a)(2).
    \37\ CAA section 111(a)(4).
    \38\ 40 CFR 60.2, 60.14(e).
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    The EPA's 1975 framework regulations also provide that an existing
source is considered a new source if it undertakes a
``reconstruction,'' which is the replacement of components of an
existing facility to an extent that (1) the fixed capital cost of the
new components exceeds 50 percent of the fixed capital cost that would
be required to construct a comparable entirely new facility, and (2) it
is technologically and economically feasible to meet the applicable
standards.\39\
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    \39\ 40 CFR 60.15.
---------------------------------------------------------------------------

    CAA section 111(a)(1) defines a ``standard of performance'' as a
standard for emissions of air pollutants which reflects the degree of
emission limitation achievable through the application of the best
system of emission reduction which (taking into account the cost of
achieving such reduction and any nonair quality health and
environmental impact and energy requirements) the Administrator
determines has been adequately demonstrated. This definition makes
clear that the standard of performance must be based on ``the best
system of emission reduction . . . adequately demonstrated'' (BSER).
The standard that the EPA develops, based on the BSER, is commonly a
numeric emission limit, expressed as a performance level (e.g., a rate-
based standard). Generally, the EPA does not prescribe a particular
technological system that must be used to comply with a standard of
performance. Rather, sources generally may select any measure or
combination of measures that will achieve the emissions level of the
standard.\40\ In establishing standards of performance, the EPA has
significant discretion to create subcategories based on source type,
class or size.\41\
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    \40\ CAA section 111(b)(5).
    \41\ CAA section 111(b)(2).
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    When the EPA establishes NSPS for new sources in a particular
source category, the EPA is also required, under CAA section 111(d)(1),
to establish requirements for existing sources in that source category
for any air pollutant that, in general, is not regulated under the CAA
section 109 requirements for the National Ambient Air Quality Standards
or regulated under the CAA section 112 requirements for hazardous air
pollutants. Unlike CAA section 111(b), which gives EPA direct authority
to set national standards, CAA section 111(d) requires the EPA to
promulgate emission guidelines directing states to develop and submit,
for EPA approval, state plans that include standards of performance for
the existing sources.

E. Regulatory Background

    In 1971, the EPA initially included fossil fuel-fired (which
includes natural gas, petroleum and coal) EGUs that use steam-
generating boilers in a category that it listed under CAA section
111(b)(1)(A),\42\ and the EPA promulgated the first set of standards of
performance for sources in that category, which it codified in subpart
D.\43\ In 1977, the EPA initially included fossil fuel-fired combustion
turbines in a category that the EPA listed under CAA section
111(b)(1)(A),\44\ and the EPA promulgated standards of performance for
that source category in 1979, which the EPA codified in subpart GG.\45\
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    \42\ 36 FR 5931 (March 31, 1971)
    \43\ ``Standards of Performance for Fossil-Fuel-Fired Steam
Generators for Which Construction Is Commenced After August 17,
1971,'' 36 FR 24875 (December 23, 1971) codified at 40 CFR 60.40-46.
    \44\ 42 FR 53657 (October 3, 1977).
    \45\ ``Standards of Performance for Electric Utility Steam
Generating Units for Which Construction is Commenced After September
18, 1978,'' 44 FR 33580 (June 11, 1979).
---------------------------------------------------------------------------

    The EPA has revised those regulations, and in some instances, has
revised the codifications (that is, the 40 CFR part 60 subparts),
several times over the ensuing decades. In 1979, the EPA divided
subpart D into 3 subparts--Da (``Standards of Performance for Electric
Utility Steam Generating Units for Which Construction is Commenced
After September 18, 1978''), Db (``Standards of Performance for
Industrial-Commercial-Institutional Steam Generating Units'') and Dc
(``Standards of Performance for Small Industrial-Commercial-
Institutional Steam Generating Units'')--in order to codify separate
requirements that it established for these subcategories.\46\ In 2006,
the EPA created subpart KKKK, ``Standards of Performance for Stationary
Combustion Turbines,'' which applied to certain sources previously
regulated in subparts Da and GG.\47\ None of these subsequent
rulemakings, including the revised codifications, however, constituted
a new listing under CAA section 111(b)(1)(A).
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    \46\ 44 FR 33580 (June 11, 1979).
    \47\ 71 FR 38497 (July 6, 2006), as amended at 74 FR 11861
(March 20, 2009).
---------------------------------------------------------------------------

    The EPA promulgated amendments to subpart Da in 2006, which
included new standards of performance for criteria pollutants for EGUs,
but no standards of performance for GHG emissions.\48\ Petitioners
sought judicial review of the rule by the DC Circuit, contending, among
other issues, that the rule was required to include standards of
performance for GHG emissions from EGUs.\49\ The January 8, 2014
preamble to the proposed CO2 standards for new EGUs \50\
includes a discussion of the GHG-related litigation of the 2006 Final
Rule as well as other GHG-associated litigation.
---------------------------------------------------------------------------

    \48\ ``Standards of Performance for Electric Utility Steam
Generating Units, Industrial-Commercial-Institutional Steam
Generating Units, and Small Industrial-Commercial-Institutional
Steam Generating Units, Final Rule.'' 71 FR 9866 (February 27,
2006).
    \49\ State of New York, et al. v. EPA, No. 06-1322.
    \50\ 79 FR 1430.
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F. Stakeholder Outreach

    The EPA has engaged extensively with a broad range of stakeholders
and the general public regarding climate change, carbon pollution from
power plants, and carbon pollution reduction opportunities. These
stakeholders included industry and electric utility representatives,
state and local officials, tribal officials, labor unions and non-
governmental organizations.
    In February and March 2011, early in the process of developing
carbon pollution standards for new power plants, the EPA held five
listening sessions to obtain information and input from key
stakeholders and the public.

Each of the five sessions had a particular target audience: The
electric power industry, environmental and environmental justice
organizations, states and tribes, coalition groups, and the petroleum
refinery industry.
    The EPA has conducted subsequent outreach sessions: The vast
majority of which occurred between September 2013 and November 2013.
The agency held 11 public listening sessions; one national listening
session in Washington, DC and 10 listening sessions in locations across
the country. In addition to the 11 public listening sessions, the EPA
has held hundreds of meetings with individual stakeholder groups, and
meetings that brought together a variety of stakeholders to discuss a
wide range of issues related to the electricity sector and regulation
of GHGs under the CAA. The agency provided and encouraged multiple
opportunities to engage with each one of the 50 states. The agency met
with electric utility associations and electricity grid operators.
Agency officials have engaged with labor unions and with leaders
representing large and small industries. Because of the focus of the
standard on the electricity sector, many of the EPA's meetings with
industry have been with utilities and industry representatives directly
related to the electricity sector. The agency has also met with energy
industries such as coal and natural gas interests. In addition, the
agency has met with companies that offer new technology to prevent or
reduce carbon pollution, including companies that represent renewable
energy and energy efficiency interests. The EPA has also met with
representatives of energy intensive industries, such as the iron and
steel and aluminum industries, to help understand the issues related to
large industrial purchasers of electricity. Agency officials engaged
with representatives of environmental justice organizations,
environmental groups, and religious organizations.
    Although this stakeholder outreach was primarily framed around the
GHG emission guidelines for existing EGUs, the outreach encompassed
issues relevant to this proposed rulemaking for modified and
reconstructed EGUs. For example, existing EGUs would be subject to
standards for modified and reconstructed EGUs should they undertake
modification or reconstruction actions, and, thus it is important that
we understand previous state and stakeholder experience with reducing
CO2 emissions in the power sector.
    A detailed discussion of this stakeholder outreach is included in
the preamble to the GHG emission guidelines for existing affected EGUs
being proposed in a separate action today.

G. Modifications and Reconstructions

1. Modifications
    The EPA's current regulations \51\ define an NSPS ``modification''
as a physical or operational change that increases the source's maximum
achievable hourly rate of emissions, with certain exemptions.\52\
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    \51\ The discussion of the EPA's regulations in this rulemaking
is for background purposes only. The EPA is not re-opening, and thus
is not soliciting comment on, any provision in its existing
regulations.
    \52\ 40 CFR 60.2, 60.14.
---------------------------------------------------------------------------

    Based on current information, the EPA believes that projects may
involve equipment changes to improve efficiency that could have the
effect of increasing a source's maximum achievable hourly emission rate
(lb CO2/h), even while decreasing its actual output based
emission rate (lb CO2/MWh). However, based on current
information, the most likely projects that could increase the maximum
achievable hourly rate of CO2 emissions would involve the
installation of add-on control equipment required to meet CAA
requirements for criteria and hazardous air pollutants. These increases
in CO2 emissions would generally be small and would occur as
a chemical by-product of the operation of the control equipment. All of
these actions, however, would be exempted from the definition of
modification under the current NSPS regulations.\53\
---------------------------------------------------------------------------

    \53\ 40 CFR 60.14.
---------------------------------------------------------------------------

    There are, however, some actions that could potentially trigger the
modification provisions of CAA section 111(b). For example, in some
cases, generation from a fossil fuel-fired electric utility steam
generating unit is limited not by the size of the boiler, but by other
factors, such as the size of the steam turbine or limitations in the
particulate control equipment that, in turn, limit the amount of coal
that can be combusted. If the steam turbine or particulate control
device is upgraded, more coal can be combusted in the boiler,
increasing hourly emissions.
    Our base of knowledge concerning the types of NSPS modifications
has depended largely on self-reporting by power plants and on the
enforcement actions brought against power plants. Over the lengthy
history of the NSPS program, the number of modifications that we are
aware of is limited.
2. Comments on the April 2012 Proposal for New Sources Related to
Modifications
    In the April 13, 2012 proposed Standards of Performance for
Greenhouse Gas Emissions for New Stationary Sources: Electric Utility
Generating Units (77 FR 22392),\54\ the EPA did not propose standards
of performance for modified sources; however, it did specifically
request comment on the types of modifications that may be expected and
on the appropriate control measures that may be applied. The agency
received a number of comments addressing standards for modified and
reconstructed EGUs.\55\ The EPA subsequently withdrew that proposed
rulemaking.\56\ While many of those comments informed today's proposal,
the EPA is not responding to those comments in this rulemaking, and if
members of the public wish to express views on this rulemaking they
must do so in comments on this rulemaking.
---------------------------------------------------------------------------

    \54\ The proposal was subsequently withdrawn with the
publication of the January 8, 2014 proposal.
    \55\ The comments are available in the rulemaking docket. Docket
ID: EPA-HQ-OAR-2011-0660.
    \56\ 79 FR 1352.
---------------------------------------------------------------------------

    Many of those comments emphasized that a standard of performance
that is based on carbon capture and storage (CCS) (or partial CCS) is
not appropriate for modified EGUs. Some commenters suggested that a
well-designed CAA section 111(d) program could obviate the need to set
separate standards of performance for modified sources. Several
commenters disagreed with EPA's assertion that it lacked adequate
information to propose standards for modified sources (at that time),
stating that proposed standards should be based on energy efficiency
measures.
3. Reconstructions
    The EPA's framework regulations, interpreting the definition of
``new source'' in CAA section 111(a)(2), provide that an existing
source, ``upon reconstruction,'' becomes subject to the standard of
performance for new sources.\57\ The regulations define reconstruction
as the replacement of components of an existing facility to such an
extent that (1) the fixed capital cost of the new components exceeds 50
percent of the fixed capital cost that would be required to construct a
comparable entirely new facility, and (2) it is technologically and
economically feasible to meet the applicable standards set forth in
this part.
---------------------------------------------------------------------------

    \57\ 40 CFR 60.15(a).

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

    Thus, a reconstruction occurs if the existing source replaces
components to such an extent that the capital costs of the new
components exceed 50 percent of the capital costs of an entirely new
facility, even if the existing source does not increase its emissions.
In addition, the component replacement constitutes a reconstruction
only if it is technologically and economically feasible for the source
to meet the applicable standards. The purpose of the reconstruction
provision is to avoid creating any regulatory incentive to perpetuate
the operation of a facility, instead of replacing it at the end of its
useful life with a newly constructed affected facility.
    The regulations require the owner or operator of an existing source
that proposes to replace components to an extent that exceeds the 50
percent level to notify the EPA and provide specified information. This
information must include: The name and address of the owner or
operator; the location of the existing facility; a brief description of
the existing facility and the components which are to be replaced; a
description of existing and proposed air pollution control equipment;
an estimate of the fixed capital cost of the replacements and of
constructing a comparable entirely new facility; the estimated life of
the existing facility after the replacements; and, a discussion of any
economic or technical limitations the facility may have in complying
with the applicable standards of performance after the proposed
replacements. The regulations require the EPA to determine, within a
specified time period, whether the proposed replacement constitutes a
reconstruction.\58\ The determination shall be based on: The fixed
capital cost in comparison to the cost to construct a comparable
entirely new facility; the estimated life of the facility after the
replacements compared to the life of a comparable entirely new
facility; the extent to which the components being replaced cause or
contribute to emissions from the facility; and any economic or
technical limitations on compliance with applicable standards of
performance which are inherent in the proposed replacements.
---------------------------------------------------------------------------

    \58\ 40 CFR 60.15(d)-(e).
---------------------------------------------------------------------------

    Historically, few EGUs have undertaken reconstructions. Because of
the relative prices of coal and natural gas, and the relative costs of
reconstructing an existing coal-fired EGU and constructing an entirely
new NGCC unit, the EPA expects that few existing coal-fired EGUs will
undertake projects that will qualify the unit to be a reconstructed
source during the analysis period of this rulemaking (i.e., through
2025). The EPA also does not expect existing NGCC units to undertake
reconstructions during the analysis period (i.e., through 2025) because
most of them are relatively young (over 80 percent of the NGCC fleet
came on-line after 2000).
    While there are specific provisions in the EPA's implementing
regulations at 40 CFR 60.15 on what constitutes a reconstructed source
(as just described), there is not such guidance on when an existing
source replaces components to such a degree that it goes beyond a
reconstruction and becomes essentially a newly constructed source.
Historically there has been little need to distinguish between
reconstructed sources and newly constructed sources as the standards of
performance are typically the same for either. However, the standards
proposed in today's action are different--for reasons we explain
later--and, therefore, there is a need to clearly delineate between a
reconstructed source and a newly constructed source. For example, it is
clear that an entirely new greenfield facility would constitute a newly
constructed source. It is EPA's view that, a new unit that is built on
property contiguous with an existing source--but not in the same
footprint as the existing source--would also constitute a newly
constructed source. And, it is EPA's view that a unit that entirely, or
for all practical purposes, completely replaces an existing sources by
being constructed on the replaced source's existing footprint would
also constitute a newly constructed source. The EPA solicits comment on
the delineation between a reconstructed source, which would be subject
to standards proposed in today's action, and a newly constructed
source, which would be subject to standards proposed in the January
2014 proposal (79 FR 1430), for those situations where significant
equipment is being replaced (enough to exceed the reconstruction
threshold) but the entire unit is not being rebuilt.
    In addition, the EPA requests comment on having an upper capital
cost threshold for reconstruction, such that facilities that exceed
that threshold would be subject to the standard of performance for
newly constructed sources. With respect to this concept, the EPA
requests comment on both: (1) The idea of having an upper threshold and
(2) the appropriate upper threshold. With respect to the appropriate
upper threshold, EPA specifically requests comment on an upper
threshold within the range of 75 to 100 percent of the cost of an
entirely new and comparable facility. Finally, the EPA requests comment
on whether this upper threshold should be coupled with a provision
comparable to 40 CFR 60.15(b)(2) and 60.15(f)(4), such that a facility
that exceeded the upper threshold would not be subject to the new
construction standard if it was technologically and economically
infeasible for that facility to meet the new construction standard.
4. Comments on the April 2012 Proposal for New Sources Related to
Reconstructions
    In the April 13, 2012 proposed Standards of Performance for
Greenhouse Gas Emissions for New Stationary Sources: Electric Utility
Generating Units (77 FR 22392), the EPA did not propose standards of
performance for reconstructed sources; however, it did specifically
request comment on the types of reconstructions that may be expected
and on the appropriate control measures that may be applied. The agency
received a number of comments addressing standards for reconstructed
EGUs.\59\ As noted above, the agency subsequently withdrew that
proposal and is not responding to those comments in this rulemaking, so
that if members of the public wish to express views on this rulemaking
they must do so in comments on this rulemaking.
---------------------------------------------------------------------------

    \59\ The comments are available in the rulemaking docket. Docket
ID: EPA-HQ-OAR-2011-0660.
---------------------------------------------------------------------------

    Many of the comments on the April 13, 2012 proposal supported a
delay in proposing standards for reconstructed sources. Others did not
favor the delay and suggested, instead, that reconstructed sources be
subject to the same standard as newly constructed sources. One
commenter expressed concern that an existing source that elected to
retrofit with CCS technology (perhaps in reliance on enhanced oil
recovery (EOR) markets) might trigger the requirements for a
reconstruction due to the high cost of CCS technology. The commenter
suggested that the EPA exclude the cost of retrofitting CCS technology
in order to eliminate barriers to voluntary use of that technology.
Several commenters expressed concern that a reconstruction could be
essentially a new plant built on a few remaining parts of an old plant.
The commenters expressed concern that such reconstructed sources would
face a standard that is much less stringent than a newly constructed
greenfield source.

III. Proposed Requirements for Modified and Reconstructed Sources

A. Applicability Requirements

    We generally refer to fossil fuel-fired electric generating units
that would be subject to an emission standard in this rulemaking as
``affected'' or ``covered'' sources, units, facilities or simply as
EGUs. These sources meet both the definition of ``affected'' and
``covered'' EGUs subject to an emission standard as provided by this
proposed rule, and the criteria for being considered ``modified'' and
``reconstructed'' sources as defined under the provisions of CAA
section 111 and the EPA's regulations.
    The EPA is proposing generally similar applicability requirements,
for purposes of this rule, that the EPA proposed in the January 2014
proposal.\60\ \61\ This section describes those requirements.
---------------------------------------------------------------------------

    \60\ See 79 FR 1445 and 1446. Note that the statements in the
January 2014 Proposal that ``existing sources undertaking
modifications or reconstructions; or certain projects under
development, including the proposed Wolverine EGU project in Rogers
City, Michigan (and, perhaps, up to two others)'' are not subject to
that rulemaking, 79 FR 1446, are not relevant for purposes of the
present rulemaking concerning modifications and reconstructions.
    \61\ In the January 2014 proposal, the EPA solicited comment on
whether certain applicability requirements were appropriate in light
of the fact that they assumed that the source had an operating
history. In this rulemaking, the affected sources that would be
undertaking modifications or reconstructions do have an operating
history. As a result, to the extent the solicitation of comment in
the January 2014 just described may be read to identify concerns
about those applicability requirements, those concerns do not apply
to this rulemaking.
---------------------------------------------------------------------------

    To be considered an EGU under subpart Da, the boiler or IGCC must
be: (1) Capable of combusting more than 250 MMBtu/h heat input of
fossil fuel,\62\ (2) constructed for the purpose of supplying more than
one-third of its potential net-electric output capacity to any utility
power distribution system for sale \63\ (that is, to the grid), and (3)
constructed for the purpose of supplying more than 25 MW net-electric
output to the grid.\64\ In the January 2014 proposal, we proposed to
revise the third criterion to read ``more than 219,000 MWh,'' as
opposed to ``25 MW,'' net-electric output to the grid. This proposed
change to 219,000 MWh net sales is consistent with the EPA Acid Rain
Program (ARP) definition, and we have concluded that it is functionally
equivalent to the 25 MW net sales language. The 25 MW sales value has
been interpreted to be the continuous sale of 25 MW of electricity on
an annual basis, which is equivalent to 219,000 MWh. In the January
2014 proposal, we proposed to include two additional applicability
criteria specific to applicability with the GHG standards: (1) That a
facility actually sells more than one-third of its potential electric
output and more than 219,000 MWh to the grid on an annual basis for
boilers and IGCC facilities and on a 3-year average for combustion
turbines, and (2) that the GHG standards are not applicable to
facilities that combust 10 percent or less fossil fuel on a 3-year
average. In this proposal, we are not proposing that any of these
additional applicability criteria apply for modified or reconstructed
boilers or IGCC facilities. Therefore, any modified or reconstructed
boiler or IGCC facility that meets the general applicability of subpart
Da would also be subject to the GHG requirements. For stationary
combustion turbines, we are proposing to maintain all of these
criteria, along with the additional criteria specific to stationary
combustion turbines, included in the January 2014 proposal: That only
stationary combustion turbines that combust over 90 percent on a 3-year
rolling average basis are subject to a numerical GHG standard.
---------------------------------------------------------------------------

    \62\ E.g., 40 CFR 60.40Da(a)(1).
    \63\ 40 CFR 60.41Da (definition of (``Electric utility steam-
generating unit'').
    \64\ Id.
---------------------------------------------------------------------------

    We are proposing and soliciting comment on an additional amendment,
not included in the January 2014 proposal, to clarify that net-electric
sales, for applicability purposes, includes electricity supplied to
other facilities that produce electricity to offset auxiliary loads.
Without this amendment, smaller EGUs that are co-located with larger
EGUs could claim that they do not meet the rule applicability criteria
because their generated power is used to offset the parasitic loads of
the larger facility. We are also soliciting comment if the 10 percent
fossil fuel use criteria should be based on 3 consecutive calendar
years or on a 3 year rolling average basis.
    Consistent with the January 2014 proposal, we are proposing several
additional adjustments to the way applicability is currently determined
under subpart Da for purposes of modifications and reconstructions.
First, we are proposing that the definition of ``potential electric
output'' be revised to include ``or the design net electric output
efficiency'' as an alternative to the default one-third efficiency
value (i.e., the proposed definition is ``33 percent or the design net
electric output efficiency times the maximum design heat input capacity
of the steam generating unit, divided by 3,413 Btu/KWh, divided by
1,000 kWh/MWh, and multiplied by 8,760 h/yr (e.g., a 35 percent
efficient steam generating unit with a 100 MW (341 MMBtu/h) fossil-fuel
heat input capacity would have a 310,000 MWh 12 month potential
electrical output capacity)'' (emphasis added)). Next, we are proposing
to add ``of the thermal host facility or facilities'' to the definition
of ``net-electric output'' (i.e., the proposed definition would read
``. . . the gross electric sales to the utility power distribution
system minus purchased power of the thermal host facility or facilities
on a calendar year basis'' (emphasis added).
    Finally, consistent with the January 2014 proposal, to avoid
circumvention of the intent of the emission standards (e.g., by having
auxiliary equipment provide steam to the EGU to increase the output of
the EGU and not including the CO2 emissions in determining
the emission rate) and to provide additional flexibility to the
regulated community through additional compliance options, we are
proposing to amend the definition of a steam generating unit to include
``plus any integrated equipment that provides electricity or useful
thermal output to either the affected facility or auxiliary equipment''
in place of the existing language ``plus any integrated combustion
turbines and fuel cells.'' The proposed definition would read, ``any
furnace, boiler, or other device used for combusting fuel for the
purpose of producing steam (nuclear steam generators are not included)
plus any integrated equipment that provides electricity or useful
thermal output to either the affected facility or auxiliary equipment''
(emphasis added). We are also proposing to add the additional language
to the definition of IGCC in subpart Da (or subpart TTTT) and
stationary combustion turbine in subpart KKKK (or subpart TTTT).
    This action proposes to set standards only for emissions of
CO2. The pollutant we propose to regulate could also be
identified as a broader suite of GHGs. However, we are not proposing to
set standards for any other GHGs, such as methane (CH4) or
nitrous oxide (N2O), because they represent less than 1
percent of total estimated GHG emissions from fossil fuel-fired
electric power generating units. This is consistent with the approach
that was taken in the proposed standards for newly constructed EGUs (79
FR 1430).
    We are also not proposing standards for certain types of sources.
These include modified and reconstructed boilers and IGCC units that
were constructed for the purpose of selling one-third or less of their
potential output and 219,000 MWh or less to the grid. These units are
not covered under

subpart Da for any other pollutants but are rather covered as
industrial boilers under subpart Db or stationary combustion turbines
under subpart KKKK. We are also not proposing standards for two types
of units that are currently covered under subpart KKKK for other
pollutants at this time. The first type of units is stationary
combustion turbines that were constructed for the purpose of selling or
are selling one-third or less of their potential output or 219,000 MWh
or less to the grid. These units only account for a small amount of the
CO2 emissions from fossil fuel-fired EGUs. The second type
of units is modified or reconstructed non-natural gas-fired stationary
combustion turbines.\65\ Under the proposed approach, applicability
with the NSPS for stationary combustion turbines could change on an
annual basis depending on electric sales and for facilities burning
fuels other than natural gas (e.g., burning backup oil).
---------------------------------------------------------------------------

    \65\ Oil-fired stationary combustion turbines, including both
simple and combined cycle units, are not subject to these proposed
standards. These units are typically used only in areas that do not
have reliable access to pipeline natural gas (for example, in non-
continental areas).
---------------------------------------------------------------------------

B. Emission Standards

    In this rulemaking, the EPA is proposing standards of performance
for CO2 emissions from modified and reconstructed EGUs
within two categories and several subcategories of affected fossil
fuel-fired EGUs.
    The proposed standards of performance for the utility boiler and
IGCC category are in the form of net energy output-based CO2
emission limits expressed in units of mass of CO2 per unit
of net energy output (e.g., net electrical output plus 75 percent of
the useful thermal output), specifically, in lb CO2/MWh-net.
This emission limit would apply to affected sources upon the effective
date of the final action. In this document, we sometimes refer to ``net
energy output'' as ``net output.''
    As explained earlier, the proposed standards of performance for
natural gas-fired stationary combustion turbines are in the form of a
gross output-based emission limit expressed in units of mass of
CO2 per unit of gross energy output, specifically, in lb
CO2/MWh-gross. We also solicit comment on whether we should
use a net output-based approach.
    The proposed method to calculate compliance is the same as was
proposed in the January 2014 proposal. Compliance would be calculated
as the sum of the emissions for all operating hours divided by the sum
of the useful energy output over a rolling 12-operating-month period.
In the alternative, as in the January 2014 proposal, we solicit comment
on requiring calculation of compliance on an annual (calendar year)
period. See 79 FR 1477.
    We are proposing additional amendments to the definition of useful
thermal output. The current definition excludes energy used to enhance
the performance of the affected facility from being considered as
useful thermal output. The intent of this restriction is to clarify
that thermal energy that is directly used by the affected facility to
create additional output (e.g., the economizer) is not counted as
useful thermal output. Without this restriction, the energy could be
doubled counted--once as useful thermal output and again as electric
output. This could also be interpreted to exclude thermal energy used
to reduce fuel moisture (e.g., coal drying) as being useful thermal
output because it enhances the performance of the affected facility.
However, coal-drying could be done at a separate offsite facility by an
industrial boiler prior to delivery at the power plant. In that
scenario, the CO2 emissions from the industrial boiler would
not be included when the coal-fired boiler determined compliance with
the proposed standards even though the overall emissions to the
atmosphere could be greater than for an integrated system where the
thermal energy for the drying is supplied by the power plant.
Therefore, we are proposing that thermal energy used for reducing fuel
moisture be counted as useful thermal output. This approach would avoid
potential disincentives for integrating coal drying at power plants. We
are also proposing that default useful thermal output be measured
relative to standard ambient temperature and pressure (25 [deg]C and
14.5 pounds per square inch (psi)) instead of International
Organization for Standardization (ISO) conditions (15 [deg]C and 14.7
psi). In other words, at standard ambient temperature and pressure
(SATP) conditions, the amount of useful thermal energy (commonly called
``enthalpy'') is considered to be zero. The rationale behind providing
a relative measurement of thermal output is so that measurements are
made relative to the energy content in the makeup water. We have
concluded that standard ambient conditions are more representative than
ISO conditions of the energy content in the makeup water. In addition,
we are proposing the combined heat and power (CHP) facilities with high
energy condensate return would measure the energy in the condensate
when determining the useful thermal output. In addition, we are
soliciting comment on providing credit for useful thermal output in the
range of two-thirds to 100 percent.
1. Emission Standards for Modified Utility Boilers and IGCC Units
    The EPA is proposing that affected modified utility boilers and
IGCC units must meet a standard of performance based on the source's
best potential performance, achieved through a combination of best
operating practices and equipment upgrades, as the BSER. The EPA is co-
proposing two alternative standards of performance. In the first
alternative, modified sources would be required to meet a unit-specific
numeric emission standard that is 2 percent lower than the unit's best
demonstrated annual performance during the years from 2002 to the year
the modification occurs.
    Based on analysis of existing data, the EPA has determined that
this standard can be met through a combination of best operating
practices and equipment upgrades. In an analysis to determine
opportunities for heat rate improvement in the U.S. coal-fired utility
power fleet, the EPA found that a total of 6 percent improvement, on
average, can be achieved through two types of measures: Best operating
practices that have the potential to improve heat rate, on average, by
4 percent, and equipment upgrades that have the potential to improve
heat rate, on average, by an additional 2 percent.\66\ The EPA also
proposes that the unit-specific emission rates that would apply to
affected modified utility boilers and IGCC units would be no more
stringent (i.e., no lower) than 1,900 lb CO2/MWh-net for
units with a heat input rating greater than 2,000 MMBtu/h, and no more
stringent (i.e., no lower) than 2,100 lb CO2/MWh-net for
units with a heat input rating of 2,000 MMBtu/h or less. These proposed
constraints on the stringency of unit-specific emission rate standards
are consistent with the emission rate standards proposed in today's
action for reconstructed utility boilers and IGCC units--based on the
EPA's review and analysis of the emissions from the best available
generating technology. The EPA is soliciting comment on whether the
most stringent standard for modified steam generating units should take
into account the current steam cycle of the

facility. For example, should large subcritical steam generating units
have a most stringent standard that is less stringent (i.e., greater
than) 1,900 lb CO2/MWh-net, which is based on the use of a
supercritical steam cycle.
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    \66\ Additional detail can be found in the Technical Support
Document: ``GHG Abatement Measures'' (Chapter 2: Heat Rate
Improvement at Existing Coal-fired EGUs), available in rulemaking
docket ID: EPA-HQ-OAR-2013-0602.
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    As we discuss in the Legal Memorandum \67\, existing sources that
are subject to requirements under an approved CAA section 111(d) plan
would remain subject to those requirements after undertaking a
modification or reconstruction. Therefore, we are co-proposing a second
alternative--that modified sources would be required to meet a unit-
specific numeric emission standard that would be dependent on the
timing of the modification relative to the adoption of a CAA section
111(d) plan that covers the source. Specifically, the EPA proposes that
sources that modify prior to becoming subject to a CAA section 111(d)
plan would be required to meet the same standard described in the first
co-proposed alternative--that is, the modified source would be required
to meet a unit-specific emission limit determined by the affected
source's best demonstrated historical performance (in the years from
2002 to the time of the modification) with an additional 2 percent
emission reduction. Sources that modify after becoming subject to a CAA
section 111(d) plan would be required to meet a unit-specific emission
limit that would be determined by the CAA section 111(b) implementing
authority and would be based on the source's expected performance after
implementation of identified unit-specific energy efficiency
improvement opportunities. We seek comment on all aspects of these co-
proposals, including whether the CAA section 111(b) implementing
authority would determine the unit-specific emission limit, even when
the implementing authority is a state, as opposed to the EPA.
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    \67\ Legal Memorandum available in rulemaking docket ID: EPA-HQ-
OAR-2013-0602.
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    In addition, we solicit comment on alternative ways to determine
the best potential performance at affected modified utility boilers and
IGCC units. Specifically, we are requesting comment on whether the
unit-specific numerical emission standard should be based on the single
best annual emission rate (for the years 2002 to the year when the
modification occurs) or the best three consecutive year average
emission rate. We also solicit comment on whether there are
circumstances where it would not be appropriate to require that the
best historical emission rate be made 2 percent more stringent, or
where some other increment of additional stringency should be required.
    The EPA also seeks comment on including an additional compliance
option for modified utility boilers and IGCC units. Specifically, we
seek comment on including uniform emission standards that are similar
to the standards proposed for reconstructed utility boilers and IGCC
units. Specifically, we seek comment on a standard of 1,900 lb
CO2/MWh-net for modified supercritical sources with a heat
input rating of greater than 2,000 MMBtu/h and a standard of 2,100 lb
CO2/MWh-net for all modified subcritical sources and for
modified supercritical sources with a heat input rating of 2,000 MMBtu/
h or less. The EPA further seeks comment on whether this option should
be available only to sources that modify before becoming subject to an
approved CAA section 111(d) plan or to all modified boilers and IGCC
units, regardless of the timing of the modification.
    The EPA further solicits comment on whether, in the case of
modified utility boilers and IGCC units subject to a CAA section 111(d)
plan, there are any circumstances in which the emission limit should be
calculated by not including the 2 percent additional emission reduction
based on equipment upgrades. This may, for example, be appropriate in
cases where the state plan requires heat rate improvements which
improve on the source's historical performance, or where the source has
recently implemented aggressive measures to improve its operating
efficiency, and as a result, the additional 2 percent improvement may
be unnecessary or not reasonable.
    The EPA also solicits comment on requiring modified utility boilers
and IGCC units subject to a CAA section 111(d) plan to take, as their
unit-specific emission rate, the lower of (1) the emission rate they
are subject to under the CAA section 111(d) plan, or (2) the emission
rate that is 2 percent less than the unit's best demonstrated annual
performance during the years from 2002 to the year the modification
occurs. Similarly, the EPA solicits comment on whether modified utility
boilers and IGCC units subject to a CAA section 111(d) plan could be
evaluated on a case-by-case basis to determine whether, as their CAA
section 111(b) standard, they should continue to be subject to the CAA
section 111(d) requirements to which they are subject. One method of
doing this might be through a delegation of the EPA's CAA section
111(b) authority over that source to the state administering the
applicable CAA section 111(d) plan. Under this option the modified
utility boilers and IGCC units would be considered to be only ``new
sources'' under 111(a)(2).
    The EPA further seeks comment on whether the time period of the
unit's best demonstrated performance should be limited to the years
from 2002 to the time that the unit becomes subject to a CAA section
111(d) plan--rather than to the date that the modification occurs. The
EPA also seeks comment on whether the time period for best historic
performance should be from 2002 to the date of modification--unless the
source can provide evidence of significant heat rate improvements that
have already been implemented, in which case the time period would be
from the year of the first heat rate improvement to the modification.
    The EPA also seeks comment on whether, and under what
circumstances, a modified utility boiler or IGCC unit that modifies
prior to becoming subject to a CAA section 111(d) plan should also be
allowed to meet a emission limit that is determined from the results of
an energy assessment or audit. The EPA also requests comment on whether
this approach should be limited to sources that may have voluntarily,
or for any other reason, implemented energy efficiency measures in the
time period between 2002 and the date of the modification and whether
those sources should be required to provide evidence of those energy
efficiency improvements.
    The EPA also solicits comment on whether we should--as we have
proposed in this action--have different standards of performance for
modified utility boilers and IGCC units depending on whether a CAA
section 111(d) plan has been submitted (or a federal plan promulgated).
On the one hand, a CAA section 111(d) plan may not necessarily impose
obligations on a particular unit. On the other hand, such a plan may
impose significant obligations on a particular source, and if that
source modifies, it may not be as well positioned to implement
additional controls. A state, in developing a CAA section 111(d) plan,
may choose to confer with its sources to determine whether any expect
to modify, and, if any do, to take that into account in developing the
state plan.
2. Emission Standards for Modified Natural Gas-Fired Stationary
Combustion Turbines
    For affected modified natural gas-fired stationary combustion
turbines, this action proposes standards of performance that are based
on efficient NGCC technology as the BSER. The emission limits proposed
for these

sources are 1,000 lb CO2/MWh-gross for facilities with heat
input ratings greater than 850 MMBtu/h, and 1,100 lb CO2/
MWh-gross for facilities with heat input ratings of 850 MMBtu/h or
less.\68\
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    \68\ This subcategorization of stationary combustion turbines is
consistent with the subcategories used in the combustion turbine
(subpart KKKK) criteria pollutant NSPS. The size limit of 850 MMBtu/
h corresponds to approximately 100 MWe.
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    In the companion rulemaking proposing emission guidelines under CAA
section 111(d) for CO2 emissions from existing affected
EGUs, the EPA is proposing that an existing source that becomes subject
to requirements under CAA section 111(d) will continue to be subject to
those requirements even after it undertakes a modification or
reconstruction. This is also discussed in greater detail in the Legal
Memorandum.\69\ Under this interpretation, a modified or reconstructed
source would be subject to both (1) the CAA section 111(d) requirements
that it had previously been subject to and (2) the modified source or
reconstructed source standard under CAA section 111(b) proposed in this
rulemaking.
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    \69\ Legal Memorandum available in rulemaking docket ID: EPA-HQ-
OAR-2013-0602.
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    The EPA also solicits comment on an optional alternative method for
calculating the emission limit that would be applicable to an affected
modified natural gas-fired stationary combustion turbine after that
unit becomes subject to a CAA section 111(d) plan. The EPA specifically
seeks comment on the option of allowing the affected source to meet a
unit-specific emission limit that is determined by the CAA section
111(b) implementing authority from an assessment to identify energy
efficiency improvement opportunities for the affected source.
3. Emission Standard for Reconstructed EGUs
    Reconstructed fossil fuel-fired boilers and IGCC units with a heat
input rating that is greater than 2,000 MMBtu/h would be required to
meet a standard of 1,900 lb CO2/MWh-net. Reconstructed
fossil fuel-fired utility boilers and IGCC units with a heat input
rating that is 2,000 MMBtu/h or less would be required to meet a
standard of 2,100 lb CO2/MWh-net.
    Reconstructed natural gas-fired stationary combustion turbines with
a heat input rating greater than 850 MMBtu/h would be required to meet
a standard of 1,000 lb CO2/MWh-gross. Reconstructed
combustion turbines with a heat input rating of 850 MMBtu/h or less
would be required to meet a standard of 1,100 lb CO2/MWh-
gross.
    While the EPA is proposing these standards of performance, we are
also taking comment on a range of potential emission limits.
Specifically, we solicit comment on the following emission limit
ranges:
    (1) For reconstructed fossil fuel-fired boilers and IGCC units with
a heat input rating that is greater than 2,000 MMBtu/h, a range of
1,700-2,100 lb CO2/MWh-net;
    (2) for reconstructed fossil fuel-fired boilers and IGCC units with
a heat input rating of 2,000 MMBtu/h or less, a range of 1,900-2,300 lb
CO2/MWh-net;
    (3) for reconstructed stationary combustion turbines with a heat
input rating greater than 850 MMBtu/h, a range of 950-1,100 lb
CO2/MWh-gross; and
    (4) for reconstructed stationary combustion turbines with a heat
input rating of 850 MMBtu/h or less, a range of 1,000-1,200 lb
CO2/MWh-gross.
    We also solicit comment on whether: (1) The standards for utility
boilers and IGCC units should be subcategorized by primary fuel type,
(2) the small utility boiler and IGCC unit subcategory should be
limited to utility boilers so that all IGCC units would be in the large
subcategory regardless of size, or if there are sufficient alternate
compliance technologies (e.g., co-firing natural gas) that the small
unit subcategory is unnecessary and should be eliminated so that those
sources would be required to meet the same emission standard as large
utility boilers and IGCC units, and (3) an annual short-term
performance test should be required for stationary combustion turbines
in addition to the 12-operating-month rolling average standard.
Requiring an initial and annual short term compliance test that is
numerically more stringent than the 12-operating-month standard for
modified and reconstructed stationary combustion turbines would insure
that efficient stationary combustion turbines are installed and
properly maintained. The less stringent 12-month rolling average
standard would be set at a level that would account for operating
conditions where the emission rate is higher than design conditions.
4. Net Output
    We are proposing standards for modified and reconstructed units as
net output emission rates. We are also requesting comment on using
either gross output standards or adjusted gross output based standards
in the final rule.\70\
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    \70\ In the January 8, 2014 proposal for new sources, we
proposed standards as gross output emission rates, See 79 FR 1447
and 1448. In the rulemaking for existing sources that we are
proposing concurrently with this rulemaking, we are proposing
emission guidelines that call for state standards as net output
emission rates (but seek comment on gross output-based emission
rates).
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C. Startup, Shutdown and Malfunction Requirements