standards of performance, the statute expressly provides that states
may consider a source's remaining useful life and other factors.
Accordingly, based on both the mandatory and discretionary aspects of
CAA section 111(d), a certain level of process is required of state
plans: Namely, they must demonstrate the application of the BSER in
establishing a standard of performance, and if the state chooses, the
consideration of remaining useful life and other factors in applying a
standard of performance to a designated facility. The EPA anticipates
that states can correspondingly establish standards of performance by
performing two sequential steps, or alternatively, as further described
later in this section, by performing these two steps simultaneously.
The two steps to establish standards of performance are: (1) Reflect
the degree of emission limitation achievable through application of the
BSER, and, if the state chooses, (2) consider the remaining useful life
and other source-specific factors.

    If a state chooses to develop standards of performance through a
sequential (i.e., two step) process, the state would as the first step
apply the BSER to a designated facility's emission performance (e.g.,
the average emission rate from the previous three years or a projected
emission rate under specific conditions such as load) and calculate the
resulting emission rate. In this step, states fulfill the obligation
that standards of performance reflect the degree of emission limitation
achievable by evaluating the applicability of each of the candidate
technologies that comprise the BSER to a specific designated facility
and calculating a corresponding standard of performance based on the
application of all candidate technologies that the state determines are
applicable to the specific designated facility. A state may determine
the most appropriate methodology to calculate a standard of performance
(which for purposes of this regulation will be in the form of an
emission rate, as further described in section III.F.1.c. of this
preamble) by applying the BSER to a designated facility based on the
characteristics of the specific source (e.g., load assumptions and
compliance timelines). For example, a state can start with the average
emission rate of a particular designated facility and adjust it to
reflect the application of each candidate technology and the associated
emission rate reduction.
    As the second step, under this two-step, sequential process
approach, after the state calculates the emission rate that reflects
application of the BSER, the state may adjust that rate by considering
the remaining useful life of the designated facility and other source-
specific factors. It should be noted that the state is not required to
take this second step and consider remaining useful life and other
factors. Rather, the state has the discretion to do so. A discussion on
how a state can consider remaining useful life and other factors, if it
so chooses, can be found in section III.F.1.b. below. States also have
the discretion to apply a specific standard of performance to a group
of existing sources within their jurisdiction, or to all existing
sources within their jurisdiction.
    As just described, the EPA believes it would be reasonable for
states to follow a sequential two-step process to establish standards
of performance. However, a state may develop its own process for
calculating standards of performance outside of this two-step process,
such as a hybridized approach which blends the two sequential steps
into one combined step, so long as the state plan submission
demonstrates application of the BSER in determining each standard of
performance, (i.e., evaluation of applicability of each and all
candidate technologies to each designated facility). For example, if a
state determines that the designated facility is able to implement only
four of the six candidate technologies (due to the remaining useful
life or other factors), the state is required to demonstrate in its
plan submission that it in fact considered the two remaining candidate
technologies in making this determination.
    For the two-step approach, a state could do this by explaining in
its plan submission that it considered the application of each of the
candidate technologies in the first instance, but in the second step
the state determined that the two candidate technologies should not be
part of the methodology to calculate the EGU's standard of performance
because of remaining useful life or other factors. The state should
additionally provide a rationale for why and how it considered
remaining useful life and other factors to discount a particular
candidate technology from the calculation of a standard of performance
(e.g., by explaining that such technology has already been implemented
by a particular source).
    For a hybridized approach, when the state is applying the BSER and
determining the emission reductions associated with the candidate
technologies for a specific designated facility, it may be readily
apparent that two of the candidate technologies are not reasonable to
install because, for example, those technologies have recently been
updated at the unit, independent of this final rule. This hybridized
approach, which blends application of the BSER and associated
stringency with consideration of remaining useful life and other
factors in one step to calculate a standard of performance, may be
appropriate provided that the state plan clearly demonstrates the
standard of performance (expressed as a degree of emission limitation)
that would result from application of the BSER and provides a rationale
for why and how remaining useful life and other factors were considered
to discount a particular candidate technology from the calculation of a
standard of performance. This is one illustrative way in which states
can demonstrate, in establishing a standard of performance, that they
have both fulfilled their obligation to apply the degree of emission
limitation achievable through the BSER to each designated facility and
also properly invoked their discretion in considering remaining useful
life and other factors.
    In this section of the preamble, the EPA addresses discrete aspects
of the standard-setting process. It is intended to provide states
clarity and direction on each of these aspects to assist the states in
developing standards of performance. The EPA is not requiring a
specific method for states to develop standards of performance.
a. Application of the BSER
    As described in other parts of this section, while the EPA's role
is to determine the BSER, CAA section 111(d)(1) squarely places the
responsibility of establishing a standard of performance for an
existing designated facility on the state as part of developing a state
plan. This final rule requires states to evaluate the applicability of
each of the candidate technologies (HRI measures) that the EPA has
determined constitute the BSER in establishing a standard of
performance for each designated facility within their jurisdiction. The
BSER is a list of candidate technologies that are HRI measures, which
states will evaluate and apply to existing sources, establishing a
standard of performance that is appropriately tailored to each existing
source.\226\ In establishing a standard of performance, a state may
consider remaining useful life and other factors as appropriate based
upon the specific characteristics of those units. In general, the EPA
envisions that the states would set standards based on considerations
most appropriate to individual sources or groups of sources (e.g.,
subcategories). These may include consideration of historical emission
rates, effect of potential HRIs (informed by the information in the
EPA's candidate technologies described earlier in section III.E), or
changes in operation of the units, among other factors the state
believes are relevant. As such, states have considerable flexibility in
determining standards of performance for units, as contemplated by the
express statutory text.
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    \226\ Because the candidate technologies that comprise the BSER
can, at least in some cases, be applied in combination at an
individual source, states should evaluate both individual candidate
technologies and combinations of candidate technologies to
appropriately establish standards of performance.
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    States have discretion to apply the same standard of performance to
groups of existing sources within their jurisdiction, as long as they
provide a sufficient explanation for this choice and a demonstration
that this approach will result in standards of performance achievable
at the sources. But states also

have discretion, expressly conferred on them by Congress in CAA section
111(d), to take into account a source's remaining useful life and other
factors when establishing a standard of performance of that source, and
much of the discussion in this final rule relates to the nature of that
discretion and the factors that should influence states' exercise of
it. As the EPA described in the proposal and as commenters have
verified, the fleet of coal-fired EGUs is diverse and each EGU has been
designed and engineered uniquely to fit the need at the time of
construction. Because each coal-fired steam boiler subject to this rule
has been designed, maintained, utilized, and upgraded uniquely, each
designated facility has a unique set of circumstances with a set of
source-specific factors governing its use. The outgrowth of the
abundance of source-specific factors has led the EPA to determine that
a tailored standard of performance (developed by states) that considers
those factors can achieve emission reductions in the fleet without
making broad assumptions about the fleet that may not be applicable to
a particular unit. The source-specific circumstances at each EGU causes
considerable variation in average emission rates across the fleet. If a
single standard of performance (i.e., a single degree of emission
limitation resulting from a particular technology or fixed set of
technologies) were to be applied to the entire fleet, the result could
be either that a large portion of the fleet would not be required to
achieve any meaningful emission reductions, or a large portion of the
fleet would face overly stringent requirements. The goal of these
emission guidelines is not to burden or shut down coal-fired EGUs--
which could compromise the stability of the power sector and thus
energy reliability to consumers, concerns which the EPA expresses,
informed by, among other factors, Congress's direction to take into
account energy requirements in determining BSER--as coal-fired EGUs
still have considerable viability as part of the power sector.
    When states apply the BSER's candidate technologies to a designated
facility, the application of each technology and the associated degree
of emission limitation achievable by such application will entail
source-specific determinations. For this reason, in Table 1, the EPA
provided the degree of emission limitation achievable through
application of the BSER in the form of ranges, which capture the
reductions and costs that the EPA expects to approximate the outcome of
the application. The degree of emission limitation achievable through
application of the BSER (i.e., the ranges of improvements in Table 1)
should be used by the states in establishing a standard of performance;
however, the standard of performance calculated for a specific
designated facility may ultimately reflect a degree of emission
limitation achievable through application of the BSER outside of the
EPA's ranges because of consideration of source-specific factors. If a
state uses the sequential two-step process to establish a standard of
performance, in the first step the EPA expects that the state will use
the range of improvements for each candidate technology (and
combinations thereof where technically feasible) to develop a standard
of performance for a designated facility (the range of costs can be
used in the second step which considers the remaining useful life and
other factors as discussed in section III.F.1.b.). The ranges of HRI in
section III.E are typical of an EGU operating under normal conditions.
While a source with typical operating conditions (assuming no
consideration of remaining useful life or other factors) will have a
standard of performance with an expected improvement in performance
within the ranges in Table 1, there may be source-specific conditions
that cause the actual HRI of the applied candidate technology to fall
outside the range. For example, if a designated facility had installed
a new boiler feed pump just prior to a state's evaluation of the
designated facility, the application of that candidate technology would
yield negligible improvement in the heat rate and thus the value would
fall outside the ranges provided by the EPA (i.e., because the
technology has already been applied and the baseline emission rate
reflects that). As with the application of all the candidate
technologies, the state plan submission must identify: (1) The value of
HRI (i.e., the degree of emission limitation achievable through
application of the BSER) for the standard of performance established
for each designated facility; (2) the calculation/methodology used to
derive such value; and (3) any relevant explanation of the calculation
that can help the EPA to assess the plan. In explaining the value of
HRI that has been calculated, if the value of the HRI falls within the
range identified by the EPA for a particular candidate technology, a
state may note as such as part of its explanation. If a resulting value
of HRI falls outside the range provided by the EPA, the state should in
its state plan submission explain why this is the case based on
application of the candidate technology to a particular source. In any
instance, the state plan submission must identify the value of HRI that
has been calculated and the calculation used to derive the value of
HRI, and explain both. The states will thus use the information
provided by the EPA, but will be expected to conduct source-specific
evaluations of HRI potential, technical feasibility, and applicability
for each of the BSER candidate technologies. After a state applies the
candidate technologies to a designated facility (i.e., step one), it
can consider the remaining useful life and other factors associated
with the source and determine whether it is cost-reasonable to actually
implement that technology at the source (i.e., step two). This is
described in detail below in section III.F.1.b.
    The approach to require states to tailor standards of performance
for designated facilities is both consistent with the framework of
cooperative-federalism envisioned under CAA section 111(d), and the new
implementing regulations for CAA section 111(d).\227\ The new
implementing regulations at40 CFR 60.21a(e) and 60.22a(b)(2) and (4)
require emission guidelines to reflect, and contain information on, the
degree of emission limitation achievable through the application of the
BSER. By providing the BSER and the associated level of stringency in
the form of HRIs and associated range of heat rate improvements, the
EPA is thus meeting applicable statutory and regulatory requirements
and is giving states the necessary information and direction to
establish standards of performance for existing sources that reflect
the degree of emission limitation achievable through application of the
BSER.\228\
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    \227\ See 83 FR 44746.
    \228\ By providing the BSER and level of stringency associated
with the BSER, ACE meets the applicable requirements of the new
implementing regulations at 40 CFR part 60, subpart Ba, regarding
the contents of an emission guideline. An ``emission guideline'' is
defined under 40 CFR 60.21a(e) as a ``final guideline document''
which must contain certain items enumerated under 40 CFR 60.22a. The
preamble, regulatory text, and record for ACE comprise the ``final
guideline document'' referenced as the emission guideline.
---------------------------------------------------------------------------

(1) Variable Emission Performance
    The Agency received comments that there is considerable variation
in emissions between designated facilities within the industry, as well
as considerable variation of emissions for individual units based on
the operating conditions. Commenters expressed concern that the degree
of emission limitation achievable through the application of the BSER
is similar to the

magnitude in the variation in the emission rate at a specific EGU due
to different operating conditions (e.g., the operating load of the
EGU). Commenters contend that because of this similarity, a designated
facility could fall out of compliance with its standard of performance
if its operating conditions change despite the source's having
installed/applied all of the candidate technologies.
    Commenters further stated that oftentimes the operation of a
designated facility is not in the control of the owner/operator when it
goes to load and cycling, and because of that the emission rate varies
based on circumstances that are outside of the designated facility's
control. The commenters further state that they should not be held
accountable to standards that are not reflective of this lack of
control and variability. The EPA acknowledges commenters' concerns
about variability among designated facilities and variability of
emission performance at an individual designated facility, and believes
the flexibilities provided for states in establishing standards of
performance, as described in this section, are sufficient to
accommodate these variables. In establishing standards of performance,
states can consider the two distinct types of variable emission
performance \229\ (i.e., variation between different facilities and
variation of emissions at one facility at different times) and states
can tailor standards of performance accordingly.
---------------------------------------------------------------------------

    \229\ In this context, variable emission performance is a result
of underlying variability in heat rate, as emissions of
CO2 from EGUs are proportional to the unit's heat rate
performance.
---------------------------------------------------------------------------

    First, standards of performance should acknowledge and reflect
variability across EGUs due to unit-specific characteristics and
factors, including, but not limited to, boiler-type, size, etc. By
allowing states to establish standards of performance for individual
designated facilities (in accordance with the statute's text and
structure which provides that states in their plans shall establish
standards of performance for existing sources), the EPA expects that
standards of performance will inherently account for unit-specific
characteristics.\230\ By applying the BSER to individual designated
facilities within the state, standards of performance would account for
unit-specific characteristics such as unit design, historical operation
and maintenance. As further described in section III.F.1.b, states may
also account for anticipated future design and/or operating plans--such
as plans to operate as baseload or load following electricity
generators.
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    \230\ Note that for administrative efficiency in developing a
state plan, a state may be able to calculate a uniform standard of
performance that reflects application of the BSER for a group of
designated facilities rather than performing the same calculation
multiple times for multiple individual sources if the group of
sources has similar characteristics such that application of BSER
would be consistent between the EGUs. This final rule does not
necessarily require a state to provide a discrete calculation and
separate standard of performance for each designated facility within
a group of similar designated facilities, but if a state chooses to
calculate a uniform rate for such a group of sources the plan
submission should explain how the uniform rate reflects application
of the BSER for all of the units in the group (e.g., because of
similar operating characteristics). Additionally, even if the same
emission rate is calculated for designated facilities at different
facilities that are included in such a group, such standard is
applicable to each individual designated facility, and each source
would be required to meet that standard by implementing ACE
requirements separately, consistent with the state plan requirements
described in section III.F.2 of this rule.
---------------------------------------------------------------------------

    Second, standards of performance should reflect variability in
emission performance at an individual designated facility due to
changes in operating conditions. Specifically, the agency believes it
would be appropriate for states to identify key factors that influence
unit-level emission performance (e.g., load, maintenance schedules, and
weather) and to establish emission standards that vary in accordance
with those factors. In other words, states could establish standards of
performance for an individual EGU that vary (i.e., differ) as factors
underlying emission performance vary. For example, states could
identify load segments (ranges of EGU load operation) that reflect
consistent emission performance within the segment and varying emission
performance between segments. States could then establish standards of
performance for an EGU that differ by load segment.
    Another possible option to account for variable emissions is to set
standards of performance based on a standard set of conditions. A state
could establish a baseline of performance of a unit at specific load
and operational conditions and then set a standard against those
conditions via the application of the BSER. Compliance for the unit
could be demonstrated annually (or by another increment of time if
appropriate based on the level of stringency of the standard of
performance set for the unit) at those same conditions. In the interim,
between the demonstration of compliance under standardized conditions,
a state could allow for the maintenance and demonstration of fully
operational candidate technologies to be a method to demonstrate
compliance as the standard of performance must apply at all times.
    The Agency believes that these approaches to providing flexibility
(and possible others not described here) in establishing standards of
performance are reasonable and appropriate by accounting for innate
variable emission performance across EGUs and at specific EGUs while
also limiting this flexibility to instances in which underlying
variable factors are evaluated and linked to variable emission
performance.
(2) Compliance Timelines
    Additionally, the new implementing regulations require that
emission guidelines identify information such as a timeline for
compliance with standards of performance that reflect the application
of the BSER.\231\ However, given the source-specific nature of these
emission guidelines and the reasonably anticipated variation between
standards established for sources within a state, the EPA believes it
more appropriate that a state establish tailored compliance deadlines
for its sources based on the standard ultimately determined for each
source. Accordingly, the EPA is superseding this aspect of 40 CFR
60.22a for purposes of ACE, as allowed under the applicability
provision in the new implementing regulations under 60.20a and allowing
for states to include an appropriate compliance deadline for each
designated facility based on its standard of performance determined as
part of the state plan process. It is important that states consider
compliance timelines that are consistent with the application of the
BSER to ensure that the compliance timeline does not undermine the BSER
determination made by the EPA. For most states, the EPA anticipates
initial compliance to be achieved by sources within twenty-four months
of the state plan submittal. If a state chooses to include a compliance
schedule (because of source-specific factors) for a source that extends
more than twenty-four months from the submittal of the state plan, the
plan must also include legally enforceable increments of progress for
that source \232\). The EPA does not envision that most states will be
using increments of progress leading up to initial compliance. However,
as with the consideration of other source-specific factors, where a
state does choose to provide for a source to comply on a longer
timeframe than twenty-four months and to employ legally enforceable
increments of progress

along the way, the state should include in its state plan submission to
the EPA an adequate justification for why that approach is warranted.
The level of stringency can be compromised if a compliance schedule
does not adequately reflect the BSER determination.
---------------------------------------------------------------------------

    \231\ See 40 CFR 60.22a.
    \232\ See 40 CFR 60.24a(d).
---------------------------------------------------------------------------

    Several commenters requested clarity on when standards of
performance must become effective (i.e., when must designated
facilities comply with their standards of performance) once a state
plan has been submitted but not yet approved by the EPA. The contents
of a state plan submission, such as standards of performance and
related requirements, are not effective or enforceable under federal
law until they are approved by the EPA. However, state plan
requirements must be fully adopted as a matter of state law, or issued
as a permit, order, or consent agreement, before the plan is submitted
to the EPA (and therefore could be enforceable as a matter of state
law, depending on when the state has chosen to make such requirements
effective).\233\ The EPA anticipates that in determining an appropriate
compliance schedule (and more specifically the initial compliance) for
designated facilities, a state will consider the anticipated timing of
review of the state's plan by the EPA and what sources may need to do
in the interim in order to assure ultimate compliance with their
standards of performance while EPA is in the process of reviewing the
plan.
---------------------------------------------------------------------------

    \233\ 40 CFR 60.23a, 60.27a(g)(2)(iii).
---------------------------------------------------------------------------

    States also have discretion in establishing a compliance schedule
for designated facilities, but the Agency urges states to use caution
as to not undermine the BSER by the determined schedules. Most programs
under CAA section 111 do not have compliance timelines greater than a
year and the Agency believes that is a good indicator for states to
take into consideration determining compliances schedules. Much of how
a compliance schedule is structured can be based on how the standard of
performance is structured. In section III.F.1.a.(1) there is a
discussion about how a state might account for variable emissions. One
of the options is to set a standard of performance under standardized
conditions to take into account many of the factors that can lead to
variable emissions from a designated facility. The standardized
conditions (e.g., load, ambient temperature, humidity etc.) that apply
to the standard of performance must also be met when there is a
compliance demonstration. Because these standardized conditions are not
maintained throughout a compliance period, the segmented nature of
demonstrating compliance could mirror the compliance schedule. For
example, a designated facility could have a monthly demonstration under
standardized conditions that mirrors a monthly compliance schedule.
This is one example to illustrate how a standard of performance can
align with a compliance schedule.
    Another consideration for states in establishing standards of
performance is the emission averaging time (e.g., the amount of time
that a designated facility may average its emission rate). As described
above in section III.F.1.a.(1), EGUs may have considerably variable
emissions due to numerous operating factors. A method to account for
seasonal variability is to average a designated facility's emission
rate over the course of multiple seasons.
b. Consideration of Remaining Useful Life and Other Factors
    CAA section 111(d) requires, in part, that the EPA ``shall permit
the State in applying a standard of performance to any particular
source under a plan submitted under [CAA section 111(d)] to take into
consideration, among other factors, the remaining useful life of the
existing source to which such standard applies.'' Consistent with the
requirements of this provision, the EPA is permitting states to
consider remaining useful life and other factors in establishing a
standard of performance for a particular source in this final rule.
States may do this in several ways. If a state is following the
sequential two-step process, the state would first apply all of the
candidate technologies to a designated facility to derive a standard of
performance with consideration to the EGU's historical or projected
performance, as previously described in section III.F.1.a. In the
second step of this process, the state would consider the ``remaining
useful life and other factors'' for the EGU and develop a standard of
performance accordingly. It should be noted that the consideration of
remaining useful life and other factors is a discretionary step for
states. If a state were to establish a standard of performance for a
designated facility based solely on the application of the BSER, it
would be reasonable to do so and not precluded under the statute.
    The CAA explicitly provided under CAA section 111(d)(1) that states
could, under appropriate circumstances, establish standards of
performance that are less stringent than the standard that would result
from a direct application of the BSER identified by the EPA. CAA
section 111(d)(1) achieves this goal by authorizing a state, in
applying a standard of performance, to take into account a source's
remaining useful life and other source-specific factors. As such, the
EPA is promulgating, as part of the new implementing regulations at 40
CFR 60.20a-29a, a provision to permit states to take into account
remaining useful life, among other factors, in establishing a standard
of performance for a particular designated facility, consistent with
CAA section 111(d)(1)(B). The new implementing regulations (also
consistent with the previous implementing regulations) give meaning to
CAA section 111(d)(1)(B)'s reference to ``other factors'' by
identifying the following as a nonexclusive list of several factors
states may consider in establishing a standard of performances:
     Unreasonable cost of control resulting from plant age,
location, or basic process design;
     Physical impossibility of installing necessary control
equipment; or
     Other factors specific to the facility (or class of
facilities) that make application of a less stringent standard or final
compliance time significantly more reasonable.
    Given that there are unique attributes and aspects of each
designated facility, there are important factors that influence
decisions to invest in technologies to meet a potential standard of
performance. These include factors not enumerated in the list provided
above, including timing considerations like expected life of the
source, payback period for investments, the timing of regulatory
requirements, and other source-specific criteria. The state may find
that there are space or other physical barriers to implementing certain
HRIs at specific units. Alternatively, the state may find that some HRI
options are either not applicable or have already been implemented at
certain units. The EPA understands that many of these ``other factors''
that can affect the application of the BSER candidate technologies
distill down to a consideration of cost. Applying a specific candidate
technology at a designated facility can be a unit-by-unit determination
that weighs the value of both the cost of installation and the
CO2 reductions.
    The EPA received comment on the ACE proposal that the EPA should
provide more information and guidance for what could be considered
``other factors'' in addition to the considerations of the remaining
useful life. In addition, commenters also requested more information on
the remaining useful life and other source-

specific factors that could be considered in developing a standard of
performance. The EPA acknowledges that there are a host of things that
could be considered ``other factors'' by states that can be used to
develop a standard of performance. While the EPA cannot identify every
set of circumstances and factors that a state could consider, the EPA
agrees with the commenters that it would be helpful for states if the
EPA were to provide a non-exhaustive set of qualitative examples that
states could consider in developing standards of performance as
described below. The EPA will evaluate each standard of performance and
the factors that were considered in the development of the standard of
performance on a case by case basis. The state should include all of
the factors and how the factors were applied for each standard of
performance in the state plan. The EPA received many notable comments
that states would like more direction and assistance in developing
standards of performance. The examples are intended to help provide
this assistance, but the EPA also understands that, because there are
so many considerations for each source, states might have further
questions while developing plans. States are encouraged to reach out to
the Agency during the development of plans for further assistance.
    As noted above, the consideration of the remaining useful life and
other factors most often is a reflection of cost. When the EPA
determines the BSER for a source category, the EPA typically considers
factors such as cost relative to assumptions about a typical unit.
Because the costs evaluated for the BSER determination are relative to
a typical unit, the source-specific conditions of any particular
existing designated facility that a state will evaluate in developing
its plan under CAA section 111(d) are not inherently considered. A
state's consideration of the remaining useful life and other factors
will reflect the costs associated with the source-specific conditions.
As part of the BSER determination, the EPA has provided a range of
costs associated with each candidate technology (see Table 1). These
costs are provided to serve as an indicator for states to determine
whether it is cost-reasonable for the candidate technology to be
installed. These cost ranges are certainly not intended to be
presumptive (i.e., the ranges are not an accurate representation for
each designated facility and should not be used without a justified
analysis by the state), but rather are provided as guide-posts to
states. If a state considers the remaining useful life and/or other
factors in determining a standard of performance, the state is required
to describe, justify, and quantify how the considerations were made in
its plan. Because these considerations are discretionary and source-
specific, the burden is on the state in its plan to demonstrate and
justify how they were taken into account.
    A state might consider the remaining useful life of a designated
facility with a retirement date in the near future by a number of ways
in the standard setting process. One way that a state may take into
account this circumstance is in applying the BSER (either through the
sequential, two-step process or through some other method that reflects
application of the BSER), establish a standard that ultimately only
applies the less costly BSER technologies in the development of the
standard of performance that the state establishes for the particular
designated facility. The shorter life of the designated facility will
generally increase the cost of control because the time to amortize
capital costs is less. Another outcome of a state's evaluation of a
designated facility's remaining useful life may lead to the state
setting a ``business as usual'' standard. This could be an appropriate
outcome where the remaining useful life of the designated facility is
so short that imposing any costs on the EGU is unreasonable. Because a
state plan must establish standards of performance for ``any''
designated facility under CAA section 111(d), the standard applied to
this designated facility would reflect ``business as usual'' and
require the unit to perform at its current level of efficiency during
the remainder of its useful life. Under all of these examples and under
any other circumstance in which a state considers remaining useful life
or other factors in establishing a standard of performance, the state
must describe in its state plan submission such consideration and
ensure it has established a standard for every designated facility
within the state, even one with an anticipated near-term retirement
date.
    Another consideration for a state in setting standards of
performance with consideration to the remaining useful life and other
factors is how the different candidate technologies interact with one
another and how they interact with the current system at a designated
facility. Commenters have expressed, and the EPA agrees, that the
application of efficiency upgrades at EGUs are not necessarily
additive. Installing HRI technologies in parallel with one another may
mitigate the effects of one or more of the technologies. While states
must apply the BSER and the degree of emission limitation achievable
through such application in calculating a standard of performance,
states may also consider the mitigating effects on the emission
reductions that would result from the installation of a particular
candidate technology, and may as a result of this consideration
determine that installing that particular candidate technology at a
particular source is not reasonable. This consideration is authorized
as one of the ``other factors'' that states may consider in
establishing a standard of performance under CAA section 111(d)(1) and
the new implementing regulations under 40 CFR 60.24a(e).
    A prime example of an ``other factor'' is ruling out the
reapplication of a candidate technology. The EPA anticipates this to be
a part of many state plans. In this scenario, a designated facility
recently applied one of the candidate technologies prior to the time
ACE becomes applicable. To require that designated facility to update
that candidate technology again, as a result of ACE, would not be
reasonable because the costs will be significant with marginal, if any,
heat rate improvement.
    As described in section III.F.1.c., states are obligated to set
rate-based standards of performance. These will generally be in the
form of the mass of carbon dioxide emitted per unit of energy (for
example pounds of CO2 per megawatt-hour or lb/MWh). The
emission rate can be expressed as either a net output-based standard or
as a gross output-based standard, and states have the discretion to set
standards of performance in either form. The difference between net and
gross generation is the electricity used at a plant to operate
auxiliary equipment such as fans, pumps, motors, and pollution control
devices. The gross generation is the total energy produced, while the
net generation is the total energy produced minus the energy needed to
operate the auxiliary equipment.
    Most of the candidate technologies, when applied, affect the gross
generation efficiency. However, some candidate technologies, namely
improved or new variable frequency drives and improved or new boiler
feed pumps, improve the net generation by reducing the auxiliary power
requirement. Because improvements in the efficiency of these devices
represent opportunities to reduce carbon intensity at existing affected
EGUs that would not be captured in measurements of emissions per gross
MWh, states may

want to consider standards expressed in terms of net generation. If a
state chooses to set standards in the form of gross energy output, it
will be up to the state to determine and demonstrate how to account for
emission reductions that are achieved through measures that only affect
the net energy output.
    One of the more significant changes between the ACE proposal and
this action is that the EPA is not finalizing the NSR reforms that it
proposed in the same document that it proposed ACE. While the EPA
intends to take final action on the NSR reform at a later time in a
separate action, the consequences of that action are no longer
considered in parallel with ACE. Two of the candidate technologies,
blade path upgrades and a redesigned/replaced economizer, were proposed
as part of the BSER considering that NSR would not be a barrier for
installation. Under ACE as finalized without parallel NSR reforms, the
EPA anticipates that states may take into account costs associated with
NSR as a source-specific factor in considering whether these two
technologies are reasonable. While the EPA believes that states are
more likely to determine that blade path upgrades and redesigned/
replaced economizers are not as reasonable as anticipated at proposal
when these were proposed as elements of BSER alongside proposed NSR
reforms, as discussed above, the EPA is still finalizing a
determination that these candidate technologies are elements of the
BSER because it still expects these technologies to be generally
applicable across the fleet of existing EGUs, and because the costs of
the technologies themselves are generally economical and reasonable. In
any case, under ACE as finalized, states are required to evaluate the
applicability of all candidate technologies (i.e., the BSER) to a
particular existing source when establishing a standard of performance
for that source.
c. Forms of Standards of Performance
    While the EPA is allowing broad flexibility for states in
establishing standards of performance for designated facilities, the
EPA is finalizing a requirement that all standards of performance be in
the form of an allowable emission rate (i.e., rate-based standard in,
for example, lb CO2/MWh-gross). As described in the proposal
an allowable emission rate is the form that corresponds to the EPA's
BSER determination for these emission guidelines. When HRIs are made at
an EGU, by definition, the CO2 emission rate will decrease
as described above in section III.E. There is a natural correlation
between the BSER and an allowable emission rate as the standard of
performance in this action. Also, by the Agency prescribing that only a
singular form of standard (i.e., an allowable emission rate) is
acceptable, it will promote continuity among states and power
companies, prevent ambiguity, and promote simplicity and ease of
administration and avoid undue burden on the states and regulated
parties.
    The EPA received considerable comment that it should allow mass-
based standards of performance. While the EPA understands the appeal of
a mass-based standard for some stakeholders, this form of standard is
not compatible with the EPA's BSER determination. In fact, the EPA
believes that a mass-based standard would undermine the EPA's BSER. If
designated facilities were to have mass-based standards, it is likely
that many would meet their compliance obligation by reduced
utilization. A standard of performance that incentivizes reduced
utilization and possibly retirements does not reflect application of
the BSER. See section II.B above for a discussion of reduced
utilization and CAA section 111.
    Additionally, given that the EPA has the obligation under CAA
section 111(d)(2) to determine whether state plans are
``satisfactory,'' certain programmatic bounds are appropriate to
facilitate the state's submission of, and EPA's review of, the
approvability of state plans. Having a uniform type of standard of
performance will help streamline the states' development of their
plans, as well as the EPA's review of those plans as there will be
fewer variables to consider in the development of each standard of
performance. While the Agency has experience implementing mass-based
programs, the uncertainty associated with projecting a level of
generation for designated facilities is unnecessary when there is a
more compatible format, i.e., a rate-based standard.
    The EPA also notes that it is not establishing a preference or
requirement for whether a rate-based standard of performance be based
in gross or net heat rate. The EPA acknowledges that there are
ramifications of applying the BSER to establish a standard of
performance with the consideration of type of heat rate used. This may
be particularly important when considering the effects of part load
operations (i.e., net heat rate would include inefficiencies of the air
quality control system at a part load whereas gross heat rate would
not). This will also be important in recognizing the improved
efficiency obtained from upgrades to equipment that reduce the
auxiliary power demand. The consideration of this factor is left to the
discretion of the state.
2. Compliance Mechanisms
    Just as states have broad flexibility and discretion in setting
standards of performance for designated facilities, sources have
flexibility in how they comply with those standards. To the extent that
a state develops a standard of performance based on the application of
the BSER for a designated facility within its jurisdiction, sources
should be free to meet that standard of performance using either BSER
technologies or certain non-BSER technologies or strategies. Thus, a
designated facility may have broad discretion in meeting its standard
of performance within the requirements of a state's plan. For example,
there are technologies, methods, and/or fuels that can be adopted at
the designated facility to allow the source to comply with its standard
of performance that were not determined to be the BSER, but which may
be applicable and prudent for specific units to use to meet their
compliance obligations. Examples of non-BSER technologies and fuels
include HRI technologies that were not included as candidate
technologies, CCS, and natural gas co-firing. In keeping with past
programs that regulated designated facilities using a standard of
performance, the EPA takes no position regarding whether there may be
other methods or approaches to meeting such a standard, since there are
likely various approaches to meeting the standard of performance that
the EPA is either unable to include as part of the BSER, or is unable
to predict. The EPA is, however, excluding some measures from use as
compliance measures: averaging and trading and bio-mass cofiring. These
measures do not meet the criteria for compliance measures. Those
criteria, which are designed to assure that compliance measures
actually reduce the source's emission rate, are two-fold: (1) The
compliance measures must be capable of being applied to and at the
source, and (2) they must be measurable at the source using data,
emissions monitoring equipment or other methods to demonstrate
compliance, such that they can be easily monitored, reported, and
verified at a unit.
    With respect to the first criterion, the EPA believes that both
legal and practical concerns weigh against the inclusion of measures
that cannot qualify as a ``system of emission reduction.'' Allowing
those measures would be inconsistent with the EPA's

interpretation of the BSER as limited to measures that apply at and to
an individual source and reduce emissions from that source. Because
state plans must establish standards of performance--which by
definition \234\ ``reflect[ ] . . . the application of the [BSER]''--
implementation and enforcement of such standards should correspond with
the approach used to set the standard in the first place. Applying an
implementation approach that differs from standard-setting would result
in asymmetrical regulation. Specifically, a state's implementation
measures would result in a more or less stringent standard implemented
at an EGU than could otherwise be derived from application of the BSER.
---------------------------------------------------------------------------

    \234\ See CAA section 111(a)(1)
---------------------------------------------------------------------------

    There are certainly methods that affected EGUs could use to meet
compliance obligations that are not the BSER, but these methods still
fit the two criteria: They can be applied to and at the source and can
be measured at the source using data, emissions monitoring equipment or
other methods to demonstrate compliance, such that they can be
monitored, reported, and verified at a unit. Such examples include CCS
and natural gas cofiring.
    Commenters also requested that reduced utilization be an available
compliance mechanism. While a designated facility reducing its
utilization would certainly reduce its mass of CO2
emissions, it would likely not lead to an improved emission rate. As
noted above in section III.F.1., a state can certainly take into
account a designated facility's projected decreased utilization in
setting a standard of performance, but it cannot make it the means of
meeting compliance obligations because the degree of emission
limitation achievable through the application of the BSER must still be
reflected in setting the standard of performance. See section II.B
above for a discussion of reduced utilization under CAA section
111.\235\
---------------------------------------------------------------------------

    \235\ For a discussion of reduced utilization in other CAA
contexts, please see ACE RTC Chapter 1, response to comment 76.
---------------------------------------------------------------------------

a. Averaging and Trading
    This section discusses the question of whether averaging and
trading are permissible means for sources to comply with ACE. For a
discussion of averaging EGU-emissions over a compliance period, see
section III.F.1.a.(2). In the proposal, the EPA solicited comment on
whether CAA section 111(d) authorizes states to include averaging or
trading between existing sources in the plans they submit to meet the
requirements of final emission guidelines.\236\ Specifically, the EPA:
(1) Proposed to allow states to incorporate, as part of their plan,
emissions averaging among EGUs across a single plant; and (2) solicited
comment on whether CAA section 111(d) should be read not to authorize
states to include trading and averaging between sources.\237\
---------------------------------------------------------------------------

    \236\ See 83 FR 44767-768.
    \237\ Id.
---------------------------------------------------------------------------

    The EPA received numerous comments on the topic of averaging and
trading for compliance with ACE. With respect to averaging across
designated facilities that are located at the same plant--including,
but not limited to, EGUs that are served by a common stack--some
commenters disapproved of this flexibility while others supported the
ability to implement ACE via averaging in state plans. On the topic of
averaging and trading between designated facilities located at
different plants, the Agency received mixed support and opposition.
Some commenters suggested that the EPA's proposed prohibition on
averaging and trading between designated facilities at different plants
was necessary given the Agency's construction of the BSER as limited to
systems that could be applied to and at the ``source'' itself. Other
commenters suggested that averaging and trading for compliance with ACE
is not precluded under CAA section 111(d). Commenters also suggested
that the statutory cross-reference under CAA section 111(d)(1) to CAA
section 110 suggests that trading could be used for implementation
under ACE. Several commenters provided examples of prior CAA section
111(d) regulations in which the agency allowed trading for
implementation (e.g., CAMR).
    In this final action, the EPA determines that: Neither (1)
averaging across designated facilities located at a single plant; nor
(2) averaging or trading between designated facilities located at
different plants are permissible measures for a state to employ in
establishing standards of performance for existing sources or for
sources to employ to meet those standards. CAA section 111(d)
authorizes states to establish standards of performance for ``any
existing source,'' which the CAA defines as ``any stationary source
other than a new source.'' \238\ ``Stationary source,'' in turn, means
``any building, structure, facility, or installation which emits or may
emit any air pollutant.'' \239\ In the ACE proposal, the EPA explained
that an EGU ``subject to regulation upon finalization of ACE is any
fossil fuel-fired electric utility steam generating unit (i.e., utility
boilers) that is not an integrated gasification combined cycle (IGCC)
unit (i.e., utility boilers, but not IGCC units) that was in operation
or had commenced construction as of [January 8, 2014],'' and ``serves a
generator capable of selling greater than 25 MW to a utility power
distribution system and has a base load rating greater than 260 GJ/h
(250 MMBtu/h) heat input of fossil fuel (either alone or in combination
with any other fuel).'' \240\ The proposal then identified HRI measures
as the BSER for such units.\241\ This action finalizes the Agency's
determination that HRI measures are the BSER for designated facilities.
See sections III.C & III.E.
---------------------------------------------------------------------------

    \238\ 42 U.S.C. 7411(a)(6).
    \239\ Id. at section 7411(a)(3).
    \240\ 83 FR 44754.
    \241\ Id. at 44755.
---------------------------------------------------------------------------

    Although the D.C. Circuit has recognized that the EPA may have
statutory authority under CAA section 111 to allow plant-wide emissions
averaging,\242\ the Agency's determination that individual EGUs are
subject to regulation under ACE precludes the Agency from attempting to
change the basic unit from an EGU to a combination of EGUs for purposes
of ACE implementation.\243\
---------------------------------------------------------------------------

    \242\ See U.S. Sugar v. EPA, 830 F.3d 579, 627 n.18 (D.C. Cir.
2016) (pointing to the definition of ``stationary source'').
    \243\ See, e.g., ASARCO v. EPA, 578 F.2d 319, 327 (D.C. Cir.
1978).
---------------------------------------------------------------------------

    In ASARCO, the EPA promulgated regulations re-defining ``stationary
source'' as ``any . . . combination of . . . facilities.'' \244\ By
treating a ``combination of facilities'' as a single source, the EPA
intended to adopt a ``bubble concept,'' which would allow a facility to
``avoid complying with the applicable NSPS so long as emission
decreases from other facilities within the same source cancel out the
increases from the affected facility.'' \245\ The Court concluded,
however, that the Agency ``has no authority to rewrite the statute in
this fashion.'' \246\ In a subsequent case, the D.C. Circuit recognized
that the EPA has ``broad discretion to define the statutory terms for
`source,' [i.e., building, structure, facility or installation], so
long as guided by a reasonable application of the statute.'' \247\
---------------------------------------------------------------------------

    \244\ Id. at 326 (emphasis added).
    \245\ Id.
    \246\ Id. at 327.
    \247\ Alabama Power Co. v. Costle, 636 F.2d 323, 396 (D.C. Cir.
1979).
---------------------------------------------------------------------------

    Following these two decisions, the EPA adopted a new regulation
defining ``building, structure, facility, or installation'' for
nonattainment-area

permitting under the NSR program as ``all of the pollutant-emitting
activities which belong to the same industrial grouping, are located on
one or more contiguous or adjacent properties, and are under the
control of the same person (or persons under common control) except the
activities of any vessel.'' \248\ That rulemaking lead to the Supreme
Court's decision in Chevron v. NRDC, 467 U.S. 837 (1984). In Chevron,
the Court recognized that ``it is certainly no affront to common
English usage to take a reference to a major facility or a major source
to connote an entire plant as opposed to its constituent parts.'' \249\
---------------------------------------------------------------------------

    \248\ 46 FR 50766.
    \249\ 467 U.S. at 860.
---------------------------------------------------------------------------

    Here, the EPA does not need to determine whether it would have been
reasonable to interpret ``building, structure, facility, or
installation'' as an entire plant for purposes of CAA section 111
(thus, encompassing all EGUs located at a single plant). Because ACE
identifies individual EGUs as the designated facility,\250\ state plans
cannot accommodate any ``bubbling'' of EGUs for compliance with these
emission guidelines.
---------------------------------------------------------------------------

    \250\ Fossil fuel-fired steam generators (i.e., EGUs) were among
the first source categories listed under CAA section 111. See 36 FR
5931. Since then, the Agency has promulgated multiple rulemakings
specifically regulating EGUs. See e.g., 40 CFR part 60, subparts D,
Da, TTTT, and UUUU. In any case, the decision to identify EGUs as
the regulated source is made under CAA section 111(b); that is
because regulations under CAA section 111(d) are authorized for
sources ``to which a standard of performance . . . would apply if
such existing source were a new source.'' In this case, new source
performance standards have been established for certain ``new,
modified, and reconstructed'' EGUs. 80 FR 64510. While the EPA
proposed to revisit several portions of those standards, see 83 FR
65424, the Agency did not propose to revise the applicability
requirements for them, id. at 65429. Accordingly, individual EGUs
continue to be the appropriate regulatory target for purposes of ACE
(and not, for example, multiple EGUs that may be co-located at a
single power plant).
---------------------------------------------------------------------------

    In addition, as proposed, the EPA is precluding averaging or
trading between designated facilities located at different plants for
the following reasons.
    The EPA believes that averaging or trading across designated
facilities (or between designated facilities and other power plants,
e.g., wind turbines) is inconsistent with CAA section 111 because those
options would not necessarily require any emission reductions from
designated facilities and may not actually reflect application of the
BSER.\251\ Because state plans must establish standards of
performance--which by definition ``reflects . . . the application of
the best system of emission reduction''--implementation and enforcement
of such standards should be based on improving the emissions
performance of sources to which a standard of performance applies.
Additionally, averaging or trading would effectively allow a state to
establish standards of performance that do not reflect application of
the BSER. For example, under a trading program, a single source could
potentially shut down or reduce utilization to such an extent that its
reduced or eliminated operation generates adequate compliance
instruments for a state's remaining sources to meet their standards of
performance without any emission reductions from any other source. This
compliance strategy would undermine the EPA's determination of the BSER
in this rule, which the EPA has determined as heat rate improvements.
---------------------------------------------------------------------------

    \251\ The EPA's interpretation of CAA section 111 on this point
has changed since the promulgation of the since-vacated CAMR and
does not necessarily extend to other CAA programs and provisions,
which can be distinguishable based on the applicable statutory and
regulatory requirements and programmatic circumstances. For example,
the EPA has implemented several trading programs under the so-called
Good Neighbor provision at CAA section 110(a)(2)(D)(i)(I). See
Finding of Significant Contribution and Rulemaking for Certain
States in the Ozone Transport Assessment Group Region for Purposes
of Reducing Regional Transport of Ozone (also known as the
NOX SIP Call), 63 FR 57356 (October 27, 1998); Clean Air
Interstate Rule (CAIR) Final Rule, 70 FR 25162 (May 12, 2005); Cross
State Air Pollution Rule (CSAPR) Final Rule, 76 FR 48208 (August 8,
2011); CSAPR Update Final Rule, 81 FR 74504 (October 26, 2016).
Section 110(a)(2)(A), which is applicable to the requirements of the
Good Neighbor provision, explicitly authorizes the use of marketable
permits and auctions of emission rights. Additionally, the Good
Neighbor provision prohibits emissions activity in certain
``amounts'' with respect to the NAAQS. The affirmative requirement
under this provision to reduce certain emissions means it is
appropriate to implement measures which will result in the required
emission reductions. The EPA has done so previously by implementing
trading programs to reduce ozone and particulate matter, the
regional-scale nature of which can be effectively regulated under a
trading program.
---------------------------------------------------------------------------

    In light of these concerns, as proposed, the EPA concludes that
neither averaging nor trading between EGUs at different plants can be
used in state plans for ACE implementation. Regarding commenters'
assertions that the statutory text of CAA section 111(d) does not
preclude averaging or trading, the Agency finds that the statutory text
of CAA section 111(d) does not require the EPA to allow averaging or
trading as a measure for states in establishing existing-source
standards of performance or allow for sources to adopt as a compliance
measure, and the interpretation of the limits on the scope of BSER
under CAA section 111(a)(1) set forth in section II above as a basis
for the repeal of the CPP suggests that those measures are not
permissible, as they are not applied to a source.
    Regarding commenters' assertions that the cross-reference in CAA
section 111(d) to CAA section 110 authorizes averaging or trading for
implementation, the Agency disagrees. The cross-reference to CAA
section 110 indicates that ``[t]he Administrator shall prescribe
regulations which shall establish a procedure similar to that provided
by CAA section 110 of this title under which each State shall submit to
the Administrator a plan . . . .'' (emphasis added). The Agency's
interpretation of this cross-reference is that it focuses on the
procedure under which states shall submit plans to the EPA. It does not
imply anything affirmative or negative about implementation mechanisms
available under CAA section 111(d). In the absence of definitive
instruction under this CAA provision, the Agency uses its best judgment
to conclude that the meaning and scope of the BSER in this rule
preclude the use of averaging or trading for covered EGUs at different
plants in state plans. Commenters also asserted that the EPA has
promulgated regulations under CAA section 111(d) that included trading
in the past, such as CAMR. As an initial matter, CAMR was vacated by
the D.C. Circuit and never implemented. Nonetheless, the Agency notes
that the CAMR included trading both in the establishment of the BSER
and as an available implementation mechanism. In the ACE rule, by
contrast, trading was not factored into the determination of the BSER
and so should not be authorized for implementation.
    Moreover, it is not clear that trading would qualify as a ``system
of emission reduction'' that can be applied to and at an individual
source and would lead to emission reductions from that source. Indeed,
the nature of trading as a compliance mechanism is such that some
sources would not need to apply any pollution control techniques at all
in order to comply with a cap-and-trade scheme. A compliance mechanism
under which multiple sources can comply not by any measures applied to
those sources individually, but instead by obtaining credits generated
by measures adopted at another source, is not consistent with the
interpretation of the limits on the scope of BSER adopted in section II
above. Accordingly, trading is not permissible under CAA section 111.
b. Biomass Co-Firing
    The ACE proposal solicited comment on the inclusion of forest-
derived and non-forest biomass as non-BSER compliance options for
affected units to meet state plan standards. The proposal also
solicited comment on what value to

attribute to biogenic CO2 associated with non-forest
biomass, if included. The EPA received a range of comments both
supporting and opposing the use of forest-derived and non-forest
biomass feedstocks for compliance under this rule. Additionally, the
EPA received a range of comments regarding the valuation of
CO2 emissions from biomass combustion.
    Numerous commenters supported the inclusion of biomass as a
compliance measure. Some reiterated the EPA's 2018 policy statement
regarding biogenic CO2 emissions, which laid out the
Agency's intent to treat biogenic CO2 emissions from forest
biomass from managed forests as carbon neutral in forthcoming Agency
actions. Specifically, these commenters stated that the nature of
biomass and its role in the natural carbon cycle (i.e., carbon is
sequestered during biomass growth that occurs offsite) makes biomass a
carbon-neutral fuel, and therefore that biomass should be eligible as a
compliance option under this rule. Commenters opposing the inclusion of
biomass for compliance asserted that biomass combustion does not reduce
stack GHGs emissions, as it emits more emissions per Btu than fossil
fuels, and therefore should not be eligible for compliance. Some
comments noted that the scientific rationale underlying the use of
biomass as a potential GHG reduction measure at stationary sources
relies primarily on terrestrial CO2 sequestration occurring
due to activities offsite (i.e., activities outside of and largely not
under the control of a designated facility).
    The construct of this final ACE rule necessitates that measures
taken to meet compliance obligations for a source actually reduce its
emission rate in that: (1) They can be applied to the source itself;
and (2) they are measurable at the source of emissions using data,
emissions monitoring equipment or other methods to demonstrate
compliance, such that they can be easily monitored, reported, and
verified at a unit (see section III.F.2). While the firing of biomass
occurs at a designated facility, biomass firing in and of itself does
not reduce emissions of CO2 emitted from that source.
Specifically, when measuring stack emissions, biomass emits more
CO2 per Btu than fossil fuels, thereby increasing the
CO2 emission rate at the source. Accordingly, recognition of
any potential CO2 emissions reductions associated with
biomass firing at a designated facility relies on accounting for
activities not applied at and largely not under the control of that
source (i.e., activities outside of and largely unassociated with a
designated facility), including consideration of terrestrial carbon
effects during the biomass fuel growth. Therefore, biomass fuels do not
meet the compliance obligations and are not eligible for compliance
under this rule.
3. Submission of State Plans
    CAA section 111(d)(1) provides that states shall submit to the EPA
plans that establish standards of performance for existing sources
within their jurisdiction and provide for implementation and
enforcement of such standards. Under CAA section 111(d)(2), the EPA has
the obligation to determine whether such plans are ``satisfactory.'' In
light of the statutory text, state plans implementing ACE should
include detailed information related to two key aspects of
implementation: Establishing standards of performance for covered EGUs
and providing measures that implement and enforce such standards.
    Generally, the plans submitted by states must adequately document
and demonstrate the process and underlying data used to establish
standards of performance under ACE. Providing such documentation is
required so that the EPA can adequately and appropriately review the
plan to determine whether it is satisfactory; the EPA's authority to
promulgate a federal plan is triggered in ``cases where the State fails
to submit a satisfactory plan . . . .'' \252\ For example, states must
include data and documentation sufficient for the EPA to understand and
replicate the state's calculations in applying BSER to establish
standards of performance. Plans must also adequately document and
demonstrate the methods employed to implement and enforce the standards
of performance such that EPA can review and identify measures that
assure transparent and verifiable implementation. Additionally, state
plan submissions must, unless otherwise provided in a particular
emissions guideline rule, adhere to the components of the new
implementing regulations described in section IV. The following
paragraphs discuss several components that states are required to
include in their state plans as required under these final emission
guidelines.
---------------------------------------------------------------------------

    \252\ CAA section 111(d)(2)(A).
---------------------------------------------------------------------------

    First, state plans must detail the approach or methods used by the
state to apply the BSER and establish standards of performance. The
state should include enough detail for the EPA to be able to reproduce
the state's methods and calculations. The methodology submitted should
clearly identify the approach by which states evaluate all of the HRIs
finalized in this action, both alone and in combination with each other
where technically feasible. To the extent that HRIs are not feasible to
apply at a particular EGU, states must provide a rationale (and
supporting data or metrics where relied upon) for why the calculation
would be invalid or inappropriate.
    Second, state plans must identify EGUs within their borders that
meet the applicability requirements and are thereby considered a
designated facility under ACE. Plans must also include emissions and
operational data relied upon to apply BSER and determine standards of
performance. These data must include, at a minimum, an inventory of
CO2 emissions data and EGU operational data (e.g., heat
input) for designated EGUs during the most recent calendar year for
which data is available at the time of state plan development and/or
submission. State plans must also include any future projections data
relied upon to establish standards of performance, including future
operational assumptions. To the extent that state plans consider an
existing source's remaining useful life in establishing a standard of
performance for that source, the state plan must specify the exact date
by which the source's remaining useful life will be zero. In other
words, the state must establish a standard of performance that
specifies the designated facility will retire by a future date certain
(i.e., the date by which the EGU will no longer supply electricity to
the grid). It is important to note that (as with all aspects of the
state plan) the standard of performance and associated retirement date
will be federally enforceable upon approval by the EPA. In the event a
source's circumstances change so that this retirement date is no longer
feasible, states generally have the authority and ability to revise
their state plans. Such plan revisions must be adopted by the state and
submitted to the EPA pursuant to the requirements of 40 CFR 60.28a.
    Third, state plans should submit detailed documentation
demonstrating in detail the application of the state's methodology to
the state's data. In other words, states should include the
calculations relied upon when applying the BSER to establish standards
of performance. States should also include detailed documentation
demonstrating the relied upon compliance mechanisms, consistent with
section III.F.2.
    Regarding establishing standards of performance and ensuring
verifiable implementation for EGUs with complex

stack configurations, states should include approaches (e.g., formulas)
that appropriately assign emissions and generation to individual EGUs.
For example, if two EGUs share a common stack, the state should provide
a methodology for disaggregating monitoring data to the individually
covered EGUs. Another example for states to consider when appropriately
assigning emissions and setting standards of performance is
apportioning HRI that affect and improve the performance of multiple
EGUs at a plant (e.g., apportioning improvement credited to installed
variable speed drives that affect multiple designated facilities at a
plant).
    As part of ensuring that regulatory obligations appropriately meet
statutory requirements such as enforceability, the EPA has historically
and consistently required that obligations placed on sources be
quantifiable, permanent, verifiable, and enforceable. The EPA is
similarly requiring that standards of performance placed on designated
facilities as part of a state plan to implement ACE be quantifiable,
permanent, verifiable, and enforceable. A state plan implementing ACE
should include information adequate to support a determination by the
EPA that the plan meets these goals.
    Additionally, the EPA is finalizing a determination that states
must include appropriate monitoring, reporting, and recordkeeping
requirements to ensure that state plans adequately provide for the
implementation and enforcement of standards of performance. Each state
will have the flexibility to design a compliance monitoring program for
assessing compliance with the standards of performance identified in
the plan. To the extent that designated facilities or states already
monitor and report relevant data to the EPA, states are encouraged to
use these existing systems to efficiently monitor and report ACE
compliance. For example, most potentially affected coal-fired EGUs
already continuously monitor CO2 emissions, heat input, and
gross electric output and report hourly data to the EPA under 40 CFR
part 75. Accordingly, if a state plan establishes a standard of
performance for a unit's CO2 emissions rate (e.g., lb/MWh),
states may use data collected by the EPA under 40 CFR part 75 to meet
the required monitoring, reporting, and recordkeeping requirements
under these emission guidelines.
    The EPA is further generally applying the new implementing
regulations for timing, process and required components for state plan
submissions and implementation for state plans required for designated
facilities. The new implementing regulations are described in detail in
section IV. In section 40 CFR 60.5740a there is a complete description
and list of what a state plan must include.
a. Electronic Submission of State Plans
    The EPA will, in the near future, provide states with an electronic
means of submitting plans. While the EPA proposed the use of the SPeCS
software which has been used by the Agency for SIP submittals, the
Agency is still developing the software to be used for ACE submittals.
The EPA recommends that states submit state plans electronically as it
will provide a more structured process and provide more timely feedback
to the submitting state. The Agency also anticipates that many states
will choose to submit plans electronically as states have a level of
familiarity with EPA software, such as SPeCS. The EPA envisions the
electronic submittal system as a user-friendly, web-based system that
enables state air agencies to officially submit state plans and
associated information electronically for review. Electronic submittal
is the EPA's preferred method for receiving state plan submissions
under ACE. However, if a state prefers to submit its state plan outside
of this forthcoming system, the state must confer with its EPA Regional
Office regarding additional guidance for submitting the plan to the
EPA.
b. Approvability of State Plans That Are More Stringent Than Required
Under ACE
    One issue raised by several commenters is whether the EPA can
approve, and thereby render federally enforceable, a state plan that
contains requirements for an existing source within a state's
jurisdiction that are more stringent than what is required under CAA
section 111(d).\253\ At proposal, the EPA acknowledged that CAA section
116 allows states to be more stringent than federal requirements as a
matter of state law, but also noted that nothing in section 116
provides for such more-stringent requirements to become federally
enforceable.\254\ Some commenters assert that it is not within the
EPA's authority under the CAA to approve such more-stringent
requirements as part of the federally enforceable state plan, and the
EPA should instead direct states to make such requirements exclusively
a matter of state law and enforceability. Other commenters assert that
the Supreme Court in Union Electric Co. v. EPA, 427 U.S. 246, (1976),
precluded a reading of section 116 that would functionally require two
separate sets of requirements, one at the stricter state level and one
at the federally approved level.
---------------------------------------------------------------------------

    \253\ Requirements under state plans generally become federally
enforceable once the EPA determines that they are ``satisfactory''
per section 111(d)(2). Section 113(a)(3) provides the EPA with the
authority, in part, to enforce any requirement of any plan approved
under the same subchapter as section 113; section 111(d) is within
the same subchapter as section 113. Additionally, section 304(a)(1)
grants citizens the authority to bring civil action against any
person in violation of an ``emission standard'' under the CAA.
Section 304(f)(1) and (3) respectively define ``emission standard''
as a standard of performance or any requirement under section 111
without regard to whether such requirement is expressed as an
emission standard. Accordingly, citizens with standing could attempt
to enforce the requirements of an EPA-approved section 111(d) state
plan.
    \254\ 83 FR 44767 n.37.
---------------------------------------------------------------------------

    In response to the commenters who contend the EPA does not have the
authority to approve more stringent state plans, the EPA believes that
these comments have merit. However, the EPA does not think it is
appropriate at this point to predetermine the outcome of its action on
a state plan submission in this regard without going through notice-
and-comment rulemaking with regard to the approval or disapproval of
that submission.\255\
---------------------------------------------------------------------------

    \255\ In the CPP, the EPA took the position that because ``the
EPA's action on a 111(d)(1) state plan is structurally identical to
the EPA's action on a SIP,'' the EPA is required to approve a state
plan that is more stringent than the BSER because of CAA section 116
as interpreted by Union Electric. Legal Memorandum Accompanying
Clean Power Plan for Certain Issues at 28-30; 80 FR 64840. For the
reasons further described in this preamble, the EPA's position on
this state plan stringency issue has evolved since the EPA addressed
it in the CPP, and the Agency now identifies a potentially salient
structural distinction between CAA sections 110 and 111(d). Notably,
the BSER aspect of section 111(d) is absent from section 110, as
SIP-measures required for attainment or maintenance of the NAAQS are
not predicated on application of a specific technology. Under CAA
section 109, the EPA establishes a health-protective standard, and
CAA section 110 then gives states broad latitude on designing the
contents of SIPs intended to meet that standard. By contrast, under
CAA section 111, the EPA identifies a particular measure or set of
measures, and CAA section 111(d) more narrowly prescribes that the
contents of state plans include performance standards based on the
application of such measures, and measures that provide for the
implementation and enforcement of such standards. Given this key
distinction between CAA sections 110 and 111(d), the EPA no longer
takes the position it took in the CPP that these two statutory
schemes are ``structurally identical'' and that therefore, under
Union Electric, it must approve section 111(d) state plans that are
more stringent on this basis. See FCC v. Fox Television Stations,
Inc., 556 U.S. 502 (2009). However, for the reasons discussed in
this preamble, the EPA is not at this stage prejudging the
approvability of any future plan submission in this regard and will
evaluate any plan submission, including one that is more stringent
than what the BSER requires, on an individual basis through notice-
and-comment rulemaking.

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

    In response to the commenters who contend the EPA has the authority
to approve more stringent state plans, as an initial matter, the EPA
notes that the Court's decision in Union Electric on its face does not
apply to state plans under CAA section 111(d). The decision
specifically evaluated whether the EPA has the authority to approve a
SIP under section 110 that is more stringent than what is necessary to
attain and maintain the NAAQS. The Court specifically looked to the
requirements in CAA section 110(a)(2)(A) as part of its analysis, a
provision that is wholly separate and distinct from CAA section 111(d).
CAA section 110(a)(2)(A) requires SIPs to include any assortment of
measures that may be necessary or appropriate to meet the ``applicable
requirements'' of the CAA, which largely relate to the attainment and
maintenance of the NAAQS. CAA section 111(d), by contrast, directs
state plans to establish standards of performance for existing sources
that reflect the degree of emission limitation achievable through the
application of the BSER that EPA has determined is adequately
demonstrated--and CAA section 111(d) expressly provides that it cannot
be used to regulate NAAQS pollutants. Because the Court's holding was
in the context of section 110 and not CAA section 111(d), the EPA
believes that Union Electric does not control the question of whether
CAA section 111(d) state plans may be more stringent than federal
requirements.
    Thus, Union Electric and the SIP issues that it addresses are
distinguishable from the CAA section 111(d) context. States have broad
discretion under section 110 to select the measures for inclusion in
their SIPs to meet the NAAQS, which are health- or welfare-based
standards not predicated on the application of any particular
technology, whereas state plans under 111(d) must establish standards
of performance, which are defined at CAA section 111(a)(1) as
reflecting the degree of emission limitation achievable through
application of the BSER at a source. However, the EPA is mindful that
it does not prejudge the approvability of any state plan submission,
but rather must determine whether it is ``satisfactory'' through
undertaking notice-and-comment rulemaking.\256\ Further, some issues of
approvability are most appropriately handled through the submission,
review, and approval or disapproval processes (with approvals and
disapprovals then being subject to judicial review). The EPA
anticipates that some states may wish to apply additional measures
beyond those that the EPA has identified as BSER when setting the
standard of performance, which states may believe are better suited to
particular existing sources within their jurisdiction. The EPA notes,
as stated above, that the comments suggesting that the EPA does not
have the authority to approve a state plan that establishes standards
of performance for existing sources more stringent than those that
would result from an application of the BSER identified by the EPA have
merit. However, the EPA believes that the question of whether it has
the authority to approve, and thereby render federally enforceable, a
state plan that establishes standards of performance that are more
stringent than those that would result from the application of the BSER
that the EPA has identified is addressed properly in the context of
evaluating an individual state plan.
---------------------------------------------------------------------------

    \256\ See CAA section 111(d)(2), 40 CFR 60.27a(b).
---------------------------------------------------------------------------

    While the EPA does not prejudge the approvability of a state plan
that establishes standards of performance for existing sources within
the state's jurisdiction that are more stringent than those that would
result from the application of the BSER that the EPA has identified,
there are clear principles and limitations imposed by CAA section
111(d) that will apply to the EPA's review of any state plan. As a
first principle, states must apply the BSER measures, as further
described in section III.E. of the preamble, and derive a standard of
performance that reflects the degree of emission limitation achievable
through application of the candidate technologies, taking into account
remaining useful life and other factors as appropriate.
    As a second principle, whatever the scope of a state's authority
under state law may be to design a scheme to meet the emissions
guidelines, the EPA's authority to approve state plans that contain
standards of performance for existing sources only extends to measures
that are authorized statutorily. Specifically, the EPA's authority is
constrained to approving measures that comport with the statutory
interpretations, including interpretations of the limitations on
``standards of performance'' and the underlying BSER. For example, CAA
section 111(d)(1) clearly contemplates that state plans may only
contain requirements for existing sources, and not other entities.
Therefore, in implementing the ACE rule, the EPA may not approve state
plan requirements on entities other than existing EGUs, which are the
designated facilities under this rule.\257\ Another example that would
exceed the EPA's authority is a state plan that includes standards of
performance or implementation measures that do not result in emission
reductions from an individual designated facility, such as the use of
biomass or emissions trading, for the reasons discussed at section
III.E.4.c. and III.F.2.a, respectively. Finally, the EPA does not have
the authority to approve measures that purport to be standards of
performance but that actually do not meet the statutory and regulatory
terms for such standards. For example, under ACE, the EPA cannot
approve a standard that is a requirement for a designated facility shut
down. Such a standard is an operational standard rather than a standard
of performance.\258\ The EPA has not authorized the use of operational
standards under CAA section 111(h) because the EPA has determined that
it is feasible to prescribe a standard of performance for this source
category and pollutant, expressed as an emission rate.\259\
---------------------------------------------------------------------------

    \257\ Section 111(d) clearly identifies that the regulated
entity under this provision is an existing source that would be of
the same source category as a new source regulated under section
111(b), i.e., a designated facility, as defined at 40 CFR 60.21(b).
If the EPA were to approve a state plan that contained provisions
regulating entities other than designated facilities, that approval
would give the EPA (and citizen groups) federal enforcement
authority over such entities. The EPA believes such a result would
be contrary to statements by the U.S. Supreme Court that caution an
agency against interpreting its statutory authority in a way that
``would bring about an enormous and transformative expansion in
[its] regulatory authority without clear congressional
authorization,'' Utility Air Regulatory Group v. EPA, 134 S. Ct.
2427, 2444 (2014).
    \258\ This example is distinguishable from the one described in
section IV.H. where a state chooses to rely on a source's remaining
useful life in establishing a less stringent standard of performance
for that source than would otherwise result from an application of
the BSER. In that instance, a state would include the shutdown date
as a measure for implementation of a standard of performance, as
required under section 111(d)(1)(B).
    \259\ The EPA also notes that for purposes of a federal plan,
the EPA is limited to promulgating a standard of performance, which,
as defined by section 111(a)(1) must reflect the degree of emission
limitation achievable by the BSER; in promulgating a standard of
performance under a federal plan, the statute directs the EPA to
take into account, among other factors, remaining useful life of the
source to which the standard applies. See section 111(d)(2).
---------------------------------------------------------------------------

    As previously described, the EPA must review state plans, including
plans that establish standards of performance for a particular existing
source or sources that are more stringent than the standards that would
result from application of the BSER, through notice-and-comment
rulemaking to determine whether they are ``satisfactory''. This review
includes ensuring that the state

plan submission does not contravene the statute by including measures
that the EPA has no authority to approve or enforce as a matter of
federal law, and that the state actually has evaluated the BSER in
setting a standard. Though the EPA lacks the authority to approve
certain measures, thereby rendering them federally enforceable, nothing
precludes states from implementing or enforcing such requirements as a
matter of state law.\260\
---------------------------------------------------------------------------

    \260\ See CAA section 116; 40 CFR 60.24a(f).
---------------------------------------------------------------------------

G. Impacts of the Affordable Clean Energy Rule

1. What are the air impacts?
    In the RIA for this action, the Agency provides a full benefit-cost
analysis of an illustrative policy scenario representing ACE, which
models adoption of HRI measures at coal-fired EGUs. This illustrative
policy scenario represents one set of potential outcomes of state
determinations of standards of performance and compliance with those
standards by affected coal-fired EGUs. Throughout the RIA, the
illustrative policy scenario is compared against a single baseline that
does not include the CPP. As described in Chapter 2 of the RIA, the EPA
believes that a single baseline without the CPP represents a reasonable
future against which to assess the potential impacts of the ACE rule.
The EPA also provides analysis in Chapter 2 of the RIA that satisfies
any need for regulatory impact analysis that may be required by statute
or executive order for the repeal of the CPP.
    The EPA has identified the BSER to be HRI. The EPA is providing
states with a list of candidate HRI technologies that must be evaluated
when establishing standards of performance. The cost, suitability, and
potential improvement for any of these HRI technologies is dependent on
a range of unit-specific factors such as the size, age, fuel use, and
the operating and maintenance history of the unit. As such, the HRI
potential can vary significantly from unit to unit. The EPA does not
have sufficient information to assess HRI potential on a unit-by-unit
basis. Therefore, any analysis of the final rule is illustrative.
Nonetheless, the EPA believes that such illustrative analyses can
provide important insights.
    In the RIA, the EPA evaluated an illustrative policy scenario that
assumes HRI potential and costs will differ based on unit size and
efficiency. To establish categories and HRI potential for use in the
RIA, the EPA developed a methodology that is explained in Chapter 1 of
the RIA. Designated facilities were grouped into twelve groups based on
three size categories and four efficiency categories. Cost and
performance assumptions for the candidate technologies were applied to
the groupings to establish representative and illustrative assumptions
for use in the RIA. The EPA then assumed these varying levels of HRI
potential and costs for the different groups in the power sector and
emissions modeling as an illustration of the potential impacts.
    The EPA evaluates the potential impacts of the illustrative policy
scenario using the present value (PV) of costs, benefits, and net
benefits, calculated for the years 2023-2037 from the perspective of
2016, using both a three percent and seven percent end-of-period
discount rate. In addition, the EPA presents the assessment of costs,
benefits, and net benefits for specific snapshot years, consistent with
historic practice. These specific snapshot years are 2025, 2030, and
2035.
    Overall, the impacts of the illustrative policy scenario in terms
of change in emissions, compliance costs, and other energy-sector
effects are small compared to the recent market-driven changes that
have occurred in the power sector. These larger industry trends are
discussed in detail in Chapter 2 of the RIA. In evaluating the
significance of the illustrative policy scenario, as presented in the
RIA and summarized here, it is important for context to understand that
these impacts are modest and do not diverge dramatically from baseline
expectations.
    Emissions are projected to be lower under the illustrative policy
scenario than under the baseline. Table 3 shows projected aggregate
emission decreases for the illustrative policy scenario, relative to
the baseline, for CO2, SO2 and NOX
from the electricity sector.

 Table 3--Projected CO2, SO2, and NOX Electricity Sector Emission Impacts for the Illustrative Policy Scenario,
                                            Relative to the Baseline
                                             [2025, 2030, and 2035]
----------------------------------------------------------------------------------------------------------------
                                                                   CO2 (million    SO2 (thousand   NOX (thousand
                                                                    short tons)     short tons)     short tons)

----------------------------------------------------------------------------------------------------------------
2025............................................................            (12)           (4.1)           (7.3)
2030............................................................            (11)           (5.7)           (7.1)
2035............................................................           (9.3)           (6.4)           (6.0)
----------------------------------------------------------------------------------------------------------------
Note: All estimates in this table are rounded to two significant figures.

    The emissions changes in these tables do not account for changes in
HAP that may occur as a result of this rule. For projected impacts on
mercury emissions, please see Chapter 3 of the RIA. The EPA was unable
to project impacts on other HAP emissions from the illustrative policy
scenario due to methodology and resource limitations.
    As noted earlier in this section, the illustrative policy scenario
is compared against a baseline that does not include the CPP. This is
because the ACE action only occurs after the repeal of the CPP. Chapter
2 of the RIA discusses the EPA's analysis of the CPP repeal. It
explains how after reviewing the comments and fully considering a
number of factors, the EPA ultimately concluded that the most likely
result of implementation of the CPP would be no change in emissions and
therefore no cost or changes in health benefits. This conclusion (i.e.,
that repeal of the CPP has little or no effect against a baseline that
includes the CPP) is appropriate for several reasons, consistent with
OMB's guidance that the baseline for analysis ``should be the best
assessment of the way the world would look absent the proposed
action.'' \261\ It is the EPA's consideration of the weight of the
evidence, taking into account the totality of the available
information, as presented in Chapter 2 of the RIA, that leads to the
finding and conclusion that there is likely to be no difference between
a world where the CPP is implemented and one where it is not. As
further explained in Chapter 2 of the RIA, the EPA comes to this
conclusion not through the use of a single analytical

scenario or modeling alone, but rather through the weight of evidence
that includes: Several IPM scenarios that explore a range of changes to
assumptions about implementation of the CPP; consideration of the
ongoing evolution and change of the electric sector; and recent
commitments by many utilities that include long-term CO2
reductions across the EGU fleet.
---------------------------------------------------------------------------

    \261\ OMB circular A-4, at 15.
---------------------------------------------------------------------------

2. What are the energy impacts?
    This final action has energy market implications. Overall, the
analysis to support this action indicates that there are important
power sector impacts that are worth noting, although they are small
relative to recent market-driven changes in the sector or compared to
some other EPA air regulatory actions for EGUs. The estimated impacts
reflect the EPA's illustrative analysis of the final action. States are
afforded considerable flexibility in the final action, and thus the
impacts could be different to the extent states make different choices
than those assumed in the illustrative analysis.
    Table 4 presents a variety of energy market impacts for 2025, 2030,
and 2035 for the illustrative policy scenario representing ACE,
relative to the baseline.

Table 4--Summary of Certain Energy Market Impacts for the Illustrative Policy Scenario, Relative to the Baseline
                                                [Percent change]
----------------------------------------------------------------------------------------------------------------
                                                                   2025 (%)         2030 (%)         2035 (%)
----------------------------------------------------------------------------------------------------------------
Retail electricity prices....................................             0.1              0.1              0.0
Average price of coal delivered to the power sector..........             0.1              0.0             (0.1)
Coal production for power sector use.........................            (1.1)            (1.0)            (1.0)
Price of natural gas delivered to power sector...............             0.0             (0.1)            (0.6)
Price of average Henry Hub (spot)............................             0.0              0.0             (0.6)
Natural gas use for electricity generation...................            (0.4)            (0.3)             0.0
----------------------------------------------------------------------------------------------------------------

    Energy market impacts are discussed more extensively in the RIA
found in the rulemaking docket.
3. What are the compliance costs?
    The power industry's ``compliance costs'' are represented in this
analysis as the change in electric power generation costs between the
baseline and illustrative policy scenario, including the cost of
monitoring, reporting, and recordkeeping. In simple terms, these costs
are an estimate of the increased power industry expenditures required
to implement the HRI required by the final action.
    The compliance assumptions--and, therefore, the projected
compliance costs--set forth in this analysis are illustrative in nature
and do not represent the plans that states may ultimately pursue. The
illustrative policy scenario is designed to reflect, to the extent
possible, the scope and nature of the final guidelines. However, there
is considerable uncertainty with regards to the precise measures that
states will adopt to meet the final requirements because there are
considerable flexibilities afforded to the states in developing their
state plans.
    Table 5 presents the annualized compliance costs of the
illustrative policy scenario.

Table 5--Compliance Costs for the Illustrative Policy Scenario, Relative
                             to the Baseline
                           [Millions of 2016$]
------------------------------------------------------------------------
                            Year                                 Cost
------------------------------------------------------------------------
2025.......................................................          290
2030.......................................................          280
2035.......................................................           25
------------------------------------------------------------------------
Note: Compliance costs equal the projected change in total power sector
  generating costs plus the costs of monitoring, reporting, and
  recordkeeping.

    More detailed cost estimates are available in the RIA included in
the rulemaking docket.
4. What are the economic and employment impacts?
    Environmental regulation may affect groups of workers differently,
as changes in abatement and other compliance activities cause labor and
other resources to shift. An employment impact analysis describes the
characteristics of groups of workers potentially affected by a
regulation, as well as labor market conditions in affected occupations,
industries, and geographic areas. Market and employment impacts of this
final action are discussed more extensively in Chapter 5 of the RIA for
this final action.
5. What are the benefits?
    The EPA reports the estimated impact on climate benefits from
changes in CO2 and the estimated impact on health benefits
attributable to changes in SO2, NOX, and
PM2.5 emissions, based on the illustrative policy scenario
described previously. The EPA refers to the climate benefits as
``targeted pollutant benefits'' as they reflect the direct benefits of
reducing CO2, and to the ancillary health benefits derived
from reductions in emissions other than CO2 as ``co-
benefits'' as they are not direct benefits from reducing the targeted
pollutant. To estimate the climate benefits associated with changes in
CO2 emissions, the EPA applied a measure of the domestic
social cost of carbon (SC-CO2). The SC-CO2 is a
metric that estimates the monetary value of impacts associated with
marginal changes in CO2 emissions in a given year. The SC-
CO2 estimates used in the RIA for these rulemakings focus on
the direct impacts of climate change that are anticipated to occur
within U.S. borders.
    The estimated health co-benefits are the monetized value of the
human health benefits among populations exposed to changes in
PM2.5 and ozone. This rule is expected to alter the
emissions of SO2 and NOX emissions, which will in
turn affect the level of PM2.5 and ozone in the atmosphere.
Using photochemical modeling, the EPA predicted the change in the
annual average PM2.5 and summer season ozone across the U.S.
for the years 2025, 2030, and 2035 for the illustrative policy
scenario. The EPA next quantified the human health impacts and economic
value of these changes in air quality using the environmental Benefits
Mapping and Analysis Program--Community Edition (BENMAP-CE). The EPA
quantified effects using concentration-response parameters

detailed in the RIA, which are consistent with those employed by the
Agency in the PM NAAQS and Ozone NAAQS RIAs (U.S. EPA, 2012; 2015)
(Table 6).

 Table 6--Estimated Economic Value of Avoided PM2.5 and Ozone-Attributable Deaths and Illnesses for the Illustrative Policy Scenario Using Alternative Approaches to Representing PM2.5 Effects
                                                                  [95% Confidence interval in parentheses; millions of 2016$] a
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2025
                                                          2030
                                                          2035
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Ozone Benefits Summed With PM Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
3% Discount rate
    No-threshold model \b\......  $390 ($37 to $1,100)....  t  $970 ($86 to $2,800)...  $490 ($47 to $1,300)...  t  $1,200 ($110 to $3,500)  $550 ($52 to $1,500)...  t  $1,400 ($120 to
                                                            o                                                    o                                                    o   $3,900).
    Limited to above LML \c\....  $370 ($36 to $1,000)....  t  $480 ($42 to $1,400)...  $440 ($42 to $1,200)...  t  $520 ($47 to $1,500)...  $480 ($25 to $1,300)...  t  $610 ($16 to $1,800).
                                                            o                                                    o                                                    o
    Effects above NAAQS \d\.....  $76 ($8 to $210)........  t  $250 ($23 to $760).....  $75 ($8 to $210).......  t  $260 ($23 to $770).....  $90 ($10 to $250)......  t  $320 ($28 to $930).
                                                            o                                                    o                                                    o
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Ozone Benefits Summed With PM Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
7% Discount rate
    No-threshold model \b\......  $360 ($34 to $990)......  t  $900 ($80 to $2,600)...  $460 ($44 to $1,200)...  t  $1,100 ($100 to $3,200)  $510 ($48 to $1,400)...  t  $1,300 ($110 to
                                                            o                                                    o                                                    o   $3,600).
    Limited to above LML \c\....  $350 ($33 to $950)......  t  $460 ($41 to $1,300)...  $410 ($39 to $1,100)...  t  $500 ($44 to $1,400)...  $450 ($22 to $1,200)...  t  $590 ($13 to $1,700).
                                                            o                                                    o                                                    o
    Effects above NAAQS \d\.....  $76 ($8 to $210)........  t  $250 ($23 to $760).....  $75 ($8 to $210).......  t  $260 ($23 to $770).....  $90 ($10 to $250)......  t  $320 ($28 to $930).
                                                            o                                                    o                                                    o
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Values rounded to two significant figures.
\b\ PM effects quantified using a no-threshold model. Low end of range reflects dollar value of effects quantified using concentration-response parameter from Krewski et al. (2009) and Smith
  et al. (2008) studies; upper end quantified using parameters from Lepeule et al. (2012) and Jerrett et al. (2009). Full range of ozone effects is included, and ozone effects range from 19%
  to 22% of the estimated values.
\c\ PM effects quantified at or above the Lowest Measured Level of each long-term epidemiological study. Low end of range reflects dollar value of effects quantified down to LML of Krewski et
  al. (2009) study (5.8 [micro]g/m\3\); high end of range reflects dollar value of effects quantified down to LML of Lepeule et al. (2012) study (8 [micro]g/m\3\). Full range of ozone effects
  is still included, and ozone effects range from 20% to 49% of the estimated values.
\d\ PM effects only quantified at or above the annual mean of 12 to provide insight regarding the fraction of benefits occurring above the NAAQS. Range reflects effects quantified using
  concentration-response parameters from Smith et al. (2008) study at the low end and Jerrett et al. (2009) at the high end. Full range of ozone effects is still included, and ozone effects
  range from 91% to 95% of the estimated values.

    To give readers insight to the distribution of estimated benefits
displayed in Table 6, the EPA also reports the PM benefits according to
alternative concentration cut-points and concentration-response
parameters. The percentage of estimated avoided PM2.5-
related deaths occurring in 2025 below the lowest measured levels (LML)
of the two long-term epidemiological studies the EPA uses to estimate
risk varies between 5 percent (Krewski et al. 2009) \262\ and 69
percent (Lepeule et al. 2012).\263\ The percentage of estimated avoided
premature deaths occurring in 2025 above the LML and below the NAAQS
ranges between 94 percent (Krewski et al. 2009) and 31 percent (Lepeule
et al. 2012). Less than 1 percent of the estimated avoided premature
deaths occur in 2025 above the annual mean PM2.5 NAAQS of 12
[micro]g/m\3\.
---------------------------------------------------------------------------

    \262\ Krewski, D., Jerrett, M., Burnett, R.T., Ma, R., Hughes,
E., Shi, Y., Turner, M.C., Pope, C.A., Thurston, G., Calle, E.E.,
Thun, M.J., Beckerman, B., DeLuca, P., Finkelstein, N., Ito, K.,
Moore, D.K., Newbold, K.B., Ramsay, T., Ross, Z., Shin, H.,
Tempalski, B., 2009. Extended follow-up and spatial analysis of the
American Cancer Society study linking particulate air pollution and
mortality. Res. Rep. Health. Eff. Inst. 5-114-36.
    \263\ Lepeule, J., Laden, F., Dockery, D., Schwartz, J., 2012.
Chronic exposure to fine particles and mortality: An extended
follow-up of the Harvard Six Cities study from 1974 to 2009.
Environ. Health Perspect. https://doi.org/10.1289/ehp.1104660.
---------------------------------------------------------------------------

    Table 7 reports the combined domestic climate benefits and
ancillary health co-benefits attributable to changes in SO2
and NOX emissions estimated for 3 percent and 7 percent
discount rates in the years 2025, 2030, and 2035, in 2016 dollars. This
table reports the air pollution effects calculated using
PM2.5 log-linear no threshold concentration-response
functions that quantify risk associated with the full range of
PM2.5 exposures experienced by the population (U.S. EPA,
2009 \264\; U.S. EPA, 2011 \265\; NRC, 2002 \266\).
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    \264\ U.S. EPA, 2009. Integrated Science Assessment for
Particulate Matter. U.S. Environmental Protection Agency, National
Center for Environmental Assessment, Research Triangle Park, NC.
    \265\ U.S. EPA, 2011. Policy Assessment for the Review of the
Particulate Matter National Ambient Air Quality Standards. Research
Triangle Park, NC.
    \266\ NRC, 2002. Estimating the Public Health Benefits of
Proposed Air Pollution Regulations. National Research Council.
Washington, DC.

                               Table 7--Monetized Benefits for the Illustrative Policy Scenario, Relative to the Baseline
                                                                   [Millions of 2016$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Values calculated using 3% discount rate                      Values calculated using 7% discount rate
                              --------------------------------------------------------------------------------------------------------------------------
                                  Domestic                                                      Domestic
                                   climate      Ancillary health        Total benefits           climate       Ancillary health co-      Total benefits
                                  benefits         co-benefits                                  benefits             benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
2025.........................              81  390 to 970........  470 to 1,000............              13  360 to 900..............  370 to 920.
2030.........................              81  490 to 1,200......  570 to 1,300............              14  460 to 1,100............  470 to 1,100.
2035.........................              72  550 to 1,400......  620 to 1,400............              13  510 to 1,300............  520 to 1,300.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: All estimates are rounded to two significant figures, so figures may not sum due to independent rounding. Climate benefits reflect the value of
  domestic impacts from CO2 emissions changes. The ancillary health co-benefits reflect the sum of the PM2.5 and ozone co-benefits and reflect the range
  based on adult mortality functions (e.g., from Krewski et al. (2009) with Smith et al. (2009) to Lepeule et al. (2012) with Jerrett et al. (2009)).
  The health co-benefits do not account for direct exposure to NO2, SO2, and HAP; ecosystem effects; or visibility impairment.

    In general, the EPA is more confident in the size of the risks
estimated from simulated PM2.5 concentrations that coincide
with the bulk of the observed PM concentrations in the epidemiological
studies that are used to estimate the benefits. Likewise, the EPA is
less confident in the risk the EPA estimates from simulated
PM2.5 concentrations that fall below the bulk of the
observed data in these studies.\267\ Furthermore, when setting the 2012
PM NAAQS, the Administrator also acknowledged greater uncertainty in
specifying the ``magnitude and significance'' of PM-related health
risks at PM concentrations below the NAAQS. As noted in the preamble to
the 2012 PM NAAQS final rule, ``EPA concludes that it is not
appropriate to place as much confidence in the magnitude and
significance of the associations over the lower percentiles of the
distribution in each study as at and around the long-term mean
concentration.'' \268\
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    \267\ The Federal Register notice for the 2012 PM NAAQS
indicates that ``[i]n considering this additional population level
information, the Administrator recognizes that, in general, the
confidence in the magnitude and significance of an association
identified in a study is strongest at and around the long-term mean
concentration for the air quality distribution, as this represents
the part of the distribution in which the data in any given study
are generally most concentrated. She also recognizes that the degree
of confidence decreases as one moves towards the lower part of the
distribution.'' See 78 FR 3159 (January 15, 2013).
    \268\ See 78 FR 3154, January 15, 2013.
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    Monetized co-benefits estimates shown here do not include several
important benefit categories, such as direct exposure to
SO2, NOX, and HAP including mercury and hydrogen
chloride. Although the EPA does not have sufficient information or
modeling available to provide monetized estimates of changes in
exposure to these pollutants for this rule, the EPA includes a
qualitative assessment of these unquantified benefits in the RIA. For
more information on the benefits analysis, please refer to the RIA for
these rules, which is available in the rulemaking docket.

IV. Changes to the Implementing Regulations for CAA Section 111(d)
Emission Guidelines

    The EPA is finalizing new regulations to implement CAA section
111(d) (implementing regulations) which will be codified at 40 CFR part
60, subpart Ba. The current implementing regulations at 40 CFR part 60,
subpart B, were originally promulgated in 1975.\269\ Section 111(d)(1)
of the CAA explicitly requires that the EPA prescribe regulations
establishing a procedure similar to that under section 110 of the CAA
for states to submit plans to the EPA establishing standards of
performance for existing sources within their jurisdiction. The
implementing regulations have not been significantly revised since
their original promulgation in 1975. Notably, the implementing
regulations do not reflect CAA section 111(d) in its current form as
amended by Congress in 1977, and do not reflect CAA section 110 in its
current form as amended by Congress in 1990. Accordingly, the EPA
believes that certain portions of the implementing regulations do not
appropriately align with CAA section 111(d), contrary to that
provision's mandate that the EPA's regulations be ``similar'' in
procedure to the provisions of section 110. Therefore, the EPA proposed
to promulgate new implementing regulations that are in accordance with
the statute in its current form (See 83 FR 44746-44813). Agencies have
the ability to revisit prior decisions, and the EPA believes it is
appropriate to do so here in light of the potential mismatch between
certain provisions of the implementing regulations and the
statute.\270\ While the preamble for the final new implementing
regulations are part of the same Federal Register document as certain
other Agency rules (specifically, the repeal of the CPP and the
promulgation of the ACE rule), these new implementing regulations are a
separate and distinct rulemaking with its own regulatory text and
response to comments. The implementing regulations are not dependent on
the other final actions contained in this Federal Register document.
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    \269\ See 40 FR 53346.
    \270\ The authority to reconsider prior decisions exists in part
because the EPA's interpretations of statutes it administers ``[are
not] instantly carved in stone,'' but must be evaluated ``on a
continuing basis.'' Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837,
863-64 (1984). Indeed, ``[a]gencies obviously have broad discretion
to reconsider a regulation at any time.'' Clean Air Council v.
Pruitt, 862 F.3d 1, 8-9 (D.C. Cir. 2017).
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    The EPA proposed to largely carry over the current implementing
regulations in 40 CFR part 60, subpart B to a new subpart that will be
applicable to emission guidelines that are finalized either
concurrently with or subsequently to final promulgation of the new
implementing regulations, as well as to state plans or federal plans
associated with such emission guidelines. For purposes of regulatory
certainty, the EPA believes it is appropriate to apply these new
implementing regulations prospectively and retain the existing
implementing regulations as applicable to CAA section 111(d) emission
guidelines and associated state plans or federal plans that were
promulgated previously. Additionally, because the original implementing
regulations also applied to regulations promulgated under CAA section
129 (a provision enacted in the 1990 Amendments that builds on CAA
section 111 but provides specific authority to address facilities that
combust waste), which has its own statutory requirements distinct from
those of CAA section 111(d), the original implementing regulations
under 40 CFR part 60, subpart B continue to apply to EPA-regulations
promulgated under CAA section 129, and any associated state plans and
federal plans. The new implementing regulations are thus applicable
only to CAA section 111(d) regulations and associated state plans
issued solely under the authority of CAA section 111(d).
    The EPA is aware that there are a number of cases where state plan
submittal and review processes are still ongoing for existing CAA
section 111(d) emission guidelines. Because the EPA is finalizing new
state plan and federal plan timing requirements under the implementing
regulations to more closely align CAA section 111(d) with both general
CAA section 110 state implementation plan (SIP) and federal
implementation plan (FIP) timing requirements, and because of the EPA's
understanding from experience of the realities of how long these
actions typically take, the EPA is applying the new timing requirements
to both emission guidelines published after the new implementing
regulations are finalized and to all ongoing emission guidelines
already published under CAA section 111(d). The EPA is finalizing
applicability of the timing changes to all ongoing 111(d) regulations
for the same reasons that the EPA is changing the timing requirements
prospectively. Based on years of experience working with states to
develop SIPs under CAA section 110, the EPA believes that given the
comparable amount of work, effort, coordination with sources, and the
time required to develop state plans, more time is necessary for the
process. Giving states three years to develop state plans is more
appropriate than the nine months provided for under the existing
implementing regulations, considering the workload required for state
plan development. These practical considerations regarding the time
needed for state plan development are also applicable and true for
recent emission guidelines where the state

plan submittal and review process are still ongoing.
    For those provisions that are being carried over from the existing
implementing regulations into the new implementing regulations, the EPA
is not intending to substantively change those provisions from their
original promulgation and continues to rely on the record under which
they were promulgated. Therefore, the following provisions remain
substantively the same from their original promulgation: 40 CFR
60.21a(a)-(d), (g)-(j) (Definitions); 60.22a(a), 60.22a(b)(1)-(3),
(b)(5), (c) (Publication of emission guidelines); 60.23a(a)-(c),
(d)(3)-(5), (e)-(h) (Adoption and submittal of state plans; public
hearings); 60.24a(a)-(d), (f) (Standards of performance and compliance
schedules); 60.25a (Emission inventories, source surveillance,
reports); 60.26a (Legal authority); 60.27a(a), (e)-(f) (Actions by the
Administrator); 60.28a(b) (Plan revisions by the state); and 60.29a
(Plan revisions by the Administrator).
    As noted at proposal, the EPA is also sensitive to potential
confusion over whether these new implementing regulations would apply
to emission guidelines previously promulgated or to state plans
associated with prior emission guidelines, so the EPA proposed that the
new implementing regulations are applicable only to emission guidelines
and associated plans developed after promulgation of this regulation,
including the emission guidelines being proposed as part of this action
for GHGs and existing designated facilities. The EPA is finalizing this
proposed applicability of the new implementing regulations.
    While the EPA is carrying over a number of requirements from the
existing implementing regulations to the new implementing regulations,
the EPA is finalizing specific changes to better align the implementing
regulations with the statute. These changes are reflected in the
regulatory text for the new implementing regulations, and include:
     An explicit provision allowing specific emission
guidelines to supersede the requirements of the new implementing
regulations;
     Changes to the definition of ``emission guidelines'';
     Updated timing requirements for the submission of state
plans;
     Updated timing requirements for the EPA's action on state
plans;
     Updated timing requirements for the EPA's promulgation of
a federal plan;
     Updated timing requirement for when increments of progress
must be included as part of a state plan;
     Completeness criteria and a process for determining