Legal Memorandum Accompanying Clean Power Plan for Certain Issues

      This document includes additional information concerning certain legal issues relevant to the Clean Power Plan. This document is intended to be read in conjunction with the preamble and the Response to Comments document. In connection with the proposed Clean Power Plan, we included in the docket a legal memorandum that provided our proposed position on a variety of legal issues. The discussion of legal issues contained in the preamble for the final rule, this Memorandum, and the Response to Comments Document supersede some of the preliminary interpretations taken in that document, as indicated in the preamble or this Memorandum.
Relationship between the Building Blocks and the BSER for New EGUs.

      In this section, in response to comments, we describe why we have not included building blocks 1, 2, and 3 as part of the BSER for new sources in the section 111(b) rule. This section largely reproduces section XI of the section 111(b) preamble.
      In the CAA section 111(b) rule for new, modified, and reconstructed steam units and new and reconstructed combustion turbines that the EPA is promulgating at the same time as this CAA section 111(d) rule, the EPA is not identifying as part of the BSER for those sources building block 1 (for steam units, efficient operation), building block 2 (for steam units, dispatch shift to existing NGCC units), and building block 3 (for steam units and combustion turbines, substitution of generation with new renewable energy). In this section, we explain our reasoning.
       Newly constructed steam generating units.
      As discussed in this preamble and in more detail in the preamble to the CAA section 111(d) rule for existing sources, the phrase "system of emission reduction" is undefined and provides the EPA with discretion in setting a standard of performance under CAA section 111(b) or emission guidelines under CAA section 111(d). Because the phrase by its plain language does not limit our review of potential systems of emission reduction in either context, the same systems could be considered for application in new and existing sources. That said, many other factors and considerations direct us to focus on different systems when establishing a standard of performance under CAA section 111(b) and an emission guideline under CAA section 111(d). Thus, it is useful to describe part of the underlying basis for the BSER  -  partial CCS - that the EPA has determined for new steam units before discussing the building blocks that form the BSER for existing units.
      For new steam generating units, the EPA is identifying, as the BSER, systems of emission reduction that assure that these sources are inherently low-emitting at the time of construction. The following reasons support this approach to the BSER.
      New sources are expected to have long operating lives over which initial capital costs can be amortized. Thus, new construction is the preferred time to drive capital investment in emission controls. In this case, the BSER for new steam generators, partial CCS, requires substantial capital expenditures, which new sources are best able to accommodate.
      While CAA section 111(b)(1)(B) and (a)(1) by their terms do not mandate that the BSER assure that new sources are inherently low emitting, that approach to the BSER is consistent with the legislative history. For instance, the 1970 Senate Committee Report explains that "[t]he overriding purpose of this section [concerning new source performance standards] would be to prevent new air pollution problems, and toward that end, maximum feasible control of new sources at the time of their construction is seen by the committee as the most effective and, in the long run, the least expensive approach." Existing sources, on the other hand, would be regulated through emission standards, which were broadly understood at the time to reflect available technology, alternative methods of prevention and control, alternative fuels, processes, and operating methods.[,]
      In this case, the BSER for new steam generators, partial CCS, requires substantial capital expenditures, which new sources are best able to accommodate.
             Practical implications of including the building blocks.
      Regardless of whether the EPA can prefer technological controls when setting new source standards, several practical considerations make the building blocks inappropriate for new sources. Thus, for the following reasons, the EPA does not consider it appropriate to include the building blocks as part of the BSER for new sources:
      Partial CCS will impose substantial costs on new steam-generating EGUs, and, as a result, the EPA does not believe that including additional measures as part of the BSER would be appropriate. One disadvantage in adding additional costs is that doing so would make it more difficult for new steam-generating EGUs to compete with new nuclear units. Because the BSER is selected after considering cost (among other factors), the EPA is not required to, and in this case believes it would not be appropriate to, select the most stringent adequately demonstrated system of emission reduction (through the combination of partial CCS and the building blocks) for purposes of setting a standard of performance under CAA section 111(b).
      In addition, building block 1 measures are not appropriate because the BSER for new steam generating units is based on highly efficient supercritical technology, i.e., state-of-the-art, efficient equipment. Accordingly, there is little improvement in efficiency that can be justified as part of the BSER.
      Building block 2 and 3 measures are not appropriate for the BSER because new steam units would have a significantly limited range of options to implement building blocks 2 and 3. The new source performance standard was proposed and is being finalized as a rate-based standard. Thus, if building blocks 2 and 3 were included in the BSER, a more stringent rate-based standard would be applicable to all new sources. However, it is conceivable that EPA could propose a hybrid standard that would include both an emission-rate limit that reflects partial CCS and a requirement for allowances that reflects building blocks 2 and 3. Accordingly, the following discussion assumes either a rate-based or mass-based standard, or part of a hybrid standard.
      In both a rate-based program and a mass-based program, building blocks 2 and 3 measures can be implemented through a range of methods, including trading with other EGUs. While it is not necessarily the case that every existing source will be able to implement each of the methods, in general, existing sources will have a range of measures to choose from. However, at least some of those methods may not be available to new sources, which would render compliance with their emission limits more challenging and potentially more costly.
      One example is emission trading with other affected EGUs. For existing sources, emission trading is an important option for implementing the building blocks. There are large numbers of existing sources, and they will become subject to the section 111(d) standards of performance at the same time. It may be more cost-effective for some existing sources to implement the building blocks than others, and, as a result, some may over-comply and some may under-comply, and the two groups may trade with each other. Because of the large numbers of existing sources, the trading market can be expected to be robust. Trading optimizes efficiency. As a result, existing sources have more flexibility in the overall amount of their investment in building blocks 2 and 3, and can adjust investment obligations among themselves through emissions trading.
      In contrast, new sources construct one at a time, and it is unknown how many new sources there will be. Without a sizeable number of new sources, there will not be a robust trading market. Thus, a new source cannot count on being able to find a new source trading partner.
      In addition, it is not possible to count on new sources being able to trade with existing sources, for several reasons. First, as noted, there are indications in the legislative history that new sources should be well-controlled at the source, which casts doubt on whether new sources should be allowed to meet their standards through the purchase of emission credits. Second, new sources must meet their standards of performance as soon as they begin operations. If they do so before the year 2022, when existing sources become subject to section 111(d) state plan standards of performance, no existing sources will be available as trading partners.
      In addition, for section 111(d) sources, we are granting a 7-year period of lead-time before the implementation of the building blocks. This is due, in part, to the benefits of allowing the ERC and allowance markets to develop. However, the new source standards take effect immediately, so that new sources would not have the advantage of this lead time were they subject to more stringent standards reflected in the building blocks.
      In addition, if there are an unexpectedly large number of new sources, then they would be obliged to invest in greater amounts of building blocks 2 and 3, and that could reduce the amounts of building blocks 2 and 3 available for existing sources, and thereby raise the costs of building blocks 2 and 3 for existing sources. This could compromise the BSER under section 111(d) and undermine the ability of existing sources to comply with their section 111(d) obligations.
B.   New combustion turbines.
      For new combustion turbines, the building blocks are not appropriate as part of the BSER for the following reasons: Building block 1 is limited to steam generating units, and therefore has no applicability to new combustion turbines. Measures comparable to those in building block 1 would not be appropriate because the highly efficient NGCC construction already entails high efficiency equipment and operation.
      Building block 2 is also limited to steam generating units and is not appropriate as part of the BSER for new NGCC units because it would not result in any emission reductions.
      The reasons why building block 3 are not appropriate are the same as discussed above for why building blocks 2 and 3 are not appropriate for new steam generating units (limited range of options for implementation (including lack of availability of trading), lack of lead-time for implementation, and the possibility of reducing the availability of renewable energy for existing sources).
      C.    Modified and reconstructed steam units and reconstructed NGCC
      For modified and reconstructed steam generators, the EPA identified the BSER as maintenance of high efficiency or implementation of a highly efficient unit. The resulting emission limit must be met over the specified time period and cannot be deviated from or averaged. As a result, a modified or reconstructed steam generator generally will require ongoing maintenance, and may find it prudent to operate below its limit as a safety margin. This represents a substantial commitment of resources. For these units, the additional costs of implementing the building blocks would not be appropriate.
      In addition, building block 1 is not appropriate for modified or reconstructed steam generating units because the BSER for these units is already based on highly efficient performance. For the same reasons, it does not make sense to attempt to develop the analogue to building block 1 for reconstructed NGCC units  -  the BSER for them, too, is already based on highly efficient performance.
      Building block 2 is not appropriate for reconstructed NGCC units because it would not yield any reductions.
      Building blocks 2 and 3 are not appropriate for modified or reconstructed steam generators, and building block 3 is not appropriate for reconstructed NGCC units, for the same reasons that they are not appropriate for new EGUs, as described above (limited range of options for implementation (including lack of availability of trading), lack of lead-time for implementation, and the possibility of reducing the availability of renewable energy for existing sources).
II.    Uniqueness of CO2 and of the Electric Power Sector
In section V.A.2.b of the preamble, we note the reasons why CO2 is a unique air pollutant and why the electric power sector is a unique source category, and the critical importance of those characteristics in shaping this rule. Here we note that the U.S. Supreme Court has recognized both the uniqueness of CO2 and the electric power sector. In Utility Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014), the Court recognized that greenhouse gases like carbon dioxide are "atypical pollutants" that are emitted in "vast quantities." Id. at 2442; see also AEP v. Connecticut, 131 S. Ct. 2527, 2538 (2011) ("Congress could hardly preemptively prohibit every discharge of carbon dioxide unless covered by a permit."). Moreover, the Supreme Court has repeatedly affirmed the authority and responsibility of the agency, charged with implementing the Clean Air Act, to deploy its expertise and the exercise of its discretion to fashion workable regulatory frameworks for greenhouse gases. UARG, 134 S. Ct. at 2441, 2442 (directing the agency to use its discretion and look to "statutory context" in applying the CAA to greenhouse gases); AEP, 131 S. Ct. at 2539 ("Congress delegated to EPA the decision whether and how to regulate carbon dioxide emissions from power plants ...."); id. at 2539 ("It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of greenhouse gas emissions."). See also AEP, 131 S. Ct. at 2539 ("The appropriate amount of regulation in any particular greenhouse gas-producing sector cannot be prescribed in a vacuum ..., informed assessment of competing interests is required.").
The Court has also recognized the uniqueness of the electric power sector. This sector is the single largest contributor to national CO2 emissions (in addition to other air pollutants); as the preamble notes, it operates as a large machine, i.e., as an interconnected entity; and it is economically critical to the country. This uniqueness is recognized by Congress throughout the Clean Air Act, including in various provisions of section 111. The Supreme Court recently directed the agency to fully exercise its discretion by considering costs in determining whether it is "appropriate and necessary" to regulate hazardous air pollutants from the power sector under section 112(n). See Michigan v. EPA, No. 14-46, at 6 (June 29, 2015) (Slip Op.) ("The Clean Air Act treats power plants differently from other sources for purposes of the hazardous-air-pollutants program."). As required under section 111, in the Clean Power Plan, the agency has, of course, considered costs among the other factors relevant to the power sector in determining the "appropriate amount of regulation" for carbon dioxide. As we discuss elsewhere, Congress added section 112(n) in the 1990 CAA Amendments, at the same time that it added Title IV to regulate acid rain precursors from the electric power sector and revised section 111 with respect to the electric power sector, and linked the Title IV revisions to the section 111 revisions.
	Numerous commenters objected that the EPA has never applied measures like the building blocks in section 111 rules, and asserted that the EPA was departing from long-standing precedent without explaining why. We disagree with these comments. As we explain in section V.A.2.b of the preamble, to determine the BSER, we began by considering the characteristics of CO2 pollution and the utility power sector. We have not previously regulated CO2 pollution from the utility power sector, and the combination of the unique characteristics of that air pollutant with the unique characteristics of that sector have led us to include building blocks 2 and 3 in the BSER. As we note in the preamble, not surprisingly, whenever the EPA begins the regulatory process under section 111, we initially undertake these same inquiries into the nature of the industry and the air pollutant and then proceed to fashion the rule to fit the industry. Thus, our approach to this rulemaking is consistent with our approach to previous section 111 rules.
III.  NSPS Rulemakings and the Integrated Grid
	This section provides a more detailed description of two EPA NSPS rulemakings that relied on the integrated grid, which supports the discussion in the preamble in section V.B.3.c.(6)(c).
      On June 11, 1979, EPA finalized new standards of performance to limit emissions of sulfur dioxide, particulate matter, and nitrogen oxides from new, modified, and reconstructed electric utility steam generating units. The revised standards limited sulfur dioxide emissions to 1.20 ppm BTU heat input for solid derived fuel and 0.80 ppm heat input for liquid or gaseous fuels. In both instances, a 90 percent reduction was also required. A 70 percent reduction was required for solid derived fuels when emissions are less than 0.60 ppm BTU heat input, and a zero percent reduction was required for liquid or gaseous fuels when emissions are less than 0.20 ppm BTU heat input. In selecting these standards, the Administrator investigated "coal cleaning and the relative economics of FGD [flue gas desulfurization] and coal cleaning" together as the "best demonstrated system for SO2 emission reduction." Compliance with the standards could be met through credits "for any cleaning of the fuel, or reduction in pollutant characteristics of the fuel, after mining and prior to combustion."
      Notably, in assessing the best demonstrated system against concerns of electric service reliability, the Administrator took into account "the generating capacity of the affected utility company..., and the amount of power that could be purchased from neighboring interconnected utility companies." Part of this analysis noted that "[a]lmost all electric utility generating units in the United States are electrically interconnected through power transmission lines and switching stations." The Administrator determined that a broad exemption from the standards was not necessary "because load can usually be shifted to other electric generating units." Moreover, "reducing the level of electric generation" could be implemented in the case of a failed FGD module and would not affect the remainder of the FGD system, thus "permit[ting] the utility to maintain compliance with the standards without having to take the generating unit entirely out of operation." In other words, "a properly designed FGD system has no routine need for an exemption from the SO2 percentage reduction requirement when the unit is operated at reduced load." Accordingly, an exemption from the standards was "not necessary to protect electric service reliability or to maintain compliance with the[] SO2 standards." These standards were upheld by the D.C. Circuit in Sierra Club v. Costle, 657 F.2d 298 (D.C. Cir. 1981).
	Similarly, in a 1982 rulemaking promulgating an NSPS, the EPA stated:
The EPA position is that unlike utility turbines, industrial turbines in some instances may represent the sole primary energy source for a major industrial process. Such a turbine could not be shut down more frequently without an unacceptable economic consequence. The unacceptable economic consequence could be that an entire plant or process depends on the continuously running gas turbine. This is not the case for utility turbines, however, since other electric generators on the grid can restore lost capacity caused by turbine down time. Inspection and maintenance can be scheduled for a low load period when full generating capacity is not needed. Since inspection and maintenance of continuously running utility turbines is not economically unreasonable, the NOx emission limit for these turbines has not been rescinded.
47 F.R. 3767, 3768 (Jan. 27, 1982).
      Commenters argue that the source-category basis for section 111 provides another reason why, in their view, the EPA is not authorized to base emission limits on controls that involve other entities, such as the measures in building blocks 2 and 3.  As the above examples illustrate, even though, in past rulemakings, the EPA has generally been able to assure emission reductions from affected EGUs through control measures that apply on-site, the fact that the affected EGUs are part of the interconnected grid has informed some of the regulatory requirements. In the present rulemaking, the EPA's reliance on the interconnected grid in determining that the BSER includes the measures in building blocks 2 and 3 is not inconsistent with what commenters describe as the source-category basis for section 111; rather, the EPA's reliance on the interconnected grid recognizes that the affected EGUs, which remain the subject of the emission reduction obligations, interact with other generators, consumers, and other entities through the interconnected grid in a manner that furnishes opportunities for emissions reduction.
      Commenters argue that the source-category basis for section 111 provides another reason why, in their view, the EPA is not authorized to base emission limits on controls that involve other entities, such as the measures in building blocks 2 and 3.  As the above examples illustrate, even though, in past rulemakings, the EPA has generally been able to assure emission reductions from affected EGUs through control measures that apply on-site, the fact that the affected EGUs are part of the interconnected grid has informed some of the regulatory requirements. In the present rulemaking, the EPA's reliance on the interconnected grid in determining that the BSER includes the measures in building blocks 2 and 3 is not inconsistent with what commenters describe as the source-category basis for section 111; rather, the EPA's reliance on the interconnected grid recognizes that the affected EGUs, which remain the subject of the emission reduction obligations, interact with other generators, consumers, and other entities through the interconnected grid in a manner that furnishes opportunities for emissions reduction.
IV.   Additional Response to Comments Concerning Section 111(h)
      Some commenters rely on Section 111(h) to argue for a contextual constraint on defining a standard of performance for purposes of section 111(d). We respond to these comments in section V.B.3 of the preamble, and add additional information here.
      Section 111(h)(1) states that  -
      if in the judgment of the Administrator, it is not feasible to prescribe or enforce a standard of performance, [she] may instead promulgate a design, equipment, work practice, or operational standard, or combination thereof, which reflects the best technological system of continuous emission reduction which (taking into consideration the cost of achieving such emission reduction, and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.
      Section 111(h)(2) provides that it is "not feasible to prescribe or enforce a standard of performance" when the Administrator determines that (A) a pollutant or pollutants cannot be emitted through a conveyance designed and constructed to emit or capture such pollutant, or that any requirement for, or use of, such a conveyance would be inconsistent with any Federal, State, or local law, or (B) the application of measurement methodology to a particular class of sources is not practicable due to technological or economic limitations.
      Commenters infer that these provisions limit EPA's interpretation of the BSER to the use of a pollution control conveyance at the source. This inference is unfounded and conveys a misunderstanding of Section 111(h).
      As discussed in section V.B of the preamble, section 111(h) concerns the relatively rare situation in which an emissions standard, which entails a numerical limit on emissions, is not appropriate because emissions cannot be measured, due either to the nature of the pollutant (i.e., the pollutant is not emitted through a conveyance) or the nature of the source category (i.e., the source category is not able to conduct measurements). In such cases, the Administrator is authorized to require sources to implement specific actions to control pollution, in the form of design, equipment, work practice, or operational standards. When an emissions standard is appropriate, including in the present rule, section 111(h) is silent as to what types of measures -- whether or not limited to a source's own design or operations -- may considered as a system of emission reduction.
      Moreover, it is far from clear that even section 111(h) draws a line between on-site and off-site measures. In particular, section 111(h) authorizes the Administrator to adopt a "work practice ... standard" (section 111(h)(1)) or "alternative means of emission limitation" (section 111(h)(3)), which, by their terms, could include on-site or off-site activities. In fact, the distinction between on-site and off-site measures is nowhere to be found in section 111. Section 111(h) merely provides that, under circumstances in which a source's air pollutant cannot be measured, in light of the fact that it is impossible to set a numerical limit on the source's emissions, the Administrator may promulgate other types of controls. Even if section 111(h) standards were limited to on-site actions, this would be a function of the fact that a more limited range of measures for reducing emissions is available to a source when the emissions cannot be measured, and this would be further evidence that Congress knew how to draw a line between on-site and off-site measures in section 111, which indicates that because Congress did not do so in section 111(a)(1), it did not intend such a distinction.
      This interpretation of section 111(h) is confirmed by its legislative history. Section 111(h) was added in the Conference Committee to reflect similar changes to section 112(e) as part of the 1977 CAA Amendments. As with section 111(h), Congress added section 112(e) to allow the promulgation of "a design, equipment, work practice, or operational standard, or combination thereof, which in [the Administrator's] judgment is adequate to protect the public health from such pollutant or pollutants with an ample margin of safety." Congress endorsed this addition because "[s]ection 112 of the existing law [had] been interpreted by some courts as only allowing the use of numerical emission standards." As a result, Congress intended to "fully authorize ... EPA regulations governing asbestos," which had been "demonstrated as requiring other than a direct numerical emission limitation." In fact, Congress observed that "[w]ork practice and other design characteristics" appeared to be "the only means available for controlling such pollutants." Accordingly, sections 111(h) and 112(e) draw a distinction between quantitative levels of control (as reflected by, for example, a standard of performance) and qualitative levels associated with work practice or design standards. Nothing in the legislative history suggests that Congress intended for section 111(h) to constrain our interpretation of section 111(a)(1).
      For these reasons, we find nothing in the plain language of section 111(h) or in its legislative history to support the inference commenters seek to draw. In any case, as we note in the preamble, section 111(h) only relates to standards of performance imposed by the Administrator (i.e., under section 111(b)) and should have no bearing on our interpretation for purposes of section 111(d).
V.   AEP v. Connecticut
      This section provides additional information based on the Supreme Court's 2011 decision in American Electric Power v. Connecticut, 131 S. Ct. 2527 (2011) ("AEP") that is relevant to the EPA's interpretation of section 111(d)(1) and (a)(1) in section V.B.3 of the preamble.

   A.          The AEP decision
      In interpreting the scope of the Agency's section 111(d) authority, the EPA was also guided by case law, including the Supreme Court's 2011 decision in American Electric Power v. Connecticut, 131 S. Ct. 2527 (2011) ("AEP"). EPA has relied on and cited AEP, along with Massachusetts v. EPA, for the proposition that it has the authority, and the responsibility, to regulate GHGs from the power sector under CAA section 111. See CPP Proposal Preamble, 79 Fed. Reg. at 34853. Moreover, the Court in AEP clearly understood, and expected, that EPA possessed sufficient authority under section 111 to achieve meaningful and significant reductions of GHG emissions from the power sector.
      In AEP, plaintiffs brought a federal common law claim of nuisance against five of the largest GHG emitters in the power sector. The Court held that the CAA displaced federal common law in this area. The Court articulated the test as being whether a federal statute "speaks directly to the question at issue." Id. at 2537 (quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978)). Applying this test, the Court stated, "we think it ... plain that the [CAA] `speaks directly' to emissions of carbon dioxide from the defendants' plants." Id. After walking through the framework of section 111, the Court concluded, "The [CAA] itself thus provides a means to seek limits on emissions of carbon dioxide from domestic power plants -- the same relief the plaintiffs seek by invoking federal common law. We see no room for a parallel track." Id. at 2538 (emphasis added).
      The "relief" plaintiffs sought were caps on existing power plant emissions that would "abate their contribution to global warming." See Complaint, Conn. et al. v. AEP et al., No. 04-civ-5669, at para. 1 (S.D.N.Y. filed July 21, 2004); id. para. 156 ("Defendants could generate the same amount of electricity while emitting significantly less carbon dioxide by employing readily available processes and technologies."); cf. S. Ct. Oral Arg. Tr., at 23, 40.
	In rejecting the plaintiffs' argument that displacement cannot occur until EPA has actually regulated GHGs, the Court went on to analyze in greater detail the regulatory scheme for GHG reduction that Congress, in its "considered judgment," 131 S.Ct. at 2538, adopted in the CAA. "The critical point is that Congress delegated to EPA the decision whether and how to regulate carbon-dioxide emissions from power plants...." Id. (emphasis added). While noting that EPA's judgment would ultimately be subject to judicial review, the Court found a host of ways in which the delegation of power from Congress, and the expertise of the EPA, make it the primary, and the most appropriate, decision maker for reductions of GHGs, noting that the Administrator must exercise her judgment in determining which sources "cause, or contribute significantly to, air pollution." Id. at 2539. The Court stated:
      The appropriate amount of regulation in any particular greenhouse gas-producing sector cannot be prescribed in a vacuum; as with other questions of national or international policy, informed assessment of competing interests is required. Along with the environmental benefit potentially achievable, our Nation's energy needs and the possibility of economic disruption must weigh in the balance. The CAA entrusts such complex balancing to EPA in the first instance, in combination with state regulators.
Id. (emphases added).
      The Court characterized EPA as the expert administrative agency uniquely suited to the complex task of regulating GHGs. Id. at 2539 ("It is altogether fitting that Congress designated an expert agency, here, EPA, as best suited to serve as primary regulator of [GHG] emissions."). Such regulation would depend on "extensive cooperation between federal and state authorities," id., and further, the Agency would be in a position (unlike a court), to "commission scientific studies or convene groups of experts for advice," "seek the counsel of regulators in the States where defendants[' power plants] are located, as well as consider and incorporate public input via the rulemaking process. Id. at 2540.
      Further, EPA could be expected to, in the words of the Court, "apportion[] responsibility for emissions reductions" among sources, id. at 2539 (citing 111(b)(2) and (d)). And the Court reasoned that it was EPA, rather than the courts, who would be in the best position to "determine, in the first instance, what amount of carbon-dioxide emissions is unreasonable ... and then decide what level of reduction is practical, feasible and economically viable." Id. at 2540.
      These statements from AEP suggest, first, that as an essential component of its federal common law displacement analysis, the Court assumed that Congress had delegated sufficient authority to EPA, and that EPA possessed the necessary scientific, policy and regulatory tools, to address the problem of carbon pollution in a robust and comprehensive manner; and, second, that it is appropriate for the EPA to consider "what amount of carbon-dioxide emissions is unreasonable ... and then decide what level of reduction is practical, feasible, and economically viable" in determining the BSER. In essence, when EPA decides what level of reduction is reasonable, the Court indicates that such judgment should be granted considerable deference, subject only to the agency's assessment of practicality, feasibility, and economic viability.
   B.          Industry Representations regarding Section 111 in AEP
      This understanding of AEP is supported by the electric power industry's own views, as expressed in that case. These were provided in briefs to the Supreme Court in AEP.  The EPA recognizes that the electric utility sector is large and complex, and does not necessarily speak with one voice. Even so, although many of these key representatives of the sector have questioned the scope of the agency's legal authority under section 111(d), the information they provided to the U.S. Supreme Court regarding their views that the CAA gives the EPA broad authority to regulate carbon pollution from power plants and their views on their capacity to reduce emissions, as well as the measures they identified as available to do so -- such as increasing renewable energy -- are all relevant to, and, in fact, provide support to, the reasonableness of the agency's decisions in defining the BSER, and other aspects of the Emission Guidelines.
      The electric utility industry itself appeared to adopt a relatively expansive view of the EPA's authority under section 111(d) to address carbon pollution from power plants. In particular, in AEP, the power company Petitioners and supporting electric power sector Amici argued, inter alia, that EPA's authority under the Clean Air Act, and in particular section 111, was sufficiently broad to displace any federal common law action against the power sector based on GHG emissions.
      Industry Petitioners stated to the Court, for example, that "Congress has addressed the issue of greenhouse gas emissions," Pet'rs' Br. 41, and "the Clean Air Act delegates regulatory authority over carbon dioxide emissions to EPA," id. at 46. Amici from the power sector further emphasized that, "Congress has `spoken directly to the question' of GHG regulation," "and has already `addressed the problem' plaintiffs now attempt to bring before the federal courts." Amicus Br. 26 (quoting Milwaukee v. Illinois, 451 U.S. 304, 315 (1972)).
      The Petitioners adopted a broad view of federal authority under the Clean Air Act. "`To say this regulatory and permitting regime is comprehensive would be an understatement.'" Pet'rs' Br. 42 (quoting North Carolina ex rel. Cooper v. TVA, 615 F.3d 291, 298 (4th Cir. 2010)). "The Clean Air Act, like the Clean Water Act, is a `comprehensive' regulatory scheme to address environmental pollution. Id. at 41. "Nothing in the [CAA] or legislative history suggests that Congress intended to leave `room for courts to attempt to improve on that program with federal common law.'" Pet'rs' Br. 41, 42 (quoting Milwaukee II, 451 U.S. at 319). Indeed, "Throughout the debates and reports of Congress, [the CAA's] sponsors repeatedly characterized the Act as `comprehensive,' and commented on its expansive reach." Id. at 42. "[T]he Clean Air Act vests EPA with broad authority not only to promulgate national standards for pollutants, but also to enforce those standards directly ...." Id. at 43. "The Act is `sweeping' and `capacious.'" Id. at 41 (quoting Massachusetts v. EPA, 549 U.S. 497, 528, 532 (2007)).
      These parties recognized, further, that "Congress has given EPA substantial authority to regulate within the context of a comprehensive legislative scheme and has left it to the Agency to oversee matters of implementation and enforcement." Amicus Br. 27; cf. id. at 26 ("Through the Clean Air Act, Congress chose to regulate GHGs and to delegate the details to EPA.") (emphasis added). See also Amicus Br. 7; id. at 28-29 ("It is clear that EPA has the power to regulate GHGs, and it is doing so.").
      The Amicus Brief on behalf of EEI and others, in particular, gives examples of the complexity of the climate problem, and also explains why the "existing regulatory scheme" is sufficient and should not be "undermined." Amicus Br. 14 (emphasis added). This Brief also notes, "EPA's forthcoming NSPS regulations calibrate GHG performance standards to `the best demonstrated emissions control technology' for the particular industry segment in order to avoid `unreasonable economic disruption." Id. at 17-18. This initiative "is designed to produce hard emissions standards for the very power plants plaintiffs want the federal courts to regulate." Id. at 9.
      The Amicus Brief of the power sector amici endorses the view that expanded reliance on cleaner methods of generating electricity are necessary to solve the GHG problem:
      [R]ational GHG-emissions cuts -- especially the sorts of sharp reductions that some contemplate in an effort to mitigate global climate change -- cannot be instituted overnight. They will require the adoption of an array of advanced no- or low-carbon technologies, including increased use of wind, solar, incremental hydroelectric, and nuclear power.
Id. at 16 (emphasis added). The Amicus Brief goes on to endorse the conclusion of an industry study that a scenario in which "the United States comprehensively encourages new technologies as part of its regulatory scheme" is necessary to avoid a spike in electricity prices, radical demand curtailment, or a "dash to [natural] gas" that would lead to "too high an emissions rate to satisfy ambitious long-term GHG reduction goals." Id. at 19-20. This discussion takes place within an argument to the Supreme Court that such a national, comprehensive regulatory scheme already exists and should not be "undermined." Id. at 14.
VI.  Industry Statements made to the EPA Prior to Proposal of the Clean Power Plan
      Representatives of the electric power industry also provided comments related to section 111(d) in the course of prior Agency rulemakings, such as the Endangerment Finding and the 2008 GHG ANPR, as well as the pre-proposal outreach sessions for the Clean Power Plan. While we recognize that there is a diversity of viewpoints in these comments, and many questioned either the appropriateness or lawfulness of regulation under section 111(d), two categories of comments are particularly relevant here: 1) several of these statements appear to endorse the view that the BSER could encompass the measures in building block 2 (dispatch shifts from coal-fired EGUs to NGCC units) and building block 3 (renewable energy), and (2) virtually all industry commenters urged the agency to allow for these measures as effective compliance options. This second category of comments is relevant given the breadth of its support across the sector. It indicates that because the industry considers these measures to be economical and effective at achieving emission reductions for compliance, these measures merit consideration as part of the "best system of emission reduction ... adequately demonstrated" itself.
      The electric utility industry's views on the role of the EPA under section 111, and how it should approach regulation of GHGs from the power sector, were presented during the Agency's early stakeholder engagement efforts on the section 111(d) proposal. In a "Summary of Listening Session 1: Electric Power Industry Representatives," dated February 4, 2011, we noted industry representatives' "general advice" to the agency:
   * "Think of the industry as an interconnected grid and not plant by plant." Id. at 1 (emphasis in original).
   * "Rate-based approach is preferred (i.e., lbs CO2/ MWh)." Id.
   * "Allow for technological and fuel flexibility." Id. (emphasis omitted).
   * "Allow for flexibility for states when demonstrating equivalency." Id.
   * For existing sources, "determine best practices nationwide using existing technologies and set the standard based on those technologies," "give states flexibility," "allow for a fleet-wide approach to meet performance standards; allow for emissions averaging and the use of offsets across companies." Id.
   * "Approaches to avoid: limitations on the technologies that can be used to comply with the standard"; "plant by plant approach to existing units." Id.
Finally, the industry's representatives noted that the timeline for action should balance two core considerations: "must allow for utilities to maintain reliability (slower timeline); must move quickly to address global warming effects." Id. at 2.
      The American Public Power Association (APPA), in comments on the Endangerment Finding, while questioning the appropriateness of NSPS regulation of GHGs, recognized the efficacy of measures not taken on site, for instance, stating, "APPA strongly believes that sequencing or other practical approaches might allow the use of energy efficiency measures involving the ultimate utility customer to be considered as a viable emissions reductions options for fossil generation electric utilities ..." APA Comments on Endangerment Finding, at 23-24.
      The Edison Electric Institute (EEI), in its comments on the Endangerment Finding, also questioned the use of section 111, but urged, "if EPA were to decide, nevertheless, to move forward with its existing CAA title I authorities to regulate GHG, we encourage the Agency to utilize market-based programs (i.e., cap-and-trade) instead of traditional command-and-control approaches." EEI, Comments on Endangerment Finding, at 7 n.1; see also Appendix I to EEI ANPR comments.
      The Utility Air Regulatory Group (UARG), in its comments on the Endangerment Finding, encouraged the agency to use flexible approaches under section 111(d) that would go beyond a particular unit. "Facility-wide, plant-wide, and company-wide standards would provide valuable flexibility but also complexity in trying to integrate such standards into potential economy-wide programs like trading." UARG, Comments on Endangerment Finding, at 108-09 (emphases added). In its comments on the Advanced Notice of Proposed Rulemaking (ANPR) for the Endangerment Finding, UARG stated, "The development of new technologies will be key to the ability to reduce GHG emissions from all sectors of the economy. ... [T]here may be existing technologies that can be employed in the short term as identified in the ANPR, such as improved plant efficiencies, fuel switching, nuclear power, and renewable power ...." UARG, ANPR Comments, at 6 (emphasis added).
      In December 2013, in pre-proposal comments, the APPA stated the following, as one of the principles to guide the agency's decision making under section 111: "Recognizes the substantial emission reductions from the power sector that have already occurred and will continue to occur as a result of unit retirements, fuel switching, energy efficiency programs, and increasing use of renewable and other non-emitting or lower emitting energy sources, both voluntarily and pursuant to state mandates, among other factors."
      Some utility commenters explicitly urged the agency to use a system-wide approach to standard setting. For example, consensus principles the Municipal Electric Utilities of Wisconsin (MEUW) shared with the agency included:
      Systemwide Compliance Basis  -  Standards should not apply to individual plants because GHG reduction projects at individual plants are extremely limited. Allow entities to average their emissions over their entire fleet or provide for an even broader base for compliance.
      Allow for Total System Emission Reducing Actions  -  Affected entities should be able to comply with the standards of performance utilizing any activities that reduce emissions. These activities include supply- and demand-side energy efficiency measures, and shifting generation from fossil resources to renewables and other emission-free or lower emitting resources.
      Individual companies and utilities amplified these points in their pre-proposal comments, frequently highlighting the role of fuel-switching to natural gas, plant retirements, and growing renewable energy (as well as demand-side energy efficiency programs, which they believed should be credited for compliance in achieving emission reductions, even while disputing the agency's legal authority). For example, "Early action `credit' should specifically include prior compliance actions, including retirement of coal units, system or end-user efficiency improvements, additions of renewable generation, development of carbon offset projects, etc., as well as any compliance activities that can be taken inside the unit's boundaries." Am. Muni. Power & Ohio Muni. Elec. Ass'n, Ltr. to Gina McCarthy, at 7 (Dec. 2013) (emphasis added). In a joint letter, utilities in the state of Missouri made clear their opposition to the EPA's legal authority to directly impose or enforce the BSER, but went on to request that the agency recognize a broad swath of measures as compliance options, including: averaging/bubbling that could include new, lower-emitting units (i.e., across a fleet, across units in a particular state or region, among sources in the same source category or in different subcategories, among existing and closed facilities, etc.); trading; purchasing energy efficiency credits generated by the increased deployment of end-use efficiency programs; shifting dispatch to lower-emitting generation; and adding new lower-emissions fossil fuels and renewable energy. Letter from Missouri Utilities to Mark Smith, Branch Chief, Air Permitting and Compliance Branch, U.S. EPA, Region 7, at 4 (Nov. 27, 2013) (emphasis added).
      These comments are similar in nature to many others received from various members of the power sector. See, e.g., Salt River Project (SRP), State of Arizona, Responses to EPA Stakeholder Questions, at 11 (Dec. 17, 2013) ("Under [SRP's recommended phased-implementation] approach [to section 111(d)], states could establish a series of `increments' at a rate- or mass-based level based on measures that are more likely to be achievable in the shorter term and in the longer term. For example: Short-term reductions are based on cost-effective "low-hanging-fruit" (i.e., basic plant efficiency upgrades, incorporation of existing renewables and demand-side efficiency programs)....") (emphasis added). At the same time these "beyond-the-fenceline" measures were touted as cost-effective compliance options for achieving substantial emission reductions, utility commenters also emphasized the relatively small emissions reductions plant efficiency upgrades could achieve on their own. See, e.g., See Letter from Kansas Utilities to Administrator Gina McCarthy, at 5 (May 20, 2014) ("Because EGUs inherently operate very close to their design efficiencies, we believe unit specific efficiency improvements will have limited impact on overall CO2 emission reductions."). Rather, individual utilities highlighted fuel-switching, plant retirements, RE, and demand-side energy efficiency measures as actions they were taking to substantially reduce their carbon emissions. See, e.g., id. at 4-5 ("Kansas is uniquely positioned to take advantage of a significant amount of renewable energy, especially wind electricity generation."); Letter from Iowa Utilities Board to Gina McCarthy and Rebecca Weber, at 3 (Dec. 6, 2013) ("Iowa has significantly increased the amount of wind generation installed in the state and has reduced the CO2 intensity of its electric generation between 2000 and 2012."); Letter from CPS Energy to EPA, at 1 (Oct. 23, 2013) ("As part of a decarbonization strategy, CPS Energy has announced it will indefinitely suspend operation of two baseload coal units ... at the end of 2018. [Combined with] solar, wind, IGCC, coal gasification with carbon capture and energy efficiency will reduce overall CO2 emissions by about 45% in 2020 from baseline year 2011."); Letter from First Energy to Joseph Goffman, at 1 (Jan. 21, 2014) ("Substantial CO2 reductions have already been realized over the past decade due to ... increasing renewable generation, low natural gas prices, energy efficiency programs, and retirements of older, less-efficient plants ...").
       Taken collectively, the body of information provided by the power sector to the agency strongly supports the technical and policy choices the EPA made in defining the BSER. The industry urged the agency to consider the sector as inter-connected rather than comprised of discrete power plants. It highlighted the efficacy of fuel-switching to natural gas, and increasing renewable energy, among other things, to reduce emissions. These measures were sufficiently measurable and enforceable that the industry sought recognition for them as compliance options. The industry recognized the limited potential of at-the-plant efficiency upgrades to reduce emissions. And it requested maximum flexibility for states and companies through the use of trading, a broad scope of creditable compliance actions, and extended compliance periods. While the agency must reject the legal theory that it can only define the BSER based solely on measures that are integrated into the design and operations of the facility, these technical and policy suggestions from the industry are found reflected in the agency's final rule, and support the reasonableness of the EPA's choices.
VII.  Division of Responsibilities under 111(d)
      This section briefly summarizes the key determinations in this rulemaking under section 111(d), including the EPA's determination of the best system of emission reduction (BSER), the identification of the source subcategory-specific emission performance rates, and the state-level rate-based and mass-based CO2 goals; the states' establishment of the standards of performance and submission of state plans; and the EPA's promulgation of standards of performance in a federal plan, under certain circumstances. In summarizing these determinations, this section highlights the respective roles of the EPA and the States.
      A.  The Determination of the BSER
      For present purposes, the initial regulatory determination under CAA section 111(d)(1) is the BSER. As we explain in section V.B.1 of the preamble, the statute clearly gives the EPA the authority to determine the BSER. Section 111(a)(1) defines "standard of performance" as a standard for emissions that "reflects the degree of emission limitation achievable through the application of the best system of emission reduction ... the Administrator determines has been adequately demonstrated" (emphasis added). Thus, we disagree with commenters who contend that the states, and not EPA, have that authority. The Administrator, under both 111(b) and (d), determines the BSER and the degree of emission limitation achievable through the application of the BSER, pursuant to section 111(a)(1). As discussed below, states establish standards of performance under section 111(d)(1), which is in contrast to the Administrator's authority to establish standards of performance under section 111(b). But section 111(d) does not alter section 111(a)(1)'s delegation of the determination of the BSER to the Administrator of the EPA.
      The language of section 111(a)(1) is also clear that after determining the BSER, the EPA is authorized under the CAA and the implementing regulations, as an integral component to setting emission guidelines, to determine the resulting emission limitation from the BSER. Specifically, the definition of a "standard of performance" under section 111(a)(1) is "a standard for emissions ... which reflects the degree of emission limitation achievable through the application of the [BSER]." Because the purpose of the BSER is to determine the amount of emissions to be reduced and because the EPA determines the BSER, it is reasonable to interpret section 111(a)(1) to authorize the EPA to determine "the degree of emission limitation achievable" from the BSER. Thus, in general, under section 111(a)(1), following the determination of the BSER, the EPA has the authority to identify the amount of emission limitation that reflects the application of the BSER to the affected sources.
      Under the CAA, an "emission limitation" is amenable to expression as a quantity, rate, or concentration of emissions of air pollutants. In the Clean Power Plan, the emission limitation is expressed as the source subcategory-specific emission performance rates for the affected EGUs. Source subcategories in this context refers to fossil steam units and stationary combustion turbines. Thus the emission limitation is expressed as two rates in pounds of CO2 per megawatt-hour of electrical generation output, one rate for steam electric units and one rate for stationary combustion turbines. (The CO2 emission performance rates may also be referred to in the emission guidelines as the emission performance level or levels. As discussed in the following section, the emission performance rates are to be distinguished both from the state goals and from standards of performance.) As discussed below, the agency is providing flexibility to allow states to demonstrate an equivalent level of emission performance through several design options for state plans.
      These emission performance rates reflect the required emission performance level for all the affected sources. Because the EPA has determined these rates to be achievable, the States in submitting approvable plans must demonstrate that they will be met. This is consistent with the agency's longstanding view of its role in determining the BSER. Some "substantive criterion" must be available to govern the Administrator's review of state plans. 40 FR 53340, 53342 (Nov. 17, 1975). While the BSER as determined in the emission guidelines "will not have the purpose or effect of national emission standards" directly applicable to sources, the agency has long believed that "it is desirable (if not legally required) that the criteria [for approvability of state plans] be made known in advance to the States, to industry, and to the general public." Id. at 53343. See also 40 CFR 60.22(b)(3) (emissions guidelines will contain "information on the degree of emission reduction which is achievable with each system"); id. 60.25(a) (requiring states to submit "correlated" data "presented in such a manner as to show the relationship between measured or estimated emissions and the amounts of such emissions allowable under applicable emission standards").
      In this rulemaking, after the EPA determined the BSER as the building blocks, the EPA then applied the building blocks to the source subcategories on a region-by-region basis. This allows us to identify the two source subcategory-specific emission performance rates in the region where application of the building blocks produced the least stringent rates. The EPA selected those least stringent rates as the two nationally uniform source subcategory-specific emission performance rates in order to ensure achievability and enhance flexibility nationwide. We discuss in more detail the legal authority to take this approach (applying the BSER on a regionwide basis, and determining nationally uniform emission levels) in Section V.A.3.e-f of the preamble. These source subcategory-specific emission performance rates are, in essence, the arithmetic expression of the BSER as applied to the two source subcategories on the basis of the least stringent region, which are then applied to the other regions. While they constitute the "degree of emission limitation achievable," and inform the agency's review of state plans for approvability, they are not, as described further below, binding in-and-of-themselves.
      B.  The Calculation of the State Goals
      Once the EPA determined the BSER and the degree of emission limitation achievable, the agency translated the source subcategory-specific emission performance rates into the state-by-state, state-level rate-based and mass-based CO2 goals. As we explain in Section VII of the preamble, these state goals inform the agency's review of state plans for approvability. However, these state goals are not binding or enforceable in and of themselves. Rather, they are the application of the source subcategory-specific emission performance rates to the mix of affected EGUs on a state-by-state basis. Thus, they are another arithmetic expression of the BSER, in this case as applied to the mix of affected EGUs in each state.
      Just because the goals are not binding in the sense of being enforceable against the states or sources, does not mean a state is free to ignore them. To do so would be to invite the EPA's disapproval of that state's plan. The goals are a type of accounting device, that is, they are part of the methodology for assuring that if states adopt standards of performance that differ from the source subcategory specific emission performance rates, the states will be able to assure that they are obtaining the same emission performance level as the application of the BSER to their sources would require. The ability to use accounting metrics to determine equivalent levels of stringency is provided for, and wholly consistent with, the framework regulations of subpart B, which provide that an emission guideline is to contain information that "reflects the application of the best system of emission reduction (considering the cost of such reduction) that has been adequately demonstrated for designated facilities, and the time within which compliance with emission standards of equivalent stringency can be achieved." 40 CFR 60.22(b)(5) (emphasis added).
      The state goals represent a statewide translation of the subcategory-specific emission performance rates. They do not impose an obligation directly on states. The EPA agrees with commenters who say that the states, as states, are not the obligated parties for compliance with emission reduction requirements under section 111. The ultimate enforceable regulatory obligation under the Clean Power Plan, as under all section 111(d) emission guidelines, must fall on the affected sources themselves, here, the affected EGUs.
      We disagree with commenters who consider the state goals to be binding in and of themselves and who then assert that the EPA does not have the authority to set binding state goals. This is a misunderstanding of the nature of the state goals as an accounting device that aids in the review of submitted state plans for approvability. Although the goals are not binding, they will inform the agency's substantive review of state plans for satisfactoriness. Given that the EPA has determined the degree of emission limitation achievable, state plans that fail to meet these levels of emission reduction would be proposed for disapproval through a disapproval process that would include notice and opportunity for public comment. Nonetheless, failure to submit an approvable state plan is not a sanctionable violation of the Clean Air Act. It simply means the agency will have the responsibility to develop a federal plan for the affected EGUs in that state.
      The agency recognizes that the goals for each state may vary to some degree, but this is a natural and unsurprising consequence of the application of the emission performance rates to each state's unique mix of affected EGUs. The variation in state goals has been substantially reduced in the final rule as compared to the proposal, in part to respond to the many adverse comments that this variation produced an unacceptable degree of inequity among sources in different states. The level of variation is minimized in the final rule.
      We note that in the final rule, the agency is allowing the states important flexibilities with respect to meeting their goals: States utilizing early action programs to achieve reductions prior to the start of the interim period may qualify for matching credits or allowances from the EPA that increase the overall size of a mass budget or the overall pool of emission rate credits. States may set their own "steps" in the interim period to allow for relatively greater emissions earlier and relatively lower emissions later (in effect, allowing a form of emissions borrowing), so long as the interim performance level is achieved. Beyond limited circumstances expressly provided in the guidelines, the EPA is not authorizing states to set less stringent standards of performance for their sources in such a way that the overall state goal goes unmet.
      Some commenters stated that this exceeds the proper scope of the EPA's authority because it sets binding, inflexible emission rate limits in the aggregate for all of a state's affected EGUs. Commenters said that under the proposal, once these "goals" are finalized, states will have no authority to change them, despite section 111(d)'s express grant of authority to the states, not EPA, to establish standards of performance and to consider factors such as the remaining useful life of sources in establishing standards of performance.
      These comments are premised on a legal view that the statute unambiguously requires the EPA to allow states to reduce the stringency of standards of performance below emissions performance levels the EPA determined were achievable. The agency disagrees with these commenters. The state must establish the standards of performance for their sources in a manner consistent with the emission guidelines, and the standards are ultimately subject to the agency's substantive review of a state plan for satisfactoriness under section 111(d)(2)(A). States plans that do not meet the level of stringency the agency believes is achievable for the sources in that state can be disapproved. This comports with the agency's longstanding view that its review of state plans under section 111(d) is substantive. The agency agrees with commenters to the extent that the statute affords EPA the discretion to decide in certain rules that a downward variation in emissions performance for some affected sources in a state under section 111(d) could be authorized. The implementing regulations provide this authority at 40 CFR 60.24(f). But this does not mean that for a particular emissions guideline for a particular pollutant from a particular category of sources, the agency cannot reasonably decide that such downward variations are unwarranted. That is the case here, as we explain in the section of the preamble and this Legal Memorandum concerning the remaining useful life provision of section 111(d)(1).
      The alternative suggested by commenters would leave the agency powerless to prevent an unbounded loosening of stringency of national air pollution control under section 111(d) by the states. As we describe in the preamble in Section V, Congress intended that the CAA be a comprehensive vehicle for regulating air pollution, and enacted this provision to ensure there was no gap in the statute through which serious air pollution problems might go unaddressed. Allowing the states to have the degree of unreviewable discretion that the commenters urge means that the states could functionally ignore national air pollution control objectives and leave the federal government without any recourse to respond. See 40 FR at 53343.
      C.  The Establishment of Standards of Performance and Design of State Plans
      Following the promulgation of the emission guidelines, the scene shifts to the States. The States are required to submit state plans that take the emissions standards approach or the state measures approach, and that meet the requirements of the guidelines. The emission guidelines give states a wide range of choices in the design of their plans. They may impose the sub-categorized emission performance levels on their sources as rate-based emission standards, or they may take one of several options to achieve an equivalent result, any of which may be preferable for a particular state given its unique circumstances. They could impose the single, combined state rate on all affected EGUs in their state. They could use a mass-based program using the mass budget that the agency determined in the final rule represents an equivalence in performance to the sub-categorized emission rates.
      The above-described set of requirements and calculations in the emission guidelines does not mean that the EPA is requiring that sources or states implement the BSER. The agency's requirement is that state plans meet emission guidelines requirements for approvability, including most importantly, the achievement of the emission performance levels. The EPA is not requiring the implementation of the building blocks or any other type of specific controls. In fact, under section 111(b)(5), where the EPA imposes standards of performance on new sources, the EPA is explicitly precluded from requiring any particular type of emission control, including the BSER. Rather, the "degree of emission limitation" determined by the BSER sets the standard of performance, but sources remain free to determine how they will meet the standard. There is no comparable provision to 111(b)(5) for existing sources under section 111(d), but the notion that the BSER is not specifically required is consistent with this statutory construct. When we promulgate a 111(d) rule determining an add-on technology like a scrubber to be the BSER, we do not require that the sources or states implement that add-on technology; rather, we require only that the states submit plans that achieve the emission performance level of the BSER that we have determined. In some past rules, as a practical matter, it may be that for a given type of pollutant or source category, a particular technology the EPA identified as the BSER is the only available means of achieving the performance standard. But this is not the case for this rule.
      Thus, we disagree with commenters who stated that we are improperly requiring states to implement the building blocks, such as by ordering re-dispatch to natural gas-fired units, or ordering the construction of renewable energy projects. The premise of these comments is incorrect. Nowhere in the final emission guidelines are such actions directed or ordered to occur. Furthermore, under this rule, the EPA would not exert enforcement authority over entities other than the affected EGUs and their owners and operators, in order to enforce the emission standards applicable to the affected EGUs set in a state plan (or federal plan if necessary). This rule does not mandate or authorize that state renewable energy or energy efficiency programs become federally enforceable under the CAA.
      As a practical matter, the states do not have to implement the BSER or require that sources implement the BSER, and sources do not have to implement the BSER to achieve the emission performance levels; even so, we recognize that some sources will, in fact, take actions that reflect or resemble the implementation of the building blocks. But as we explain in Section V.B of the preamble, states and sources have many choices other than the building blocks. They can choose to get emissions reductions by implementing demand-side-energy efficiency (DS-EE) projects and programs; co-fire with natural gas, re-power with natural gas, or take other measures that we describe in the preamble and that others have described.
      We expect that some sources will implement measures that reflect or resemble the building blocks. These measures met the requirements of being the "best" system of emission reduction that is adequately demonstrated, taking into account costs and other factors. Thus, it is entirely reasonable to anticipate that they will be used in practice. But commenters are incorrect in asserting that the EPA is requiring states and sources to implement the building blocks or reduce generation, or that states and sources have no choice but to implement the BBs or reduce generation. As discussed above, states and sources have choices as to the amount or degree to which they implement the BBs and a high degree of flexibility to use other methods.
      All of this is consistent with how EPA has promulgated section 111 rules in the past. Sources do not have to implement the BSER, although in many cases they can be expected to do so. For this rule, we expect greater use of alternatives to the BSER measures than in other rules, in part because DS-EE is a relatively inexpensive means of obtaining emission reductions from the affected EGUs.
      D.  The Establishment of Standards of Performance in a Federal Plan
      If a state does not submit a state plan or the EPA disapproves a state plan submittal, the EPA will promulgate a federal plan that will impose the standards of performance (in implementing regulations referred to as "emission standards") on affected EGUs, and provide for their implementation and enforcement. The EPA is proposing a federal plan to demonstrate how this can be done. The federal plan will also serve as a model rule for states to adopt or tailor for use in their own state plans. Even where the EPA is directly implementing the standards of performance in a federal plan, however, the agency will not, and need not, attempt to order sources to implement the measures that comprise the BSER. Rather, the agency would set emission standards for each of the affected EGUs in the federal-plan state, provide mechanisms for their implementation and enforcement, and otherwise leave to the owners and operators of the affected EGUs the decisions about what measures they want to take to comply with the emission standard. Though the emission standards will be federally enforceable, as under a state plan, sources may achieve them through implementation of measures in the BSER, or any other method. The state and its officials do not necessarily need to play any role in the implementation of a federal plan. However, the agency may delegate administration of aspects of the program or may approve partial state plans for portions of the otherwise-federal program. These mechanisms and other facets of implementation will be set out in greater detail in the preamble and other supporting documentation to the proposed federal plan.
      In the context of a federal plan, it becomes easier to see why the question whether the EPA would have the authority to directly order the implementation of the measures in the building blocks is not only not relevant, but represents a categorical misunderstanding of the nature of the BSER in relation to the imposition of standards of performance. Commenters on the proposal asserted that the BSER cannot include building blocks 2, 3, or 4 because the EPA may include in the BSER only controls that the EPA has the authority to implement or enforce, and, the commenters continue, the EPA does not have the authority to implement or enforce these building blocks. We disagree with these comments. First, the EPA has determined not to finalize building block 4 as a component of the BSER. Additionally, the authority or practical ability of the EPA to implement or enforce the BSER itself is irrelevant and based on a false premise. To illustrate this, by the same token, the EPA could not enforce many logistical aspects of a control requirement such as a scrubber  -  for instance, the EPA does not have the authority to order the creation of companies that manufacture scrubbers, or order their construction or delivery on a certain schedule. The EPA need not have before it at the stage of determining the BSER all of the information regarding manufacturing, transportation of parts, or other logistical requirements to ensure that each scrubber gets constructed and delivered to a source. Nonetheless, the agency can determine the BSER premised on a reasonable assumption that all of those things can actually happen.
      What is relevant is that the control requirements that the EPA identifies meet the statutory considerations to qualify as the BSER, which include that the owners or operators of the affected sources be able to implement the control measures and achieve their emission limits through those control measures. As we discuss elsewhere, that is the case for all of the building blocks in the final rule. Thus, the EPA can reasonably determine that the federally enforceable emission standards that would be set in a federal plan, just as in a state plan, are achievable by the affected EGUs and will be met either through the measures in the building blocks or, if the affected EGUs so choose, through other measures that contribute to its compliance. The agency will provide for the implementation of the standards of performance via the same types of regulatory mechanisms being made available to states in the emission guidelines.
      E.  Summary of the Determinations Under section 111(d) and Respective EPA and State Roles

      Through the process of section 111(d), the EPA regulates air pollutants from source categories of existing sources, in this case, CO2 from certain fossil fuel-fired EGUs. This regulation necessarily has impacts on the source category, which in this case is a key part of the broader electric utility power sector. But this does not mean that the EPA is overstepping its authority. The fact that the EPA has the authority to determine the BSER means that the EPA has the authority to determine the degree of emission limitation achievable, which in the Clean Power Plan is expressed as the CO2 emission performance rates. The agency has translated these into a set of state goals that each reflect an emission performance level that is equivalent to the emission performance rates. The agency's emission guidelines set forth these performance levels, along with other requirements, as the minimum requirements for states to meet in order to have an approvable state plan. If a state fails to submit an approvable plan, the EPA will implement a federal plan imposing emission standards for the affected EGUs in that state.
      Contrary to the views of some commenters, the Clean Power Plan does not usurp state authority over the electric utility sector or other traditional areas of state regulation. As in many other areas of environmental law, the EPA has set minimum federal requirements for a class of polluting facilities, and states have the opportunity to design a program to meet those requirements, or go beyond them if they so choose. In this way, the Clean Power Plan is fully consistent with the principles of cooperative federalism that underlie the Clean Air Act and that are incorporated into section 111 and maintains a proper balance of roles between the federal government and the States.
VIII.  Authority of the Administrator to determine State Plans to be "Satisfactory"
	Section 111(d)(2)(A) authorizes the EPA to promulgate a federal plan for any State that "fails to submit a satisfactory plan" establishing standards of performance under section 111(d)(1). This also provides the standard by which the EPA reviews state plan submittals: such submittals must be "satisfactory." The reason is structural: Any other standard than "satisfactory" for the EPA's action on a plan submittal would leave a grey area between submittals that are disapproved under the other standard and the EPA's federal plan authority, which is based on whether a plan is "satisfactory." In other words, the standard triggering the EPA's federal plan authority must be identical with the standard for action on state plans.
	The relevant dictionary meaning of "satisfactory" is "fulfilling all demands or requirements." The American College Dictionary ("ACD") 1078 (C.L. Barnhart, ed. 1970); see also Oxford English Dictionary ("OED") (2d and 3d ed.; online version) ("To answer the requirements of (a state of things, a hypothesis, etc.); to accord with (conditions). †Also rarely of a person: To fulfil the requirements of."). The related word "satisfy" (both originate from the Latin "satisfacere") can mean "to fulfill the requirements or conditions of." ACD at 1078. Thus, the natural interpretation of "satisfactory plan" is a section 111(d) plan that meets the conditions or requirements of the emission guidelines.
	Furthermore, section 111(d)(2) states that the EPA shall have the "same authority to prescribe a plan for a State in cases where the State fails to submit a satisfactory plan as [the EPA] would have under section 7410(c) of this title in the case of failure to submit an implementation plan." Because 111(d)(2) gives the EPA the "same" authority as EPA would have under section 110(c), the meaning of "satisfactory" should be informed by the structure of 110(c). In other words, EPA should have the same authority, structurally, as EPA does under 110(c).
	When section 111 was added to the CAA, section 110(c) read:
      The Administrator shall, after consideration of any State hearing record, promptly prepare and publish proposed regulations setting forth an implementation plan, or portion thereof, for a State if --
      (1)	the State fails to submit an implementation plan for any national ambient air quality primary or secondary standard within the time prescribed,
      (2)	the plan, or any portion thereof, submitted for such State is determined by the Administrator not to be in accordance with the requirements of this section, or
      (3)	the State fails, within 60 days after notification by the Administrator or such longer period as he may prescribe, to revise an implementation plan as required pursuant to a provision of its plan referred to in subsection (a)(2)(H).
Clean Air Amendments of 1970, Pub. L. 91-604, § 4, 84 Stat. 1682 (1970). Subsections 110(c)(1) and (c)(3) correspond to failure to submit a plan or revised plan, respectively, and do not set a standard for a submitted plan. On the other hand, subsection 110(c)(2) does set a standard: under subsection 110(c)(2), State submissions must "be in accordance with the requirements" of Section 110. Thus, the natural interpretation of "satisfactory" described above is consistent with this: if EPA can issue a FIP after determining a SIP is not in accordance with the requirements of section 110, then under section 111(d)(2), the EPA can issue a federal plan if the state plan is not in accordance with the requirements of section 111(d)(1). In both cases, it is understood that regulations the EPA issues specifying requirements under the relevant sections (e.g. subpart B and these emission guidelines under section 111(d)(1)) are to be considered "requirements of" the relevant section. Any other outcome would eviscerate the EPA's authority under sections 301(a) and 111(d)(1) to issue binding regulations.
	In its current form, as amended by the 1990 Clean Air Act Amendments, the corresponding portion of section 110(c)(1) (i.e. the portion that gives the EPA FIP authority when the state submits a SIP, but it is deficient) does not set a standard for submitted SIPs. Instead, the corresponding portion, subsection 110(c)(1)(B), is conditioned on the EPA's disapproval of a SIP submittal in whole or part. The substantive standard for the EPA's action on a SIP submittal is set in section 110(k)(3): it must "meet[] the applicable requirements of [the Act]." (See also section 110(l): SIP revisions cannot "interfere with ... any other applicable requirement of [the Act].") It should be noted that, in this context, "meet" is synonymous with the connotation of "satisfy" mentioned above: "to satisfy the requirements of (a particular case, a deadline, etc.)." OED. Thus, the current form of section 110(c) confirms the above interpretation of "satisfactory": for a section 111(d)(1) state plan to be "satisfactory," it must meet the applicable requirements of the Act, including and in particular the applicable requirements of section 111(d)(1), subpart B, and the EPA's emission guidelines. And the language, "applicable requirements of the Act," in section 110(k)(3) confirms that the plan must meet the requirements of section 111(d)(1) and any other applicable section of the Act, and any regulations the EPA promulgates (i.e. subpart B and the emission guidelines) under section 111(d)(1) or section 301 that apply.
	Thus, based on the dictionary meaning of "satisfactory" and the structure of the Act, Congress has spoken directly to the issue. "Satisfactory" means "meet all applicable requirements of the Act." But even if a court found "satisfactory" ambiguous with respect to this issue, EPA's interpretation of "satisfactory" would be reasonable. There is nothing in the legislative history to suggest that section 111(d)(1) state plans should be reviewed by the EPA by any other standard, and as described above, it is reasonable that the EPA's authority to issue regulations under sections 111(d)(1) and 301 should have actual effect in the EPA's action on state plans.
	Finally, courts have routinely referred to "satisfactory" plans or SIPs as a shorthand way of summarizing the approval/disapproval process under section 110(k). See, e.g., Vigil v. Leavitt, 381 F.3d 826, 830-831 (9th Cir. 2004) ("In the event that a state does not submit a SIP or does not submit a satisfactory plan within the specified time, the EPA Administrator shall promulgate a federal implementation plan"); NRDC v. EPA, 22 F.3d 1125, 1134-35 (D.C. Cir. 1994) (discussing conditional approvals as "an alternative to disapproving substantive, but not entirely satisfactory, SIPs submitted by the statutory deadlines"); Illinois EPA v. U.S. EPA, 947 F.2d 283, 285 (7th Cir. 1991) (describing SIP negotiations that "failed to produce a satisfactory SIP" and the consequential SIP disapproval); New Mexico Environmental Improv. Div. v. Thomas, 789 F.2d 825, 833 (10th Cir. 1986) (explaining that the "EPA reasonably concluded that a satisfactory SIP in terms of section 7502 requirements had never been submitted"); and Air Pollution Control Dist. v. U.S. EPA, 739 F.2d 1071, 1075 (6th Cir. 1984) (explaining the EPA's authority to devise a FIP "[i]f a state fails to submit a satisfactory plan").
	Accordingly, in light of the EPA's authority under section 110(c), it is mandated, or at the least reasonable, that the term "satisfactory plan" should be interpreted to mean a plan that meets all applicable requirements of the Act, including but not limited to section 111(d), subpart B, and these emissions guidelines. For structural reasons, it is also the case that the EPA not only has the authority to, but in fact must approve a plan that meets all applicable requirements of the Act. Although there is no case law specifically on the standard of review of a section 111(d)(1) state plan or the EPA's duty to approve satisfactory plans, as explained above, the EPA's action on a 111(d)(1) state plan is structurally identical to the EPA's action on a SIP. Under section 110(k)(3), EPA must approve a SIP that meets all requirements of the Act. See Train v. NRDC, 421 U.S. 60 (1975) (discussing the 1970 version of the Act); Virginia v. EPA, 108 F.3d 1397, 1408-10 (D.C. Cir. 1995) (discussing the 1970, 1977, and 1990 versions). Therefore, the EPA must also approve section 111(d)(1) state plans that meet all applicable requirements of the Act (i.e., are "satisfactory")  -  any other result would leave a void where the EPA did not approve a satisfactory plan, but could not promulgate a federal plan.
	Based on the reasoning of Train v. NRDC and the language of sections 110 and 116 of the Act, the U.S. Supreme Court in Union Elec. Co. v. EPA, 427 U.S. 246 (1976), held that the EPA could not disapprove a SIP on the basis that the plan required technologically infeasible controls that might force facilities to shut down. The Court noted that the most natural reading of section 110 did not preclude the state from imposing requirements that might reduce emissions more than necessary to attain the national ambient air quality standards ("NAAQS"). Id. at 262-63. The Court also noted that section 116 specifically provided that States could adopt emission standards that are more stringent than national standards. Id. In response to the argument that such more stringent emission standards could not be part of the SIP, the Court reasoned that it would be difficult for the Administrator to determine what emission standards would precisely bring an area into attainment but no more, and pointless for States to maintain two sets of emission standards (one federally enforceable and one not). Id. at 264. Thus, the Court held that "States may submit implementation plans more stringent than federal law requires and that the Administrator must approve such plans if they meet the minimum requirements" of the Act. Id. at 265.
	Both Train and Union Electric set out a general principle that the EPA cannot "question the wisdom of a State's choices of emission limitations if they are part of a plan which satisfies" the requirements of the Act. Train, 421 U.S. at 79. "[S]o long as the ultimate effect of a State's choice of emission limitations is compliance with the national standards for ambient air, the State is at liberty to adopt whatever mix of emission limitations it deems best suited to its particular situation." Id.; accord Union Elec., 427 U.S. at 266 ("So long as the national standards are met, the State may select whatever mix of control devices it desires, and industries with particular economic or technological problems may seek special treatment in the plan itself.") (citing Train, 421 U.S. at 79). This State discretion includes the discretion to "submit implementation plans more stringent than federal law requires." Id. at 265. In the section 110 context, the critical cooperative-federalism inquiry is whether the EPA has provided the States "real choice" in how to develop SIPs that meet CAA requirements. The relevant precedents do not stand for the broader proposition -- suggested by some commenters -- that states have unlimited discretion in developing SIPs, or that EPA is prohibited from interpreting CAA requirements or reviewing SIP submissions for compliance with CAA requirements. To the contrary, the Supreme Court recently affirmed EPA's authority to reasonably interpret the CAA requirements applicable to SIPs, and to evaluate the sufficiency of SIPs against those requirements.
	No Court has had occasion to consider whether the general principles of Train and Union Electric should apply to emission guidelines for section 111(d) state plans, but to the extent those principles do apply here, these guidelines satisfy them. The EPA has given States maximum flexibility to achieve the rate-based or mass-based goals, or (should a State adopt the performance rates) to provide ERCs from various types of measures. Numerous measures that reduce CO2 emissions from affected EGUs and that are otherwise consistent with the requirements of these guidelines (such as enforceability) and the purposes of section 111(d)(1) may be credited. Furthermore, a state is free to reallocate the burdens of these guidelines among affected EGUs by imposing emission standards that vary from EGU to EGU. Finally, the possibility of interstate trading using fungible allowances or ERCs does not impermissibly constrain a state's authority under section 116 to impose more stringent emission standards, as a state is free to require affected EGUs to hold more allowances or ERCs, or to emit less CO2 than is required under these guidelines. This significant flexibility allows states to take local circumstances and state policy goals into account in determining how to reduce emissions from their affected sources, provided the plan meets minimum federal requirements. Accordingly, states have real choice to develop specific measures in state plans in way that meets the broader requirements of section 111(d) and this rule. Far from unlawfully encroaching upon state discretion, the federal-state balance in this rule is a paradigmatic example of cooperative federalism in pollution control laws.
IX.  "Remaining Useful Life" Provision of Section 111(d)(1)
      This section discusses our interpretation of the "remaining useful life" provision of section 111(d)(1) and our application of that interpretation to these emission guidelines.
      The second and last sentence of section 111(d)(1) provides: "Regulations of the Administrator under this paragraph shall permit the State in applying a standard of performance to any particular source under a plan submitted under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies." This portion of the legal memorandum examines: A) remaining useful life in the context of the implementing regulations in 40 CFR part 60 subpart B; B) the legislative history of the remaining useful life provision; C) the meaning of certain terms in the provision; and D) the EPA's interpretation of similar provisions in the Act's visibility program (including some relevant case law). We conclude that (and as supported by the preceding four discussions), these emission guidelines reasonably interpret the remaining useful life provision, and we conclude that, on the record before us, these emission guidelines reasonably permit states to take into consideration remaining useful life and other factors. We also review two U.S. Supreme Court opinions examining variances under the Clean Water Act and discuss their relevance to remaining useful life as implemented by these emission guidelines.
   A.          Implementing Regulations in Subpart B
Some commenters argued that, due to the remaining useful life provision, these guidelines impermissibly require state plans to achieve the rate-based or mass-based goals. In these commenters' views, if a State relaxes an emission limitation for one affected EGU in order to take into consideration remaining useful life, the State should not be required to increase the stringency of other emission limitations to maintain the goal. The implementing regulations in subpart B contemplate that states, in certain limited circumstances subject to EPA approval, may impose emission standards on particular facilities that are less stringent than generally required by emission guidelines. See 40 C.F.R. § 60.24(f). We therefore start with a discussion of those regulations.
 The EPA first promulgated the subpart B regulations in 1975. 40 Fed. Reg. 53,340 (Nov. 17, 1975). At that time, section 111(d)(1) stood as enacted by the 1970 Clean Air Act:
The Administrator shall prescribe regulations which shall establish a procedure similar to that provided by section 110 under which each State shall submit to the Administrator a plan which (A) establishes emission standards for any existing source for any air pollutant (i) for which air quality criteria have not been issued or which is not included on a list published under section 108(a) or 112(b)(1)(A) but (ii) to which a standard of performance under subsection (b) would apply if such existing source were a new source, and (B) provides for the implementation and enforcement of such emission standards.
Pub. L. 91-604 § 4(a), 84 Stat. 1676, 1684. Thus, when the EPA first promulgated the subpart B regulations, there was no remaining useful life provision, and subsection 111(d)(1)(A) required states to establish "emission standards," not "standards of performance."
	In proposing the subpart B regulations, the EPA stated: "It is the Administrator's judgment that section 111(d) permits him to approve State emission standards only if they reflect application of the best systems of emission reduction (considering the cost of such reduction) that are available." 39 Fed. Reg. 36,102, 36,102/1,2 (Oct. 7, 1974). Of particular relevance to remaining useful life, EPA went on to state:
It is recognized, however, that application of such standards may be unreasonable in some situations. For example, to require that existing controls be upgraded by a small margin at a high relative cost may be unreasonable in some cases. The proposed regulations, therefore, provide that States may establish less stringent emission standards on a case-by-case basis provided that sufficient justification is demonstrated in each case.
Id. at 36,102/2. The EPA therefore proposed that the subpart B regulations should contain a variance provision. See id. at 36,104/2. In response to an adverse comment, the EPA in finalizing the regulations stated:
Although section 111(d) does not explicitly provide for variances, it does require consideration of the cost of applying standards to existing facilities. Such a consideration is inherently different than for new sources, because controls cannot be included in the design of an existing facility and because physical limitations may make installation of particular control systems impossible or unreasonably expensive in some cases. For these reasons, EPA believes the provision [§ 60.24(f)] allowing States to grant relief in cases of economic hardship (where health-related pollutants are involved) is permissible under section 111(d).
40 Fed. Reg. 53,340, 53,344/2 (Nov. 17, 1975). The EPA did not state that section 111(d) compelled the EPA to provide for variances, just that it was permissible. As promulgated in 1975, subsection 60.24(f) provided:
On a case-by-case basis for particular designated facilities, or classes of facilities, States may provide for the application of less stringent emission standards or longer compliance schedules than those otherwise required by paragraph (c) of this section, provided that the State demonstrates with respect to each such facility (or class of facilities):
	(1) Unreasonable cost of control resulting from plant age, location, or basic 	process design;
	(2) Physical impossibility of installing necessary control equipment; or
	(3) Other factors specific to the facility (or class of facilities) that make 	application of a less stringent standard or final compliance time 	significantly more reasonable.
Id. at 53,347/3. Thus, under the 1975 regulations, States had to demonstrate that a less stringent emission standard was warranted, and that demonstration and the resulting emission standard were subject to the EPA review and approval. Id. at 53,348/2, 3. Despite the adverse comment, the promulgation of 60.24(f) was not challenged.
As discussed in detail in the next section, Congress added the remaining useful life provision in the 1977 Amendments. The legislative history indicates that Congress was aware of the 1975 implementing regulations and, through the remaining useful life provision, addressed the concerns (particularly regarding unreasonably expensive retrofit controls) that the EPA expressed when promulgating 60.24(f). The EPA did not revise the implementing regulations after the 1977 Amendments, but the EPA did issue emission guidelines for certain source categories. E.g., 45 Fed. Reg. 26,294 (Apr. 17, 1980) (primary aluminum plants). In responding to an adverse comment on the primary aluminum plant emission guidelines, the EPA stated: "The States may take into consideration the remaining useful life of a plant. Where a facility contains both old and new [reduction] cells, it may be reasonable to apply somewhat less stringent standards to the old." Id. at 26,295. Thus, the EPA thought that subpart B adequately addressed the remaining useful life provision for the purposes of that guideline, and was not challenged on that position.
Some commenters argued that the 1975 regulations, having been promulgated prior to the 1977 Amendments, necessarily do not implement the remaining useful life provision. Based on the history of the 1975 implementing regulations presented here and the 1977 Amendments presented below, we think those comments are overstated; however, that disagreement is not necessary to our promulgation of these emission guidelines as we next explain. We did not reopen the implementing regulations in Subpart B for comment and, because we are not relying on them to implement the remaining useful life provision it is not necessary to respond to these commenters.
      In 1995, the EPA added the prefatory phrase "Unless specified otherwise in the applicable subpart" to 60.24(f). The EPA was not challenged on that revision to subpart B, which now applies to emission guidelines issued under both sections 111(d)(1) and 129(b). On its face, the language now allows for other approaches to satisfying the remaining useful life provision. Thus, subpart B does not mandate the outcome that the commenters suggest, that States must be permitted to relax emission standards on particular affected EGUs on the basis of remaining useful life (or other factors) without requiring offsetting reductions from other affected EGUs. In fact, the EPA promulgated section 111(d)(1) emission guidelines, as part of the Clean Air Mercury Rule (CAMR), that set mass-based statewide caps on mercury emissions from coal-fired electric utility steam-generating units. States either had to adopt an allowance-based trading program, or had to impose individual emission standards; in both cases, the statewide cap had to be met and could not be adjusted. Thus, under CAMR, the sort of adjustment that commenters argue is necessarily required in order to take into account remaining useful life was not allowed. In any case, these emission guidelines avail themselves of the possibility added in the 1995 revision to make the source-specific variance factors inapplicable. Instead, they satisfy the remaining useful life provision in other ways, as discussed in this section of the legal memorandum.
      B.  Legislative History
	As mentioned above, the 1970 version of section 111(d)(1) did not contain a remaining useful life provision. The provision in subsection 111(d)(1) for state plans and the similar but not identical provision for federal plans in subsection 111(d)(2) were added to section 111(d) in the 1977 Clean Air Act Amendments. Pub. L. 95-95 § 109(b)(1), 91 Stat. 685, 699. The provisions first appeared in a House bill introduced in the 94th Congress. See H.R. 10498, § 111 (May 15, 1976), reprinted in A Legislative History of the Clean Air Act Amendments of 1977 ("1977 LH"), Environmental Policy Division, Congressional Research Service, Library of Congress, at 5961 (Aug. 1978, Serial No. 95-16). They were "intended to clarify the basis for standard-setting for existing sources under section 111(d) of the Act." H. Rep. to accompany H.R. 10498; 1977 LH at 6717.
      In the 95th Congress, the House proposed a nearly identical bill to H.R. 10498, which included the same language on "remaining useful life." The House report accompanying H.R. 6161 even repeated the explanations stated in the House report accompanying H.R. 10498, see H. Rep. 95-264 at 195; 1977 LH at 2662. Also, H.R. 6161 added a new section on visibility protection, which required the consideration of the remaining useful life of any existing source subject to "best available retrofit technology" (BART) or "maximum feasible progress" (as enacted, "reasonable progress") requirements. See H.R. 6161, § 116 (May 12, 1977); 1977 LH at 2329.
      According to the House report accompanying H.R. 6161, the revisions to section 111 were also intended to clarify section 111(d):
      This section is also intended to clarify the basis for standard-setting for existing sources under section 111(d) of the Act. Under the committee bill, the standards in the section 111(d) State plan would be based on the best available means (not necessarily technological) for categories of existing sources to reduce emissions. The Administrator would establish guidelines as to what the best system for each such category of existing sources is. However, the State would be responsible for determining the applicability of such guidelines to any particular source or sources. The Administrator's guidelines must take into account the remaining useful life of existing sources. Unless the State decides to adopt and enforce more stringent standards, the State plan would be expected to take into account the remaining useful life of the source (or sources).
H. Rep. 95-294 at 195; 1977 LH at 2662.
      From the perspective of remaining useful life, three things are worth noting about this passage. First, it adopts the term "guidelines" consistently with the EPA's usage of the term in the 1975 implementing regulations. This indicates that the remaining useful life provision was informed by those implementing regulations, including the EPA's intention in using the word "guideline" to indicate a rule that was not directly enforceable against affected sources, but that was binding on states in developing and submitting their plans. See 40 Fed. Reg. 53,340, 53,341/2 (Nov. 17, 1975). The sentence in the legislative history about states determining applicability is consistent with this: the guidelines are not directly applicable to a particular source, but the state plan does apply to particular sources within the guideline source category.
      Second, because Congress recognized the EPA's interpretation in the implementing regulations and therefore expected the EPA's emission guidelines in general to set binding requirements for states, Congress in particular expected the EPA to set binding requirements for consideration of remaining useful life. This is clear from the sentence stating, "The Administrator's guidelines must take into account the remaining useful life of existing sources." It should also be noted that this sentence uses "life," not "lives"; thus, it was not expected that the EPA, in promulgating emission guidelines, would examine the remaining useful life of each particular source individually. Instead, the EPA should determine how remaining useful life should generally be taken into account for a particular source category.
      Third, the House report states: "Unless the State decides to adopt and enforce more stringent standards, the State plan would be expected to take into account the remaining useful life of the source (or sources)." Thus, consistent with the statutory text, "in applying a standard of performance to any particular source," Congress intended that taking into account remaining useful life was not an avenue to avoid application of a standard of performance to a particular source, but instead a way to tailor to some extent (based on remaining useful life) the application of the standard to that particular source. In other words, the remaining useful life provision does not provide an unmitigated ability for States to exempt their sources from standards of performance, particularly if such exemptions would lead to a failure to achieve the degree of emission limitation the EPA determined to be achievable when there is on the record no warrant for doing so.
      This is consistent with the 1975 implementing regulations, which do not provide for an exemption, but instead provide for application of a less stringent standard based on certain factors. 40 Fed. Reg. 53,340, 53,347/3 (Nov. 17, 1975) (promulgation of 40 C.F.R. 60.24(f)). Thus, the interpretation of the provision here as not allowing for an exemption is consistent with those regulations.
      The points above are general but consistent with the overall framework of section 111(d); a concrete concern of Congress addressed in the remaining useful life provision was the cost of retrofit technology at existing sources and the potential for other, more cost-effective means of compliance. This can be seen in the legislative history in the broader context of the corresponding changes in the House bill to the provisions for new source performance standards. In the 1977 Amendments, Congress required that new sources install controls to reduce emissions, in lieu of reliance on cleaner fuels. A reason for this was to reduce demand by new sources for cleaner fuels, freeing up those fuels (which were perceived at the time to be relatively scarce) to be used by existing sources. H. Rep. 95-294 at 185; 1977 LH at 2652. For older and smaller existing sources, it might not be physically or economically feasible to install retrofit technology. By allowing those latter sources to comply through use of cleaner fuels, sources with "relatively short remaining useful lives" could stay in operation rather than shut down, and sources with small marginal revenues could avoid large up-front capital costs associated with retrofit controls. H. Rep. 95-294 at 186; 1977 LH at 2653.
	This provides necessary context for the statement in the legislative history that "the standards in the section 111(d) State plan would be based on the best available means (not necessarily technological) for categories of existing sources to reduce emissions." H. Rep. 95-294 at 195; 1977 LH at 2662. Thus, in explicitly retaining the BSER as the standard for existing sources, Congress made clear that the EPA was not obligated to base the BSER on control technology, but could nonetheless, for some source categories and some pollutants, reasonably do so after considering costs.
      One other parallel context in the 1977 Amendments should be discussed. Congress added a new section to the Clean Air Act, section 169A, regarding protection of visibility in certain National Parks and Wilderness Areas. The definition of best available retrofit technology (BART) required states (or EPA in a FIP) to consider five specific factors, including the remaining useful life of the source and the costs of compliance. While the legislative history does not discuss the remaining useful life factor in detail, Congress made clear that best available retrofit technology (BART) should not be required at all on sources built prior to 1962. H. Rep. to accompany H.R. 6161, 1977 LH at 2480; see also H.R. 6161, § 116, 1977 LH at 3237. Consequently, Congress provided an explicit exemption for these older sources. This exemption is instructive for two reasons. First, it shows that Congress was concerned primarily with the EPA requiring retrofit controls on older sources likely to have shorter remaining useful lives. Second, and more importantly, it shows that Congress viewed the consideration of "remaining useful life" to be something other than an exemption. Where Congress wanted to provide an exemption for certain sources from retrofit requirements, it did so explicitly. This is consistent with the legislative history for the section 111(d)(1) remaining useful life provision, which expressed a concern that older sources with "relatively short remaining useful lives" might prematurely shut down if required to install expensive controls, but does not express an intent that they be exempted from requirements entirely.
      In summary, we draw the following conclusions from the legislative history. First, Congress intended the EPA to issue binding requirements for remaining useful life and to take into account characteristics of a source category in determining how remaining useful life should be addressed. Second, Congress intended remaining useful life to be used by states to tailor the application of a standard of performance to a particular source, not to exempt sources from a standard of performance altogether. Third, Congress intended the provision to primarily address the problem of existing sources with relatively short remaining useful lives, for which installation of retrofit technology might be unreasonably expensive.
      C.  Meaning of Terms in the Remaining Useful Life Provision
      The term "shall" of course creates a mandatory requirement for this guideline; in other words, this guideline must "permit the State in applying a standard of performance to any particular source ... to take into consideration, among other factors, the remaining useful life of the source."
      However, contrary to some commenters' assertions, this mandatory requirement does not create unbounded authority for States to consider remaining useful life (or, for that matter, any other factor the state may wish to consider) in any way a State sees fit. Because this provision is part of the CAA, the EPA has the authority to interpret it in the first instance. In addition, ultimately, the EPA has the authority to review and determine whether state plans are satisfactory, including whether they achieve a requisite level of emission performance. Thus, the provision is best read to focus on the Administrator's obligation to promulgate guidelines that permit States to consider remaining useful life, and not on any "right" of the States Compare the provision with, for example, section 116 of the Act, which specifically reserves "the right of any State or political subdivision" to adopt more stringent requirements. 42 U.S.C. § 7416 (emphasis added). Thus, when Congress wanted to prohibit EPA from imposing constraints or parameters on State discretion, Congress knew how to say that.
	The language of the remaining useful life provision is consistent with this. To "permit" is "to let (something) be done or occur," as in "the law permits the sale of such drugs." ACD at 902 to 903; see also OED ("To allow or give consent to (a person or thing) to do or undergo something."). In the dictionary's example usage, "the law permits the sale of such drugs," it is well understood that the law may (and likely does) set conditions on the sale. Thus, the natural interpretation of the remaining useful life provision is that the Administrator may set reasonable conditions on how, or reasonable terms under which, states are allowed or "permitted" to take into consideration remaining useful life.
      In addition, the terms "consideration" and "among other factors" must be discussed. "Consideration" in this context is "regard or account: something taken, or to be taken, into account." ACD at 258; see also OED ("The taking into account of anything as a motive or reason; a fact or circumstance taken, or to be taken, into account; a reason considered."). Thus, "consideration" of "remaining useful life" means taking it into account "in applying a standard of performance to any particular source."
      However, taking remaining useful life into account is not the same as making remaining useful life dispositive. This interpretation is bolstered by the language "among other factors." This indicates that "remaining useful life" is itself a "factor." A "factor" is "one of the elements that contribute to bring about any given result." ACD at 431 (emphasis added); see also OED ("a circumstance, fact, or influence which contributes to a result."). Thus remaining useful life is one element of the application of a State's standard of performance to a particular source, but it is not dispositive.
      Finally, to "apply" is "to bring to bear; put into practical operation, as a principle, law, rule, etc." ACD at 61; see also OED ("To bring (a rule, a test, a principle, etc.) into contact with facts; to bring to bear practically; to put into practical operation"). Thus, "applying a standard of performance" to a "particular source" means putting the standard of performance into practical effect for that source. It does not mean exempting a particular source from a standard of performance, and as discussed in the legislative history, Congress knew how to allow sources to be exempted from requirements when Congress so desired.
      This analysis of the language of the remaining useful life provision confirms much of the legislative intent discussed above. First, even after addition of the remaining useful life provision, in submitting approvable state plans, states would remain subject to minimum criteria in the emission guidelines promulgated by the Administrator; the remaining useful life provision is not an unrestricted grant of a right to a state. Second, the Administrator can set conditions under which states are "permitted" to consider remaining useful life. Third, a state's consideration of remaining useful life should tailor the standard of performance to the source, not exempt it. Finally, the Administrator may review the state's application of the standard of performance to its sources, as part of the state plan, to assure that the state plan is "satisfactory," that is, meets the requirements of the CAA and the EPA's emission guidelines.
      D.  Remaining Useful Life in the Visibility Program
      A closer look at the "remaining useful life" provision in the visibility program sheds additional light on the meaning of the provision under section 111(d)(1).
      Under section 169A of the Act, SIPs are required to contain "a long-term [] strategy for making reasonable progress toward meeting the national goal," 42 U.S.C. 7491(b)(2)(B), of "prevention of any future, and the remedying of any existing, impairment of visibility" in certain National Parks and Wilderness Areas, id. (a)(1). A component of reasonable progress is the imposition of best available retrofit technology (BART) at certain existing sources. Id. (b)(2)(A).
      Remaining useful life plays a part in the visibility program in two ways. In determining BART for a particular source, States (or EPA in the case of a FIP) "shall take into consideration" five enumerated factors, including "the remaining useful life of the source." Id. (g)(2). Similarly, the remaining useful life of existing sources (along with three other factors) must be taken into consideration in determining reasonable progress for the long-term strategy. Id. (g)(1).
      Section 169A also requires EPA to issue "guidelines" for states to use in determining BART. Id. (b)(1). These guidelines must be followed for certain fossil-fuel fired power plants. Id. (b). In the "BART Guidelines," EPA has interpreted the "remaining useful life" BART factor and set very specific requirements (that is, requirements when it comes to the mandatory BART sources) for how States should consider it:
      The "remaining useful life" of a source, if it represents a relatively short time period, may affect the annualized costs of retrofit controls. ... If the remaining useful life will clearly exceed th[e] time period [for amortization based on the type of control], the remaining useful life has essentially no effect on control costs and on the BART determination process. Where the remaining useful life is less than the time period for amortizing costs, you should use this shorter time period in your cost calculation.
40 CFR Part 51, App. Y, section IV.D.4.k (emphasis added). Thus, the EPA interpreted the BART remaining useful life factor, consistent with Congressional intent, to address a possible unreasonable cost of retrofit controls at a particular source, and the EPA promulgated a specific methodology for taking the factor into consideration through computing the annualized cost of retrofit controls. The effect of this is, where a source may have a shorter remaining useful life than the amortization period for the retrofit control, the annual cost of the control will be correspondingly higher, and that may weigh (when considering the five factors) against determining that the particular control is BART. In promulgating this interpretation of the remaining useful life factor and corresponding requirement,the EPA rejected a comment that the remaining useful life factor should be interpreted to allow for postponement of BART requirements. 70 Fed. Reg. 39,104, 39,127/3 (July 6, 2005).
      As explained in Section VIII of the preamble, these emission guidelines permit states to take into consideration remaining useful life in a manner consistent with the statute, legislative history, and prior agency interpretation in the BART Guidelines. The agency has determined the BSER in this case to be a set of measures that produce an emission performance level that is reasonable rather than maximal and that already accounts for an average level of performance at a regionalized level. In the emission guidelines, the EPA is giving the states the tools to take advantage of this flexibility, such as relatively long periods for sources to come into full compliance, multiple-year compliance periods, the ability to credit early action, the use of emissions trading, and the ability to link to other state plans to create larger emissions markets. Among other things, these mechanisms create economic incentives that reward over-performance of some sources, allow others to simply acquire credits or allowances to comply with their emission standard, and avoid the need for installation of costly pollution controls at sources on a short time horizon.
      The availability of trading is particularly important to how remaining useful life is permitted to be considered in these emission guidelines. Essentially, trading amortizes the costs of compliance over compliance periods. Affected EGUs with relatively short remaining useful lives need only comply for a proportionately smaller number of periods as compared with affected EGUs with relatively long remaining useful lives. Thus, the cost of complying with these emission guidelines is distributed in a way that is consistent with how the BART Guidelines compute the cost of compliance for sources with relatively short remaining useful lives.
      It is true that the same term may be interpreted in different ways in different contexts of the Clean Air Act. Envt'l Def. et al. v. Duke Energy Corp. et al., 549 U.S. 561, 574 (2007). However, general consistency with the BART Guidelines is evidence that the EPA's interpretation of the remaining useful life provision here is reasonable. This is particularly true in light of the addition by Congress of both provisions in the 1977 Amendments and the Congressional concern in both provisions with the cost of retrofit controls. Our interpretation that remaining useful life does not create an exemption is also consistent with the EPA's rejection of the comment that remaining useful life should allow for postponement of BART requirements.
      The 2005 promulgation of the BART Guidelines in part responded to a decision of the U.S. Court of Appeals for the District of Columbia Circuit ("D.C. Circuit"), Am. Corn Growers v. EPA, 291 F.3d 1 (D.C. Cir. 2002) ("Corn Growers"). In Corn Growers, various parties challenged the EPA's initial promulgation of the Regional Haze Regulations, which created various requirements for SIPs to address visibility impairment. A particular requirement that was challenged was a "no degradation" provision that "require[d] implementation plans to `provide for an improvement in visibility for the most impaired days over the period of the implementation plan and ensure no degradation in visibility for the least impaired days over the same period.'" Id. at 11. The petitioners argued that this impermissibly conflicted with States' discretion to consider the four reasonable progress factors, including the remaining useful life factor. The court rejected this argument, first stating that the "no degradation" provision was consistent with the statutory purpose of progress toward the national goal. Id. at 12. Second, the court noted that degradation was not even one of the four factors and "[t]herefore, the states will be able to comply with the no degradation requirement while applying" the four factors. In essence, the EPA could permissibly constrain application of the four factors to be consistent with the statutory purpose.
      This decision rebuts comments that the EPA must give states discretion to revise the goals in order to consider remaining useful life. First, in response to such comments, we note here (as elsewhere) that states can adequately consider remaining useful life, through the use of trading, even when they do not adopt a rate- or mass-based goal, but instead adopt the performance rates. No adjustment of a goal is necessary. However, if a state decides to reallocate burdens among its affected EGUs in order to address remaining useful life or other factors, it is permissible for the EPA to constrain the state's discretion so that application of those factors is consistent with the overall purpose of section 111(d): the set of affected EGUs as a whole achieves BSER-level emission reductions. To be sure, the agency agrees with commenters to the extent that the statute affords the EPA the discretion to decide in certain cases that a downward variation in emissions performance for some affected sources in a state under section 111(d) could be authorized. Indeed, the agency's implementing regulations have provided that ability for many years. But this does not mean that for a particular emissions guideline for a particular pollutant from a particular category of sources, the agency cannot reasonably decide that such downward variations are unwarranted and unnecessary. That is the case here.
      Finally, we note two recent decisions regarding EPA's action on visibility SIPs. Oklahoma et al. v. U.S. EPA, 723 F.3d 1201 (10th Cir. 2013); North Dakota et al. v. U.S. EPA et al., 730 F.3d 750 (8th Cir. 2013). Both the Eighth and Tenth Circuit Courts of Appeals rejected (among other arguments) generic arguments that States had primacy in determining BART and that EPA merely had the ministerial task of approving the State's determination. Oklahoma, 723 F.3d at 1207-10.; North Dakota, 730 F.3d at 760-61. In both cases, the courts upheld EPA's rejection of BART determinations that relied on cost estimates that either were inconsistent with the BART Guidelines, Oklahoma 723 F.3d at 1211-14, or otherwise flawed, North Dakota, 730 F.3d at 760-61. These decisions are consistent with our interpretation that we have the authority to prescribe the conditions under which remaining useful life can be considered and to reject as unsatisfactory plans that do not follow those conditions.
      E.  These Emission Guidelines and Remaining Useful Life
      There are two general reasons that these emission guidelines satisfy the requirement that they "permit the State in applying a standard of performance to any particular source ... to take into consideration, among other factors, the remaining useful life of the source." First, the emission guidelines are based on a reasonable interpretation of the provision, and second, on the record before us, the consequences of this interpretation are reasonable.
      In general, the EPA may reasonably interpret ambiguous terms in the remaining useful life provision. The first (potentially) ambiguous term is "permit." In its natural reading, discussed above, the term "permit" is well understood in its legal usage to authorize the entity permitting an action to set binding conditions on the action that is permitted. If in fact the term is ambiguous, then the question that is left unanswered by the statute is whether the EPA may, as urged by commenters, decline to set binding conditions on the manner in which states can consider remaining useful life. Our interpretation that the EPA may do so, if not compelled, is certainly reasonable: to hold otherwise would be contrary to the typical supervisory role of the EPA in this cooperative federalism scheme (as discussed in North Dakota and Oklahoma) and, as it would allow states to relax requirements at affected EGUs virtually at will, contrary to the statutory purpose of achieving emissions performance levels equivalent to the BSER at affected EGUs.
      The term "permit" does not specify the particular manner in which the EPA should permit States to consider remaining useful life (and other factors). It is therefore ambiguous with respect to this issue. We also note that the other terms discussed above, "applying," "consideration," and "factors" are not specific as to the manner of consideration. In sum, it is perhaps most straightforward to say that the entire phrase "permit the State in applying a standard of performance to any particular source under a plan submitted under this paragraph to take into consideration, among other factors, the remaining useful life of the existing source to which such standard applies" is ambiguous with respect to the issue of how the EPA may permit the State to do so. Thus, the EPA may reasonably specify the conditions under which States may take into consideration remaining useful life.
      The specifications in these emission guidelines are reasonable. First, as discussed in detail above they are consistent with the language of the provision, with the legislative intent, and with our interpretation of the similar (but not identical) provision in the visibility program. As with the BART Guidelines, the EPA may reasonably be quite specific about the manner of consideration of this factor that is allowed. The additional flexibilities provided by these guidelines  -  adoption of the uniform performance rates, adoption of the rate-based goal but imposition of non-uniform rates, adoption of emission trading programs, adoption of the mass-based goal with flexibility to distribute allowances, or adoption of the state measures plan type  -  reasonably permit States to consider remaining useful life and other factors in various ways. For example, a state may adopt mass limits, and allocate a relatively greater number of allowances to a source with limited remaining useful life, on the understanding that the source will retire before 2030 and free up allowances for other sources. Similarly, under rate-based limits, a state could direct ERCs generated by a state-run or state-subsidized renewable energy or energy efficiency project to be transferred to an affected EGU with limited remaining useful life, or the state could simply impose a less stringent rate-based limit on the affected EGU.