----------------------------------------------------------------------------------------------------------------
                                                CO2  (millions short  SO2  (thousand short  NOX  (thousand short
                                                        tons)                 tons)                 tons)
----------------------------------------------------------------------------------------------------------------
2020 Final Guidelines:
    Base Case.................................                 2,155                 1,311                 1,333
    Final Guidelines..........................                 2,085                 1,297                 1,282
    Emissions Reductions......................                    69                    14                    50
2025 Final Guidelines:
    Base Case.................................                 2,165                 1,275                 1,302
    Final Guidelines..........................                 1,933                 1,097                 1,138
    Emissions Reductions......................                   232                   178                   165
2030 Final Guidelines:
    Base Case.................................                 2,227                 1,314                 1,293
    Final Guidelines..........................                 1,812                   996                 1,011
    Emissions Reductions......................                   415                   318                   282
----------------------------------------------------------------------------------------------------------------
Source: Integrated Planning Model, 2015.
Note: Emissions may not sum due to rounding.

    Table 16--Summary of CO2 and Other Air Pollutant Emission Reductions From the Base Case Under Mass-Based
                                           Illustrative Plan Approach
----------------------------------------------------------------------------------------------------------------
                                                 CO2  (million short  SO2  (thousand short  NOX  (thousand short
                                                        tons)                 tons)                 tons)
----------------------------------------------------------------------------------------------------------------
2020 Final Guidelines:
    Base Case.................................                 2,155                 1,311                 1,333
    Final Guidelines..........................                 2,073                 1,257                 1,272
    Emissions Reductions......................                    81                    54                    60
2025 Final Guidelines:
    Base Case.................................                 2,165                 1,275                 1,302
    Final Guidelines..........................                 1,901                 1,090                 1,100
    Emissions Reductions......................                   265                   185                   203
2030 Final Guidelines:
    Base Case.................................                 2,227                 1,314                 1,293
    Final Guidelines..........................                 1,814                 1,034                 1,015
    Emissions Reductions......................                   413                   280                   278
----------------------------------------------------------------------------------------------------------------
Source: Integrated Planning Model, 2015.
Note: Emissions may not sum due to rounding.

    The reductions in Tables 15 and 16 do not account for reductions in
hazardous air pollutants (HAPs) that may occur as a result of this
rule. For instance, the fine particulate reductions presented above do
not reflect all of the reductions in many heavy metal particulates.

B. Endangered Species Act

    As explained in the preamble to the proposed rule (79 FR at 34933-
934), the EPA has carefully considered the requirements of section
7(a)(2) of the Endangered Species Act (ESA) and applicable ESA
regulations, and reviewed relevant ESA case law and guidance, to
determine whether consultation with the U.S. Fish and Wildlife Service
(FWS) and/or National Marine Fisheries Service (together, the Services)
is required by the ESA. The EPA proposed to conclude that the
requirements of ESA section 7(a)(2) would not be triggered by
promulgation of the rule, and we now finalize that determination.
    Section 7(a)(2) of the ESA requires federal agencies, in
consultation with one or both of the Services (depending on the species
at issue), to ensure that actions they authorize, fund, or carry out
are not likely to jeopardize the continued existence of federally
listed endangered or threatened species or result in the destruction or
adverse modification of designated critical habitat of such species. 16
U.S.C. 1536(a)(2). Under relevant implementing regulations, section
7(a)(2) applies only to actions where there is discretionary federal
involvement or control. 50 CFR 402.03. Further, under the regulations
consultation is required only for actions that ``may affect'' listed
species or designated critical habitat. 50 CFR 402.14. Consultation is
not required where the action has no effect on such species or habitat.
Under this standard, it is the federal agency taking the action that
evaluates the action and determines whether consultation is required.
See 51 FR 19926, 19949 (June 3, 1986). Effects of an action include
both the direct and indirect effects that will be added to the
environmental baseline. 50 CFR 402.02. Direct effects are the direct or
immediate effects of an action on a listed species or its
habitat.\1040\ Indirect effects are those that are ``caused by the
proposed action and are later in time, but still are reasonably certain
to occur.'' Id. To trigger the consultation requirement, there must
thus be a causal connection between the federal action, the effect in
question, and the listed species, and if the effect is indirect, it
must be reasonably certain to occur.
---------------------------------------------------------------------------

    \1040\ See Endangered Species Consultation Handbook, U.S. Fish &
Wildlife Service and National Marine Fisheries Service at 4-25
(March 1998) (providing examples of direct effects: e.g., driving an
off road vehicle through the nesting habitat of a listed species of
bird and destroying a ground nest; building a housing unit and
destroying the habitat of a listed species). Available at https://www.fws.gov/ENDANGERED/esa-library/pdf/esa_section7_handbook.pdf.
---------------------------------------------------------------------------

    The EPA notes that the projected environmental effects of this rule
are positive: Reductions in overall GHG emissions, and reductions in PM
and ozone-precursor emissions (SO2 and NOX). The
EPA recognizes that beneficial effects to listed species can, as a
general matter, result in a ``may affect'' determination under the ESA.
However, the EPA's assessment that the rule will have an overall net
positive environmental effect by virtue of reducing emissions of
certain air pollutants does not address whether the rule may affect any
listed species or designated critical habitat for ESA section 7(a)(2)
purposes and does not constitute any finding of effects for that
purpose. The fact that the rule will have overall positive effects on
the national and global environment does not mean that the rule may
affect any listed species in its habitat or the designated critical
habitat of such species within the meaning of ESA section 7(a)(2) or
the implementing regulations or require ESA consultation. The EPA has
considered various types of potential effects in reaching the
conclusion that ESA consultation is not required for this rule.
    With respect to the projected GHG emission reductions, the EPA
considered in detail in the proposal why such reductions do not trigger
ESA consultation requirements under section 7(a)(2). As explained in
the proposal, in reaching this conclusion the EPA was mindful of
significant legal and technical analysis undertaken by FWS and the U.S.
Department of the Interior (DOI) in the context of listing the polar
bear as a threatened species under the ESA. In that context, in 2008,
FWS and DOI expressed the view that the best scientific data available
were insufficient to draw a causal connection between GHG emissions and
effects on the species in its habitat.\1041\ The DOI Solicitor
concluded that where the effect at issue is climate change, proposed
actions involving GHG emissions cannot pass the ``may affect'' test of
the section 7 regulations and thus are not subject to ESA consultation.
---------------------------------------------------------------------------

    \1041\ See, e.g., 73 FR 28212, 28300 (May 15, 2008); Memorandum
from David Longly Bernhardt, Solicitor, U.S. Department of the
Interior re: ``Guidance on the Applicability of the Endangered
Species Act's Consultation Requirements to Proposed Actions
Involving the Emission of Greenhouse Gases'' (Oct. 3, 2008).
Available at http://www.doi.gov/solicitor/opinions/M-37017.pdf.
---------------------------------------------------------------------------

    As described in the proposal, the EPA has also previously
considered issues relating to GHG emissions in connection with the
requirements of ESA section 7(a)(2) and has supplemented DOI's analysis
with additional consideration of GHG modeling tools and data regarding
listed species. Although the GHG emission reductions projected for this
final rule are large (estimated reductions of about 415 million short
tons of CO2 in 2030 relative to the base case under the
rate-based illustrative plan approach--see Table 14 above), the EPA
evaluated larger reductions in assessing this same issue in the context
of the light-duty vehicle GHG emission standards for model years 2012-
2016 and 2017-2025. There the agency projected emission reductions over
the lifetimes of the model years in question \1042\ which are roughly
five to six times those projected above and, based on air quality
modeling of potential environmental effects, concluded that ``EPA knows
of no modeling tool which can link these small, time-attenuated changes
in global metrics to particular effects on listed species in particular
areas. Extrapolating from global metric to local effect with such small
numbers, and accounting for further links in a causative chain, remain
beyond current modeling capabilities.'' \1043\ The EPA reached this
conclusion after evaluating issues relating to potential improvements
relevant to both temperature and oceanographic pH outputs. The EPA's
ultimate finding was that ``any potential for a specific impact on
listed species in their habitats associated with these very small
changes in average global temperature and ocean pH is too remote to
trigger the threshold for ESA section 7(a)(2).'' Id. The EPA believes
that the same conclusion applies to the present rule. See, e.g., Ground
Zero Center for Non-Violent Action v. U.S. Dept. of Navy, 383 F. 3d
1082, 1091-92 (9th Cir. 2004) (where the likelihood of jeopardy to a
species from a federal action is extremely remote, ESA does not require
consultation). The EPA's conclusion is entirely consistent with DOI's
analysis regarding ESA requirements in the

context of federal actions involving GHG emissions.\1044\
---------------------------------------------------------------------------

    \1042\ See 75 FR at 25438 Table I.C 2-4 (May 7, 2010); 77 FR at
62894 Table III-68 (Oct. 15, 2012).
    \1043\ EPA, Light-Duty Vehicle Greenhouse Gas Emission Standards
and Corporate Average Fuel Economy Standards, Response to Comment
Document for Joint Rulemaking at 4-102 (Docket ID EPA-OAR-HQ-2010-
0799). Available at http://www.epa.gov/otaq/climate/regulations/420r10012a.pdf.
    \1044\ The EPA has received correspondence from a U.S. Senator
and a Member of the U.S. House of Representatives noting that the
Services have identified several listed species affected by global
climate change. See Letter from Rob Bishop, Chairman, House
Committee on Natural Resources, to Gina McCarthy, Administrator,
U.S. Environmental Protection Agency, dated June 11, 2015; Letter
from Rob Bishop, Chairman, House Committee on Natural Resources, and
James M. Inhofe, Chairman, Senate Committee on Environment and
Public Works, to Gina McCarthy, Administrator, U.S. Environmental
Protection Agency, dated June 15, 2015. EPA's assessment of ESA
requirements in connection with the present rule does not address
whether global climate change may, as a general matter, be a
relevant consideration in the status of certain listed species.
Rather, the requirements of ESA section 7(a)(2) must be considered
and applied to the specific action at issue. As explained above,
EPA's conclusion that ESA section 7(a)(2) consultation is not
required here is premised on the specific facts and circumstances of
the present rule and is fully consistent with prior relevant
analyses conducted by DOI, FWS, and EPA.
---------------------------------------------------------------------------

    With regard to non-GHG air emissions, the EPA also projects
substantial reductions of SO2 and NOX as a
collateral consequence of this final action. However, CAA section
111(d)(1) standards cannot directly control emissions of criteria
pollutants. See CAA section 111(d)(1)(i). Consequently, CAA section
111(d) provides no discretion to adjust the standard based on potential
impacts to endangered species of reduced criteria pollutant emissions.
Section 7(a)(2) consultation thus is not required with respect to the
projected reductions of criteria pollutant emissions. See 50 CFR
402.03; see also, WildEarth Guardians v. U.S. Envt'l Protection Agency,
759 F.3d 1196, 1207-10 (10th Cir. 2014) (EPA has no duty to consult
under section 7(a)(2) of the ESA regarding hazardous air pollutant
controls that it did not require--and likely lacked authority to
require--in a federal implementation plan for regional haze controls
under section 169A of the CAA).
    Finally, the EPA has also considered other potential effects of the
rule (beyond reductions in air pollutants) and whether any such effects
are ``caused by'' the rule and ``reasonably certain to occur'' within
the meaning of the ESA regulatory definition of the effects of an
action. 50 CFR 402.02. As the EPA noted in the proposal, there are
substantial questions as to whether any potential for relevant effects
results from any element of the rule or would result instead from
separate decisions and actions made in connection with the development,
implementation, and enforcement of a plan to implement the standards
established in the rule. Cf. American Trucking Assn's v. EPA, 175 F. 3d
1027, 1043-45 (D.C. Cir. 1999), rev'd on different grounds sub nom.,
Whitman v. American Trucking Assn's, 531 U.S. 457 (2000) (National
Ambient Air Quality Standards have no economic impact, for purposes of
Regulatory Flexibility Act, because impacts result from the actions of
states through their development, implementation and enforcement of
SIPs).\1045\ The EPA recognized, for instance, that questions may exist
whether decisions such as increased utilization of solar or wind power
could have effects on listed species. The EPA received comments on the
proposal asserting that because potential increased reliance on wind or
solar power may be an element of building block 3, and because wind and
solar facilities may in some cases have effects on listed species, the
EPA must consult under the ESA on this aspect of the rule. The EPA is
also aware of certain questions regarding potential effects of the rule
on the Big Bend Power Station located in Florida, which discharges
effluent that provides a warm water refuge for manatees. The Big Bend
Power Station and another coal-fired facility located in Florida--the
Crystal River Plant--are, for example, referenced in the June 11, 2015,
and June 15, 2015, congressional letters to EPA cited above.
---------------------------------------------------------------------------

    \1045\ One commenter questioned the EPA's citation to American
Trucking Assn's. As stated by the commenter, the statute at issue in
that case--the Regulatory Flexibility Act (RFA)--is distinguishable
from the ESA in that it addresses only direct effects and does not
consider indirect effects. The commenter misreads the EPA's citation
to this case. The EPA cites this case simply to reference a decision
considering the impacts of an EPA action--the revision of a NAAQS
under the CAA--that in certain respects provides a useful analogy to
the present rule. A NAAQS is implemented through a series of
subsequent planning decisions generally taken by states by means of
adoption of SIPs. States can choose to impose or avoid the types of
impacts at issue in the D.C. Circuit case through their planning
decisions; thus such impacts were not viewed as having been caused--
for purposes of the RFA--by the EPA's promulgation of the revised
NAAQS in the first instance. The standard setting and implementation
mechanisms under section 111(d) are very similar. Under section
111(d), the EPA is required to establish ``a procedure similar to
that provided by section 7410''--the provision establishing the SIP
mechanism for implementing NAAQS. Thus, the D.C. Circuit's
discussion provides a useful analogy to the present rule and the
various types of potential effects that may be attributable to
future implementation planning decisions by states and other
entities as they exercise their discretion in determining how to
implement the federal guidelines, but not to promulgation of the
rule itself. The EPA's citation to this case was not intended to
address any comparison of the scope of effects covered by the RFA
and the effects cognizable under section 7(a)(2) of the ESA. The EPA
is aware that the ESA addresses both direct and indirect effects as
defined by the applicable ESA regulations. The discussion supporting
the EPA's ESA conclusion expressly acknowledges the relevance of
indirect effects to the ESA analysis and explains why such effects
are not present here.
---------------------------------------------------------------------------

    The EPA has carefully considered the comments and the
correspondence from Congress as well as the case law and other
materials cited in those documents. The EPA does not believe that the
effects of potential future changes in the energy sector--including
increased reliance on wind or solar power as a result of future
potential actions by states or other implementing entities--or any
potential alterations in the operations of any particular facility are
caused by the current rule or sufficiently certain to occur so as to
require ESA consultation on the rule. The EPA appreciates that the ESA
regulations call for consultation where actions authorized, funded, or
carried out by federal agencies may have indirect effects on listed
species or designated critical habitat. However, as noted above,
indirect effects must be caused by the action at issue and must be
reasonably certain to occur. At this point, there is no reasonable
certainty regarding implementation of any planning measures in any
location, let alone in any location occupied by a listed species or its
designated critical habitat. The EPA cannot predict with reasonable
certainty where such measures may take effect or which measures may be
adopted. It is not clear, for instance, whether a particular
implementation plan will call, if at all, for increased reliance on
wind power, as opposed to solar power, or on some other form of low or
zero carbon emitting generation. It is also entirely uncertain how a
future implementation plan for a particular state might affect, if at
all, operations at a specific facility.\1046\ The precise steps
included in an implementation plan cannot be determined or ordered by
this federal action, and they are not sufficiently certain to be
attributable to this final rule for ESA purposes. These steps will flow
from a series of later in time decisions generally made by other
entities--usually states--in their

distinct planning processes. These later decisions cannot now be
required by the rule, are not caused by the rule, and are not
reasonably certain to occur. The EPA also notes that the plans adopted
for particular states may themselves provide wide degrees of
implementation flexibility, thus further increasing the uncertainty
that any species-impacting activity will occur in any particular
location, if at all. The Services have explained that section 7(a)(2)
was not intended to preclude federal actions based on potential future
speculative effects.\1047\ These are precisely the types of speculative
future activities and effects at issue here.\1048\ For this additional
reason, the EPA concludes that the rule does not have effects on listed
species that trigger the section 7(a)(2) consultation
requirement.\1049\
---------------------------------------------------------------------------

    \1046\ A congressional letter of June 11, 2015, referenced above
asserts that EPA's modeling suggests that the Big Bend Power Station
and Crystal River Energy Complex in Florida will be prematurely
retired as a result of the rule. EPA notes that any such facility-
level projections associated with the rule cannot be stated with
sufficient certainty to qualify as potential indirect effects under
the ESA. These projections are based on numerous assumptions
regarding a variety of planning and business decisions yet to be
made by the implementing governments (usually states) and facility
owners. Given the wide degrees of discretion and flexibility and the
numerous options available for such decision making, the potential
for such outcomes to be realized as currently projected is at this
point too uncertain to qualify as an effect under the ESA.
    \1047\ See 51 FR at 19933 (describing effects that are
``reasonably certain to occur'' in the context of consideration of
cumulative effects and distinguishing broader consideration that may
be appropriate in applying a procedural statute such as the National
Environmental Policy Act, as opposed to a substantive provision such
as ESA section 7(a)(2) that may prohibit certain federal actions);
Endangered Species Consultation Handbook, U.S. Fish & Wildlife
Service and National Marine Fisheries Service at 4-30 (March 1998)
(in the same context, describing indicators that an activity is
reasonably certain to occur as including governmental approvals of
the action or indications that such approval is imminent, project
sponsors' assurance that the action will proceed, obligation of
venture capital, or initiation of contracts; and noting that the
more governmental administrative discretion remains to be exercised,
the less there is reasonable certainty the action will proceed).
Available at https://www.fws.gov/ENDANGERED/esa-library/pdf/esa_section7_handbook.pdf.
    \1048\ EPA also notes that some of the future implementing
activities may involve federal actions that are subject to ESA
consultation, thus providing consideration of any impacts on listed
species at the appropriate point when particular activities have
become reasonably certain. Several commenters on the proposal
specifically noted that such future activities--e.g., development of
additional RE facilities such as wind farms--may call for ESA
consultation. Further, EPA notes that section 9 of the ESA, which
prohibits the take of individuals of most listed species, provides
an additional protection for listed species as future implementing
activities become reasonably certain.
    \1049\ The commenters cite certain cases that they assert
support consulting under ESA section 7(a)(2). The EPA has considered
these cases, each of which is distinguishable from the present rule.
By way of example, a commenter cites two cases involving EPA
actions: Defenders of Wildlife v. EPA, 420 F.3d 946 (9th Cir. 2005),
rev'd, National Association of Homebuilders v. Defenders of
Wildlife, 551 U.S. 644 (2007); and Washington Toxics Coalition v.
EPA, 413 F.3d 1024 (9th Cir. 2005). In Defenders of Wildlife (a
decision that was reversed by the U.S. Supreme Court), a principal
relevant impact of the federal action at issue--the EPA's approval
of a state's permitting program under the Clean Water Act--was that
following the action, the relevant permitted activities would no
longer be subject to consultation under the ESA. By contrast,
promulgation of the present rule will result in no change to any ESA
requirements applicable to any future activities directed by plans
(either state or federal) implementing the rule. The action at issue
in Washington Toxics Coalition involved the EPA's registration of
certain pesticide active ingredients under the Federal Insecticide,
Fungicide, and Rodenticide Act. Such actions provide authorization
for the sale and distribution of those products, consistent with
applicable labelling requirements. The EPA also notes that under the
EPA's regulations, registered pesticide labels must, among other
things, specify the product ingredients and the methods and sites of
product application. 40 CFR 156.10. By contrast, the present rule
only sets goals and describes potential pathways to meeting those
goals, all of which are subject to future considerations and
decisions involved in the implementation of plans (generally by
states). The rule neither authorizes, nor directs, any of the future
measures to meet the rule's goals. Those activities remain subject
to the full range of future decision making addressing which types
of measures to implement, what emitting entities will be affected,
how much, and when.
---------------------------------------------------------------------------

C. What are the energy impacts?

    The final guidelines have important energy market implications.
Table 17 presents a variety of important energy market impacts for
2020, 2025, and 2030 under both the rate-based and mass-based
illustrative plan approaches.

   Table 17--Summary Table of Important Energy Market Impacts for Rate-Based and Mass-Based Illustrative Plan
                                                   Approaches
                                         [Percent change from base case]
----------------------------------------------------------------------------------------------------------------
                                                  Rate-based                             Mass-based
                                   -----------------------------------------------------------------------------
                                        2020         2025         2030         2020         2025         2030
----------------------------------------------------------------------------------------------------------------
Retail electricity prices.........            3            1            1            3            2            0
Price of coal at minemouth........           -1           -5           -4           -1           -5           -3
Coal production for power sector             -5          -14          -25           -7          -17          -24
 use..............................
Price of natural gas delivered to             5           -8            2            4           -3           -2
 power sector.....................
Natural gas use for electricity               3           -1           -1            5            0           -4
 generation.......................
----------------------------------------------------------------------------------------------------------------

    These figures reflect the EPA's illustrative modeling that presumes
policies that lead to generation shifts and growing use of demand-side
EE and renewable electricity generation out to 2029. If states make
different policy choices, impacts could be different. For instance, if
states implement renewable and/or demand-side EE policies on a more
aggressive time-frame, impacts on natural gas and electricity prices
would likely be less. Implementation of other measures not included in
the BSER calculation or compliance modeling, such as nuclear uprates,
transmission system improvements, use of energy storage technologies or
retrofit CCS, could also mitigate gas price and/or electricity price
impacts.
    Energy market impacts from the guidelines are discussed more
extensively in the RIA found in the docket for this rulemaking.

D. What are the compliance costs?

    The compliance costs of this final action are represented in this
analysis as the change in electric power generation costs between the
base case and the final rule in which states pursue a distinct set of
strategies beyond the strategies taken in the base case to meet the
terms of the final guidelines. The compliance costs estimates include
cost estimates for demand-side EE. The compliance assumptions--and,
therefore, the projected compliance costs--set forth in this analysis
are illustrative in nature and do not represent the full suite of
compliance flexibilities states may ultimately pursue. The illustrative
analysis is designed to reflect, to the extent possible, the scope and
the nature of the final guidelines. However, there is considerable
uncertainty with regards to the precise measures that states will adopt
to meet the final requirements, because there are considerable
flexibilities afforded to the states in developing their state plans.
    The incremental cost is the projected additional cost of complying
with the guidelines in the year analyzed and includes the amortized
cost of capital investment, needed new capacity, shifts between or
amongst various fuels, deployment of demand-side EE programs, and other
actions associated with compliance. These important

dynamics are discussed in more detail in the RIA in the rulemaking
docket.
    The EPA estimates the annual incremental compliance cost for the
rate-based approach for final emission guidelines to be $2.5 billion in
2020, $1.0 billion in 2025 and $8.4 billion in 2030, including the
costs associated with monitoring, reporting, and recordkeeping
(MR&R).\1050\ The EPA estimates the annual incremental compliance cost
for the mass-based approach for final emission guidelines to be $1.4
billion in 2020, $3.0 billion in 2025 and $5.1 billion in 2030,
including the costs associated with MR&R.
---------------------------------------------------------------------------

    \1050\ The MR&R costs estimates are $65 million in 2020, $15
million in 2025 and $15 million in 2030 and are assumed to be the
same for both rate-based and mass-based illustrative plan
approaches.
---------------------------------------------------------------------------

    More detailed cost estimates are available in the RIA included in
the rulemaking docket.

E. What are the economic and employment impacts?

    The final standards are projected to result in certain changes to
power system operation as a compliance with the standards. See Table 16
above for a variety of important energy market impacts for 2020, 2025,
and 2030 under both the rate-based and mass-based illustrative plan
approaches.
    It is important to note that the EPA's modeling does not
necessarily account for all of the factors that may influence business
decisions regarding future coal-fired capacity. Many power companies
already factor a potential financial liability associated with carbon
emissions into their long term capacity planning that would further
influence business decisions to replace these aging assets with modern,
and significantly cleaner, generation.
    The compliance modeling done to support the final rule assumes that
overall electric demand will decrease as states ramp up programs that
result in lower overall demand. Demand-side EE levels are expected to
increase such that they achieve about a 7.8 percent reduction on
overall electricity demand levels in 2030 under the final guidelines.
    Changes in price or demand for electricity, natural gas, and coal
can impact markets for goods and services produced by sectors that use
these energy inputs in the production process or supply those sectors.
Changes in the cost of production may result in changes in prices,
quantities produced, and profitability of affected firms. The EPA
recognizes that these guidelines provide significant flexibilities and
states implementing the guidelines may choose to mitigate impacts to
some markets outside the utility power sector. Similarly, demand for
new generation or demand-side EE as a result of states implementing the
guidelines can result in shifts in production and profitability for
firms that supply those goods and services.
    Executive Order 13563 directs federal agencies to consider the
effect of regulations on job creation and employment. According to the
Executive Order, ``our regulatory system must protect public health,
welfare, safety, and our environment while promoting economic growth,
innovation, competitiveness, and job creation. It must be based on the
best available science.'' (Executive Order 13563, 2011) Although
standard benefit-cost analyses have not typically included a separate
analysis of regulation-induced employment impacts, we typically conduct
employment analyses. While the economy continues moving toward full-
employment, employment impacts are of particular concern and questions
may arise about their existence and magnitude.
    States have the responsibility and flexibility to implement
policies and practices for compliance with the final guidelines.
Quantifying the associated employment impacts is complicated by the
wide range of approaches that states may use. As such, the EPA's
employment analysis includes projected employment impacts associated
with illustrative plan approaches for these guidelines for the electric
power industry, coal and natural gas production, and demand-side EE
activities. These projections are derived, in part, from a detailed
model of the utility power sector used for this regulatory analysis,
and U.S government data on employment and labor productivity. In the
electricity, coal, and natural gas sectors, the EPA estimates that
these guidelines could result in a net decrease of approximately 25,000
job-years in 2025 for the final guidelines under the rate-based
illustrative plan approach and approximately 26,000 job-years in 2025
under the mass-based approach. For 2030, the estimates of the net
decrease in job-years are 31,000 under the rate-based approach and
34,000 under the mass-based approach. The agency is also offering an
illustrative calculation of potential employment effects due to demand-
side EE programs. Employment impacts from demand-side energy EE
programs in 2030 could range from approximately 52,000 to 83,000 jobs
under the final guidelines.
    By its nature, demand-side EE reduces overall demand for electric
power. The EPA recognizes as more efficiency is built into the U.S.
power system over time, lower fuel requirements may lead to fewer jobs
in the coal and natural gas extraction sectors, as well as in fossil-
fuel fired EGU construction and operation than would otherwise have
been expected. The EPA also recognizes the fact that, in many cases,
employment gains and losses that might be attributable to this rule
would be expected to affect different sets of people. Moreover, workers
who lose jobs in these sectors may find employment elsewhere just as
workers employed in new jobs in these sectors may have been previously
employed elsewhere. Therefore, the employment estimates reported in
these sectors may include workers previously employed elsewhere. This
analysis also does not capture potential economy-wide impacts due to
changes in prices (of fuel, electricity, labor, for example) or other
factors such as improved labor productivity and reduced health care
expenditures resulting from cleaner air. For these reasons, the numbers
reported here should not be interpreted as a net national employment
impact.

F. What are the benefits of the final goals?

    Implementing the final standards will generate benefits by reducing
emissions of CO2 and criteria pollutant precursors,
including SO2, NOX, and directly-emitted
particles. SO2 and NOX are precursors to
PM2.5 (particles smaller than 2.5 microns), and
NOX is a precursor to ozone. The estimated benefits
associated with these emission reductions are beyond those achieved by
previous EPA rulemakings including the Mercury and Air Toxics Standards
rule. The health and welfare benefits from reducing air pollution are
considered co-benefits for these standards. For this rulemaking, we
were only able to quantify the climate benefits from reduced emissions
of CO2 and the health co-benefits associated with reduced
exposure to PM2.5 and ozone. There are many additional
benefits which we are not able to quantify, leading to an underestimate
of monetized benefits. In summary, we estimate the total combined
climate benefits and health co-benefits for the rate-based approach to
be $3.5 to $4.6 billion in 2020, $18 to $28 billion in 2025, and $34 to
$54 billion in 2030 (3 percent discount rate, 2011$). Total combined
climate benefits and health co-benefits for the mass-based approach are
estimated to be $5.3 to $8.1 billion in 2020, $19 to $29 billion in
2025, and

$32 to $48 billion in 2030 (3 percent discount rate, 2011$). A summary
of the emission reductions and monetized benefits estimated for this
rule at all discount rates is provided in Tables 15 through 22 of this
preamble.

               Table 18--Summary of the Monetized Global Climate Benefits for the Final Guidelines
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                                                            Monetized climate benefits
                 Year                         Discount rate      -----------------------------------------------
                                               (statistic)             2020            2025            2030
----------------------------------------------------------------------------------------------------------------
                                               Rate-based Approach
----------------------------------------------------------------------------------------------------------------
CO2 Reductions (million short tons)...  ........................              69             232             415
                                        5 percent (average SC-             $0.80            $3.1            $6.4
                                         CO2).
                                        3 percent (average SC-              $2.8             $10             $20
                                         CO2).
                                        2.5 percent (average SC-            $4.1             $15             $29
                                         CO2).
                                        3 percent (95th                     $8.2             $31             $61
                                         percentile SC-CO2).
----------------------------------------------------------------------------------------------------------------
                                               Mass-based Approach
----------------------------------------------------------------------------------------------------------------
CO2 Reductions (million short tons)...  ........................              81             265             413
                                        5 percent (average SC-             $0.94            $3.6            $6.4
                                         CO2).
                                        3 percent (average SC-              $3.3             $12             $20
                                         CO2).
                                        2.5 percent (average SC-            $4.9             $17             $29
                                         CO2).
                                        3 percent (95th                     $9.7             $35             $60
                                         percentile SC-CO2).
----------------------------------------------------------------------------------------------------------------
\a\ Climate benefit estimates reflect impacts from CO2 emission changes in the analysis years presented in the
  table and do not account for changes in non-CO2 GHG emissions. These estimates are based on the global social
  cost of carbon (SC-CO2) estimates for the analysis years and are rounded to two significant figures.

 Table 19--Summary of the Monetized Health Co-Benefits in the U.S. for the Final Guidelines, Rate-based Approach
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                         National
                                         emission         Monetized health  co-         Monetized Health  Co-
              Pollutant                 reductions        benefits  (3 percent          benefits  (7 percent
                                       (thousands of            discount)                     discount)
                                        short tons)
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Rate-based Approach, 2020
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \b\
    SO2.............................              14  $0.44 to $0.99..............  $0.39 to $0.89
    NOX.............................              50  $0.14 to $0.33..............  $0.13 to $0.30
Ozone precursor: \c\
    NOX (ozone season only).........              19  $0.12 to $0.52..............  $0.12 to $0.52
                                     ---------------------------------------------------------------------------
        Total Monetized Health Co-    ..............  $0.70 to $1.8...............  $0.64 to $1.7
         benefits.
        Total Monetized Health Co-    ..............  $3.5 to $4.6................  $3.5 to $4.5
         benefits combined with
         Monetized Climate Benefits
         \d\.
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Rate-based Approach, 2025
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \b\
    SO2.............................             178  $6.4 to $14.................  $5.7 to $13
    NOX.............................             165  $0.56 to $1.3...............  $0.50 to $1.1
Ozone precursor: \c\
    NOX (ozone season only).........              70  $0.49 to $2.1...............  $0.49 to $2.1
                                     ---------------------------------------------------------------------------
        Total Monetized Health Co-                    $7.4 to $18.................  $6.7 to $16
         benefits.
        Total Monetized Health Co-                    $18 to $28..................  $17 to $26
         benefits combined with
         Monetized Climate Benefits
         \d\.
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Rate-based Approach, 2030
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \b\
    SO2.............................             318  $12 to $28..................  $11 to $25
    NOX.............................             282  $1.0 to $2.3................  $0.93 to $2.1
Ozone precursor: \c\
    NOX (ozone season only).........             118  $0.86 to $3.7...............  $0.86 to $3.7
                                     ---------------------------------------------------------------------------
        Total Monetized Health Co-                    $14 to $34..................  $13 to $31
         benefits.
        Total Monetized Health Co-                    $34 to $54..................  $33 to $51
         benefits combined with
         Monetized Climate Benefits.
         \d\.
----------------------------------------------------------------------------------------------------------------
\a\ All estimates are rounded to two significant figures, so estimates may not sum. It is important to note that
  the monetized co-benefits do not include reduced health effects from direct exposure to SO2, direct exposure
  to NO2, exposure to mercury, ecosystem effects or visibility impairment. Air pollution health co-benefits are
  estimated using regional benefit-per-ton estimates for the contiguous U.S.

\b\ The monetized PM2.5 co-benefits reflect the human health benefits associated with reducing exposure to PM2.5
  through reductions of PM2.5 precursors, such as SO2 and NOX. The co-benefits do not include the benefits of
  reductions in directly emitted PM2.5. These additional benefits would increase overall benefits by a few
  percent based on the analyses conducted for the proposed rule. PM co-benefits are shown as a range reflecting
  the use of two concentration-response functions, with the lower end of the range based on a function from
  Krewski et al. (2009) and the upper end based on a function from Lepeule et al. (2012). These models assume
  that all fine particles, regardless of their chemical composition, are equally potent in causing premature
  mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates
  by particle type.
\c\ The monetized ozone co-benefits reflect the human health benefits associated with reducing exposure to ozone
  through reductions of NOX during the ozone season. Ozone co-benefits are shown as a range reflecting the use
  of several different concentration-response functions, with the lower end of the range based on a function
  from Bell, et al. (2004) and the upper end based on a function from Levy, et al. (2005). Ozone co-benefits
  occur in the analysis year, so they are the same for all discount rates.
\d\ We estimate climate benefits associated with four different values of a one ton CO2 reduction (model average
  at 2.5 percent discount rate, 3 percent, and 5 percent; 95th percentile at 3 percent). Referred to as the
  social cost of carbon, each value increases over time. For the purposes of this table, we show the benefits
  associated with the model average at 3 percent discount rate, however we emphasize the importance and value of
  considering the full range of social cost of carbon values. We provide combined climate and health estimates
  based on additional discount rates in the RIA.

 Table 20--Summary of the Monetized Health Co-Benefits in the U.S. for the Final Guidelines, Mass-based Approach
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                                                     National        Monetized       Monetized
                                                                     emission       health  co-     health  co-
                            Pollutant                               reductions     benefits  (3    benefits  (7
                                                                   (thousands of      percent         percent
                                                                    short tons)      discount)       discount)
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Mass-based Approach, 2020
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \ b\
    SO2.........................................................              54    $1.7 to $3.8    $1.5 to $3.4
    NOX.........................................................              60  $0.17 to $0.39  $0.16 to $0.36
Ozone precursor: \c\
    NOX (ozone season only).....................................              23  $0.14 to $0.61  $0.14 to $0.61
                                                                 -----------------------------------------------
        Total Monetized Health Co-benefits......................  ..............    $2.0 to $4.8    $1.8 to $4.4
        Total Monetized Health Co-benefits combined with          ..............    $5.3 to $8.1    $5.1 to $7.7
         Monetized Climate Benefits \d\.........................
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Mass-based Approach, 2025
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \ b\
    SO2.........................................................             185     $6.0 to $13     $5.4 to $12
    NOX.........................................................             203   $0.58 to $1.3   $0.52 to $1.2
Ozone precursor: \c\
    NOX (ozone season only).....................................              88   $0.56 to $2.4   $0.56 to $2.4
                                                                 -----------------------------------------------
        Total Monetized Health Co-benefits......................  ..............     $7.1 to $17     $6.5 to $16
        Total Monetized Health Co-benefits combined with          ..............      $19 to $29      $18 to $27
         Monetized Climate Benefits \d\.........................
----------------------------------------------------------------------------------------------------------------
                                   Final Guidelines, Mass-based Approach, 2030
----------------------------------------------------------------------------------------------------------------
PM2.5 precursors: \b\
    SO2.........................................................             280      $10 to $23     $9.0 to $20
    NOX.........................................................             278   $0.87 to $2.0   $0.79 to $1.8
Ozone precursor: \c\
NOX (ozone season only).........................................             121   $0.82 to $3.5   $0.82 to $3.5
                                                                 -----------------------------------------------
        Total Monetized Health Co-benefits......................  ..............      $12 to $28      $11 to $26
        Total Monetized Health Co-benefits combined with          ..............      $32 to $48      $31 to $46
         Monetized Climate Benefits \d\.........................
----------------------------------------------------------------------------------------------------------------
\a\ All estimates are rounded to two significant figures, so estimates may not sum. It is important to note that
  the monetized co-benefits do not include reduced health effects from direct exposure to SO2, direct exposure
  to NO2, exposure to mercury, ecosystem effects or visibility impairment. Air pollution health co-benefits are
  estimated using regional benefit-per-ton estimates for the contiguous U.S.
\b\ The monetized PM2.5 co-benefits reflect the human health benefits associated with reducing exposure to PM2.5
  through reductions of PM2.5 precursors, such as SO2 and NOX. The co-benefits do not include the benefits of
  reductions in directly emitted PM2.5. These additional benefits would increase overall benefits by a few
  percent based on the analyses conducted for the proposed rule. PM co-benefits are shown as a range reflecting
  the use of two concentration-response functions, with the lower end of the range based on a function from
  Krewski et al. (2009) and the upper end based on a function from Lepeule et al. (2012). These models assume
  that all fine particles, regardless of their chemical composition, are equally potent in causing premature
  mortality because the scientific evidence is not yet sufficient to allow differentiation of effect estimates
  by particle type.
\c\ The monetized ozone co-benefits reflect the human health benefits associated with reducing exposure to ozone
  through reductions of NOX during the ozone season. Ozone co-benefits are shown as a range reflecting the use
  of several different concentration-response functions, with the lower end of the range based on a function
  from Bell, et al. (2004) and the upper end based on a function from Levy, et al. (2005). Ozone co-benefits
  occur in the analysis year, so they are the same for all discount rates.
\d\ We estimate climate benefits associated with four different values of a one ton CO2 reduction (model average
  at 2.5 percent discount rate, 3 percent, and 5 percent; 95th percentile at 3 percent). Referred to as the
  social cost of carbon, each value increases over time. For the purposes of this table, we show the benefits
  associated with the model average at 3 percent discount rate, however we emphasize the importance and value of
  considering the full range of social cost of carbon values. We provide combined climate and health estimates
  based on additional discount rates in the RIA.

    The EPA has used the social cost of carbon (SC-CO2)
estimates presented in the Technical Support Document: Technical Update
of the Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866 (May 2013, Revised June 2015) (``current TSD'')
to analyze CO2 climate impacts of this rulemaking.\1051\ We
refer to these estimates, which were developed by the U.S. Government,
as ``SC-CO2 estimates.'' The SC-CO2 is a metric
that estimates the monetary value of impacts associated with marginal
changes in CO2 emissions in a given year. It includes a wide
range of anticipated climate impacts, such as net changes in
agricultural productivity and human health, property damage from
increased flood risk, and changes in energy system costs, such as
reduced costs for heating and increased costs for air conditioning. It
is typically used to assess the avoided damages as a result of
regulatory actions (i.e., benefits of rulemakings that lead to an
incremental reduction in cumulative global CO2 emissions).
---------------------------------------------------------------------------

    \1051\ Docket ID EPA-HQ-OAR-2013-0495, Technical Support
Document: Technical Update of the Social Cost of Carbon for
Regulatory Impact Analysis Under Executive Order 12866, Interagency
Working Group on Social Cost of Carbon, with participation by
Council of Economic Advisers, Council on Environmental Quality,
Department of Agriculture, Department of Commerce, Department of
Energy, Department of Transportation, Domestic Policy Council,
Environmental Protection Agency, National Economic Council, Office
of Management and Budget, Office of Science and Technology Policy,
and Department of the Treasury (May 2013, Revised July 2015).
Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
---------------------------------------------------------------------------

    The SC-CO2 estimates used in this analysis were
developed over many years, using the best science available, and with
input from the public. Specifically, an interagency working group (IWG)
that included the EPA and other executive branch agencies and offices
used three integrated assessment models (IAMs) to develop the SC-
CO2 estimates and recommended four global values for use in
regulatory analyses. The SC-CO2 estimates were first
released in February 2010 and updated in 2013 using new versions of
each IAM. The 2010 SC-CO2 Technical Support Document (2010
TSD) \1052\ provides a complete discussion of the methods used to
develop these estimates and the current TSD presents and discusses the
2013 update (including two recent minor corrections to the
estimates).\1053\
---------------------------------------------------------------------------

    \1052\ Docket ID EPA-HQ-OAR-2009-0472-114577, Technical Support
Document: Social Cost of Carbon for Regulatory Impact Analysis Under
Executive Order 12866, Interagency Working Group on Social Cost of
Carbon, with participation by the Council of Economic Advisers,
Council on Environmental Quality, Department of Agriculture,
Department of Commerce, Department of Energy, Department of
Transportation, Environmental Protection Agency, National Economic
Council, Office of Energy and Climate Change, Office of Management
and Budget, Office of Science and Technology Policy, and Department
of Treasury (February 2010). Also available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.
    \1053\ The current version of the TSD is available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-response-to-comments-final-july-2015.pdf, Docket ID EPA-HQ-OAR-2013-0495,
Technical Support Document: Technical Update of the Social Cost of
Carbon for Regulatory Impact Analysis Under Executive Order 12866,
Interagency Working Group on Social Cost of Carbon, with
participation by Council of Economic Advisers, Council on
Environmental Quality, Department of Agriculture, Department of
Commerce, Department of Energy, Department of Transportation,
Domestic Policy Council, Environmental Protection Agency, National
Economic Council, Office of Management and Budget, Office of Science
and Technology Policy, and Department of Treasury (May 2013, Revised
July 2015).
---------------------------------------------------------------------------

    The EPA received numerous comments on the SC-CO2
estimates as part of this rulemaking. The comments covered a wide range
of topics including the technical details of the modeling conducted to
develop the SC-CO2 estimates, the aggregation and
presentation of the SC-CO2 estimates, and the process by
which the SC-CO2 estimates were derived. Many but not all
commenters were supportive of the SC-CO2 and its application
to this rulemaking. Commenters also provided constructive
recommendations for potential opportunities to improve the SC-
CO2 estimates in future updates. Many of these comments were
similar to those that OMB's Office of Information and Regulatory
Affairs received in response to a separate request for public comment
on the approach used to develop the estimates. After careful evaluation
of the full range of comments submitted to OMB, the IWG continues to
recommend the use of the SC-CO2 estimates in regulatory
impact analysis.\1054\ With the release of the response to comments,
the IWG announced plans to obtain expert independent advice from the
National Academies of Sciences, Engineering, and Medicine (Academies)
to ensure that the SC-CO2 estimates continue to reflect the
best available scientific and economic information on climate change.
The Academies review will be informed by the public comments received
and focus on the technical merits and challenges of potential
approaches to improving the SC-CO2 estimates in future
updates. See the EPA Response to Comments document for the complete
response to comments received on SC-CO2 as part of this
rulemaking.
---------------------------------------------------------------------------

    \1054\ See https://www.whitehouse.gov/omb/oira/social-cost-of-carbon for additional details, including the OMB Response to
Comments and the SC-CO2 TSDs.
---------------------------------------------------------------------------

    Concurrent with OMB's publication of the response to comments on
SC-CO2 and announcement of the Academies process, OMB posted
a revised TSD that includes two minor technical corrections to the
current estimates. One technical correction addressed an inadvertent
omission of climate change damages in the last year of analysis (2300)
in one model and the second addressed a minor indexing error in another
model. On average the revised SC-CO2 estimates are one
dollar less than the mean SC-CO2 estimates reported in the
November 2013 revision to the May 2013 TSD. The change in the estimates
associated with the 95th percentile estimates when using a 3 percent
discount rate is slightly larger, as those estimates are heavily
influenced by the results from the model that was affected by the
indexing error.
    The EPA, as a member of the IWG on the SC-CO2, has
carefully examined and evaluated the minor technical corrections in the
revised TSD and the public comments submitted to OMB's separate SC-
CO2 comment process. Additionally, the EPA has carefully
examined and evaluated all comments received regarding the SC-
CO2 through this rulemaking process. The EPA concurs with
the IWG's conclusion that it is reasonable, and scientifically
appropriate, to use the current SC-CO2 estimates for
purposes of regulatory impact analysis, including for this proceeding.
    The four SC-CO2 estimates are as follows: $12, $40, $60,
and $120 per short ton of CO2 emissions in the year 2020
(2011$).\1055\ The first three values are based on the average SC-
CO2 from the three IAMs, at discount rates of 5, 3, and 2.5
percent, respectively. The SC-CO2 value at several discount
rates are included because the literature shows that the SC-
CO2 is quite sensitive to assumptions about the discount
rate, and because no consensus exists on the appropriate rate to use in
an intergenerational context (where costs and benefits are incurred by
different generations). The fourth value is the 95th percentile of the
SC-CO2 from all three models at a 3 percent discount

rate. It is included to represent higher-than-expected impacts from
temperature change further out in the tails of the SC-CO2
distribution (representing less likely, but potentially catastrophic,
outcomes).
---------------------------------------------------------------------------

    \1055\ The current version of the TSD is available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf. The 2010 and 2013 TSDs present SC-CO2 in
2007$ per metric ton. The estimates were adjusted to (1) short tons
for using conversion factor 0.90718474 and (2) 2011$ using GDP
Implicit Price Deflator, http://www.gpo.gov/fdsys/pkg/ECONI-2013-02/pdf/ECONI-2013-02-Pg3.pdf.
---------------------------------------------------------------------------

    There are limitations in the estimates of the benefits from the
final emission guidelines, including the omission of climate and other
CO2 related benefits that could not be monetized. The 2010
TSD discusses a number of limitations to the SC-CO2
analysis, including the incomplete way in which the IAMs capture
catastrophic and non-catastrophic impacts, their incomplete treatment
of adaptation and technological change, uncertainty in the
extrapolation of damages to high temperatures, and assumptions
regarding risk aversion. Currently, IAMs do not assign value to all of
the important impacts of CO2 recognized in the literature,
such as ocean acidification or potential tipping points, for various
reasons, including the inherent difficulties in valuing non-market
impacts and the fact that the science incorporated into these models
understandably lags behind the most recent research. Nonetheless, these
estimates and the discussion of their limitations represent the best
available information about the social benefits of CO2
emission reductions to inform the benefit-cost analysis. As previously
noted, the IWG plans to seek independent expert advice on technical
opportunities to improve the SC-CO2 estimates from the
Academies. The Academies process will help to ensure that the SC-
CO2 estimates used by the federal government continue to
reflect the best available science and methodologies. Additional
details are provided in the TSDs.
    The health co-benefits estimates represent the total monetized
human health benefits for populations exposed to reduced
PM2.5 and ozone resulting from emission reductions from the
illustrative compliance strategy for the final standards. Unlike the
global SC-CO2 estimates, the air pollution health co-
benefits are estimated for the contiguous U.S. only. We used a
``benefit-per-ton'' approach to estimate the benefits of this
rulemaking. To create the PM2.5 benefit-per-ton estimates,
we conducted air quality modeling for an illustrative scenario
reflecting the proposed standards to convert precursor emissions into
changes in ambient PM2.5 and ozone concentrations. We then
used these air quality modeling results in BenMAP \1056\ to calculate
average regional benefit-per-ton estimates using the health impact
assumptions used in the PM NAAQS RIA \1057\ and Ozone NAAQS
RIAs.1058 1059 The three regions were the Eastern U.S.,
Western U.S., and California. To calculate the co-benefits for the
final standards, we multiplied the regional benefit-per-ton estimates
generated from modeling of the proposed standards by the corresponding
regional emission reductions for the final standards.\1060\ All
benefit-per-ton estimates reflect the geographic distribution of the
modeled emissions for the proposed standards, which may not exactly
match the emission reductions in this final rulemaking, and thus they
may not reflect the local variability in population density,
meteorology, exposure, baseline health incidence rates, or other local
factors for any specific location. More information regarding the
derivation of the benefit-per-ton estimates is available in the RIA.
---------------------------------------------------------------------------

    \1056\ http://www.epa.gov/airquality/benmap/index.html.
    \1057\ U.S. Environmental Protection Agency (U.S. EPA). 2012.
Regulatory Impact Analysis for the Final Revisions to the National
Ambient Air Quality Standards for Particulate Matter. Research
Triangle Park, NC: Office of Air Quality Planning and Standards,
Health and Environmental Impacts Division. (EPA document number EPA-
452/R-12-003, December). Available at: <http://www.epa.gov/pm/2012/finalria.pdf>.
    \1058\ U.S. Environmental Protection Agency (U.S. EPA). 2008b.
Final Ozone NAAQS Regulatory Impact Analysis. Research Triangle
Park, NC: Office of Air Quality Planning and Standards, Health and
Environmental Impacts Division, Air Benefit and Cost Group Research.
(EPA document number EPA-452/R-08-003, March). Available at: <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=194645>.
    \1059\ U.S. Environmental Protection Agency (U.S. EPA). 2010.
Section 3: Re-analysis of the Benefits of Attaining Alternative
Ozone Standards to Incorporate Current Methods. Available at:
<http://www.epa.gov/ttnecas1/regdata/RIAs/s3-supplemental_analysis-updated_benefits11-5.09.pdf>.
    \1060\ U.S. Environmental Protection Agency. 2013. Technical
support document: Estimating the benefit per ton of reducing PM2.5
precursors from 17 sectors. Research Triangle Park, NC: Office of
Air and Radiation, Office of Air Quality Planning and Standards,
January. Available at: <http://www.epa.gov/airquality/benmap/models/Source_Apportionment_BPT_TSD_1_31_13.pdf>.
---------------------------------------------------------------------------

    PM benefit-per-ton values are generated using two concentration-
response functions, Krewski et al. (2009) \1061\ and Lepeule et al.
(2012).\1062\ These models assume that all fine particles, regardless
of their chemical composition, are equally potent in causing premature
mortality because the scientific evidence is not yet sufficient to
allow differentiation of effect estimates by particle type. Even though
we assume that all fine particles have equivalent health effects, the
benefit-per-ton estimates vary between PM2.5 precursors
depending on the location and magnitude of their impact on
PM2.5 concentrations, which drive population exposure.
---------------------------------------------------------------------------

    \1061\ Krewski D.; M. Jerrett; R.T. Burnett; R. Ma; E. Hughes;
Y. Shi, et al. 2009. Extended Follow-up and Spatial Analysis of the
American Cancer Society Study Linking Particulate Air Pollution and
Mortality. Health Effects Institute. (HEI Research Report number
140). Boston, MA: Health Effects Institute. Available at http://www.healtheffects.org/Pubs/RR140-Krewski.pdf.
    \1062\ Lepeule, J.; F. Laden; D. Dockery; J. Schwartz. 2012.
``Chronic Exposure to Fine Particles and Mortality: An Extended
Follow-Up of the Harvard Six Cities Study from 1974 to 2009.''
Environmental Health Perspective, 120(7), July, pp. 965-970.
---------------------------------------------------------------------------

    It is important to note that the magnitude of the PM2.5
and ozone co-benefits is largely driven by the concentration response
functions for premature mortality and the value of a statistical life
used to value reductions in premature mortality. For PM2.5,
we use two key empirical studies, one based on the American Cancer
Society cohort study (Krewski et al., 2009) and one based on the
extended Six Cities cohort study (Lepuele et al., 2012). We present the
PM2.5 co-benefits results as a range based on benefit-per-
ton estimates calculated using the concentration-response functions
from these two epidemiology studies, but this range does not capture
the full range of uncertainty inherent in the co-benefits estimates. In
the RIA for this rule, which is available in the docket, we also
include PM2.5 co-benefits estimates using benefit-per-ton
estimates based on expert judgments of the effect of PM2.5
on premature mortality (Roman et al., 2008) \1063\ as a
characterization of uncertainty regarding the PM2.5-
mortality relationship.
---------------------------------------------------------------------------

    \1063\ Roman, H., et al. 2008. ``Expert Judgment Assessment of
the Mortality Impact of Changes in Ambient Fine Particulate Matter
in the U.S.'' Environmental Science & Technology, Vol. 42, No. 7,
February, pp. 2268-2274.
---------------------------------------------------------------------------

    For the ozone co-benefits, we present the results as a range
reflecting benefit-per-ton estimates which use several different
concentration-response functions for mortality, with the lower end of
the range based on a benefit-per-ton estimate using the function from
Bell et al. (2004) \1064\ and the upper end based on a benefit-per-ton
estimate using the function from Levy et al. (2005).\1065\ Similar to
PM2.5, the range of ozone co-benefits does not capture the
full range of inherent uncertainty.
---------------------------------------------------------------------------

    \1064\ Bell, M.L., et al. 2004. ``Ozone and Short-Term Mortality
in 95 U.S. Urban Communities, 1987-2000.'' Journal of the American
Medical Association, 292(19), pp. 2372-8.
    \1065\ Levy, J.I., S.M. Chemerynski, and J.A. Sarnat. 2005.
``Ozone exposure and mortality: An empiric Bayes metaregression
analysis.'' Epidemiology. 16(4): p. 458-68.
---------------------------------------------------------------------------

    In this analysis, in estimating the benefits-per-ton for
PM2.5 precursors,

the EPA assumes that the health impact function for fine particles is
without a threshold. This is based on the conclusions of EPA's
Integrated Science Assessment for Particulate Matter,\1066\ which
evaluated the substantial body of published scientific literature,
reflecting thousands of epidemiology, toxicology, and clinical studies
that documents the association between elevated PM2.5
concentrations and adverse health effects, including increased
premature mortality. This assessment, which was twice reviewed by the
EPA's independent Science Advisory Board, concluded that the scientific
literature consistently finds that a no-threshold model most adequately
portrays the PM-mortality concentration-response relationship.
---------------------------------------------------------------------------

    \1066\ U.S. Environmental Protection Agency. 2009. Integrated
Science Assessment for Particulate Matter (Final Report). Research
Triangle Park, NC: National Center for Environmental Assessment, RTP
Division. (EPA document number EPA-600-R-08-139F, December).
Available at: http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546.
---------------------------------------------------------------------------

    In general, we are more confident in the magnitude of the risks we
estimate from simulated PM2.5 concentrations that coincide
with the bulk of the observed PM concentrations in the epidemiological
studies that are used to estimate the benefits. Likewise, we are less
confident in the risk we estimate from simulated PM2.5
concentrations that fall below the bulk of the observed data in these
studies.
    For this analysis, policy-specific air quality data are not
available,\1067\ and thus, we are unable to estimate the percentage of
premature mortality associated with this specific rule that is above
the lowest measured PM2.5 levels (LML) for the two
PM2.5 mortality epidemiology studies that form the basis for
our analysis. As a surrogate measure of mortality impacts above the
LML, we provide the percentage of the population exposed above the
lowest measured PM2.5 level (LML) in each of the two
studies, using the estimates of baseline projected PM2.5
from the air quality modeling for the proposed guidelines used to
calculate the benefit-per-ton estimates for the EGU sector. Using the
Krewski et al. (2009) study, 88 percent of the population is exposed to
annual mean PM2.5 levels at or above the LML of 5.8
micrograms per cubic meter ([mu]g/m\3\). Using the Lepeule et al.
(2012) study, 46 percent of the population is exposed above the LML of
8 [mu]g/m\3\. It is important to note that baseline exposure is only
one parameter in the health impact function, along with baseline
incidence rates, population, and change in air quality.
---------------------------------------------------------------------------

    \1067\ In addition, site-specific emission reductions will
depend upon how states implement the guidelines.
---------------------------------------------------------------------------

    Every benefit analysis examining the potential effects of a change
in environmental protection requirements is limited, to some extent, by
data gaps, model capabilities (such as geographic coverage) and
uncertainties in the underlying scientific and economic studies used to
configure the benefit and cost models. Despite these uncertainties, we
believe the air quality co-benefit analysis for this rule provides a
reasonable indication of the expected health benefits of the air
pollution emission reductions for the illustrative analysis of the
final standards under a set of reasonable assumptions. This analysis
does not include the type of detailed uncertainty assessment found in
the 2012 PM2.5 National Ambient Air Quality Standard (NAAQS)
RIA (U.S. EPA, 2012) because we lack the necessary air quality input
and monitoring data to conduct a complete benefits assessment. In
addition, using a benefit-per-ton approach adds another important
source of uncertainty to the benefits estimates. The 2012
PM2.5 NAAQS benefits analysis provides an indication of the
sensitivity of our results to various assumptions.
    We note that the monetized co-benefits estimates shown here do not
include several important benefit categories, including exposure to
SO2, NOX, and hazardous air pollutants (e.g.,
mercury and hydrogen chloride), as well as ecosystem effects and
visibility impairment. Although we do not have sufficient information
or modeling available to provide monetized estimates for this rule, we
include a qualitative assessment of these unquantified benefits in the
RIA for the final guidelines. In addition, in the RIA for the final
standards, we did not estimate changes in emissions of directly emitted
particles. As a result, quantified PM2.5 related benefits
are underestimated by a relatively small amount. In the RIA for the
proposed guidelines, the benefits from reductions in directly emitted
PM2.5 were less than 10 percent of total monetized health
co-benefits across all scenarios and years.
    For more information on the benefits analysis, please refer to the
RIA for this rule, which is available in the rulemaking docket.

XII. Statutory and Executive Order Reviews

    Additional information about these Statutory and Executive Orders
can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

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

    This final action is an economically significant regulatory action
that was submitted to the OMB for review. Any changes made in response
to OMB recommendations have been documented in the docket. The EPA
prepared an analysis of the potential costs and benefits associated
with this action. This analysis, which is contained in the ``Regulatory
Impact Analysis for Clean Power Plan Final Rule'' (EPA-452/R-15-003,
July 2015), is available in the docket and is briefly summarized in
section XI of this preamble.
    Consistent with Executive Order 12866 and Executive Order 13563,
the EPA estimated the costs and benefits for illustrative compliance
approaches of implementing the guidelines. The final rule establishes:
(1) Carbon dioxide (CO2) emission performance rates for two
source categories of existing fossil fuel-fired EGUs, fossil fuel-fired
electric utility steam generating units and stationary combustion
turbines, and (2) guidelines for the development, submittal and
implementation of state plans that implement the CO2
emission performance rates. Actions taken to comply with the guidelines
will also reduce the emissions of directly-emitted PM2.5,
SO2 and NOX. The benefits associated with these
PM2.5, SO2 and NOX reductions are
referred to as co-benefits, as these reductions are not the primary
objective of this rule.
    The EPA has used the social cost of carbon estimates presented in
the Technical Support Document: Technical Update of the Social Cost of
Carbon for Regulatory Impact Analysis Under Executive Order 12866 (May
2013, Revised July 2015) (``current TSD'') to analyze CO2
climate impacts of this rulemaking. We refer to these estimates, which
were developed by the U.S. government, as ``SC-CO2
estimates.'' The SC-CO2 is an estimate of the monetary value
of impacts associated with a marginal change in CO2
emissions in a given year. The four SC-CO2 estimates are
associated with different discount rates (model average at 2.5 percent
discount rate, 3 percent, and 5 percent; 95th percentile at 3 percent),
and each increases over time. In this summary, the EPA provides the
estimate of climate benefits associated with the SC-CO2
value deemed to be central in the current TSD: The model average at 3
percent discount rate.
    In the final emission guidelines, the EPA has translated the source
category-

specific CO2 emission performance rates into equivalent
state-level rate-based and mass-based CO2 goals in order to
maximize the range of choices that states will have in developing their
plans. Because of the range of choices available to states and the lack
of a priori knowledge about the specific choices states will make in
response to the final goals, the Regulatory Impact Analysis (RIA) for
this rule analyzed two implementation scenarios designed to achieve
these goals, which we term the ``rate-based'' illustrative plan
approach and the ``mass-based'' illustrative plan approach.
    It is very important to note that the differences between the
analytical results for the rate-based and mass-based illustrative plan
approaches presented in the RIA may not be indicative of likely
differences between the approaches if implemented by states and
affected EGUs in response to the final guidelines. Rather, the two sets
of analyses are intended to illustrate two different approaches to
accomplish the emission performance rates finalized in the Clean Power
Plan Final Rule. In other words, if one approach performs differently
than the other on a given metric during a given time period, this does
not imply this will apply in all instances in all time periods in all
places.
    The EPA estimates that, in 2020, the final guidelines will yield
monetized climate benefits (in 2011$) of approximately $2.8 billion for
the rate-based approach and $3.3 billion for the mass-based approach (3
percent model average). For the rate-based approach, the air pollution
health co-benefits in 2020 are estimated to be $0.7 billion to $1.8
billion (2011$) for a 3 percent discount rate and $0.64 billion to $1.7
billion (2011$) for a 7 percent discount rate. For the mass-based
approach, the air pollution health co-benefits in 2020 are estimated to
be $2.0 billion to $4.8 billion (2011$) for a 3 percent discount rate
and $1.8 billion to $4.4 billion (2011$) for a 7 percent discount rate.
The annual, illustrative compliance costs estimated by IPM and
inclusive of demand-side EE program and participant costs and MRR costs
in 2020, are approximately $2.5 billion for the rate-based approach and
$1.4 billion for the mass-based approach (2011$). The quantified net
benefits (the difference between monetized benefits and compliance
costs) in 2020 are estimated to range from $1.0 billion to $2.1 billion
(2011$) for the rate-based approach and from $3.9 billion to 6.7
billion (2011$) for the mass-based approach, using a 3 percent discount
rate (model average).
    The EPA estimates that, in 2025, the final guidelines will yield
monetized climate benefits (in 2011$) of approximately $10 billion for
the rate-based approach and $12 billion for the mass-based approach (3
percent model average). For the rate-based approach, the air pollution
health co-benefits in 2025 are estimated to be $7.4 billion to $18
billion (2011$) for a 3 percent discount rate and $6.7 billion to $16
billion (2011$) for a 7 percent discount rate. For the mass-based
approach, the air pollution health co-benefits in 2025 are estimated to
be $7.1 billion to $17 billion (2011$) for a 3 percent discount rate
and $6.5 billion to $16 billion (2011$) for a 7 percent discount rate.
The annual, illustrative compliance costs estimated by IPM and
inclusive of demand-side EE program and participant costs and MRR costs
in 2025, are approximately $1.0 billion for the rate-based approach and
$3.0 billion for the mass-based approach (2011$). The quantified net
benefits (the difference between monetized benefits and compliance
costs) in 2025 are estimated to range from $17 billion to $27 billion
(2011$) for the rate-based approach and $16 billion to $26 billion
(2011$) for the mass-based approach, using a 3 percent discount rate
(model average).
    The EPA estimates that, in 2030, the final guidelines will yield
monetized climate benefits (in 2011$) of approximately $20 billion for
the rate-based approach and $20 billion for the mass-based approach (3
percent model average). For the rate-based approach, the air pollution
health co-benefits in 2030 are estimated to be $14 billion to $34
billion (2011$) for a 3 percent discount rate and $13 billion to $31
billion (2011$) for a 7 percent discount rate. For the mass-based
approach, the air pollution health co-benefits in 2030 are estimated to
be $12 billion to $28 billion (2011$) for a 3 percent discount rate and
$11 billion to $26 billion (2011$) for a 7 percent discount rate. The
annual, illustrative compliance costs estimated by IPM and inclusive of
demand-side EE program and participant costs and MRR costs in 2030, are
approximately $8.4 billion for the rate-based approach and $5.1 billion
for the mass-based approach (2011$). The quantified net benefits (the
difference between monetized benefits and compliance costs) in 2030 are
estimated to range from $26 billion to $45 billion (2011$) for the
rate-based approach and from $26 billion to $43 billion (2011$) for the
mass-based approach, using a 3 percent discount rate (model average).
    Tables 20 and 21 provide the estimates of the climate benefits,
health co-benefits, compliance costs and net benefits of the final
emission guidelines for rate-based and mass-based illustrative plan
approaches, respectively.

   Table 21--Summary of the Monetized Benefits, Compliance Costs, and Net Benefits for the Final Guidelines in
                       2020, 2025 and 2030 Under the Rate-Based Illustrative Plan Approach
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                                                                Rate-based approach
                                                                 -----------------------------------------------
                                                                       2020            2025            2030
----------------------------------------------------------------------------------------------------------------
Climate Benefits \b\
    5% discount rate............................................           $0.80            $3.1            $6.4
    3% discount rate............................................            $2.8             $10             $20
    2.5% discount rate..........................................            $4.1             $15             $29
    95th percentile at 3% discount rate.........................            $8.2             $31             $61
----------------------------------------------------------------------------------------------------------------
                                      Air Quality Co-benefits Discount Rate
----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 3%.................  7%................  3%................  7%................  3%................  7%
Air Quality Health Co-benefits   $0.70 to $1.8......  $0.64 to $1.7.....  $7.4 to $18.......  $6.7 to $16.......  $14 to $34........  $13 to $31
 \c\.
--------------------------------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Compliance Costs \d\............................................            $2.5            $1.0            $8.4
----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits \e\...............  $1.0 to $2.1.......  $1.0 to $2.0......  $17 to $27........  $16 to $25........  $26 to $45........  $25 to $43
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Monetized Benefits.........                                              Non-monetized climate benefits.
                                                                      Reductions in exposure to ambient NO2 and SO2.
                                                                            Reductions in mercury deposition.
                                                 Ecosystem benefits associated with reductions in emissions of NOX, SO2, PM, and mercury.
                                                                                Visibility impairment.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All are rounded to two significant figures, so figures may not sum.
\b\ The climate benefit estimate in this summary table reflects global impacts from CO2 emission changes and does not account for changes in non-CO2 GHG
  emissions. Also, different discount rates are applied to SC-CO2 than to the other estimates because CO2 emissions are long-lived and subsequent
  damages occur over many years. The benefit estimates in this table are based on the average SC-CO2 estimated for a 3 percent discount rate. However,
  we emphasize the importance and value of considering the full range of SC-CO2 values. As shown in the RIA, climate benefits are also estimated using
  the other three SC-CO2 estimates (model average at 2.5 percent discount rate, 3 percent, and 5 percent; 95th percentile at 3 percent). The SC-CO2
  estimates are year-specific and increase over time.
\c\ The air pollution health co-benefits reflect reduced exposure to PM2.5 and ozone associated with emission reductions of SO2 and NOX. The range
  reflects the use of concentration-response functions from different epidemiology studies. The co-benefits do not include the benefits of reductions in
  directly emitted PM2.5. These additional benefits would increase overall benefits by a few percent based on the analyses conducted for the proposed
  rule. The reduction in premature fatalities each year accounts for over 98 percent of total monetized co-benefits from PM2.5 and ozone. These models
  assume that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific
  evidence is not yet sufficient to allow differentiation of effect estimates by particle type.
\d\ Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning Model for the final guidelines and a
  discount rate of approximately 5 percent. This estimate includes monitoring, recordkeeping, and reporting costs and demand-side EE program and
  participant costs.
\e\ The estimates of net benefits in this summary table are calculated using the global SC-CO2 at a 3 percent discount rate (model average). The RIA
  includes combined climate and health estimates based on additional discount rates.

   Table 22--Summary of the Monetized Benefits, Compliance Costs, and Net Benefits for the Final Guidelines in
                       2020, 2025 and 2030 Under the Mass-Based Illustrative Plan Approach
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                                                                Mass-based approach
                                                                 -----------------------------------------------
                                                                       2020            2025            2030
----------------------------------------------------------------------------------------------------------------
Climate Benefits \b\
5% discount rate................................................            $0.9            $3.6            $6.4
3% discount rate................................................            $3.3             $12             $20
2.5% discount rate..............................................            $4.9             $17             $29
95th percentile at 3% discount rate.............................            $9.7             $35             $60
----------------------------------------------------------------------------------------------------------------
                                      Air Quality Co-benefits Discount Rate
----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                3%................  7%................  3%................  7%...............  3%...............  7%
Air Quality Health Co-benefits  $2.0 to $4.8......  $1.8 to $4.4......  $7.1 to $17.......  $6.5 to $16......  $12 to $28.......  $11 to $26
 \c\.
--------------------------------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
Compliance Costs \d\............................................            $1.4            $3.0            $5.1
----------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits \e\...............  $3.9 to $6.7.......  $3.7 to $6.3......  $16 to $26........  $15 to $24........  $26 to $43........  $25 to $40
--------------------------------------------------------------------------------------------------------------------------------------------------------
Non-Monetized Benefits.........                                              Non-monetized climate benefits.
                                                                      Reductions in exposure to ambient NO2 and SO2.
                                                                            Reductions in mercury deposition.
                                                 Ecosystem benefits associated with reductions in emissions of NOX, SO2, PM, and mercury.
                                                                                Visibility improvement.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ All are rounded to two significant figures, so figures may not sum.
\b\ The climate benefit estimate in this summary table reflects global impacts from CO2 emission changes and does not account for changes in non-CO2 GHG
  emissions. Also, different discount rates are applied to SC-CO2 than to the other estimates because CO2 emissions are long-lived and subsequent
  damages occur over many years. The benefit estimates in this table are based on the average SC-CO2 estimated for a 3 percent discount rate. However,
  we emphasize the importance and value of considering the full range of SC-CO2 values. As shown in the RIA, climate benefits are also estimated using
  the other three SC-CO2 estimates (model average at 2.5 percent discount rate, 3 percent, and 5 percent; 95th percentile at 3 percent). The SC-CO2
  estimates are year-specific and increase over time.
\c\ The air pollution health co-benefits reflect reduced exposure to PM2.5 and ozone associated with emission reductions of SO2 and NOX. The co-benefits
  do not include the benefits of reductions in directly emitted PM2.5. These additional benefits would increase overall benefits by a few percent based
  on the analyses conducted for the proposed rule. The range reflects the use of concentration-response functions from different epidemiology studies.
  The reduction in premature fatalities each year accounts for over 98 percent of total monetized co-benefits from PM2.5 and ozone. These models assume
  that all fine particles, regardless of their chemical composition, are equally potent in causing premature mortality because the scientific evidence
  is not yet sufficient to allow differentiation of effect estimates by particle type.
\d\ Total costs are approximated by the illustrative compliance costs estimated using the Integrated Planning Model for the final guidelines and a
  discount rate of approximately 5 percent. This estimate includes monitoring, recordkeeping, and reporting costs and demand-side EE program and
  participant costs.
\e\ The estimates of net benefits in this summary table are calculated using the global SC-CO2 at a 3 percent discount rate (model average). The RIA
  includes combined climate and health estimates based on additional discount rates.

    There are additional important benefits that the EPA could not
monetize. Due to current data and modeling limitations, our estimates
of the benefits from reducing CO2 emissions do not include
important impacts like ocean acidification or potential tipping points
in natural or managed ecosystems. Unquantified

benefits also include climate benefits from reducing emissions of non-
CO2 GHGs (e.g., nitrous oxide and methane) and co-benefits
from reducing direct exposure to SO2, NOX and
hazardous air pollutants (e.g., mercury), as well as from reducing
ecosystem effects and visibility impairment. Based upon the foregoing
discussion, it remains clear that the benefits of this final action are
substantial, and far exceed the costs. Additional details on benefits,
costs, and net benefits estimates are provided in this RIA.

B. Paperwork Reduction Act (PRA)

    The information collection requirements in this rule have been
submitted for approval to OMB under the PRA. The Information Collection
Request (ICR) document prepared by the EPA has been assigned the EPA
ICR number 2503.02. You can find a copy of the ICR in the docket for
this rule, and it is briefly summarized here. The information
collection requirements are not enforceable until OMB approves them.
    This rule does not directly impose specific requirements on EGUs
located in states or areas of Indian country. The rule also does not
impose specific requirements on tribal governments that have affected
EGUs located in their area of Indian country. For areas of Indian
country, the rule establishes CO2 emission performance goals
that could be addressed through either tribal or federal plans. A tribe
would have the opportunity under the Tribal Authority Rule (TAR), but
not the obligation, to apply to the EPA for Treatment as State (TAS)
for purposes of a CAA section 111(d) plan and, if approved by the EPA,
to establish a CAA section 111(d) plan for its area of Indian country.
To date, no tribe has requested or obtained TAS eligibility for
purposes of a CAA section 111(d) plan. For areas of Indian country with
affected EGUs where a tribe has not applied for TAS and submitted any
needed plan, if the EPA determines that a CAA section 111(d) plan is
necessary or appropriate, the EPA would have the responsibility to
establish the plans. Because tribes are not required to implement
section 111(d) plans and because no tribe has yet sought TAS
eligibility for this purpose, this action is not anticipated to impose
any information collection burden on tribal governments over the 3-year
period covered by this ICR.
    This rule does impose specific requirements on state governments
with affected EGUs. The information collection requirements are based
on the recordkeeping and reporting burden associated with developing,
implementing, and enforcing a plan to limit CO2 emissions
from existing sources in the utility power sector. These recordkeeping
and reporting requirements are specifically authorized by CAA section
114 (42 U.S.C. 7414). All information submitted to the EPA pursuant to
the recordkeeping and reporting requirements for which a claim of
confidentiality is made is safeguarded according to agency policies set
forth in 40 CFR part 2, subpart B.
    The annual burden for this collection of information for the states
(averaged over the first 3 years following promulgation) is estimated
to be a range of 505,000 to 821,000 hours at a total annual labor cost
of $35.8 to $58.1 million. The lower bound estimate reflects the
assumption that some states already have EE and RE programs in place.
The higher bound estimate reflects the overly-conservative assumption
that no states have EE and RE programs in place.
    The total annual burden for the federal government associated with
the state collection of information (averaged over the first 3 years
following promulgation) is estimated to be 54,000 hours at a total
annual labor cost of $3.00 million. Burden is defined at 5 CFR
1320.3(b).
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for the
EPA's regulations in 40 CFR are listed in 40 CFR part 9. When OMB
approves this ICR, the agency will announce that approval in the
Federal Register and publish a technical amendment to 40 CFR part 9 to
display the OMB control number for the approved information collection
activities contained in this final rule.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities.
Specifically, emission guidelines established under CAA section 111(d)
do not impose any requirements on regulated entities and, thus, will
not have a significant economic impact upon a substantial number of
small entities. After emission guidelines are promulgated, states
establish emission standards on existing sources, and it is those
requirements that could potentially impact small entities.
    Our analysis here is consistent with the analysis of the analogous
situation arising when the EPA establishes NAAQS, which do not impose
any requirements on regulated entities. As here, any impact of a NAAQS
on small entities would only arise when states take subsequent action
to maintain and/or achieve the NAAQS through their SIPs. See American
Trucking Assoc. v. EPA, 175 F.3d 1029, 1043-45 (D.C. Cir. 1999) (NAAQS
do not have significant impacts upon small entities because NAAQS
themselves impose no regulations upon small entities).
    Nevertheless, the EPA is aware that there is substantial interest
in the rule among small entities and, as detailed in section III.A of
the preamble to the proposed carbon pollution emission guidelines for
existing EGUs (79 FR 34845-34847; June 18, 2014) and in section II.D of
the preamble to the proposed carbon pollution emission guidelines for
existing EGUs in Indian Country and U.S. Territories (79 FR 65489;
November 4, 2014), has conducted an unprecedented amount of stakeholder
outreach. As part of that outreach, agency officials participated in
many meetings with individual utilities and electric utility
associations, as well as industry leaders and trade association
representatives from various industries. While formulating the
provisions of the rule, the EPA considered the input provided over the
course of the stakeholder outreach as well as the input provided in the
many public comments.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or
more as described in UMRA, 2 U.S.C. 1531-1538, and does not
significantly or uniquely affect small governments. The emission
guidelines do not impose any direct compliance requirements on EGUs
located in states or areas of Indian country. As explained in section
XII.B above, the rule also does not impose specific requirements on
tribal governments that have affected EGUs located in their area of
Indian country. The rule does impose specific requirements on state
governments that have affected EGUs. Specifically, states are required
to develop plans to implement the guidelines under CAA section 111(d)
for affected EGUs. The burden for states to develop CAA section 111(d)
plans in the 3-year period following promulgation of the rule was
estimated and is listed in section XII.B above, but this burden is
estimated to be below $100 million in any one year. Thus, this rule is
not subject to the requirements of section 202 or section 205 of the
UMRA.

    This rule is also not subject to the requirements of section 203 of
UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments. Specifically, the
state governments to which rule requirements apply are not considered
small governments.
    In light of the interest among governmental entities, the EPA
conducted outreach with national organizations representing state and
local elected officials and tribal governmental entities while
formulating the provisions of this rule. Sections III.A and XI.F of the
preamble to the proposed carbon pollution emission guidelines for
existing EGUs (79 FR 34845-34847; June 18, 2014) and sections II.D and
VI.F of the preamble to the proposed carbon pollution emission
guidelines for existing EGUs in areas of Indian Country and U.S.
Territories (79 FR 65489; November 4, 2014) describes the extensive
stakeholder outreach the EPA has conducted on setting emission
guidelines for existing EGUs. The EPA considered the input provided
over the course of the stakeholder outreach as well as the input
provided in the many public comments when developing the provisions of
these emission guidelines.

E. Executive Order 13132: Federalism

    The EPA has concluded that this action may have federalism
implications, pursuant to agency policy for implementing the Order,
because it imposes substantial direct compliance costs on state or
local governments, and the federal government will not provide the
funds necessary to pay those costs. As discussed in the Supporting
Statement found in the docket for this rulemaking, the development of
state plans will entail many hours of staff time to develop and
coordinate programs for compliance with the rule, as well as time to
work with state legislatures as appropriate, to develop a plan
submittal. Consistent with this determination, the EPA provides the
following federalism summary impact statement.
    The EPA consulted with state and local officials early in the
process of developing the proposed action to permit them to have
meaningful and timely input into its development. As described in the
Federalism discussion in the preamble to the proposed standards of
performance for GHG emissions from new EGUs (79 FR 1501; January 8,
2014), the EPA consulted with state and local officials in the process
of developing the proposed standards for newly constructed EGUs. This
outreach addressed planned actions for new, reconstructed, modified and
existing sources. The EPA invited the following 10 national
organizations representing state and local elected officials to a
meeting on April 12, 2011, in Washington, DC: (1) National Governors
Association; (2) National Conference of State Legislatures, (3) Council
of State Governments, (4) National League of Cities, (5) U.S.
Conference of Mayors, (6) National Association of Counties, (7)
International City/County Management Association, (8) National
Association of Towns and Townships, (9) County Executives of America,
and (10) Environmental Council of States. The National Association of
Clean Air Agencies also participated. On February 26, 2014, the EPA re-
engaged with those governmental entities to provide a pre-proposal
update on the emission guidelines for existing EGUs and emission
standards for modified and reconstructed EGUs. In addition, as
described in section III.A of the preamble to the proposed carbon
pollution emission guidelines for existing EGUs (79 FR 34845-34847;
June 18, 2014), extensive stakeholder outreach conducted by the EPA
allowed state leaders, including governors, state attorneys general,
environmental commissioners, energy officers, public utility
commissioners, and air directors, opportunities to engage with EPA
officials and provide input regarding reducing carbon pollution from
power plants.
    In the spirit of Executive Order 13132, and consistent with the
EPA's policy to promote communications between the EPA and state and
local governments, the EPA specifically solicited comment on the
proposed action from state and local officials. The EPA received
comments from over 400 entities representing state and local
governments.
    Several themes emerged from state and local government comments.
Commenters raised concerns with the building blocks that comprise the
best system of emission reduction (BSER), including the stringency of
the building blocks, and the timing of achieving interim CO2
levels. They also identified the potential for electric system
reliability issues and stranded assets due to the proposed timeframe
for plan submittals and CO2 emission reductions. In
addition, states commented on state plan development and implementation
topics, including state plan approaches, early actions, trading
programs, interstate crediting for RE, and EPA guidance and outreach.
    Commenters identified overarching concerns regarding the stringency
of the CO2 goals and the timeframe for achieving reductions
that encompassed the building blocks, the BSER, and associated timing
for achievement of interim CO2 levels. State commenters, in
particular, identified changes to the stringency of the building
blocks, concerns with the timeframe over which reductions must be
achieved, and concerns with the approaches and measures used for the
BSER. For the final rule, in response to stakeholder comments, the EPA
has made refinements to the building blocks, the period of time over
which measures are deployed, and the stringency of emission limitations
that those measures can achieve in a practical and reasonable cost way.
The final BSER reflects those refinements.
    To many commenters, the proposal's 2020 compliance date, together
with the stringency of the interim CO2 goal, bore
significant reliability implications. In this final rule, the agency is
addressing those concerns via adjustments to the compliance timeframe
(an 8-year interim period that begins in 2022) and to the approach for
meeting interim CO2 emission performance rates (a glide path
separated into three steps, 2022-2024, 2025-2027, and 2028-2029), as
well as a more gradual phase in of the emission reduction expectations.
These adjustments provide more time for planning, consultation and
decision making in the formulation of state plans and in EGUs' choices
of compliance strategies. The final rule also retains flexibilities
presented in the proposal and offers additional opportunities,
including opportunities for trading within and between states, and
other multi-state compliance approaches that will further support
electric system reliability. The EPA is also requiring each state to
demonstrate in its final state that it has considered electric system
reliability issues in developing its plan--and is providing the time to
do so. Even with this foundation of flexibility in place, these final
guidelines further provide states with the option of proposing
amendments to approved plans in the event that unanticipated and
significant reliability challenges arise.
    Commenters provided compelling information indicating that it will
take longer than the agency initially anticipated to for states to
complete the tasks necessary to finalize a state plan, including
administrative and potential legislative processes. Recognizing this,
as well as the urgent need for actions to reduce GHG emissions, the EPA
is requiring states to make an initial submittal by September 6, 2016,
and is allowing states two additional years to

submit a final plan, if justified (to be submitted by September 6,
2018).
    States commented on state plan development and implementation
topics that included state plan approaches, early actions being taken
into account, trading programs being allowed, interstate crediting for
RE being allowed, and guidance and outreach being provided by the EPA.
For the state plan approaches, commenters expressed concerns with the
proposed ``portfolio approach'' for state plans, including concerns
with enforceability of requirements, and identified a ``state
commitment approach'' with backstop measures as an option for state
plans. In this final rule, in response to stakeholder comments on the
portfolio approach and alternative approaches, the EPA is finalizing a
``state measures'' approach that includes a requirement for the
inclusion of backstop measures.
    State commenters supported providing incentives for states and
utilities to deploy CO2-reducing investments, such as RE and
demand-side EE measures, as early as possible. The EPA recognizes the
value of such early actions, and in this final rule is establishing the
CEIP to provide opportunities for investment in RE and demand-side EE
projects that deliver results in 2020 and/or 2021.
    Many state commenters supported the use of mass-based and rate-
based emission trading programs in state plans, including interstate
emission trading programs. The EPA also received a number of comments
from states and stakeholders about the value of EPA support in
developing and/or administering tracking systems to support state
administration of rate-based and mass-based emission trading programs.
In this final rule, states may use trading or averaging approaches and
technologies or strategies that are not explicitly mentioned in any of
the three building blocks as part of their overall plans, as long as
they achieve the required emission reductions from affected fossil-
fuel-fired EGUs. In addition, in response to concerns from states and
power companies that the need for up-front interstate cooperation in
developing multi-state plans could inhibit the development of
interstate programs that could lower cost, the final rule provides
additional options to allow individual EGUs to use creditable out-of-
state reductions to achieve required CO2 reductions, without
the need for up-front interstate agreements. The EPA is committed to
working with states to provide support for tracking of emissions and
allowances or credits, to help implement multi-state trading or
averaging approaches.
    In their comments, many states identified the need for the EPA to
provide guidance, including guidance on RE and EE emission measurement
and verification (EM&V), and to maintain regular contact/forums with
states throughout the implementation process. To provide state and
local governments and other stakeholders with an understanding of the
rule requirements, and to provide efficiencies where possible and
reduce the cost and administrative burden, the EPA will continue
outreach throughout the plan development and submittal process.
Outreach will include opportunities for states to participate in
briefings, teleconferences, and meetings about the final rule. The
EPA's 10 regional offices will continue to be the entry point for
states and tribes to ask technical and policy questions. The agency
will host (or partner with appropriate groups to co-host) a number of
webinars about various components of the final rule during the first
two months after the final rule is issued. The EPA will use information
from this outreach process to inform the training and other tools that
will be of most use to the states and tribes that are implementing the
final rule. The EPA expects to issue guidance on specific topics,
including evaluation, measurement and verification (EM&V) for RE and
demand-side EE, state-community engagement, and resources and financial
assistance for RE and demand-side EE. As guidance documents, tools,
templates and other resources become available, the EPA, in
consultation with the U.S. Department of Energy and other federal
agencies, will continue to make these resources available via a
dedicated Web site.
    A list of the state and local government commenters has been
provided to OMB and has been placed in the docket for this rulemaking.
In addition, the detailed response to comments from these entities is
contained in the EPA's response to comments document on this final
rulemaking, which has also been placed in the docket for this
rulemaking.
    As required by section 8(a) of Executive Order 13132, the EPA
included a certification from its Federalism Official stating that the
EPA had met the Executive Order's requirements in a meaningful and
timely manner when it sent the draft of this final action to OMB for
review pursuant to Executive Order 12866. A copy of the certification
is included in the public version of the official record for this final
action.

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

    This action has tribal implications. However, it will neither
impose substantial direct compliance costs on federally recognized
tribal governments, nor preempt tribal law. Tribes are not required to
develop or adopt CAA programs, but they may apply to the EPA for
treatment in a manner similar to states (TAS) and, if approved, do so.
As a result, tribes are not required to develop plans to implement the
guidelines under CAA section 111(d) for affected EGUs in their areas of
Indian country. To the extent that a tribal government seeks and
attains TAS status for that purpose, these emission guidelines would
require that planning requirements be met and emission management
implementation plans be executed by the tribes. The EPA notes that this
rule does not directly impose specific requirements on affected EGUs,
including those located in areas of Indian country, but provides
guidance to any tribe approved by the EPA to address CO2
emissions from EGUs subject to section 111(d) of the CAA. The EPA also
notes that none of the affected EGUs are owned or operated by tribal
governments.
    As described in sections III.A and XI.F of the preamble to the
proposed carbon pollution emission guidelines for existing EGUs (79 FR
34845-34847; June 18, 2014) and sections II.D and VI.F of the preamble
to the proposed carbon pollution emission guidelines for existing EGUs
in Indian Country and U.S. Territories (79 FR 65489; November 4, 2014),
the rule was developed after extensive and vigorous outreach to tribal
governments. These tribes expressed varied points of view. Some tribes
raised concerns about the impacts of the regulations on EGUs located in
their areas of Indian country and the subsequent impact on jobs and
revenue for their tribes. Other tribes expressed concern about the
impact the regulations would have on the cost of water covered under
treaty to their communities as a result of increased costs to the EGU
that provide energy to transport the water to the tribes. Other tribes
raised concerns about the impacts of climate change on their
communities, resources, ways of life and hunting and treaty rights. The
tribes were also interested in the scope of the guidelines being
considered by the agency (e.g., over what time period, relationship to
state and multi-state plans) and how tribes will participate in these
planning activities.

    The EPA consulted with tribal officials under the EPA Policy on
Consultation and Coordination with Indian Tribes early in the process
of developing this action to permit them to have meaningful and timely
input into its development. A summary of that consultation follows.
    Prior to issuing the supplemental proposal on November 4, 2014, the
EPA consulted with tribes as follows. The EPA held a consultation with
the Ute Tribe, the Crow Nation, and the Mandan, Hidatsa, Arikara (MHA)
Nation on July 18, 2014. On August 22, 2014, the EPA held a
consultation with the Fort Mojave Tribe. On September 15, 2014, the EPA
held a consultation with the Navajo Nation. The Navajo Nation sent a
letter to the EPA on September 18, 2014, summarizing the information
presented at the consultation and the Navajo Nation's position on the
supplemental proposal. One issue raised by tribal officials was the
potential impacts of the June 18, 2014 proposal and the supplemental
proposal on tribes with budgets that are dependent on revenue from coal
mines and power plants, as well as employment at the mines and power
plants. The tribes noted the high unemployment rates and lack of access
to basic services on their lands. Tribal officials also asked whether
the rules will have any impact on a tribe's ability to seek TAS. Tribal
officials also expressed interest in agency actions with regard to
facilitating power plant compliance with regulatory requirements. The
Navajo Nation made the following recommendations in their letter of
September 18, 2014: The Navajo Nation supports a mass-based
CO2 emission standard based on the highest historical
CO2 emissions since 1996; the Navajo Nation requests that
the EPA grant the Navajo Nation carbon credits and that the Navajo
Nation retains ownership and control of such credits; building block 2
is not appropriate for the Navajo Nation because there are no NGCC
plants located on the Navajo Nation; building block 3 is not
appropriate for the Navajo Nation because the Navajo people already
receive virtually all of their electricity from carbon-free sources
(mostly hydroelectric power) and their use of electricity is negligible
compared to the generation at the power plants; building block 4 is not
appropriate for the Navajo Nation because of the inadequate access to
electricity, and the goal should allow for an increase in energy
consumption on the Navajo Nation; the supplemental proposal should
consider the useful life of the power plants located on the Navajo
Nation; and the supplemental proposal should clarify that RE projects
located within the Navajo Nation that provide electricity outside the
Navajo Nation should be counted toward meeting the relevant state's RE
goals under the Clean Power Plan.
    After issuing the supplemental proposal, the EPA held additional
consultation with tribes. On November 18, 2014, the EPA held
consultations with the following tribes: Fort McDowell Yavapai Nation,
Fort Mojave Tribe, Hopi Tribe, Navajo Nation, and Ak-Chin Indian
Community. A consultation with the Ute Indian Tribe of the Uintah and
Ouray Reservation was held on December 16, 2014 and with the Gila River
Indian Community on January 15, 2015. The Navajo Nation reiterated the
concerns raised during the previous consultation. Several tribes also
again indicated that they wanted to ensure they would be included in
the development of any tribal or federal plans for areas of Indian
country. The Fort Mojave Tribe and the Navajo Nation expressed concern
with using data from 2012 as the basis for the goal for their areas of
Indian country; in their view, that year was not representative for the
affected EGU. On April 28, 2015, the EPA held an additional
consultation with the Navajo Nation. The issues raised by the Navajo
Nation during the consultation included whether the EPA has the
authority to set less stringent standards on a case-by-case basis, and
a suggested ``parity glide path'' that would account and adjust for the
very low electricity usage by the Navajo Nation and promote Navajo
Nation economic growth and demand. Furthermore, on July 7, 2015 the EPA
conducted an additional consultation with the Navajo Nation. One of the
goals of the consultation was for the new government of the Navajo
Nation to deepen their understanding of the rulemaking. The questions
raised by the nation had to do with goal setting and carbon credits,
the timing of the rulemaking, and the proposed federal plan.
Additionally, on July 14, 2015 the EPA conducted an additional
consultation with the Fort Mojave Tribe. The Fort Mojave tribes
expressed concerns that 2012 is not a representative year, that natural
gas-fired combined cycle power plants should be treated differently
from coal-fired power plants, and that the proposed goal for Fort
Mojave was not appropriate. Additionally, they also expressed interest
in being engaged in the federal plan process. Responses to these
comments and others received are available in the Response to Comment
Document that is in the docket for this rulemaking. As required by
section 7(a), the EPA's Tribal Consultation Official has certified that
the requirements of the executive order have been met in a meaningful
and timely manner. A copy of the certification is included in the
docket for this action.

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

    This action is subject to Executive Order 13045 (62 FR 19885, April
23, 1997) because it is an economically significant regulatory action
as defined by Executive Order 12866, and the EPA believes that the
environmental health or safety risk addressed by this action has a
disproportionate effect on children. Accordingly, the agency has
evaluated the environmental health and welfare effects of climate
change on children.
    CO2 is a potent GHG that contributes to climate change
and is emitted in significant quantities by fossil fuel-fired power
plants. The EPA believes that the CO2 emission reductions
resulting from implementation of these final guidelines, as well as
substantial ozone and PM2.5 emission reductions as a co-
benefit, will further improve children's health.
    The assessment literature cited in the EPA's 2009 Endangerment
Finding concluded that certain populations and lifestages, including
children, the elderly, and the poor, are most vulnerable to climate-
related health effects. The assessment literature since 2009
strengthens these conclusions by providing more detailed findings
regarding these groups' vulnerabilities and the projected impacts they
may experience.
    These assessments describe how children's unique physiological and
developmental factors contribute to making them particularly vulnerable
to climate change. Impacts to children are expected from heat waves,
air pollution, infectious and waterborne illnesses, and mental health
effects resulting from extreme weather events. In addition, children