insufficient allowances and would be in violation of allowance-holding
requirements even though EGUs at the same facility had more than enough
allowances to meet these requirements for the entire facility.
Facility-level compliance would also be consistent with other EPA-
administered mass-based trading programs.
    General accounts could be used by any person or group for holding
or trading allowances. However, allowances could not be used for
compliance with emissions limitations so long as the allowances were
held in, and not properly and timely transferred out of, a general
account. To open a general account, a person or group would have to
submit an application for a general account, which would be

similar in many ways to a certificate of representation. The
application would include, in a format prescribed by the Administrator:
The name and identifying information of the individual who would be the
authorized account representative and of any individual who would be
the alternate authorized account representative; an identifying name
for the account; the names of all persons with an ownership interest
with respect to allowances held in the account; and certification
language and signatures of the authorized account representative and
alternate. The authorized account representative and alternate would be
authorized upon receipt of the application by the Administrator. The
provisions for changing the authorized account representative and
alternate, for changing the application to take account of changes in
the persons having an ownership interest with respect to allowances,
and for delegating authority to make electronic submissions would be
analogous to those applicable to comparable matters for designated
representatives and alternates.
4. Recordation of Allowance Allocations and Transfers
    The EPA proposes to establish the following schedule and procedures
for recordation of allowance allocations and transfers. By June 1,
2021, the Administrator would record allowance allocations for EGUs for
2022 through 2024. Then, by June 1 of the year prior to the beginning
of each compliance period, the Administrator would record the allowance
allocations for the proposed mass-based trading program for each year
within that next compliance period, e.g., for 2025, 2026, and 2027 by
June 1, 2024. Recording these allowance allocations in advance of the
first year for which they could be used for compliance would facilitate
compliance planning by owners and operators and promote robust
allowance markets, including futures markets for allowances.
    Under the proposed provisions, the process for transferring
allowances from one account to another would be quite simple.
Allowances could be transferred by submitting a transfer form
providing, in a format prescribed by the Administrator, the account
numbers of the accounts involved, the serial numbers of the allowances
involved, and the name and signature of the transferring authorized
account representative or alternate. If a transfer form containing all
the required information were submitted to the Administrator and, when
the Administrator attempted to record the transfer, the transferor
account included the allowances identified in the form, the
Administrator would record the transfer by moving the allowances from
the transferor account to the transferee account within 5 business days
of the receipt of the transfer form.
5. Compliance With Emissions Limitations
    The EPA proposes to include the following provisions regarding
compliance with emission limitations. Under the proposed provisions,
once the compliance period has ended (e.g., at midnight on December 31,
2024 for the first compliance period), facilities with affected EGUs
would have a window of opportunity following the compliance period to
evaluate their reported emissions and obtain any allowances that they
might need to cover their emissions during the compliance period. For
example, the allowance transfer deadline for the first compliance
period would be midnight on May 1, 2025 (the EPA is also requesting
comment on earlier or later allowance transfer deadlines). Each
allowance issued in the proposed mass-based trading program would
authorize emission of one ton of CO2 and so would be usable
for compliance, for the compliance period that includes the year for
which the allowance was allocated or a later compliance period.
Consequently, each affected EGU would need, as of the allowance
transfer deadline, to have in its facility compliance account, or to
have a properly submitted transfer that would move into its compliance
account, enough allowances usable for compliance to authorize its total
emissions for the compliance period. The authorized account
representative could identify specific allowances to be deducted, but,
in the absence of such identification or in the case of a partial
identification, the Administrator would deduct on a first-in, first-out
basis. Deducting allowances may have tax and accounting implications,
so having a default deduction method provides the representatives with
certainty regarding which allowances will be deducted for compliance.
Allowances that are deducted for compliance will remain in the system
in an EPA account, which ensures they will not be used again. If a
facility were to fail to hold sufficient allowances for compliance by
all affected EGUs at the facility, then the owners and operators of the
facility and each affected EGU at the facility would have to provide,
for deduction by the Administrator, two allowances allocated for the
compliance period in the next year for every allowance that the owners
and operators failed to hold as required to cover emissions. This
submittal of two times the allowances required for the prior period is
an ongoing obligation until compliance is achieved, and there is an
ongoing obligation to comply in the current period. In addition, these
owners and operators would be subject to civil penalties for each
violation in accordance with the CAA, with each ton of unauthorized
emissions and each day of the compliance period involved constituting a
violation of the CAA.
    The EPA believes that it is important to include a requirement for
an automatic deduction of allowances. The deduction of one allowance
per allowance that the owners and operators failed to hold would offset
this failure. The automatic deduction of another allowance per
allowance that the owners and operators failed to hold that could not
be avoided, regardless of any explanation provided by the owners and
operators for their failure, would provide a strong incentive for
compliance with the allowance-holding requirement by ensuring that non-
compliance would be a significantly more expensive option than
compliance. Such automatic deductions have been successfully used in
prior programs including the CAIR, achieving compliance rates close to
100 percent.
6. Other Allowance Tracking and Compliance Operations Provisions
    The proposed provisions regarding allowance tracking and compliance
also provide that the Administrator could, at his or her discretion and
on his or her own motion, correct any type of error that he or she
finds in an account in the ATCS. In addition, the Administrator could
review any submission under the mass-based trading program, make
adjustments to the information in the submission, and deduct or
transfer allowances based on such adjusted information. These
provisions are a standard part of other trading programs administered
by the EPA including the ARP and Cross State Air Pollution Rule (see 40
CFR 72.96, 73.37, 97.427, and 97.428).

H. Emissions Monitoring and Reporting Requirements

    The EPA proposes that units subject to the mass-based federal plan
trading program would monitor and report CO2 mass emissions
in accordance with 40 CFR part 75.
    The EPA is proposing to require affected EGUs in all states covered
by the mass-based federal plan trading program to monitor and report
CO2 emissions and output data by January 1, 2022. Quarterly
reporting would be

required, with each quarterly report due to the Administrator 30 days
after the last day in the quarter. The reporting would be in accordance
with 40 CFR 75.60. The use of 40 CFR part 75 certified monitoring
methodologies would be required. Many EGUs that might be covered by the
proposed federal plans will generally have no changes to their
monitoring and reporting requirements and will continue to monitor and
submit reports under 40 CFR part 75 as they have under existing
programs. The EPA anticipates fewer than 50 affected EGUs that would
not otherwise be subject to the ARP will have to purchase and install
additional CEMS and data handling systems or upgrade existing equipment
in order to meet the monitoring and reporting requirements of this
program (the EPA anticipates approximately 10 coal fired units and
approximately 40 gas and oil fired units will qualify for an excepted
monitoring methodology). Several of the units not otherwise subject to
the ARP are subject to the MATS program and, therefore, will have
already installed stack flow rate and/or CO2 monitors
necessary to comply with this rule in order to comply with the MATS.
The CEMS used to comply and report data for MATS will be used for this
rule to generate and report CO2 emissions data without
having to install duplicative monitors. The same CO2 and
stack gas flow rate monitored data used in conjunction with mercury and
other CEMS to calculate a toxic pollutant emission rate may be used to
calculate a CO2 mass or CO2 emission rate for
this program. RGGI, ARP, MATS and this rule all refer to CEMS installed
and certified in accordance with 40 CFR part 75. RGGI and ARP currently
require the reporting of CO2 mass emissions on an hourly
basis and cumulative totals at the end of each calendar quarter. The
same monitors and data collected may be used for multiple purposes for
RGGI, ARP, MATS and this rule. Relying on the same monitors that are
certified and quality ensured in accordance with 40 CFR part 75 ensures
cost efficient, consistent, and accurate data that may be used for
different purposes for multiple regulatory programs.
    The majority of the units covered by this rule are already affected
by the Acid Rain and/or RGGI programs and will have minimal additional
monitoring and reporting requirements.
    The EPA also requests comment on requiring monitoring and reporting
of CO2 mass and net generation for the year before the
initial compliance period begins, i.e., to commence January 1, 2021.
Only the monitoring and reporting would be required in 2021--compliance
with the requirement to hold allowances would commence on the
compliance period schedule that is detailed in section V.C of this
preamble.

VI. Implementation of the Federal Plan and Delegation

    Under section 111(d) of the CAA, the EPA adopts EGs that are then
implemented when the EPA approves a state or tribal \115\ plan or
promulgates a federal plan that implements and enforces the EGs for
affected EGUs in states or areas of Indian country \116\ without an
approved state or tribal plan. Congress has determined that the primary
responsibility for air pollution prevention and control rests with
state and local agencies, while also recognizing that federal
leadership is essential for the development of cooperative federal,
state, regional, and local programs to prevent and control air
pollution. See CAA section 101(a)(3) and (4). Congress has also
provided for Indian Tribes meeting specified eligibility criteria to
implement the CAA within the exterior boundaries of their reservations
or other areas within the tribe's jurisdiction. See CAA section
301(d)(1) and (2). Even in the event that it becomes necessary for the
EPA to directly regulate affected EGUs under CAA section 111(d), states
and eligible tribes may still seek a delegation of authority from the
EPA to implement a federal plan, similar to the ability to take
delegated authority under other CAA programs. The EPA encourages states
and eligible tribes that do not submit approvable plans to request
delegation of the federal plan if they wish to have primary
responsibility for implementing the EGs. Approved and effective state
or tribal plans or delegation of the federal plan is the EPA's
preferred outcome in many circumstances where the EPA believes that
state and local, or tribal, agencies have practical knowledge and
enforcement resources critical to achieving the highest rate of
compliance. Delegation of a standard or requirement generally means
that obligations a source may have to the EPA under a federally
promulgated standard become obligations to a state or tribe in the
first instance (except for functions that the EPA retains for itself)
upon delegation.117 118
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    \115\ As discussed in section VI.D of this preamble, tribes with
affected EGUs in their areas of Indian country can apply for TAS for
the purpose of developing and seeking EPA approval of a tribal
implementation plan (TIP) implementing the EG, but are not required
to do so.
    \116\ As discussed in section VI.D of this preamble, in adopting
a federal plan implementing the EGs in areas of Indian country
containing affected EGUs, the EPA must determine that such a plan is
``necessary or appropriate'' to protect air quality. See 40 CFR
49.11(a).
    \117\ If the Administrator chooses to retain certain authorities
under a standard, those authorities cannot be delegated, e.g., the
authority to allow alternative methods of demonstrating compliance.
    \118\ We note that issuance of a title V permit is not
equivalent to the approval of a state plan or delegation of a
federal plan. This has been discussed in prior rulemakings, see,
e.g., Proposed Federal Plan for Commercial Industrial Solid Waste
Incinerators (CISWI) (67 FR 70640, 70652; November 25, 2002); Final
Federal Plan for CISWI (68 FR 57518, 57535; October 3, 2003).
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A. Delegation of the Federal Plan and Retained Authorities

    If a state or tribe \119\ intends to take delegation of the federal
plan, the state or tribe should submit to the appropriate EPA Regional
Office a written request for delegation of authority. The state or
tribe should explain how it meets the criteria for delegation. These
criteria are explainedgenerally in the ``Good Practices Manual for
Delegation of NSPS and NESHAP'' (EPA, February 1983). The letter
requesting delegation of authority to implement the federal plan
should: (1) Demonstrate that the state or tribe has adequate resources,
as well as the legal and enforcement authority to administer and
enforce the program; (2) include an inventory of affected EGUs, which
includes those that have ceased operation but have not been dismantled,
an inventory of the affected units' air emissions, and a provision for
state or tribal progress reports to the EPA; (3) certify that a public
hearing has been held on the state or tribal delegation request; and
(4) include a memorandum of agreement between the state or tribe and
the EPA that sets forth the terms and conditions of the delegation, the
effective date of the agreement and the mechanism to transfer
authority. Upon signature of the agreement, the appropriate EPA
Regional Office would publish an approval documentin the Federal
Register, thereby incorporating the delegation of authority into the
appropriate subpart of 40 CFR part 62. See also EPA's Delegations
Manual, Delegation 7-139, ``Implementation and Enforcement of 111(d)(2)
and 111(d)(2)/129(b)(3) federal plans.'' (A copy of this delegation has
been placed in the docket for this action.)
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    \119\ A tribe interested in taking delegation of the federal
plan must also apply, and be approved by the EPA, for TAS
eligibility for that purpose. See 40 CFR part 49.
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    If authority is not delegated to a state or tribe, the EPA will
implement the federal plan. Also, if a state or tribe fails to properly
implement a delegated portion of the federal plan, the EPA will assume
direct implementation and

enforcement of that portion. The EPA will continue to hold inspection,
information gathering, enforcement, and other parallel authorities
along with the state or tribe even when a state or tribe has received
delegation of the federal plan. In all cases where the federal plan is
delegated, the EPA may retain and not transfer authority to a state or
tribe to approve certain items promulgated in the 2015 CAA section
111(d) Clean Power Plan.
    This proposed federal plan also specifies that EGU owners or
operators who wish to petition the agency for any alternative
requirement should submit a request to the Regional Administrator with
a copy sent to the appropriate state.

B. Mechanisms for Transferring Authority

    There are two mechanisms for transferring implementation authority
to state and local agencies and tribes: (1) EPA approval of a state or
tribal plan after the federal plan is in effect; and (2) if a state or
tribe does not submit or obtain approval of its own plan, EPA
delegation to a state or tribe of the authority to implement certain
portions of this federal plan to the extent appropriate and if allowed
by state or tribal law. Both of these options are described in more
detail below.
1. Federal Plan Becomes Effective Prior To Approval of a State or
Tribal Plan
    After EGUs in a state or area of Indian country become subject to
the federal plan, the state or local agency or tribe may still adopt
and submit a plan to the EPA. If the EPA determines that the state or
tribal plan is satisfactory and approvable pursuant to the EGs, the EPA
will approve the state or tribal plan. If the EPA, on review of the
submitted state or tribal plan, determines that this is not the case,
the EPA will disapprove the plan and the EGUs covered in the state or
tribal plan would remain subject to the federal plan until a state or
tribal plan covering those EGUs is approved and effective. Prior to
disapproval, the EPA will work with states and eligible tribes to
attempt to reconcile areas of the plan that are unapprovable.
    Upon the effective date of an approved state or tribal plan, the
federal plan would no longer apply to EGUs covered by such a plan and
the state or local agency, or the tribe, would implement and enforce
the state or tribal plan in lieu of the federal plan. The timing of
effectiveness of an approved state or tribal plan in this circumstance
may depend in part on the need to ensure a smooth transition and
maintain regulatory certainty. Thus, for example, under a mass-based
federal plan, we propose to handle these transitions so that they
coincide with the compliance periods. The approval of a state or tribal
plan would also involve a public comment process, which would give
interested stakeholders including any affected EGUs, the opportunity to
comment. This will assist in ensuring that compliance, program
integrity, electric reliability, and other critical factors are
maintained. When an EPA Regional Office approves a state or tribal
plan, it will amend the appropriate subpart of 40 CFR part 62 or 40 CFR
part 49, respectively, to indicate such approval, as well as the timing
of its effectiveness.
    As discussed elsewhere in this document, the EPA may also in
certain circumstances approve a partial state or tribal plan (sometimes
called an ``abbreviated state plan'') that may modify certain limited
provisions in the federal plan trading program. For example, this could
occur if a state or tribe wishes to handle the initial allocation of
allowances in a mass-based trading program, as discussed in section V.E
of this preamble. The partial state or tribal plan would allow for the
state or tribe to assume direct authority for administering and
implementing this aspect of the trading program, while the remainder of
the federal plan remains in place. The procedural and submission
requirements set forth in the framework regulations of 40 CFR part 60,
subpart B and the EGs would generally apply to a partial state or
tribal plan, just as they would a full state or tribal plan. The scope
of the requirement, however, would be commensurate with the scope of
the partial plan. For instance, if a state or tribe seeks approval of a
partial plan solely to handle allowance allocations, then the required
statement of legal authority would be limited to those legal
authorities the state or tribe must have to implement and enforce this
component of the trading program.
2. State or Tribe Takes Delegation of the Federal Plan
    The EPA, in its discretion, may delegate to state or tribal air
agencies the authority to implement this federal plan. As discussed
above, the EPA believes that it is advantageous and the best use of
resources for state or local agencies or tribes to agree to undertake,
on the EPA's behalf, administrative and substantive roles in
implementing the federal plan to the extent appropriate and where
authorized by state or tribal law. If a state or tribe requests
delegation, the EPA will generally delegate the entire federal plan to
the state or tribal agency, thereby providing authority to the state or
tribe for things such as administration and oversight of compliance
reporting and recordkeeping requirements, inspections of its affected
EGUs, and enforcement. The EPA will continue to hold inspection,
information gathering, enforcement, and other authorities along with
the state or tribe even when a state or tribe has received delegation
of the federal plan. The delegation will not include any authorities
retained by the EPA.

C. Implementing Authority

    The EPA Regional Administrators have been delegated the authority
for implementing the federal plan. All reports required by the federal
plan should be submitted to the appropriate Regional Administrator.
Section II.B of this preamble includes Table 2 that lists names and
addresses of the EPA Regional Office contacts and the states they
cover.
    With respect to the administration of a federal trading program in
any final federal plan for a state or tribe, group of states or
combined group of states and tribes, the Office of Air and Radiation
within the Headquarters of the EPA is proposed to be the primary office
within the agency with delegated CAA section 111(d)(2) authority. See
Delegation 7-139, section 3(c).

D. Necessary or Appropriate Finding for Affected EGUs in Indian Country

    Indian Tribes may, but are not required to, submit tribal plans to
implement the EGs. Section 301(d) of the CAA and 40 CFR part 49
authorize the Administrator to treat an Indian Tribe in the same manner
as a state (i.e., TAS) for purposes of developing and implementing a
tribal plan implementing the EGs. See 40 CFR 49.3; see also ``Indian
Tribes: Air Quality Planning and Management,'' hereafter ``Tribal
Authority Rule,'' (63 FR 7254, February 12, 1998). We invite tribes
with EGU in their area of Indian country to comment on the level of
their interest, if any, in developing their own plans.
    The EPA is proposing in this action to find that it is necessary or
appropriate to regulate affected EGUs in each of the three areas of
Indian country that have affected EGUs under the proposed federal plan.
The EPA is authorized to directly implement the EGs in Indian country
when it finds, consistent with the authority of CAA section 301 which
the EPA has exercised in 40 CFR 49.11, that it is necessary or
appropriate to do so. In the final EGs, the EPA establishes emission
performance rates for the four EGUs located in Indian country and

mass- and rate-based emission goals for each of the three affected
areas of Indian country. These areas include lands of the Navajo
Nation's reservation, lands of the Ute Tribe of the Uintah and Ouray
Reservation, and lands of the Fort Mojave Tribe's reservation. The EPA
proposed carbon pollution EGs for EGUs in these areas and U.S.
Territories in a Supplemental Notice of Proposed Rulemaking. See 79 FR
65482 (November 4, 2014). The four facilities with affected EGUs
located in Indian country that the EPA identified in the Supplemental
Notice are: The South Point Energy Center, on the Fort Mojave
Reservation geographically located within Arizona; the Navajo
Generating Station, on the Navajo Indian Reservation geographically
located within Arizona; the Four Corners Power Plant, on the Navajo
Indian Reservation geographically located within New Mexico; and the
Bonanza Power Plant, on the Uintah and Ouray Indian Reservation
geographically located within Utah. The emission performance targets
for these areas were finalized along with those for EGUs located in the
rest of the country in the final EGs.
    In this action, we are proposing to find that it is necessary or
appropriate, in each of the three areas of Indian country that have
affected EGUs, to establish a federal plan that applies to the four
power plants located on the Navajo Nation, the Fort Mojave Indian
Reservation, and the Uintah and Ouray Reservation of the Ute Tribe. The
affected EGUs located on the Navajo Nation are in an area of Indian
country located within the continental United States, are
interconnected with the western electricity grid, and are owned and
operated by entities that generate and provide electricity to customers
in several states. The affected EGU located on the Uintah and Ouray
Reservation of the Ute Tribe is in an area of Indian country located
within the continental United States, is interconnected with the
western electricity grid, and is owned and operated by an entity that
generates and provides electricity to customers in several states. The
affected EGU located on the Fort Mojave Indian Reservation is in an
area of Indian country located within the continental United States, is
interconnected with the western electricity grid, and is owned and
operated by an entity that generates and provides electricity to
customers in several states. To date, none of the three tribes on whose
areas of Indian country the four power plants are located have
expressed a clear intent to develop and seek approval of a tribal
implementation plan. Thus, absent a federal plan, the significant
emissions from these four power plants could go unregulated by the
Clean Power Plan.
    Because the agency has finalized emission performance targets for
these power plants in the EGs, there is, in our view, little benefit to
be had by not proposing to include them in a federal plan now and a
potentially significant downside to not doing so; the reductions the
EPA has determined are achievable in the EGs would become more
difficult and costly for these power plants to achieve if they are
delayed in entering into the trading program the agency intends to
establish. In order to meet the performance targets, we are
anticipating that the affected EGUs may need to secure allowances or
ERCs (depending on the approach ultimately finalized) during the
compliance periods. They may also be able to generate and sell
compliance instruments by participating in the trading program. Thus,
proposing a finding that it is necessary or appropriate to establish
one or more federal plans providing the ability to participate in a
rate- or mass-based trading program is in the interest of these four
power plants located in areas of Indian country. We believe that this
together with the facts that, as indicated above, all four EGU are
interconnected with the western electricity grid and are owned and
operated by an entity that generates and provides electricity to
customers in several states thereby making it potentially disruptive
and inequitable not to include them in one or more federal plans on the
same schedule as other affected EGU strongly supports proposing to find
that it is necessary or appropriate to establish one or more applicable
federal plans at this time.
    We recognize that the governments of these tribes may still choose
to seek TAS to develop a tribal plan, and this proposed determination
does not preclude the tribes from taking such actions. We also note
that this proposed determination does not preclude these tribes from
seeking TAS and receiving delegation to administer aspects of any
applicable federal plan that is ultimately promulgated. In the event a
federal plan is needed, proposing a necessary or appropriate finding at
this time will allow the EPA to expeditiously promulgate a final
federal plan for one or all of these power plants in the future to
allow trading to occur. We will continue to consult with the
governments of the Navajo Nation, Fort Mojave Indian Tribe, and the Ute
Tribe of the Uintah and Ouray Reservation during the comment period for
this proposal, and prior to taking any action to finalize a necessary
or appropriate finding and/or a federal plan. Comments on the
appropriateness of the proposed finding should be submitted within the
comment period specified in the DATES section of this preamble.

VII. Amendments To Process for Submittal and Approval of State Plans
and EPA Actions

    As indicated in the final rulemaking action for the CAA section
111(d) guideline, ``Carbon Pollution Emission Guidelines for Existing
Stationary Sources: Electric Utility Generating Units,'' in this
action, in addition to the proposed federal plans and model trading
rules, the EPA is also proposing to amend the framework regulations and
update the process for acting on CAA section 111(d) state plans under
40 CFR part 60, subpart B. These changes would be applicable to any
future CAA section 111(d) rules going forward, not just the Clean Power
Plan EGs. The EPA proposes six changes to the CAA section 111(d)
process in the framework regulations to include: (1) Partial approval/
disapproval mechanisms similar to CAA section 110(k)(3); (2) a
conditional approval mechanism similar to CAA section 110(k)(4); (3) a
mechanism for the EPA to make calls for plan revisions similar to the
``SIP-call'' provisions of CAA section 110(k)(5); (4) an error
correction mechanism similar to CAA section 110(k)(6); (5) completeness
criteria and a process for determining completeness of state plans and
submittals similar to CAA section 110(k)(1) and (2); and (6) updates to
the deadlines for the EPA action. In addition, in this section, the
agency is proposing an interpretation regarding the effect under
section 111 if an existing facility subject to CAA section 111(d)
modifies or reconstructs. We believe these changes will significantly
streamline the state plan review and approval process, be more
respectful of state processes, and generally enhance the administration
of the CAA section 111(d) program.
    CAA section 111(d)(1) provides that the EPA ``shall establish a
procedure similar to that provided by CAA section [110] of this title
under which each state shall submit to the Administrator a [111(d)]
plan. . . .'' 42 U.S.C. 7411(d)(1). Thus, the CAA directs the EPA to
look to the structure of the SIP program when designing the procedures
the states and agency will use to develop CAA section 111(d) plans.
Notably, the CAA does not require the CAA section 111(d) procedures to
be identical to those the EPA uses under

CAA section 110 for SIPs.\120\ Therefore, the EPA interprets CAA
section 111(d) to provide the EPA flexibility in designing procedures
that reflect the structure of those used under CAA section 110 for
implementation plans, without requiring the EPA to exactly track SIP
procedures when acting on section 111(d) plans.
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    \120\ See Webster's II New Riverside University Dictionary
(Riverside 1988) (defining ``similar'' to mean ``resembling though
not completely identical'').
---------------------------------------------------------------------------

    As a general matter these proposed changes would simply update the
CAA section 111(d) framework regulations to include several new, more
flexible procedural tools that Congress introduced into section 110 in
the 1990 CAA Amendments. The basic procedures in the CAA section 111(d)
framework regulations were promulgated in 1975 based on the structure
of CAA section 110 as Congress designed it in the 1970 CAA. See 40 FR
53340-49 (November 17, 1975). Over the years since 1970, the EPA and
the states learned a great deal about the procedural limitations of the
original SIP review process. The 1970 CAA only allowed the EPA two
choices--to approve or disapprove SIP submittals. The agency struggled
to deal responsively to situations where the EPA wanted to work with
states to get state programs approved to the extent possible, while
maintaining consistency with CAA requirements. Congress responded in
1990 and enhanced the procedural mechanisms the EPA has to act on SIPs.
The EPA is proposing correspondingly to update the CAA section 111(d)
regulations in a similar fashion. Currently, the EPA's framework
regulations for submittal and adoption of CAA section 111(d) state
plans do not explicitly provide for the EPA to use some of the same
procedures for approving or disapproving state plans Congress
introduced into the SIP program in the 1990 CAA Amendments. The EPA is
proposing to amend the procedures for approval or disapproval of CAA
section 111(d) state plans to reflect the enhancements Congress
included in CAA section 110 for agency actions on SIPs. These proposed
amendments are discussed in more detail below.

A. Partial Approvals/Disapprovals

    First, the EPA proposes to add authority similar to that under CAA
section 110(k)(3) to partially approve or disapprove a plan.\121\ This
is a particularly useful function when much of a state plan is
approvable and the EPA and the state cannot reach resolution on only a
small, severable portion of the state plan. In this case, the EPA
prefers not to be in a position where it must disapprove the full plan,
but rather to allow the state to move forward with those portions of
the plan that are approvable. This approach would also address those
situations where the state wishes to take over a discrete part of a
federal plan. For instance, in this proposal, states will be able to
seek approval of a partial state plan that will give them the ability
to handle the allocation of allowances under a mass-based federal plan.
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    \121\ We recognize that the regulations appear to already
contemplate partial approval/disapprovals to some extent. See 40 CFR
60.27(a) (``The Administrator may . . . extend the period for
submission of any plan . . . or portion thereof.'') (emphasis
added). We note that this language only allows for extensions of
time with respect to portions of state plan submissions and may not
sufficiently authorize a permanent partial approval. The proposed
enhancement will resolve any ambiguity that partial approvals/
disapprovals are an acceptable mechanism under CAA section 111(d).
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    In cases where elements of a plan are functionally severable from
each other, and one element is approvable while another is not, this
provision will authorize the EPA to approve one part of a plan and
disapprove the other. It will also authorize the EPA to accept and
review a state plan that is only partial in nature, if identified by
the state as such, so long as the other applicable submission
requirements are met (such as demonstration of legal authority and
completion of the public process). When the state submits what it
intends to be a full state plan (rather than just a partial plan), the
EPA proposes that the approvable portion of a plan must be functionally
severable from the rest of the plan. This will be the case when the
following conditions are met. First, the approvable portion of the plan
must not depend on the rest of the plan. In other words, the
disapproval of the remaining portion of the plan must not affect the
portion that is approved. Second, approval of the approvable portion
must not alter the function of the submittal in a way that is contrary
to the state's intent.
    The partial disapproval would be a disapproval for the purposes of
CAA section 111(d)(2)(A) and would trigger the EPA's authority to issue
a federal plan for the state, at least for that part of the plan that
was disapproved. Incorporating this mechanism under the framework
regulations for CAA section 111(d) will enable the EPA to approve a
state to implement as much of its program as is consistent with a CAA
section 111(d) guideline and may reduce the scope of any federal plan
that would be necessary.

B. Conditional Approvals

    The second mechanism is the authority under CAA section 110(k)(4)
to conditionally approve a plan. Where a state has submitted a plan
that substantially meets the requirements of a CAA section 111(d)
emission guideline, but requires some specific amendments to make it
fully approvable, this provision authorizes the EPA to conditionally
approve the plan. The Governor or his/her designee must submit to the
EPA a commitment that specifies the amendments to be adopted and
submitted to the EPA by no later than 1 year from the effective date of
the conditional approval. If the state fails to meet its commitment,
the conditional approval is treated as a disapproval. Incorporating
this mechanism under the framework regulations for CAA section 111(d)
will enable the EPA to approve a state to begin to administer a
substantially complete program that requires only specific changes to
be fully approvable. This provision is designed to authorize a state
with a substantially complete and approvable program to begin
implementing it, while promptly amending the program to ensure it fully
complies with CAA section 111(d).

C. Calls for Plan Revisions

    CAA section 110(k)(5) authorizes the EPA to find that a SIP does
not comply with the requirements of the CAA. To date, the EPA has not
considered using a similar procedure pursuant to the authority under
CAA section 111(d). We now propose to do so. The ability to call for
plan revisions is fundamental to a program that will be implemented
over many years or multiple decades. Under the Clean Power Plan EGs,
states have more than a decade to fully implement emissions standards
or state measures in order to ensure affected EGUs achieve the emission
goals of the EGs. Throughout this period, the EPA and the states will
be monitoring their programs to ensure they are achieving the intended
results. It is possible that design assumptions about the effect of
control measures the states incorporate into their plans could prove
inaccurate in retrospect and could result over time in the plan not
meeting the emission reductions required by the EGs. In that case,
having a procedural mechanism available under CAA section 111(d)
similar to the so-called ``SIP call'' mechanism in CAA section
110(k)(5) will allow the agency to initiate a process with the state to
make necessary

revisions to ensure the plan functions properly.
    Accordingly, the EPA is proposing to amend the framework
regulations to include a provision similar to CAA section 110(k)(5)
under which the EPA may find that a state's CAA section 111(d) plan is
substantially inadequate to comply with the requirements of the CAA and
require the state to revise the plan as necessary to correct such
inadequacies. Consistent with CAA section 110(k)(5), the EPA shall
notify the state of any inadequacies and establish a reasonable
deadline for the state to submit required plan revisions. That deadline
will not exceed 18 months after the date of the action. The EPA will
make its finding and notice to the state available to the public.\122\
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    \122\ Consistent with the agency's practice under CAA section
110(k)(5), the EPA anticipates that a call for plan revisions under
CAA section 111(d) will be done via notice and comment rulemaking.
---------------------------------------------------------------------------

    The effect of such a finding is that either the state submits the
program corrections by the date the EPA sets in the document, or
pursuant to CAA section 111(d)(2)(A), the EPA has authority to issue a
federal plan for a state that misses its deadline to correct its plan.
In effect, the finding of plan inadequacy establishes a plan submittal
deadline subject to the provisions of CAA section 111(d)(2)(A). A
finding of failure to meet that new deadline triggers the EPA's
authority to issue a federal plan for the state. The EPA may promulgate
a federal plan at any time following the state's failure to timely
submit an adequate plan that addresses the EPA's finding.
    While these authorities are important, the intention of having a
mechanism to call for plan revisions is to have a way to initiate an
orderly process to improve plans when they are not meeting program
objectives. It is the EPA's hope that a call for plan revision leads to
a constructive dialogue with a state or states, and ultimately, an
improved and more effective CAA section 111(d) plan.
    The EPA is also proposing that the agency can call for a plan
revision in circumstances where a state is not implementing its
approved state plan and, therefore, the state plan is substantially
inadequate to provide for the implementation of CAA section 111(d)
standards of performance. As discussed above, the CAA directs the EPA
to develop a procedure for state plans under CAA section 111(d) similar
to CAA section 110 SIP procedures. Calling a plan that is substantially
inadequate to provide for implementation of standards of performance
(i.e., there is a failure to implement a state plan) is one area where
the EPA proposes it is appropriate to adapt the procedural mechanisms
available in the SIP program to provide a similar process that assures
effective state plan implementation under CAA section 111(d). Under CAA
section 110(k)(5), the EPA may call for a revision of a state plan
``[w]henever the Administrator finds that the . . . plan . . . is
substantially inadequate to . . . comply with any requirement of [the
Act].'' If the state does not submit a plan revision in response to the
call to cure the failure to provide for implementation, the EPA would
have the authority to promulgate the federal plan being proposed.
    One critical requirement of CAA section 111(d)(1)(B) is that a
state must submit a plan that ``provides for the implementation and
enforcement of such standards of performance'' (emphasis added). If,
after the EPA has approved a plan, a state fails to implement that
plan, the plan has become substantially inadequate to comply with this
requirement of the CAA. Under this proposal, the EPA's remedy would be
to find the plan is substantially inadequate, which triggers the
state's obligation to cure, and failing that, the EPA's authority to
promulgate the federal plan.
    In the alternative, the EPA proposes that this authority to call a
plan for failure to implement is anchored in the authority provided
under CAA section 110(k)(5) to call a SIP when the agency finds that it
is ``substantially inadequate to attain or maintain the relevant
national ambient air quality standard.'' In the context of CAA section
111, this authority translates into the EPA calling a state plan when
the agency finds that it is substantially inadequate to achieve the
emission reductions required under the EGs. If a state has failed to
implement its plan, and that failure is pervasive enough to render the
requirements of the plan ineffective, it is reasonable for the EPA to
find that the state plan is substantially inadequate to achieve the
emission reductions required under the EGs. The state's failure to
implement has revised the effect of the plan so that it is no longer
adequate to meet the CAA's requirements.

D. Error Corrections

    The fourth mechanism is the error correction authority under CAA
section 110(k)(6). Where the EPA concludes that it has erroneously
approved, disapproved, or promulgated a plan or plan revision (or part
thereof), this section authorizes the agency to revise its action, in
the same manner as the original action, without requiring any further
submission from the state. Prior to the 1990 CAA Amendments, there was
some question whether the EPA could unilaterally correct a previous
action on a SIP submittal without the state having to submit a new SIP.
This limitation imposed unnecessary burdens on states to fix even
obvious errors, because CAA section 110(a)(2) requires the state to
provide notice and a public hearing on each new SIP submittal.
Incorporating this mechanism into the CAA section 111(d) framework
regulations will allow the EPA to fix errors in its prior actions on
state plans without imposing on the states the corresponding burden of
providing notice and a public hearing as required under the CAA section
111(d) framework regulations. See 40 CFR 60.23.

E. Completeness Criteria

    Completeness criteria provide the agency with a means to determine
whether a submission by a state includes the minimum elements that must
be met before the EPA is required to act on such submission. When
submittals do not contain the necessary minimum elements, then the EPA
may, without further action, find that a state has failed to submit a
plan. This determination is ministerial in nature and requires no
exercise of discretion or judgment on the agency's part, nor does it
reflect a judgment on the sufficiency or adequacy of the submitted
portions of a state plan. The task is accomplished by simply comparing
the materials provided by the state as its submittal against the
required criteria to determine whether the plan is complete or not. In
the case of SIPs under CAA section 110(k)(1), the EPA promulgated
completeness criteria in 1990 at Appendix V to 40 CFR part 51 (55 FR
5830; February 16, 1990). The EPA proposes to adopt criteria similar to
the criteria set out at section 2.0 of Appendix V for determining the
completeness of submissions under CAA section 111(d). The completeness
criteria can be grouped into: (1) Administrative materials; and (2)
technical support. The EPA proposes that both groups would apply to all
CAA section 111(d) rules going forward. The agency notes that the
addition of completeness criteria in the framework regulations does not
alter any of the submission requirements states already have under the
EGs.
    For administrative materials, the EPA is proposing completeness
criteria that mirror the existing administrative criteria for SIP
submittals because the two programs have similar

administrative processes. The EPA proposes that a complete final state
plan submittal under CAA section 111(d) must include: (1) A formal
letter of submittal from the Governor or his/her designee requesting
EPA approval of the plan or revision thereof; (2) evidence that the
state has adopted the plan in the state code or body of regulations
(That evidence must include the date of adoption or final issuance as
well as the effective date of the plan, if different from the adoption/
issuance date.); (3) evidence that the state has the necessary legal
authority under state law to adopt and implement the plan; (4) a copy
of the actual regulation, or document submitted for approval and
incorporation by reference into the plan. The submittal must be a copy
of the official state regulation/document signed, stamped and dated by
the appropriate state official indicating that it is fully enforceable
by the state (The effective date of the regulation/document must,
whenever possible, be indicated in the document itself. The state's
electronic copy must be an exact duplicate of the hard copy. For
revisions to the approved plan, the submittal must indicate the changes
made (for example, by redline/strikethrough) to the approved plan.);
(5) evidence that the state followed all of the procedural requirements
of the state's laws and constitution in conducting and completing the
adoption/issuance of the plan; (6) evidence that public notice was
given of the proposed change with procedures consistent with the
requirements of 40 CFR 60.23, including the date of publication of such
notice; (7) certification that public hearing(s) were held in
accordance with the information provided in the public notice and the
state's laws and constitution, if applicable and consistent with the
public hearing requirements in 40 CFR 60.23; and (8) compilation of
public comments and the state's response thereto.
    These criteria, as proposed, are intended to be generic to all CAA
section 111(d) plans going forward, with the proviso that specific EGs
may provide otherwise. The technical support completeness criteria that
the EPA proposes will also be generic to all CAA section 111(d) rules,
with the same proviso. The EPA proposes that the technical support
required for all plans must include each of the following: (1)
Description of the plan approach and geographic scope; (2)
identification of each designated facility, identification of emission
standards for each designated facility, and monitoring, recordkeeping,
and reporting requirements that will determine compliance by each
designated facility; (3) identification of compliance schedules and/or
increments of progress; (4) demonstration that the state plan submittal
is projected to achieve emissions performance under the applicable EGs;
(5) documentation of state recordkeeping and reporting requirements to
determine the performance of the plan as a whole; and (6) demonstration
that each emission standard is quantifiable, non-duplicative,
permanent, verifiable, and enforceable.
    The EPA proposes a process similar, though not identical, to that
set forth in 40 CFR 51.103 and Appendix V to 40 CFR part 51 to make
completeness determinations. Similar to CAA section 110(k)(1)(C), under
this proposal, where the EPA determines that a state submission
required under CAA section 111(d) does not meet the minimum
completeness criteria we are proposing to establish, the state will be
considered to have not made the submission. The EPA further proposes
that, similar to CAA section 110(k)(1)(B), within 60 days of the EPA's
receipt of a state submission, but no later than 6 months after the
date, if any, by which a state is required to submit the plan or
revision, the Administrator shall determine whether the minimum
criteria have been met. Any plan or plan revision that a state submits
to the EPA, and that has not been determined by the EPA by the date 6
months after receipt of the submission to have failed to meet the
minimum criteria, shall on that date be deemed by operation of law to
meet such minimum criteria. In cases where a state does not submit
anything to the agency, however, the Administrator must make a finding
of failure to submit no later than 6 months after the date, if any, by
which a state is required to submit the plan or revision. (In other
words, ``completeness by operation of law'' is only available where the
state has actually submitted a plan to the agency.)
    As with the completeness determination process for SIP submissions,
the EPA's determination that a submittal is complete is not a finding
that the submittal meets the substantive requirements of CAA section
111(d) or the guideline. That must be done via the process for approval
or disapproval of a state plan, which would be done through notice and
comment rulemaking. In the completeness process, the EPA will confirm
that a state's submittal appears to have addressed the criteria for a
complete submittal and, therefore, the submittal is sufficient to
trigger the EPA's obligation to act on it. But in the completeness
process the agency will not assess the content of those submissions to
determine if they are approvable. Accordingly, even when the EPA
affirmatively determines that a submittal is complete, it does not
prevent the agency from later finding that the state plan does not meet
the requirements of the EGs, including finding that the submittal
failed to address a required element and must be disapproved.
    Similarly, when a submittal is determined to be complete by
operation of law after 6 months without the EPA's affirmative
determination of completeness, the only legal consequence is that the
EPA now has an obligation to act on that submittal. Completeness by
operation of law means that the submittal is deemed complete and
requires the EPA's review, whether or not the state has actually
addressed all the required elements. Accordingly, if the agency
determines that a state has failed to address a required element in its
submittal once the EPA begins review of the state plan that is complete
by operation of law, the agency must go through the process of
disapproving (or partially disapproving or conditionally approving, as
discussed below) that plan, unless the state and the EPA work together
to cure the deficiency. In other words, the EPA cannot simply find the
plan incomplete and return it to the state at that point. But the
finding of completeness by operation of law in no way prevents the EPA
from subsequently concluding that the state's submission is missing a
required element of the program and making that finding as part of a
disapproval of the plan.
    As described in the final rulemaking action for the CAA section
111(d) EGs, a state will submit all CAA section 111(d) plans
electronically. If the EPA determines that any submission fails to meet
the completeness criteria, the agency may return the plan to the state
and request corrections, identifying the components that are absent or
insufficient to allow the EPA to perform a review of the plan. The
state will not have met its obligation to submit a final plan until it
resubmits a revised state plan or supporting materials addressing the
corrections the EPA identified in its incompleteness determination.
    The EPA is also proposing to include an exception to the criteria
for complete administrative materials in cases where a state and the
EPA are ``parallel processing'' the final plan. Parallel processing
allows a state to submit the plan prior to final adoption by the state
and provides an opportunity for the

state to consider the EPA's comments prior to submission of a final
plan for final review and action. The EPA would propose to take action
on a state plan based on a proposed state regulation. The EPA would
only finalize the action if the state adopts a final plan that is
legally effective under state law. The EPA would only approve the plan
if the state addressed any corrections that the EPA identified in its
proposed action on the state plan without any other material change to
the plan. Note that a plan submitted for parallel processing must still
meet all the criteria for technical completeness so that the EPA and
the public have a sufficient basis on which to evaluate and comment on
the EPA's proposed action.

F. Update to Deadlines for EPA Actions

    The EPA proposes to update the deadlines for acting on state
submittals and promulgating a federal plan under 40 CFR 60.27(b), (c),
and (d) to more closely track the current versions of CAA sections
110(c) and 110(k) adopted in 1990. The framework regulations for CAA
section 111(d) state plans currently are parallel to the prior version
of CAA section 110. They require the EPA to act on a state plan or plan
revision submittal within 4 months after the date required for
submission of a plan or plan revision. See 40 CFR 60.27(b). The
regulations then require the EPA to issue a proposed federal plan in
certain circumstances after consideration of any state hearing record,
see 40 CFR 60.27(c), and require the EPA to promulgate the proposed
federal plan within 6 months after the date required for plan
submissions, see 40 CFR 60.27(d).
    The final CO2 EGs for affected EGUs have already
adjusted the deadline in 40 CFR 60.27(b) to require the EPA to act on a
state plan under those EGs within 12 months (rather than 4 months)
after the date required for submission of a plan. See 40 CFR 60.5715.
However, the Clean Power Plan EGs did not modify the 6-month deadline
for a federal plan in 40 CFR 60.27(d).
    The EPA is proposing to amend 40 CFR 60.27(b) to allow the EPA 12
months to approve or disapprove submittals of all plans or plan
revisions under CAA section 111(d), not just those related to the Clean
Power Plan under 40 CFR 60.5715. This change would provide the EPA with
sufficient time for the steps required to approve or disapprove the
submittal, which include proposing the EPA's approval or disapproval of
the plan or plan revision, a public comment period on the EPA's
proposal, time for the EPA to review and respond to public comments,
and the issuance of a final rule approving or disapproving the plan or
plan revision.
    The EPA is also proposing to amend 40 CFR 60.27(b) to specify that
the deadline for the EPA to act on a plan or plan revision is 12 months
after receipt of a complete plan or plan revision, rather than 12
months after the deadline for submittal of a plan or plan revision.
This amendment will allow the EPA to have the full 12 months to act on
submittals of complete plans or plan revisions.
    The EPA also proposes slight modifications to the provision related
to issuing a proposed federal plan in 40 CFR 60.27(c); changing the 6-
month deadline for issuing a final federal plan in 40 CFR 60.27(d) to 1
year; \123\ and, similar to the change in timing for 40 CFR 60.27(b)
above, setting the deadline for promulgation of a federal plan to run
from the date of the EPA's action on a state submittal, rather than
from the original deadline for a state submittal.
---------------------------------------------------------------------------

    \123\ As under CAA section 110, the EPA believes that, should it
fail for whatever reason to meet a deadline by which it was to take
action, such as issue a federal plan, under CAA section 111(d), that
failure does not thereby obviate or in any way remove the EPA's
authority or obligation to take that action. See Oklahoma v. U.S.
EPA, 723 F.3d 1201, 1224 (10th Cir. 2013) (``Although the statute
undoubtedly requires that the EPA promulgate a FIP within two years,
it does not stand to reason that it loses its ability to do so after
this two-year period expires. Rather, the appropriate remedy when
the EPA violates the statute is an order compelling agency
action.'').
---------------------------------------------------------------------------

    The EPA believes it is appropriate to modify these timing
requirements for several reasons. First, the EPA notes that under CAA
section 111(d)(2), Congress gave the EPA the ``same'' authority to
prescribe a federal plan under CAA section 111(d) as it would have
under CAA section 110(c) in the case of a state failure to submit a
SIP. The term ``same'' stands in contrast to the term ``similar'' in
CAA section 111(d)(1) (discussed above). As with the use of the term
``similar,'' the EPA believes it is authorized by this language to
follow the timing provisions of CAA section 110(c) as currently
enacted. Second, as a general matter, the timing requirements of
current 40 CFR 60.27(c) and (d), which effectively require the EPA to
propose and finalize a federal plan within 6 months of the deadline for
state submittals, may be outdated and unrealistic with respect to the
timelines for review of state plans and the time periods for action,
particularly as informed by the agency's experience with CAA section
110 SIPs (which led to the extension of the timelines and other changes
to CAA section 110 in the 1990 Amendments discussed above). Third, in
the Clean Power Plan EGs, the EPA has finalized a timing requirement
that gives the agency a year to approve or disapprove a state plan or
revision. The existing requirement in 40 CFR 60.27(d) that the EPA must
promulgate a federal plan within 6 months of the initial deadline for
state plans is therefore inconsistent with this provision. Fourth,
existing 40 CFR 60.27(c) tracks the prior version of CAA section 110(c)
with respect to the issuance of a proposed federal plan. This
relatively prescriptive language is no longer present in CAA section
110(c). The procedural requirements for rulemakings under both CAA
section 110 and 111(d) are set out in section 307(d) of the CAA, and
the EPA believes those provisions are appropriate and adequate to guide
its rulemaking process for CAA section 111(d) federal plans.
    The EPA invites comment on all of these proposed changes to the
framework regulations. The EPA notes that the addition of these
mechanisms to the framework regulations will make them available for
all CAA section 111(d) regulations, not just those under the Clean
Power Plan at 40 CFR part 60, subpart UUUU.

G. Proposed Interpretation Regarding Existing Sources That Modify or
Reconstruct

    In the proposed rulemaking for the Clean Power Plan, the EPA
proposed the interpretation that if an existing source is subject to a
CAA section 111(d) state plan, and then undertakes a modification or
reconstruction, the source remains subject to the state plan, while
also becoming subject to the modification or reconstruction
requirements. See 79 FR 34830, 34903-4 (June 18, 2014). The EPA did not
finalize a position on this issue in the final EGs rule, but indicated
that it would re-propose and request comment on this issue through this
federal plan rulemaking. The EPA also stated deferral of action on this
issue does not impact states' and affected EGUs' pending obligations
under the final Emission Guidelines relating to plan submission
deadlines, as this issue concerns potential obligations or impacts
after an existing source has already become subject to the requirements
of a state plan. The EPA intends to finalize its position on this issue
through this rulemaking, which will be well in advance of the plan
performance period beginning in 2022, at which point state plan
obligations on existing sources are effectuated.
    We noted in the Clean Power Plan proposal that CAA section 111(d)
is arguably silent as to this issue. Thus, we

took this to grant the agency the authority to provide a reasonable
interpretation to fill in the gaps where the statute is silent. In the
proposal for the Clean Power Plan, we proposed to disallow existing
sources to leave the CAA section 111(d) program through modification or
reconstruction. We did this for two reasons. First, if a source did so,
that could prove disruptive to the state plan. Second, allowing sources
to do so could provide them an incentive that would be contrary to the
purposes of CAA section 111(d). We then asked for comment on ``whether
this interpretation is supported by the statutory text and whether this
interpretation is sensible policy and will further the goals of the
statute.''
    We received many comments disagreeing with this approach. After
reviewing these comments, the agency believes an alternative
interpretation is more appropriate in the particular context here. In
order to give the public an opportunity to comment on this, we are
proposing this interpretation here. That is, when CAA section 111(d)
EGs are initially promulgated for existing stationary sources in
response to corresponding CAA section 111(b) standards of performance
for the same pollutant, the statute prevents new, modified, or
reconstructed sources (including under those particular CAA section
111(b) standards of performance and as those terms are applied in the
relevant new source performance standards (NSPS)) from simultaneously
being subject to state plans under those particular CAA section 111(d)
EGs. This interpretation gives meaning to the definition of ``existing
source'' in CAA section 111(a)(6) and is consistent with the definition
of ``new source'' in CAA section 111(a)(2). Further, it is consistent
with the historical treatment of modified and reconstructed sources in
the CAA section 111 program.
    The EPA notes the concerns it noted in the proposal supporting why
the originally proposed interpretation was reasonable are being
addressed in other ways in the final EGs, and in the proposed federal
plan. In other words, there will be other ways to minimize disruption
to state plans if such a modification or reconstruction were to take
place. We invite comment on the agency's proposed interpretation that
when an existing source modifies or reconstructs in such a way that it
meets the definition of a new source, for purposes of a particular NSPS
and emission guideline, it becomes a new source under the statute and
is no longer subject to the CAA section 111(d) program

H. Separate Finalization of These Changes

    The agency intends to finalize these procedural changes and
interpretation sooner than it finalizes the rest of this proposed
action. The EPA believes these changes generally enhance and improve
the framework regulations in a way that will be of benefit to the
states, the EPA, and other stakeholders, and will improve the overall
efficacy of the program. We believe it is important to finalize these
changes to the framework regulations relatively quickly in order to
provide states and other stakeholders predictability in how the EPA
intends to process state plans and submissions under CAA section
111(d). If the EPA does finalize these changes sooner than the model
trading rules or the federal plan, it will do so after the close of the
comment period, and after consideration and response to any comments on
these changes.

VIII. Impacts of This Action

A. Endangered Species Act

    Consistent with the requirements of section 7(a)(2) of the
Endangered Species Act (ESA), the EPA has considered the effects of
this proposed rule and has reviewed applicable ESA regulations, case
law, and guidance to determine what, if any, impact there may be to
listed endangered or threatened species or designated critical habitat.
Section 7(a)(2) of the ESA requires federal agencies, in consultation
with the U.S. Fish and Wildlife Service (FWS) and/or the National
Marine Fisheries Service, 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. See 16 U.S.C. 1536(a)(2). Under relevant implementing
regulations, ESA section 7(a)(2) applies only to actions where there is
discretionary federal involvement or control. See 50 CFR 402.03.
Further, under the regulations consultation is required only for
actions that ``may affect'' listed species or designated critical
habitat. See 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. See
50 CFR 402.02. Direct effects are the direct or immediate effects of an
action on a listed species or its habitat.\124\ Indirect effects are
those that are caused by the action, later in time, and are reasonably
certain to occur. Id. To trigger a consultation requirement, there must
thus be a causal connection between the federal action, the effect in
question, and if the effect is indirect, it must be reasonably certain
to occur.
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    \124\ 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).
---------------------------------------------------------------------------

    The EPA has considered the effects of this proposed rule and has
reviewed applicable ESA regulations, case law, and guidance to
determine what, if any, impact there may be to listed species or
designated critical habitat for purposes of ESA section 7(a)(2)
consultation. The EPA notes that the projected environmental effects of
this proposal are, like the EGs that it implements, positive:
Reductions in overall GHG emissions, and reductions in PM and ozone-
precursor emissions (sulfur oxides and NOX), for EGUs that
will be covered by the federal plan. 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 considering whether ESA consultation is required for this rule.
    With respect to the projected GHG emission reductions, the EPA does
not believe that such reductions trigger ESA consultation requirements
under ESA section 7(a)(2). In reaching this conclusion, the EPA is
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.\125\
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 ESA section 7 regulations and, thus, are not
subject to ESA consultation.
---------------------------------------------------------------------------

    \125\ 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'' (October 3, 2008).
---------------------------------------------------------------------------

    The EPA has also previously considered issues relating to GHG
emissions in connection with the requirements of ESA section 7(a)(2).
In the final EGs, the agency noted that, although the GHG emission
reductions projected for the EGs are large (estimated reductions of
about 415 million short tons of CO2 in 2030 relative to the
base case), 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,\126\ 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.'' EPA, Light Duty Vehicle Greenhouse Gas Standards and
Corporate Average Fuel Economy Standards, Response to Comment Document
for Joint Rulemaking at 4-102 (Docket EPA-OAR-HQ-2009-4782). The EPA
reached this conclusion after evaluating issues relating to potential
improvements from the fuel efficiency rule relevant to both temperature
and oceanographic pH outputs. The EPA's ultimate finding was that ``any
potential for a specific impact [of the specific federal action] 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. See also, e.g.,
Ground Zero Center for Non-Violent Action v. U.S. Dept. of Navy, 383 F.
3d 1082, 1091-92 (9th Cir. 2004). The EPA similarly proposes to
determine that the likelihood of jeopardy to a species from this
proposed action is extremely remote, and ESA does not require
consultation. The EPA's proposed conclusion is entirely consistent with
DOI's analysis regarding ESA requirements in the context of federal
actions involving GHG emissions.
---------------------------------------------------------------------------

    \126\ See 75 FR 25438 Table I.C 2-4 (May 7, 2010); 77 FR at
62894 Table III-68 (October 15, 2012).
---------------------------------------------------------------------------

    With regard to non-GHG air emissions, the EPA is also projecting
substantial reductions of SO2 and NOX as a
collateral consequence of this proposal (which will be, as stated
above, only a subset of the total reductions from the EGs). However,
CAA section 111(d) cannot directly control emissions of criteria
pollutants. And furthermore, a federal plan under CAA section 111(d)(2)
does no more than prescribe emissions standards of the same stringency
as the corresponding EGs. See 40 CFR 60.27(e)(1). Consequently, CAA
section 111(d) provides no discretion to set a standard in a federal
plan based on potential impacts to endangered species of reduced
criteria pollutant emissions. ESA section 7(a)(2) consultation 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) (the
EPA has no duty to consult under section 7 of the ESA regarding HAP
controls that it did not require--and likely lacked authority to
require--in a FIP 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. See 50 CFR 402.02. The EPA recognizes, 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 EGs 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 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
would, at the time of promulgation of a federal plan, be 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.
    Under a federal plan, it is the EPA that would implement a CAA
section 111(d) plan. The EPA believes that even with this proposed
federal plan, any effects on listed species or designated habitat are
too uncertain to require consultation under ESA section 7. This is so
for at least two reasons: (1) The EPA cannot know with any certainty at
this stage which states will actually become subject to a finally
promulgated federal plan. Which affected EGUs, in which states, will be
covered by this plan can only be known after states have failed to
submit a plan, or have had their plans disapproved by the EPA; and (2)
the federal plan as proposed will be implemented through some form of
emissions trading. Emissions trading inherently provides maximum
flexibility to individual affected EGUs to choose their method of
compliance, including continuing to emit the relevant pollutant at
historical rates so long as the affected EGU holds sufficient credits
or allowances. At this point, the EPA has no meaningful information to
express in any more than the broadest terms how any particular affected
EGU may choose to comply with the federal plan, should it be
promulgated for them based on their location in an area not covered by
an approved state plan. The Services have explained that ESA section
7(a)(2) was not intended to preclude federal actions based on potential
future speculative effects.\127\

These are precisely the types of speculative future activities and
effects currently at issue here. The EPA requests comment on its
proposed conclusion that ESA section 7 consultation is not required for
this action. The EPA will continue to evaluate the scope and potential
effects of federal planning activities for this source category to the
extent federal plans are needed and implemented in specific areas and
over specific sources.
---------------------------------------------------------------------------

    \127\ See 51 FR 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).
---------------------------------------------------------------------------

B. What are the air impacts?

    The EPA anticipates significant emission reductions under this
proposed action for the utility power sector. Specifically, the EPA is
proposing approaches in the form of mass- and rate-based trading
options that provide flexibility in implementing emission standards for
a state's affected EGUs. Both proposed approaches to the federal plan
would require affected EGUs to meet emission standards set using the
CO2 emission performance rates in the Clean Power Plan EGs.
    However, at the time of this proposal, the EPA has no information
on whether any or how many states will require a federal plan or will
adopt a model rule. Because of this lack of information, in the
Regulatory Impact Analysis (RIA) for this proposal, the EPA chose to
examine a scenario where all states of the contiguous United States
will be regulated under a federal plan or will adopt the model rule.
Additionally, we examine two alternative federal plan approach
scenarios. The first federal plan approach assumes all states in the
contiguous United States are regulated under a rate-based federal plan.
The second federal plan approach assumes all contiguous states are
regulated under a mass-based federal plan.\128\
---------------------------------------------------------------------------

    \128\ It is important to note that the differences between the
analytical results for the rate-based and mass-based federal plan
approaches presented may not be indicative of likely differences
between the approaches. 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.
---------------------------------------------------------------------------

    Under the rate-based approach, when compared to 2005,
CO2 emissions are projected to be reduced by approximately
22 percent in 2020, 28 percent in 2025, and 32 percent in 2030. Under
the mass-based approach, when compared to 2005, CO2
emissions are projected to be reduced by approximately 23 percent in
2020, 29 percent in 2025, and 32 percent in 2030. The proposal is
projected to result in substantial co-benefits through reductions of
SO2, NOX, and PM2.5 that will have
direct public health benefits by lowering ambient levels of these
pollutants and ozone. Table 12 and Table 13 of this preamble show
expected CO2 and other air pollutant emissions in the base
case and reductions under the proposal for 2020, 2025, and 2030 for
both rate-based and mass-based approaches.

Table 12--Summary of CO2 and Other Air Pollutant Emission Reductions From the Base Case Under Rate-Based Federal
                                                  Plan Approach
----------------------------------------------------------------------------------------------------------------
                                                                   CO2 (million    SO2 (thousand   NOX (thousand
                                                                    short tons)     short tons)     short tons)
----------------------------------------------------------------------------------------------------------------
2020
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,155           1,311           1,333
Rate-based Federal Plan Approach................................           2,085           1,297           1,282
Emission Reductions.............................................              69              14              50
----------------------------------------------------------------------------------------------------------------
2025
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,165           1,275           1,302
Rate-based Federal Plan Approach................................           1,933           1,097           1,138
Emission Reductions.............................................             232             178             165
----------------------------------------------------------------------------------------------------------------
2030
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,227           1,314           1,293
Rate-based Federal Plan Approach................................           1,812             996           1,011
Emission Reductions.............................................             415             318             282
----------------------------------------------------------------------------------------------------------------
Source: Integrated Planning Model, 2015.
Note: Emissions may not sum due to rounding.

Table 13--Summary of CO2 and Other Air Pollutant Emission Reductions From the Base Case Under Mass-Based Federal
                                                  Plan Approach
----------------------------------------------------------------------------------------------------------------
                                                                   CO2 (million    SO2 (thousand   NOX (thousand
                                                                    short tons)     short tons)     short tons)
----------------------------------------------------------------------------------------------------------------
2020
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,155           1,311           1,333
Mass-based Federal Plan Approach................................           2,073           1,257           1,272
Emission Reductions.............................................              81              54              60
----------------------------------------------------------------------------------------------------------------
2025
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,165           1,275           1,302
Mass-based Federal Plan Approach................................           1,901           1,090           1,100

Emission Reductions.............................................             265             185             203
----------------------------------------------------------------------------------------------------------------
2030
----------------------------------------------------------------------------------------------------------------
Base Case.......................................................           2,227           1,314           1,293
Mass-based Federal Plan Approach................................           1,814           1,034           1,015
Emission Reductions.............................................             413             280             278
----------------------------------------------------------------------------------------------------------------
Source: Integrated Planning Model, 2015.
Note: Emissions may not sum due to rounding.

    The reductions in Tables 12 and 13 of this preamble do not account
for reductions in HAP 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.

C. What are the energy impacts?

    The proposed action may have important energy market implications.
Table 14 of this preamble presents a variety of important energy market
impacts for 2020, 2025, and 2030 under both the rate-based and mass-
based federal plan approaches described in section VIII.B of this
preamble and presented in the RIA for this proposal.

Table 14--Summary Table of Important Energy Market Impacts for Rate-Based and Mass-Based Federal 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%
Average electricity bills.................................        3       -4       -7        2       -3       -8
Price of coal at minemouth................................       -1       -5       -4       -1       -5       -3
Coal production for power sector use......................       -5      -14      -25       -7      -17      -24
Price of natural gas delivered to power sector............        5       -8        2        4       -3       -2
Natural gas use for electricity generation................        3       -1       -1        5        0       -4
----------------------------------------------------------------------------------------------------------------

    These figures reflect the EPA's modeling that presumes policies
that lead to generation shifts and growing use of DS-EE and renewable
electricity generation out to 2029. If different implementation choices
are made than those modeled, impacts could be different.

D. What are the compliance costs?

    The compliance costs of this proposed action are represented in
this analysis as the change in electric power generation costs between
the base case and modeled federal plan approaches described in section
VIII.B of this preamble and presented in the RIA for this proposal. The
incremental cost is the projected additional cost of complying with the
proposed action in the year analyzed and includes the amortized cost of
capital investment, needed new capacity, shifts between or among
various fuels, deployment of DS-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 federal plan approach to be $2.5 billion in 2020, $1.0
billion in 2025 and $8.4 billion in 2030. The EPA estimates the annual
incremental compliance cost for the mass-based federal plan approach to
be $1.4 billion in 2020, $3.0 billion in 2025, and $5.1 billion in
2030. More detailed cost estimates are available in the RIA in the
rulemaking docket.

E. What are the economic and employment impacts?

    Based on the analysis presented in the RIA, the proposed action is
projected to result in certain changes to power system operation as a
compliance approach with the standards. See Table 14 of this preamble
for a variety of important energy market impacts for 2020, 2025, and
2030 under both the rate-based and mass-based federal plan approaches
described in Section VIII.B of this preamble and presented in the RIA
for this proposal.
    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 the EGs provide significant flexibilities and states
implementing the EGs may choose to mitigate impacts to some markets
outside the utility power sector. Similarly, demand for new generation
or DS-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 to move toward full
employment, employment impacts are of particular concern and questions
may arise about their existence and magnitude.
    The EPA's employment analysis includes projected employment impacts
associated with modeled federal plan approaches for the electric power
industry, coal and natural gas production, and DS-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 the proposed action
could result in a net decrease of approximately 25,000 job-years in
2025 under the rate-based federal 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 DS-EE programs. Employment impacts from DS-EE programs
in 2030 could range from approximately 52,000 to 83,000 jobs under the
proposal.
    By its nature, DS-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, or 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 proposed action?

    Implementing the proposed action 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 this proposal. 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 federal plan
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 federal plan 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 17 of this preamble.

                   Table 15--Summary of the Monetized Global Climate Benefits for the Proposal
                                             [Billions of 2011$] \a\
----------------------------------------------------------------------------------------------------------------
                                                                            Monetized climate benefits
                 Year                         Discount rate      -----------------------------------------------
                                               (statistic)             2020            2025            2030
----------------------------------------------------------------------------------------------------------------
                                        Rate-based Federal Plan 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 Federal Plan 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 16--Summary of the Monetized Health Co-Benefits in the U.S. for the Proposal, Rate-Based Federal Plan
                                                    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)
----------------------------------------------------------------------------------------------------------------
                                     Rate-Based Federal Plan 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-benefits                                                 $0.70 to $1.8   $0.64 to $1.7
Total Monetized Health Co-benefits combined with Monetized Climate Benefits \d\     $3.5 to $4.6    $3.5 to $4.5
----------------------------------------------------------------------------------------------------------------
                                     Rate-Based Federal Plan 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-benefits                                                   $7.4 to $18     $6.7 to $16
Total Monetized Health Co-benefits combined with Monetized Climate Benefits \d\       $18 to $28      $17 to $26
----------------------------------------------------------------------------------------------------------------
                                     Rate-Based Federal Plan 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-benefits                                                    $14 to $34      $13 to $31
Total Monetized Health Co-benefits combined with Monetized Climate Benefits \d\       $34 to $54      $33 to $51
----------------------------------------------------------------------------------------------------------------
\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 United States.
\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 Clean Power Plan EGs. 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 17--Summary of the Monetized Health Co-Benefits in the U.S. for the Proposal, Mass-Based Federal Plan
                                                    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)
----------------------------------------------------------------------------------------------------------------
                                     Mass-Based Federal Plan 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 Monetized Climate Benefits \d\     $5.3 to $8.1    $5.1 to $7.7
----------------------------------------------------------------------------------------------------------------
                                     Mass-Based Federal Plan 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 Monetized Climate Benefits \d\       $19 to $29      $18 to $27
----------------------------------------------------------------------------------------------------------------
                                     Mass-Based Federal Plan 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 Monetized Climate Benefits \d\       $32 to $48      $31 to $46
----------------------------------------------------------------------------------------------------------------
\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 United States.
\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 Clean Power Plan EGs. 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 July 2015) (``current TSD'')
to analyze CO2 climate impacts of this rulemaking.\129\ 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).
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    \129\ 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, DOE, 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). Available at: http://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-final-july-2015.pdf.
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    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) \130\ 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).\131\
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    \130\ 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.
    \131\ The current version of the TSD is available at: https://www.whitehouse.gov/sites/default/files/omb/inforeg/scc-tsd-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).
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    OMB's Office of Information and Regulatory Affairs received
comments in response to a 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 RIA.\132\ 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.
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    \132\ 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.
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    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 SC-
CO2 comment 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 RIA,
including for this proceeding.
    The four SC-CO2 estimates are as follows: $12, $40, $60,
and $120 per short ton of CO2 emissions in the year 2020
(2011$).\133\ 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).
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    \133\ 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 Gross
Domestic Product and Related Price Measures: Indexes and Percent
Changes, http://www.gpo.gov/fdsys/pkg/ECONI-2013-02/pdf/ECONI-2013-02-Pg3.pdf.
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    There are limitations in the estimates of the benefits from this
proposal, 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
federal plan approaches examined in the RIA for this proposal. Unlike
the global SC-CO2 estimates, the air pollution health co-
benefits are estimated for the contiguous United States 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 Clean Power Plan EGs to convert precursor
emissions into changes in ambient PM2.5 and ozone
concentrations. We then used these air quality modeling results in
BenMAP \134\ to calculate average regional benefit-per-ton estimates
using the health impact assumptions used in the PM NAAQS RIA \135\ and
Ozone NAAQS RIAs.136 137 The three regions were the Eastern
United States, Western United States, and California. To calculate the
co-benefits for this proposal, we multiplied the regional benefit-per-
ton estimates generated from modeling of the proposed Clean Power Plan
EGs standards by the corresponding regional emission reductions for
this proposal.\138\ All benefit-per-ton estimates reflect the
geographic distribution of the modeled emissions for the proposed Clean
Power Plan EGs, which may not exactly match the emission reductions in
this proposed 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 Clean Power Plan Final Rule RIA.
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    \134\ http://www.epa.gov/airquality/benmap/index.html.
    \135\ 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 2012). Available at: http://www.epa.gov/ttnecas1/regdata/RIAs/finalria.pdf.
    \136\ U.S. Environmental Protection Agency (U.S. EPA). 2008b.
Final Ozone NAAQS Regulatory Impact Analysis. Research Triangle