To: Re: to avoid creating perverse “grandfathering”-type incentives for operators to extend the natural useful life of

As discussed above, under Section 111 of the Clean Air Act, EPA must identify a “best system of emission reduction” or BSER, and the emission reductions achievable through use of the BSER guides the stringency of the regulatory program. [...] The Court found that the 2015 Clean Power Plan’s inclusion of “generation shifting”— shifting electricity generation from coal-fired plants to natural-gas-fired plants, and from fossil-fuel-fired plants to renewables—as part of the BSER was unlawful.80 West Virginia narrowed EPA’s authority for determining the BSER, but the Court declined to foreclose the possibility that EPA could set the BSER ba. [...] 16 BSER.”81 In fact, the Court explicitly distinguished the Clean Power Plan from the Clean Air Mercury Rule, a 2005 power plant rule issued under Section 111(d)82 that included a cap-and- trade mechanism as part of the BSER.83 The daylight between the Court’s descriptions of the Clean Power Plan and the Clean Air Mercury Rule—specifically how each rule set an emissions cap—suggests how EPA may be. [...] The Court emphasized that in the Clean Air Mercury Rule, “EPA set the cap based on the application of particular controls, and regulated sources could have complied by installing them.”84 In the Clean Air Mercury Rule itself, EPA explained that it “determined that a cap-and- trade program based on control technology available in the relevant timeframe is the best system for reducing [mercury] emis. [...] For example, in setting the cap on mercury emissions during the first phase of the rule, EPA declined to require more stringent on-site controls that would indirectly reduce mercury emissions “because the incremental cost effectiveness of such a requirement would be extraordinarily high.”92 In the rule’s second phase, EPA set the cap based on the level of mercury reductions that could be achieved.