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«SUBJECT: Request authorization for public hearing for Board Order AM-08-11, proposed rules affecting NR 404 and 484 pertaining to adopting the ...»

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NATURAL RESOURCES BOARD AGENDA ITEM Item No. ___3.A.2____

Form 1100-001

(R 2/11)

SUBJECT:

Request authorization for public hearing for Board Order AM-08-11, proposed rules affecting NR 404 and 484 pertaining

to adopting the National Ambient Air Quality Standards (NAAQS) for sulfur dioxide (SO2) and nitrogen dioxide (NO2).

FOR: OCTOBER BOARD MEETING

TO BE PRESENTED BY / TITLE: Mike Friedlander, Program and Planning Analyst

SUMMARY:

The U.S. Environmental Protection Agency (EPA) is required by the federal Clean Air Act (CAA) to promulgate NAAQS to protect public health (i.e., primary standards) and public welfare (i.e., secondary standards). The Department is required by state law (s. 285.21, Wis. Stats.) to promulgate by rule a similar, but no more restrictive, air quality standard when the U.S. EPA promulgates a new or revised NAAQS.

On February 9, 2010, the U.S. EPA promulgated a 1-hour primary NAAQS for NO2 at a level of 100 parts per billion (75 FR 6474). In addition, the U.S. EPA promulgated a 1-hour primary NAAQS for SO2 at a level of 75 parts per billion on June 22, 2011 (75 FR 35520). As a result of these federal actions, the Department is proposing to adopt the NO2 and SO2 NAAQS into ch. NR 404, Wis. Adm. Code. In addition, the Department is proposing to revise ch. NR 484, Wis. Adm.

Code, to include references to applicable U.S. EPA data handling conventions for NO2 and SO2.

Incorporating new 1-hour standards for NO2 and SO2 into ch. NR 404 will trigger the need to do additional dispersion modeling and engineering analysis in reviews for minor construction and operation permits in order to satisfy s. 285.63(1) (b), Wis. Stats. This will increase the amount of time and cost of applying for and receiving these air pollution control permits for both the private sector and the agency. Major NO2 and SO2 emitters, such as electric generating utilities (EGUs), paper mills, petrochemical refineries and metal foundries are the entities primarily affected by the proposed rule.

Although the adoption of the federal SO2 and NO2 NAAQS primarily pertains to EGUs, paper mills, petrochemical refineries and metal foundries, some small businesses may be affected.

.

RECOMMENDATION: That the Board authorize the Department to hold hearings on Order AM-08-11.

LIST OF ATTACHED MATERIALS:

No Fiscal Estimate Required Yes Attached No Environmental Assessment or Impact Statement Required Yes Attached No Background Memo Yes Attached

APPROVED:

____/S/______________________________________________________ ____9/15/11_____________

Bureau Director, William B. Bauman Date ___

–  –  –

SUBJECT: Background Memo on Board Order AM-08-11, proposed rules affecting NR 404 and 484, pertaining to adopting the National Ambient Air Quality Standards (NAAQS) for sulfur dioxide (SO2) and nitrogen dioxide (NO2)

WHY IS THE RULE BEING PROPOSED

The U.S. Environmental Protection Agency (EPA) is required by the federal Clean Air Act (CAA) to promulgate NAAQS to protect public health (i.e., primary standards) and public welfare (i.e., secondary standards). The Department is required by state law (s. 285.21, Wis. Stats.) to promulgate by rule a similar, but no more restrictive, air quality standard when the U.S. EPA promulgates a new or revised NAAQS.

On February 9, 2010, the U.S. EPA promulgated a 1-hour primary NAAQS for NO2 at a level of 100 parts per billion (75 FR 6474). In addition, the U.S. EPA promulgated a 1-hour primary NAAQS for SO2 at a level of 75 parts per billion on June 22, 2011 (75 FR 35520).

SUMMARY OF THE RULE

As a result of the recent federal actions regarding NO2 and SO2, the Department is proposing to adopt the revised NAAQS into ch. NR 404, Wis. Adm. Code. In addition, the Department is proposing to revise ch.

NR 484, Wis. Adm. Code, to include references to applicable U.S. EPA data handling conventions for NO2 and SO2.

HOW DOES THIS PROPOSAL AFFECT CURRENT POLICY?

The proposed rule will affect NR 404 and NR 484, Wis. Adm. Code. This proposal will affect the permitting efforts of the Air Program by strengthening standards for SO2 and NO2. Incorporating new 1hour standards for NO2 and SO2 into ch. NR 404 will trigger the need to do additional dispersion modeling and engineering analysis in reviews for minor construction and operation permits in order to satisfy s. 285.63(1)(b), Wis. Stats. This will increase the amount of time and cost of applying for and receiving these air pollution control permits for both the private sector and the agency. It should be noted that these standards are already being considered for construction permit actions.

HAS THE BOARD DEALT WITH THESE ISSUES BEFORE?

Yes, in May, 2010, to keep current with revised federal standards, the Natural Resource Board revised NR 404 and NR 484, Wis. Adm. Code, relating to the adoption of the NAAQS for fine particulate matter (PM2.5). The 24-hour PM2.5 standard was strengthened to 35 micrograms per cubic meter in 2006. In addition, the Board has adopted other federal standards, such as lead, carbon monoxide and ground-level ozone.





WHO WILL BE IMPACTED BY THE PROPOSED RULE? HOW WILL THEY BE IMPACTED?

Major NO2 and SO2 emitters, such as electric generating utilities (EGUs), paper mills, petrochemical refineries and metal foundries are the entities primarily affected by the proposed rule. The short term 1hour NO2 and SO2 NAAQS will need to be considered, via dispersion modeling, when the Department conducts operation and minor permit reviews.

ENVIRONMENTAL ANALYSIS

Under s. NR 150.03(3), Wis. Adm. Code, an environmental analysis is not needed because this proposal is considered a Type III action. A Type III Action is one that normally does not have the potential to cause significant environmental effects, normally odes not significantly affect energy usage and normally does not involve unresolved conflicts in the use of available resources.

SMALL BUSINESS ANALYSIS

Although the adoption of the federal SO2 and NO2 NAAQS primarily pertains to EGUs, paper mills, petrochemical refineries and metal foundries, some small businesses may be affected. Permit applicants for minor construction and operation permits will require additional modeling and engineering analysis as a result of this action. This will increase the amount of time and cost of applying for and receiving these air pollution control permits for both the private sector and the agency.

–  –  –

The primary action trigged by incorporation of the NO2 and SO2 NAAQS into ch. NR 404, Wis. Adm. Code, is increased consideration of the air quality standards during the Department’s air permit program review process. When the U.S.

EPA promulgates new or revised NAAQS, only the prevention of significant deterioration (PSD) permit program must account for compliance with the air quality standards. However, once the air quality standards are incorporated in state law, all permit actions must account for compliance with the air quality standards, including operation permits and minor construction permits.

Incorporating new 1-hr standards for NO2 and SO2 into ch. NR 404 will trigger the need to do additional dispersion modeling and engineering analysis in reviews for minor construction and operation permits in order to satisfy s.

285.63(1)(b), Wis. Stats. This will increase the amount of time and cost of applying for and receiving these air pollution control permits for both the private sector and the agency.

The amount of time forecast to be spent on the one-hour standards for minor source permits (both construction and operation) is presented below.

During the public comment process, the Department will solicit feedback from potentially affected stakeholders to determine the potential number of state air permit applications that would be affected by this action. This information, along with other public comments received, will be used to develop a detailed economic impact analysis.

Long-Range Fiscal Implications

–  –  –

Assumptions Used in Arriving at Fiscal Estimate – Continued One-Hour SO2 NAAQS During the previous 3 years, 30-40% of the minor construction and operation projects had some sort of SO2 analysis. Assuming 150 projects per year, it is estimated that 50 may have to address 1-hr SO2..

Department cost (3 year total) – $69,540 or approximately $48,940 the first year and $10,300 per year thereafter First Year  100 hours of staff time for dispersion modeling analysis for individual permits @ $45/hr or $4,500  100 hours of staff engineering time for technical analysis for individual permits @ $58/hr or $5,800  80 hours of staff time for dispersion modeling analysis for registration permits @ $45/hr or $3,600  160 hours of staff engineering time for technical analysis for registration permits @ $58/hr or $9,280  160 hours of staff time for dispersion modeling analysis for general permits @ $45/hr or $7,200  320 hours of staff engineering time for technical analysis for general permits @ $58/hr or $18,560 Second Year  100 hours of staff time for dispersion modeling analysis for individual permits @ $45/hr or $4,500  100 hours of staff engineering time for technical analysis for individual permits @ $58/hr or $5,800 Third Year  100 hours of staff time for dispersion modeling analysis for individual permits @ $45/hr or $4,500  100 hours of staff engineering time for technical analysis for individual permits @ $58/hr or $5,800 For the purposes of this estimate, it is assumed that meeting applicable requirements in individual permits will be primarily accomplished with restrictions on fuel use, fuel switching or source modification that reduces ambient impact.

Applicant cost (3 year total) – $105,000 or approximately $35,000 per year  300 hours of private consultant time for technical analysis and preparing application material @ $150/hr or $45,000  600 hours of applicant time for analysis, consultation and determining applicable requirements @ $100/hr or $60,000 One-Hour NO2 NAAQS During the previous 3 years 50-65% of the projects had some sort of NO2 analysis. Assuming 150 projects per year, it is estimated that 80 of them may have to address 1-hr NO2.

Department cost (3 year total) – $217,440 or approximately $112,320 the first year and $52,560 per year thereafter First Year  40 hours of staff time related to EPA approvals @ $45/hr or $1,800  240 hours of staff time for dispersion modeling analysis for individual permits @ $45/hr or $10,800  720 hours of staff engineering time for technical analysis for individual permits @ $58/hr or $41,760  120 hours of staff time for dispersion modeling analysis for registration permits @ $45/hr or $5,400  240 hours of staff engineering time for technical analysis for registration permits @ $58/hr or $13,920  240 hours of staff time for dispersion modeling analysis for general permits @ $45/hr or $10,800  480 hours of staff engineering time for technical analysis for general permits @ $58/hr or $27,840

–  –  –

Assumptions Used in Arriving at Fiscal Estimate – Continued Third Year • 240 hours of staff time for dispersion modeling analysis for individual permits @ $45/hr or $10,800 • 720 hours of staff engineering time for technical analysis for individual permits @ $58/hr or $41,760 For the purposes of this estimate, it is assumed that meeting applicable requirements in individual permits will be primarily accomplished with restrictions on fuel use, or source modification that reduces ambient impact.

Applicant cost (3 year total) – $972,000 or approximately $324,000 per year • 2160 hours of private consultant time for technical analysis and preparing application material @ $150/hr or $324,000 • 6480 hours of applicant time for analysis, consultation and determining applicable requirements @ $100/hr or $648,000

–  –  –

The Wisconsin Natural Resources Board proposes an order to repeal NR 404.04 (2) (a) 1. and 2.; to renumber and amend NR 404.04 (2) (a) (intro.); to amend NR 404.04.(2) (a) (title), 404.06 (2), and 484.04; to repeal and recreate NR 404.04 (6); and to create NR 484.04 (7) and (7m); relating to adopting the National Ambient Air Quality Standards, (NAAQS) for sulfur dioxide, (SO2) and nitrogen dioxide, (NO2).

–  –  –

1. Statute interpreted: Section 285.11(6), Stats. The State Implementation Plan developed under s.

285.11(6), Stats., is revised.

2. Statutory authority: Sections 227.11(2)(a), 285.11(1), and 285.21(1)(a), Stats.

3. Explanation of agency authority: Section 227.11(2)(a), Stats. expressly confers rule making authority to an agency. Section 285.11(1) and (6) requires that the Department promulgate rules and establish control strategies in order to prepare and implement the State Implementation Plan for the prevention, abatement and control of air pollution in the state. Section 285.21(1)(a) requires that the Department promulgate by rule ambient air quality standards that are similar to, but not more restrictive than the National Ambient Air Quality Standards (NAAQS).

4. Related statute or rule: There are no other statutes or rules directly related to the adoption of the NAAQS for sulfur dioxide (SO2), and nitrogen dioxide (NO2).

5. Plain language analysis: The U.S. Environmental Protection Agency (EPA) is required by the federal Clean Air Act (CAA) to promulgate NAAQS to protect public health (i.e., primary standards) and public welfare (i.e., secondary standards). The Department is required by state law (s. 285.21, Wis. Stats.) to promulgate by rule a similar, but no more restrictive, air quality standard when the U.S. EPA promulgates a new or revised NAAQS.



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