Peter Davis, Chief Legal Counsel, (608) 266-2993.
Natural Resources
Environmental Protection — Air Pollution Control,
Chs.
400—
(DNR # AM-19-13)
This statement of scope was approved by the governor on May 1, 2013.
Rule No.
Revises Chapter
NR 446, Subchapter III.
Relating to
Control of mercury air emissions from coal-fired electric generating units (EGUs).
Rule Type
Permanent and emergency.
1. Nature of Emergency
The Department is requesting authority for both a permanent and an emergency rule-making process to extend the state mercury rule ch.
NR 446, subchapter III, Wis. Adm. Code
, compliance date from January 1, 2015, to April 16, 2016. This date may be further modified if necessary to accommodate any potential change in federal implementation dates. This state rule regulates mercury emitted by coal-fired electric generating units (EGUs). Recently federal rules have been promulgated which also regulate mercury emitted by coal-fired EGUs. This proposed rule change facilitates transitioning the EGUs from regulation of mercury emissions under the state rule to the federal rules.
Authority for an emergency rule-making is requested to implement the proposed rule change by January 1, 2015, in the event the permanent rule cannot become effective by that date. A delay in the permanent rule beyond this date may simply result due to the current timeframes and logistics associated with permanent rule-making process. Initiating the rule change by January 1, 2015, is necessary to avoid additional compliance burden and cost to the electric utilities as a result of the current state and federal mercury compliance schedules. In this case, added cost for compliance will be passed onto the consumer in electricity rates and will harm the public welfare and economy. At the same time there is no definable environmental benefit resulting under the current compliance schedules as compared to the proposed rule change.
2. Detailed Description of the Objective of the Proposed Rule
Chapter
NR 446, Subchapters II and III, Wis. Adm. Code, collectively referred to as the “state mercury rule", regulate mercury emitted by coal-fired electric generating units (EGUs). Under Subchapter II, EGUs were required to comply with a 40% emission control requirement starting January 1, 2010. Subchapter III initiates a second phase of mercury emission control starting
January 1, 2015. The requirements under the second phase are 90% control for large EGUs and use of Best Available Control Technology (BACT) for small EGUs. The second phase of control under the state rule is anticipated to affect 35 coal-fired EGUs operating at 14 Wisconsin power plants.
The U.S. EPA recently promulgated two federal mercury control rules that regulate the same coal-fired EGUs that are subject to the second phase of state mercury rule requirements starting January 1, 2015. The two federal rules are the Mercury and Air Toxics Standards (MATS) and the Industrial, Commercial, and Institutional (ICI) Boiler rule with initial compliance dates of April 16, 2015 and January 31, 2016, respectively.
According to Wisconsin Statute s.
285.27 (2) (d), when the affected EGUs are regulated by their applicable federal mercury emission standard they will then become exempt from the state mercury rule requirements. This means that on January 1, 2015, the 35 affected coal-fired EGUs will be subject to state rule requirements and then exempt a short time later when they comply with either the MATS rule beginning April 16, 2015, or the ICI boiler rule beginning January 31, 2016. The result is that the federal MATS and ICI boiler rules set the long-term mercury emissions control requirements for the affected EGUs.
The Department examined the interaction between the state and federal rules. The Department has found that the state and federal rule requirements will both implement deep mercury reductions. However, the differences between the state and federal rules are likely meaningful enough to require a different focus in planning, control strategies, and installation of equipment for some of the utilities. Potential differences include approaches to emissions averaging, annual versus 30-day emission limitations, and administrative requirements. One major difference is that the federal rules will focus compliance on an individual unit basis whereas the state rule allows compliance averaging over an operator's EGU fleet. The impact of the differences between the state and federal requirements is further compounded due to the short time between their initial compliance dates.
Under these circumstances, the Department believes that requiring affected EGUs to comply with the state mercury rule requirements beginning on January 1, 2015, and then transitioning to the federal rule requirements beginning on April 16, 2015, and January 31, 2016, will result in unnecessary regulatory burden and cost. Therefore, the Department proposes to extend the compliance date for the second phase of state rule requirements until April 16, 2016. The proposed April 16, 2016, compliance date for the state rule is significant because it coincides with and will accommodate approval of a one year compliance extension available under the federal rules. In this way, the EGUs will not become subject to the state rule second phase requirements, via exemption under the state statute, unless the federal rules are delayed.
In summary, revising the state mercury rule second phase compliance date to April 16, 2016 achieves the following objectives:
•
Avoids compliance with two different mercury control rules in a staggered fashion, thus simplifying administrative requirements, planning, equipment installations and avoids undue cost in achieving the deep mercury control levels.
•
Maintains the existing state mercury rule requirement under ch.
NR 446 Subchapter
II, Wis. Adm. Code
, for 40% mercury control until EGUs comply with the federal standards and become exempt from all state mercury requirements.
• Maintains ch.
NR 446 Subchapter
III, Wis. Adm. Code, requirements in the event that federal rules are delayed. Maintaining the state mercury rule in a backup position ensures that health-based emission requirements targeted by both the federal and state rules will be achieved in a reasonable time-frame in order to fulfill the state finding for mercury control; and
•
Allows granting of the one-year extension to federal MATS requirements until April 16, 2016, on a case-by-case basis, in order to maintain reliability without being in conflict with the state mercury rule requirements.
3. Description of the Existing Policies Relevant to the Rule, New Policies Proposed to be Included in the Rule, and an Analysis of Policy Alternatives
Existing Policy and Rules
Mercury has been determined to be a hazardous pollutant that bio-accumulates in the environment and impacts human and wildlife health. This impact has resulted in the need to issue a state-wide advisory for the consumption of fish for all Wisconsin waters.
State Mercury Rule: In 2008, the state made a “health-based finding" in accordance with Wisconsin Statute s.
285.27 (2) (b) that requires reduction of mercury emitted by coal-fired EGUs. To fulfill this finding, the state enacted the state mercury rule as described in item 2 discussion of the rule objective. The state mercury rule 40% control requirement that began in 2010 is the first step in fulfilling the state health finding. The January 1, 2015, requirement is the second step of deep reductions necessary in fulfilling the finding.
Federal Mercury Rules: In accordance with the Clean Air Act (CAA), Section 112, the U.S. EPA has recently promulgated two rules that regulate mercury for the same coal-fired EGUs subject to the state rule. Of the EGUs subject to the state rule, 32 EGUs will be regulated under the MATS rule beginning April 16, 2015. The remaining 3 EGUs will be regulated under the ICI boiler rule. Refer to description of federal rule in item 2 discussion of the rule objective for more details.
Wisconsin Statute for Exemption: According to Wisconsin Statute s.
285.27(2)(d), EGUs will be exempt from state mercury rule requirements of the state mercury rule, ch.
NR 446, Subchapters II and III, Wis. Adm. Code, when the EGUs begin regulating mercury emissions under the MATS and ICI boiler rules. Wisconsin Statute s.
285.27 (2) (d) reads:
“Emissions limitations promulgated under par. (b) and related control requirements do not apply to hazardous air contaminants emitted by emissions units, operations, or activities that are regulated by an emission standard promulgated under section 112 of the federal clean air act"
New Policy
The Department does not view this proposed rule change as new policy regarding the control of mercury emitted by coal-fired EGUs. Rather, the Department believes the proposed rule change implements existing policy by facilitating transition to the federal rules as the intended long-term mercury regulatory requirement. Specifically, the proposed rule supports existing policy for the following reasons:
1) The proposed rule change maintains ensures the state health finding is fulfilled in two ways. First, the 40% control requirement is maintained until federal requirements apply. Second, deeper control requirements under the state rule will occur by April 16, 2016 in the event federal rules are delayed.
2)
Existing policy, as set under Wisconsin Statute s.
285.27 (2) (d), directs that the federal rules, when in place, will be the long-term compliance requirement for controlling mercury emissions. This rule change facilitates transition to the federal requirements.
3) This proposed rule change does not result in a definable difference in the amount of mercury emitted to the environment versus what the state rule would have achieved without promulgation of the federal standards. The Department has estimated that in 2015, the federal rule alone can result in emissions ranging from 34 pounds more of mercury emitted to the environment or up to 80 pounds less of mercury emitted when compared to implementing the state rule alone.
Analysis of Alternatives
One alternative to the proposed rule is to take no action to address the transition from the state to the federal rules. The “No Action" option may result in undue compliance burden and cost. Further, the comparison of mass mercury reduction in 2015 resulting under the state and federal rules does not indicate a clear environmental benefit to maintaining the January 1, 2015, requirement under the state mercury rule.
Another option is to repeal the state mercury rules effective when EGU mercury emissions are regulated under the federal rules. However, this is not a simple approach to implement since the two federal rules have different compliance dates. In addition, pending litigation introduces uncertainty as to the final disposition and implementation of the federal rules and, consequently, the fulfillment of the state health-based finding. Essentially, this option is already implemented by the default exemption when EGUs are regulated under the federal rules. The proposed rule option facilitates the intended exemption from the state rule.
For these reasons, the Department believes extending the initial compliance date of the state mercury rule second phase requirements to April 16, 2016, is the preferred and least controversial option at this time.
4. Detailed Explanation of Statutory Authority for the Rule (Including the Statutory Citation and Language)
Wisconsin Statute s.
227.11 (2) (a). Each agency may promulgate rules interpreting the provisions of any statute enforce or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute, but a rule is not valid if the rule exceeds the bounds of correct interpretation.
Wisconsin Statute s.
285.11 (9). Prepare and adopt minimum standards for the emissions of mercury compounds or metallic mercury into the air, consistent with s.
285.27 (2) (b).
5. Estimate of Amount of Time that State Employees Will Spend Developing the Rule and of Other Resources Necessary to Develop the Rule
Permanent Rule: The Department anticipates the rule-making process to range from 18 to 20 months and require approximately 700 hours of Department staff time. This includes one primary staff employee at 20 hours per month, one supervisor at 5 hours per month, and additional technical, administrative, and legal staff at 2 hours per month.
Emergency Rule: In the event that an emergency rule is initiated, the rule language and supporting materials developed during the permanent rule making process will provide the necessary base information for the emergency rule. The Department only anticipates additional work for preparing documents specific to the emergency rule process. Therefore, the Department is allotting 120 hours of staff and supervisory time specifically for administering the emergency rule process.
5. List with Description of all Entities that may be Affected by the Proposed Rule
The Department anticipates 35 EGUs will be subject to the state mercury rule requirements that must be complied with on January 1, 2015. Of these EGUs, 32 will be subject to the federal MATS rule and 3 will be subject to the ICI Boiler rule. The affected EGUs are owned or operated by the following utility entities: Alliant Energy, Dairyland Power Cooperative, Manitowoc Public Utilities, Wisconsin Public Service Corporation, We Energies, and Xcel Energy.
6. Summary and Preliminary Comparison with any Existing or Proposed Federal Regulation that is Intended to Address the Activities to be Regulated by the Proposed Rule
Refer to previous discussions of the federal MATS and ICI boiler rules under item 2, the description of the rule objective; and 3, the description of existing rules and policy.
7. Anticipated Economic impact of Implementing the Rule (Note if the Rule is Likely to Have an Economic Impact on Small Businesses)
The economic impact of the proposed rule is expected to be minimal. The rule modification will not result in additional cost versus existing requirements under ch.
NR 446, Subchapter II and III, Wis. Adm. Code. One goal of the rule change is to minimize any cost impact caused by transitioning from state to federal rule requirements over a short period of time. The proposed rule will not affect small businesses.
8. Contact Person
Joseph Hoch
Bureau of Air Management, Regional Pollutant and Mobil Section, Section Chief
Wisconsin Department of Natural Resources
101 South Webster Street
Madison, WI 53707-7921
(608) 267-7543
Revenue
This statement of scope was approved by the governor on April 17, 2013.
Rule No.
Relating to
The apportionment of Wisconsin apportionable income of interstate air freight forwarders that are affiliated with a direct air carrier.
Rule Type
Permanent.
1. Detailed Description of the Objective of the Proposed Rule
If the proper amount of income assignable to Wisconsin for any corporation cannot be determined with reasonable certainty using the current apportionment rules, the department may prescribe rules.
Currently, there are taxpayers in Wisconsin who facilitate the transportation of property by air, and would otherwise be required to use the apportionment rules provided for interstate air carriers, except they do not operate any aircraft. These businesses are commonly known as air freight forwarders.
The department's objective is to create s.
Tax 2.465 to specify the apportionment factors for determining the amount of income assignable to Wisconsin for air freight forwarders that are affiliated with a direct air carrier.
2. Description of the Existing Policies Relevant to the Rule, New Policies Proposed to be Included in the Rule, and an Analysis of Policy Alternatives
Existing policies for assigning income to Wisconsin are set forth in the rules. Specifically, s.
Tax 2.46 describes the factors used to apportion income to Wisconsin for interstate air carriers. The proposed rules will provide guidance to air freight forwarders on how to properly apportion/assign income to Wisconsin. If a rule is not implemented, there will continue to be uncertainty for these businesses as they plan, prepare, and file their Wisconsin tax returns.
3. Detailed Explanation of Statutory Authority for the Rule (Including the Statutory Citation and Language)
Sections
71.04 (8) (c) and
71.25 (10) (c), Wis. Stats., require the department to promulgate rules for apportioning income of specialized industries, specifically “The net business income of railroads, sleeping car companies, car line companies, pipeline companies, financial organizations, telecommunications companies,
air carriers, and public utilities requiring apportionment shall be apportioned pursuant to rules of the department of revenue, but the income taxed is limited to the income derived from business transacted and property located within the state."
Section
71.25 (12), Wis. Stats., provides “If the income of any such corporation properly assignable to the state of Wisconsin cannot be ascertained with reasonable certainty by the methods under this section, then the same shall be apportioned and allocated under such rules as the department of revenue may prescribe."
Section
227.11 (2) (a), Wis. Stats., provides “[e]ach agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute..."
4. Estimate of Amount of Time that State Employees Will Spend Developing the Rule and of Other Resources Necessary to Develop the Rule
The department estimates it will take approximately 100 hours to develop the rule.
5. List with Description of all Entities that may be Affected by the Proposed Rule
Air freight forwarders who are not direct air carriers, but are affiliated with direct air carriers.
6. Summary and Preliminary Comparison with any Existing or Proposed Federal Regulation that is Intended to Address the Activities to be Regulated by the Proposed Rule
There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the rule.
7. Anticipated Economic Impact of Implementing the Rule (Note if the Rule is Likely to Have a Significant Economic Impact on Small Businesses)
No economic impact is anticipated.
