Rule-Making Notices (Hearing Notices)

Plain language analysis

The objective of this rule package is to revise language in chs. NR 400, 405, and 408 to maintain consistency with federal requirements and definitions. Additionally, sections of chs. NR 400 and 410 need to be repealed due to the repeal of ch. NR 411.

In May 2006, the Department requested approval by the U.S. Environmental Protection Agency (USEPA) of rules promulgated by Wisconsin to incorporate federal New Source Review Reform requirements as a revision to the State Implementation Plan (SIP). The USEPA approved the SIP revisions, but subsequently requested changes to language in chs. NR 405 and 408. The changes pertain to the fuel use prohibition that is part of the definition of “major modification."

Section NR 405.02 (25i) defines “Regulated NSR air contaminant" and specifically identifies volatile organic compounds as a precursor for ozone. USEPA has requested inclusion of nitrogen oxides (NOx) in the definition for clarification purposes. Similarly, USEPA requires, through its 2008 New Source Review Rule, explicit identification of NOx and sulfur dioxide (SO2) as precursors to particulate matter with a diameter of 2.5 micrometers or less (PM2.5) within the definition of “Regulated NSR air contaminant." The Department has also amended the definition of “Regulated NSR air contaminant" in s. NR 408.02 (29m) to specifically address precursor pollutants in nonattainment areas. Additionally, the Department will amend the definitions of PM2.5 and particulate matter with a diameter of 10 micrometers or less (PM10) to address a USEPA-identified SIP deficiency. The definitions as currently written do not specifically mention condensables as required in the federal 2008 New Source Review Rule.

On April 27, 2011, the Joint Committee for Review of Administrative Rules (JCRAR) adopted a motion under s. 227.26 (2) (d), Stats., suspending ch. NR 411. Subsequent passage of legislation introduced by JCRAR in support of the suspension (see 2011 Wisconsin Act 121), resulted in the repeal of ch. NR 411. The primary purpose of ch. NR 411 had been to control carbon monoxide emissions from indirect sources through conditions established in construction and operation permits. Therefore, the Department proposes to repeal rules whose only purpose is in support of ch. NR 411. Rules proposed for repeal include ss. NR 400.02 (101) and (106), and 410.03 (3). Section NR 400.02 (101) and (106) define `modified indirect source' and `new indirect source' respectively. Section NR 410.03 (3) establishes fees for the application and issuance of permits to construct or modify an indirect source.

Summary of, and comparison with, existing or proposed federal statutes and regulations

In a letter dated June 17, 2009, the USEPA notified the Department that the definition of the term “major modification" in s. NR 405.02 was inadequate because it failed to identify permits issued under federal authority. Wisconsin's Prevention of Significant Deterioration (PSD) program was approved into its SIP on June 28, 1999. Before that, PSD construction permits were issued under federal authority. When s. NR 405.02 (21) (b) (5) was written, the references to federal authority were inadvertently omitted. Because the federal citations were omitted from the rule, USEPA identified that in a very limited situation, the current state definition would allow a source to make a change to use a different fuel or raw material without undergoing major new source permit review for the change, even though the change could be prohibited under a federal permit. The Department will amend this definition to ensure that it is consistent with USEPA rule and policy and recognizes all federally-issued permits. The Department is likewise amending the definition of “major modification" at s. NR 408.02 (20) for nonattainment area new source review.

The alternative to this rule action is to keep the rules as they are, which USEPA has already identified as an inconsistency with federal rules. However, in a Federal Register filed June 15, 2012, USEPA disapproved narrow portions of the SIP pertaining to permit requirements in chs. NR 405 and 408 that would be addressed with this rulemaking. In the Federal Register, USEPA stated that they are under obligation to promulgate a Federal Implementation Plan (FIP) addressing the disapproved portions of the SIP within 2 years. The Federal Register states that the FIP will not be promulgated if Department rectifies the deficiencies within the 2-year timeframe.

The clarifications of NOx as a precursor to ozone and NOx and SO2 as precursors to PM2.5, as well as the clarification of accounting for PM2.5 and PM10 condensables as a portion of PM2.5 and PM10 emissions are not policy changes nor do they change how Department currently implements chs. NR 405 and 408 requirements. On June 15, 2012, USEPA disapproved a narrow portion of Wisconsin's SIP for the 1997 ozone National Ambient Air Quality Standard pertaining to air construction permitting. This was done because NOx was not explicitly identified as a precursor to ozone as part of PSD permit program requirements. The final disapproval triggered a requirement that USEPA promulgate a FIP addressing the deficiency no later than 2 years from the date of disapproval. USEPA published a proposed disapproval of Wisconsin's submittal on December 18, 2012, because the submittal did not meet the 2008 PM2.5 SIP requirements. Specifically, the revisions submitted did not explicitly define the precursors of PM2.5, nor did they contain the prescribed language to ensure that gases that condense to form particulate matter (PM), known as condensables are regulated as part of PM2.5 and PM of less than 10 micrometer (PM10) emissions. Final disapproval to portions of the SIP relating to identifying precursors of PM2.5 will also result in the promulgation of a FIP unless the deficiencies are addressed.

Not repealing sections of chs. NR 400 and 410 in response to the repeal of ch. NR 411 by the legislature would potentially create confusion and perpetuate an inconsistency with Department rules.

Comparison with similar rules in adjacent states (Illinois, Iowa, Michigan, and Minnesota)

Illinois and Minnesota are delegated states, so they are directly implementing the federal program and not implementing their programs through a State Implementation Plan (SIP), as Wisconsin does. Iowa and Michigan, similar to Wisconsin, are SIP approved states, so they are also implementing a federal program, but through their own state rules and regulations. It is the goal of SIP-approved states to implement federal programs in accordance with the regulations set out in federal code. The majority of this rule package addresses changes necessary to comply with federal regulations. Those changes not dictated by federal regulations are associated with the repeal of fees related to the indirect source program which no longer exists in Wisconsin, thereby addressing a current internal inconsistency.

Summary of factual data and analytical methodologies used and how any related findings support the regulatory approach chosen

The Department did not use any factual data or analytical methodologies in developing the proposed rules. The changes proposed in this rule package are based on deficiencies in the rules identified by the USEPA and a comparison of the current state rules to the federal rules.

Analysis and supporting documents used to determine the effect on small business or in preparation of an economic impact analysis

The proposed changes to the new source permit review programs only affect major sources which typically do not include small businesses. The proposed changes related to the former indirect source permit program will not have any effect on small businesses since the indirect permit program has been repealed and the proposed changes are of a clean-up nature only. The Department did not use existing documentation in determining the effect on small business or in preparation of the economic impact analysis.

Effect on Small Business (Initial Regulatory Flexibility Analysis)

The Department does not believe that the proposed rule revisions will have an economic impact on small businesses.

The Small Business Regulatory Coordinator may be contacted at [e-mail], or by calling [phone].

Environmental Analysis

The Department has made a preliminary determination that adoption of the proposed rules would not involve significant adverse environmental effects and would not need an environmental analysis under ch. NR 150, Wis. Adm. Code. However, based on comments received, an environmental analysis may be prepared before proceeding. This analysis would summarize the Department's consideration of the impacts of the proposal and any reasonable alternatives.

Fiscal Estimate and Economic Impact Analysis Summary

The Department believes the proposed rules will have no fiscal effect. The changes being proposed either amend rules to match current practice and maintain consistency with federal requirements and definitions, or eliminate definitions and fees for a program no longer used in Wisconsin.

The Department solicited information and advice on the economic impacts of the proposed rules from those who potentially could be affected or who might likely be interested. Most responders to the solicitation indicated that they had no input because they believe the proposed rules will have no economic impact on them. One responder felt there was economic benefit from the proposed rules and asked the Department to quantify that benefit. Additionally, the commenter felt that the proposed rules addressed broader policy issues whose economic benefits should be analyzed. The Department does not believe the proposed rules provide economic benefit. The economic benefit from the repeal of ch. NR 411 occurred when the chapter was repealed through legislative action and is not due to the clean-up of related rules proposed. Testimony, including an estimate of the costs associated with the indirect source permit program, was given at the time of the legislative action. The portions of the rule package associated with the major new source review program found in chs. NR 405 and 408 are amendments to ensure that the rules align with current Department practice as well as USEPA policy and do not represent changes in implementation. The economic impact analysis speaks to the economic impacts of the proposed rules, not the underlying statutes that give the Department authority for rulemaking. There were no revisions to the Economic Impact Analysis.

Agency Contact Person

Gail Good

P.O. Box 7921

Madison, WI 53707-7921

Telephone: [phone]

E-mail: [e-mail]

STATE OF WISCONSIN DEPARTMENT OF ADMINISTRATION DOA-2049 (R03/2012)	Division of Executive Budget and Finance 101 East Wilson Street, 10th Floor P.O. Box 7864 Madison, WI 53707-7864 FAX: [phone]
ADMINISTRATIVE RULES Fiscal Estimate & Economic Impact Analysis

1. Type of Estimate and Analysis
X Original   ⍽ Updated   ⍽ Corrected
2. Administrative Rule Chapter, Title and Number
Chapters NR 400 Air Pollution Control Definitions, NR 405 Prevention of Significant Deterioration, NR 408 Construction Permits for Direct Major Sources in Nonattainment Areas, and NR 410 Air Permit, Emission, and Inspection Fees.
3. Subject
Proposed rules relating to consistency with federal major source permit review requirements and clean-up of rules related to the former indirect source permit program.
4. Fund Sources Affected			5. Chapter 20, Stats. Appropriations Affected
⍽ GPR   ⍽ FED   ⍽ PRO   ⍽ PRS   ⍽ SEG   ⍽ SEG-S
6. Fiscal Effect of Implementing the Rule
X No Fiscal Effect ⍽ Indeterminate	⍽ Increase Existing Revenues ⍽ Decrease Existing Revenues		⍽ Increase Costs ⍽ Could Absorb Within Agency's Budget ⍽ Decrease Cost
7. The Rule Will Impact the Following (Check All That Apply)
⍽ State's Economy ⍽ Local Government Units		X Specific Businesses/Sectors ⍽ Public Utility Rate Payers ⍽ Small Businesses (if checked, complete Attachment A)
8. Would Implementation and Compliance Costs Be Greater Than $20 million? ⍽ Yes   X No
9. Policy Problem Addressed by the Rule
The DNR is proposing to amend definitions in chs. NR 400, 405, and 408, Wis. Adm. Code, related to the major new source permit review program for both attainment and nonattainment areas. Definitions proposed to be amended include PM2.5 emissions, PM10 emissions, major modification, and regulated New Source Review (NSR) air contaminant. These changes do not represent a policy problem, but are being proposed in response to deficiencies identified by the U.S. Environmental Protection Agency (EPA), and are necessary to maintain approval of the state implementation plan. The DNR is also proposing to repeal several rule provisions whose purpose was in support of an indirect source permit program. This permit program was previously implemented through ch. NR 411, which was repealed through legislative action. The provisions include several definitions and permit fees in chs. NR 400 and 410, Wis. Adm. Code, respectively. These proposed changes do not represent a policy problem, but are appropriate since the purpose of the rules affected was only related to ch. NR 411.
10. Summary of the businesses, business sectors, associations representing business, local governmental units, and individuals that may be affected by the proposed rule that were contacted for comments. The businesses that were contacted for comment were all those listed as major sources by the WDNR. Additionally, Wisconsin Manufacturers and Commerce, Wisconsin Paper Council, and the Wisconsin Utilities Association were contacted.
11. Identify the local governmental units that participated in the development of this EIA.
None
12. Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
The proposed changes to the new source review program are being made to ensure consistency with federal regulations and implementation policy governing this permit program. DNR believes that the proposed rule changes will not have an economic impact on any of the entities listed or on the state's economy as a whole. Two companies responded to the request for input to say that they had no input because they believed the proposed rule changes would not have an economic impact on them. The proposed repeal of rules related to the former indirect source permit program will have no economic impact since the requirements to obtain such a permit have already been repealed.
13. Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
The alternative to this rule action is to keep the rules as they are which U.S. EPA has already identified as an inconsistency with the major source permit program. In the Federal Register, U.S. EPA stated that they are under obligation to promulgate a Federal Implementation Plan (FIP) addressing the disapproved portions of the associated state implementation plan within 2 years. The Federal Register states that the FIP will not be promulgated if DNR rectifies the deficiencies within the 2 year timeframe. Not repealing sections of chs. NR 400 and 410 in response to the repeal of NR 411 by the legislature would potentially create confusion and perpetuate an inconsistency with DNR rules.
14. Long Range Implications of Implementing the Rule
The proposed rule changes to the new source review program do not represent changes in operation by WDNR, so there are no long term implications. The proposed rule changes to the indirect source fee structure are of a clean-up nature and also have no long term implications.
15. Compare With Approaches Being Used by Federal Government
The purpose of the proposed changes related to the major source permit program is to ensure state rules are consistent with federal regulations. The federal government does not have regulations for an indirect source permit program.
16. Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
Illinois and Minnesota are states delegated by the U.S. EPA to implement the federal air pollution program, so they are directly implementing the federal program. Iowa and Michigan, similar to Wisconsin, are SIP-approved states, so they are also implementing a federal program, but through their own state rules and regulations. It is the goal of SIP-approved states to implement federal programs in accordance with federal regulations. The majority of this rule package addresses changes necessary to comply with federal regulations. Those changes not dictated by federal regulations are associated with the repeal of fees related to the indirect source program which is no longer existing in Wisconsin, thereby addressing a current internal inconsistency.
17. Contact Name				18. Contact Phone Number
Gail Good				[phone]

This document can be made available in alternate formats to individuals with disabilities upon request.

Notice of Hearing

Revenue

rulemaking_notices CR 13-078 CR 13-078

NOTICE IS HEREBY GIVEN that, pursuant to ss. 71.04 (8) (c) and (11) and 71.25 (10) (c) and (12), Stats., the Department of Revenue will hold a public hearing to consider permanent rules revising Chapter Tax 2, relating to apportionable income of interstate air freight forwarders affiliated with a direct air carrier.

Hearing Information

The hearing will be held:

Date:   Monday, October 28, 2013
Time:   9:00 a.m.
Locations:   Events Room
  State Revenue Building
  2135 Rimrock Road
  Madison, WI 53713

Handicap access is available at the hearing location.

Appearances at the Hearing and Submittal of Written Comments

Interested persons are invited to appear at the hearing and may make an oral presentation. It is requested that written comments reflecting the oral presentation be given to the department at the hearing. Written comments may also be submitted to the contact person listed below or to adminrules.wisconsin.gov no later than October 28, 2013, and will be given the same consideration as testimony presented at the hearing.

Dale Kleven

Department of Revenue

Mail Stop 6-40

2135 Rimrock Road

P.O. Box 8933

Madison, WI 53708-8933

Telephone: [phone]

E-mail: [e-mail]

Analysis Prepared by the Department

Statutes interpreted

Sections 71.04 and 71.25, Stats.

Statutory authority

Sections 71.04 (8) (c) and (11) and 71.25 (10) (c) and (12), Stats.

Explanation of agency authority

Sections 71.04 (8) (c) and 71.25 (10) (c), Stats., provide “[t]he 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."

Sections 71.04 (11) and 71.25 (12), Stats., provide “[i]f the income…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."

Related statute or rule

Section Tax 2.45 interprets s. 71.25 (12), Stats., and provides for apportionment in special cases.

Section Tax 2.46 prescribes the method of apportionment to be used by interstate air carriers.

Section Tax 2.47 prescribes the method of apportionment to be used by interstate motor carriers.

Plain language analysis

The proposed rule prescribes the method of apportionment to be used by air freight forwarders.

Summary of, and comparison with, existing or proposed federal regulation

There is no existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule.

Comparison with rules in adjacent states

The department is not aware of a similar rule in an adjacent state.

Summary of factual data and analytical methodologies

The department knows of a type of entity, an “air freight forwarder," which is engaged in the facilitation of transportation of property by air, does not itself operate aircraft, and is affiliated with a direct air carrier. The income of this type of entity properly assignable to Wisconsin cannot be determined with reasonable certainty under s. Tax 2.46, which prescribes the method of apportionment to be used by interstate air carriers, or s. Tax 2.47, which prescribes the method of apportionment to be used by interstate motor carriers. Therefore, the department finds it necessary to create a rule that prescribes the method of apportionment to be used by this type of entity.

Analysis and supporting documents used to determine effect on small business

Based on the nature and scope of its activities (the facilitation of the transportation of property by air between states), the type of entity this proposed rule affects would not be a small business as defined in s. 227.114 (1), Stats.

Anticipated costs incurred by private sector

This proposed rule order does not have a fiscal effect on the private sector.

Effect on Small Business

This proposed rule order does not affect small business.

Agency Contact Person

Please contact Dale Kleven at [phone] or [e-mail] if you have any questions regarding this proposed rule order.

Text of Rule

SECTION 1. Tax 2.465 is created to read:

Tax 2.465 Apportionment of apportionable income of interstate air freight forwarders affiliated with a direct air carrier. (1) General. The apportionable income of a qualified air freight forwarder affiliated with a direct air carrier and engaged in business in and outside this state shall be apportioned to Wisconsin as described in this section, except if the qualified air freight forwarder is in a combined group, its Wisconsin share of the combined group's apportionable income is computed as provided in s. 71.255 (5), Stats., and further detailed in s. Tax 2.61 (7).

Note: A qualified air freight forwarder that is a corporation may be in a combined group for taxable years beginning on or after January 1, 2009. See s. Tax 2.61 (2) for a description of corporations required to use combined reporting.

(2) Definitions. In this section:

(a) An air freight forwarder is “affiliated" with a direct air carrier if all of the following apply:

1. The air freight forwarder owns or controls either directly or indirectly at least 80% of the ownership interests of the direct air carrier, or at least 80% of the ownership interests of the air freight forwarder is owned or controlled either directly or indirectly by the direct air carrier, or at least 80% of the ownership interests of both the air freight forwarder and the direct air carrier is owned or controlled either directly or indirectly by the same interests.

2. The air freight forwarder is principally engaged in the business of air freight forwarding.

3. The air freight forwarder's air freight forwarding business is carried on principally with the direct air carrier.

(b) "Combined group" has the same meaning as in s. Tax 2.60 (2) (a).

(c) “Direct air carrier" means a business entity principally engaged in air transportation through the direct operation of aircraft under a certificate issued by the federal aviation administration.

(d) “Engaged in business in and outside this state" has the same meaning as in s. Tax 2.39 (2) (b).