State Budget Update M ajor Sources 1 st Proposal Major Sources - - PDF document

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State Budget Update M ajor Sources 1 st Proposal Major Sources - - PDF document

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11/ 14/ 2013 Eric Bott Director of Environmental and Energy Policy Wisconsin Manufacturers & Commerce ebott@wmc.org T opical Overview State Policy Carbon SO2 Update NO2 Budget Recap Boiler M ACT Nonmetallic

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11/ 14/ 2013 1

Eric Bott Director of Environmental and Energy Policy Wisconsin Manufacturers & Commerce ebott@wmc.org

T

  • pical Overview
  • State Policy

Update

  • Budget Recap
  • Nonmetallic Mining
  • Federal Air

Impacts

  • A More Aggressive EP

A?

  • Ozone
  • Carbon
  • SO2
  • NO2
  • Boiler M ACT
  • Utility M ACT
  • PM2.5
  • Coal Ash
  • OSHA Silica
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11/ 14/ 2013 2

State Budget Update – M ajor Sources

  • 1st Proposal – Major Sources
  • Increase Major Source Fees from $35.71/ ton to $59.81/ ton and index at 4%/ year.
  • 2nd Proposal
  • $3,000 base surcharge on all major sources
  • $46,980 on Coal-fired EGU
  • $960-$1,500 for MACT

, PSD, NSPS

  • Act 20
  • Tiered Surcharges:
  • 0-10 tons - $900
  • 10-25 tons- $1,300
  • 25-50 tons- $1,600
  • 50-80 tons-$2,300
  • 80 tons and up- $3,000

State Budget Update – M ajor Sources

  • Act 20 Continued
  • $46,980 Coal-fired EGU
  • $960 NSPS and M ACT

, $1,500 PSD

  • DNR must simplify or eliminate duplicative, excessive monitoring

and reporting

  • Additional Ozone Monitor for Sheboygan County
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11/ 14/ 2013 3

State Budget – M inor Sources

  • 1st Proposal – M inor Sources
  • Increase fees from $300 to $725
  • Allow DNR to fill several vacant (“ phantom”) positions
  • Act 20
  • $300 to $400
  • Streamline Permitting Program

ROP Threshold to 50% Request EP A to exempt all natural minors Notify permit holders of tools Eliminate phantom positions

Nonmetallic Mining

  • Wisconsin Post Zwiefelhofer
  • Zoning vs. Police Powers
  • Abuses of Local Road Use Agreements
  • T

echnical Standards for Blasting at the T

  • wn Level?
  • Air and Water Permitting at the T
  • wn Level?
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11/ 14/ 2013 4

Senate Bill 349

  • Local Regulation of Nonmetallic Mining through Zoning
  • Create a Reasonable Framework for Local Road Agreements
  • Reaffirm the DNR as the State’s Environmental Regulator
  • DSPS as the Regulator of Blasting

Federal Update: EP A Standard & Regulations

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11/ 14/ 2013 5

EP A Power Grab by the Numbers

10 20 30 40 50 60 70 80 90 100 Bill Clinton 2 George W Bush 1 George W Bush 2 Obama 1 44 42 12 95 1 1 19 Disapprovals Takeovers

* * * Obama Presidency to Date – 54 proposed or imposed takeovers.

EP A Sue and Settle by the Numbers

5 10 15 20 25 30 35 40 45 50 Bill Clinton 2 George W. Bush 1 George W. Bush 2 Obama 1 15 7 8 48 Sue and Settle

Conservative Estimate of Compliance Costs 2009-2012: $13 Billion

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11/ 14/ 2013 6

Green House Gases Regulation

  • 2007 – Massachusetts v. EP

A: SCOTUS rules that GHGs are pollutants under CAA and that EP A can regulate.

  • Predicated on “endangerment finding” – that emissions from

automobiles endanger public health or welfare.

  • 2009 – EP

A issues endangerment finding and extends to major stationary sources.

  • 2013 – SCOTUS to review one question:
  • "whether EP

A permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.”

Climate Action Plan and Carbon

  • June 25th 2013 – President Obama announces Climate Action Plan
  • 17% reduction in carbon emissions from 2005 to 2020
  • Prepare US for Climate Change
  • Take leadership role on world stage
  • Sep. 20th, 2013 – EP

A Proposes NSPS

  • 1,000 lbs/ mwh for Gas
  • 1,100 lbs/ mwh for coal
  • Amounts to total ban on new coal
  • President Obama called for EP

A to propose rules for existing plants by June 1st, 2014 and to finalize those rules by June 1st, 2015.

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11/ 14/ 2013 7

Benefits of Carbon Regulation?

  • In their own words…
  • EP

A – “EP A projects that this proposed rule will result in negligible CO2 emission changes, quantified benefits, and costs… [emphasis added]”

  • United Nation’s Intergovernmental Panel on Climate Change (IPCC)

Assessment Reports: if Americans ceased all fossil fuel consumption, the impact on global temperatures would be a reduction of about 0.08°C by 2050.

Carbon – Impact on WI

  • 62% of capacity is coal (51% of production in 2012)
  • Recently invested billions in new coal construction
  • 2nd most manufacturing per capita
  • No oil or natural gas reserves (CCS, even if it existed in real life wouldn’t be

an economic option)

  • Other compliance options don’t yet exist
  • 46% of rail shipping on the 4 largest lines is coal
  • 73% of the income of the poorest Wisconsinites already goes to energy
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11/ 14/ 2013 8

T

  • p States For Coal Use vs. EP

A Listening Sessions Percentage of Electricity from Coal in Listening Session States

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11/ 14/ 2013 9

Governor Walker Letter to EP A Admin. McCarthy

  • “ The elimination of coal as a fuel for electric generation would

have dramatic implications for electricity prices for Wisconsin families and job creators, as well as impact the competitiveness

  • f American manufacturing.”
  • Requests a Listening Sessions in WI.
  • Asks EP

A to provide as much flexibility to states as possible.

Clean Air Success: Ozone Precursor

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11/ 14/ 2013 10

Clean Air Success: Ozone & PM 2.5 Precursor

1997 Ozone Redesignation

  • All Wisconsin counties (except for Sheboygan) were designated

to attainment for the 1997 8-hour standard of 84 ppb.

  • Although Sheboygan County had met the standard continuously

since 2008, the 2012 ozone season resulted in an apparent violation while EP A was considering the 2009 redesignation request.

  • The failure to redesignate Sheboygan County in a timely manner

is an unfortunate example of how bureaucratic delay and efforts to “run out the clock” can harm communities.

  • WMC pursuing legislation to force faster request to redesignate
  • Meanwhile, the EP

A began looking at nonattainment boundaries for the 2008 ozone standard…

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11/ 14/ 2013 11

2008 Ozone Nonattainment Boundaries

  • New boundaries based upon 2010 monitor data, unless a given

state asked to use 2011 data.

  • All Wisconsin counties (except Sheboygan) met the standard

based upon 2010 data, but…

  • The Illinois Governor requested that EP

A use 2011 data to bring the Chicago area into nonattainment, and thereby receive congestion mitigation grants to help with their budget deficit.

  • The EP

A granted Illinois’s request, and used 2011 data to designate the Chicago area as nonattainment.

Ozone Nonattainment: Kenosha

  • Because Kenosha County is technically part of the greater

Chicago CMSA, EP A proposed to add Kenosha County as part of the “new” Chicago nonattainment area.

  • EP

A ultimately designated only a portion of Kenosha County (roughly everything East of I-94).

  • The EP

A decision to break Kenosha County off from the greater Milwaukee 5-county area is significant because the Kenosha monitor has historically been the worst monitor in the area.

  • New Kenosha (Water T
  • wer) monitor registered 69 ppb v 75

ppb at Chiwaukee in 2013.

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11/ 14/ 2013 12

2013 8-Hour Ozone Standard

  • The Bush Administration EP

A promulgated the 75 ppb 8- hour ozone standard in 2008.

  • Obama EP

A reconsidered the 2008 standard at a level between 60-70 ppb.

  • President Obama then directed his EP

A to hold off on a new

  • zone standard until 2013.
  • EP

A expected to issue a standard between 60-70 ppb in Dec.

2013 Ozone Season Compliance * (preliminary)

45 50 55 60 65 70 75 80 85 90

Ozone Design Value (ppb)

1997 Standard (84 2008 Standard (75 ppb) 2013 Proposed (60-70 ppb)

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11/ 14/ 2013 13

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11/ 14/ 2013 14

Percentage of 675 Ozone Monitors Triggering Nonattainment at Current and Potential Standards

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 75 ppb 70 ppb 65 ppb 60 ppb 48% 76% 90% 96%

Consequences of Nonattainment?

Vehicle inspection and maintenance programs + Vehicle idling restrictions + Boutique fuel blend mandates + Speed-limit reductions + Application of Lowest Achievable Emission Reduction (LAER) to industry = Invitation to do business elsewhere

  • Manufacturers Alliance for Productivity and Innovation – 60 ppb:
  • $1 trillion annual compliance costs, 7.3 lost jobs nationally
  • $6.2 billion compliance cost, $6.4 billion loss of GDP

, 78,647 lost jobs in WI

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11/ 14/ 2013 15

Federal SO2 Standard

  • 1-hour standard for SO2 at 75 ppb. The previous 24-hour standard

was 140 ppb.

  • Only one monitor has recorded a violation, (Oneida County). In July,

EP A issued nonattainment designation for the Rheinlander Area

  • All other counties recommended to be “unclassifiable.”
  • EP

A proposed to further define nonattainment areas based upon dispersion modeling of significant SO2 sources, and proposed that states model major sources for compliance with the new standard.

Federal SO2 Standard

  • After receiving significant pushback from states and industry on

their attainment modeling proposal, EP A countered with aggressive monitoring requirements.

  • EP

A accepted comments on a new approach that would consider use of both modeling and monitoring to demonstrate attainment.

  • WMC and WDNR submitted comments requesting as much

flexibility as possible.

  • EP

A appears to have indefinitely postponed implementation of modeling and monitoring requirements at this time.

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11/ 14/ 2013 16

Federal NO2 Standard

  • In 2010, EP

A tightened the NO2 standard by establishing a new hourly standard of 100 ppb.

  • The prior annual standard of 53 ppb was retained as well.
  • All Wisconsin counties meeting the standard, but new “near road”

monitors will be required in Milwaukee and eventually Madison.

  • DNR is constructing a near road monitor in Milwaukee along 1-94

south of the I-894 bypass at an existing park and ride location.

Boiler MACT

  • EP

A met its court order to issue the final Boiler MACT rule by December 15 of 2012.

  • Costs of Original Rule?
  • Fisher International Inc. – $470 million capital cost in Wisconsin,

11 paper mill closures, 7,500 lost jobs

  • IHS Global Insight - $570 million, 9,124 lost jobs
  • Nationally, expected to cost more than $14 billion in

capital, $63.3 billion in lost GDP , and 800,000 lost jobs.

  • Finalized rule only slightly less costly for WI paper industry.
  • Low-cost Natural Gas(hydraulic fracturing) helping some…
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11/ 14/ 2013 17

Utility MACT

  • EP

A finalized the Mercury and Air T

  • xics Standards

(MATS) rule for electric utilities in December of 2011.

  • Since that time, EP

A has been reconsidering the rule’s impact on new sources.

  • Applies to coal fired utility boilers, and will reduce

mercury and acid gases.

  • Expected to be incredibly expensive – with a projected

cost of $10.9 billion/ year according to EP A.

Why Utility MACT?

  • EP

A based regulation on modeled group of pregnant, subsistence fisherwomen consuming 225 pounds or more of self caught fish each year from the most polluted 1/ 10th of America’s inland, fresh water bodies.

  • Modeling built in part on studies of Faroe Islanders diets consisting primarily
  • f whale blubber and Seychelles Islanders diets averaging 12 meals of ocean

caught fish each day.

  • EP

A has yet to identify a single actual child with cognitive impairment that can be traced to prenatal mercury exposure in this context.

  • EP

A estimates the potential benefits at $500,000 - $6,000,000/ year

  • Cost Benefit Ratio: 1,800 to 1
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11/ 14/ 2013 18

Federal PM 2.5 Standard

  • EP

A promulgated the current 24-hour PM 2.5 standard at 35 micrograms in 2006, but kept the annual standard at 15.

  • In December, EP

A finalized a new standard by retaining the 24-hour standard at 35-micrograms, but lowering the annual standard from 15micrograms down to 12 micrograms.

  • EP

A had also proposed a new secondary standard for visibility in urban areas between 28-30 decibels, but abandoned that concept based upon public comment opposing it.

  • All Wisconsin counties currently meet the new 12 microgram PM2.5

standard, but some are very close to the threshold.

2006 PM 2.5 Attainment Redesignation

  • Milwaukee County designated as nonattainment for the standard in

2009, and Racine and Waukesha Counties also designated based upon a “significant contribution” to Milwaukee County.

  • Good News: Milwaukee County monitors met the 35 µg/ m3 standard

at the end of 2010, and the DNR sent “clean data” to EP A in early 2011.

  • Bad News: EP

A still has not finalized the clean data finding for the 2010 data – this should not have been difficult.

  • More Bad News: EP

A has not acted upon Wisconsin’s PM2.5 redesignation request. 2012 will likely represent the 3rd consecutive year of complying with this standard, yet EP A has not granted relief.

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11/ 14/ 2013 19

Coal Combustion Residual Rule

  • Coal Combustion Residuals currently considered exempt from the Resource

Conservation and Recovery Act (RCRA)

  • EP

A under court order to schedule rulemaking

  • EP

A considering classification of coal ash as nonhazardous under subtitle D

  • f RCRA or as a hazardous substance under subtitle C
  • Cost - $55 - $104 billion over next 20 years
  • Devastating to utility and transportation infrastructure sectors
  • Uniquely harmful to WI
  • H.R. 2218, allowing states to regulate, passed house 265-155. Uncertain

future in Senate despite bipartisan support

OSHA Workplace Crystalline Silica Standard

  • OSHA proposes lowering the permissible exposure limit (PEL) to 50 micrograms

per cubic meter over an 8 hour average with an action level at 25 micrograms

  • Applied evenly to all industries
  • American Chemistry Council: $5.5 billion
  • American Foundry Association: $2 billion on just cast metals
  • Comments extended to January 27th, Hearings March 18th
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11/ 14/ 2013 20

Thank you!

Eric Bott Director of Environmental and Energy Policy Wisconsin Manufacturers and Commerce (608) 258-3400 ebott@wmc.org @BottWMC