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

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 Mining  Utility M ACT  PM2.5  Federal Air  Coal Ash Impacts  OSHA Silica  A More Aggressive EP A?  Ozone 1

11/ 14/ 2013 State Budget Update – M ajor Sources  1 st Proposal – Major Sources  Increase Major Source Fees from $35.71/ ton to $59.81/ ton and index at 4%/ year. 2 nd 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 • 2

11/ 14/ 2013 State Budget – M inor Sources 1 st 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 own Level?  Air and Water Permitting at the T own Level? 3

11/ 14/ 2013 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 4

11/ 14/ 2013 EP A Power Grab by the Numbers 100 95 90 80 70 60 50 44 42 Disapprovals 40 Takeovers 30 20 19 12 10 1 0 0 1 Bill Clinton 2 George W Bush George W Bush 1 Obama 1 2 * * * Obama Presidency to Date – 54 proposed or imposed takeovers. EP A Sue and Settle by the Numbers 48 50 45 40 35 30 Sue and Settle 25 20 15 15 8 7 10 5 0 Bill Clinton 2 George W. Bush 1 George W. Bush 2 Obama 1 Conservative Estimate of Compliance Costs 2009-2012: $13 Billion 5

11/ 14/ 2013 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 25 th 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. 20 th , 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 1 st , 2014 and to finalize those rules by June 1 st , 2015. 6

11/ 14/ 2013 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 2 nd 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 7

11/ 14/ 2013 T op States For Coal Use vs. EP A Listening Sessions Percentage of Electricity from Coal in Listening Session States 8

11/ 14/ 2013 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 of 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 9

11/ 14/ 2013 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… 10

11/ 14/ 2013 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 ower) monitor registered 69 ppb v 75 ppb at Chiwaukee in 2013. 11

11/ 14/ 2013 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 ozone standard until 2013.  EP A expected to issue a standard between 60-70 ppb in Dec. 2013 Ozone Season Compliance * (preliminary) 90 1997 Standard (84 85 80 2008 Standard (75 ppb) 75 Ozone Design Value (ppb) 70 2013 Proposed (60-70 ppb) 65 60 55 50 45 12

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11/ 14/ 2013 Percentage of 675 Ozone Monitors Triggering Nonattainment at Current and Potential Standards 100% 96% 90% 90% 80% 76% 70% 60% 48% 50% 40% 30% 20% 10% 0% 75 ppb 70 ppb 65 ppb 60 ppb 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 14

11/ 14/ 2013 Federal SO 2 Standard  1-hour standard for SO 2 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 SO 2 sources, and proposed that states model major sources for compliance with the new standard. Federal SO 2 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. 15