### State of Wisconsin
DEPARTMENT OF NATURAL RESOURCES 101 S. Webster Street Box 7921 Madison WI 63707-7921

May 4, 201 J

Ms. Susan Hedman US EPA-Region V 77 WestJackson Boulevard Chicago IL 60604 Scott Walker, Governor Cathy Stepp, Secretary Telephone 608·266.2621**~~d.kil::::~'-""-~"-1** WISCONSIN FAX 608·267-3679 DEPT. OF NATURAL RESOURCES TTY Access via relay

- 711

Subject: Wisconsin SIP Revision Regarding Greenhouse Gasses

Dear Ms. Hedman:

On April 1,20 I 0, US EPA promulgated the first standard for regulating motor vehicle gases contributing to climate change, i.e., greenhouse gases or GHG. Because of the way the Clean Air Act (CAA) is structured, once GHG emissions from motor vehicles are subject to regulation, stationary sources become regulated for these
gases. Without further action by EPA, this standard had the unintended affect of subjecting literally tens of thousands of sources across the country to some of the most complex air permit and emission control regulations. In order to mitigate this unintended effect, EPA promulgated on June 3, 20 I0 (75 FR 31514), an additional "tailoring" rule that limits the number of sources subject to the permit and emission control regulations.

Under current state statutes and administrative code, Wisconsin sources would have become subject to permit and emission control requirements on January 2, 20 II. However, Wisconsin sources could not benefit from the tailoring rule limiting applicability under air permit and emission control regulations until revisions were made to Wisconsin's administrative code. These changes were made in rule AM·17-1O. approved by the DNR Board in its April 20 II meeting.

Specifically, AM-17-1 0 defines the greenhouse gases subject to regulation, establishes greenhouse gas emission thresholds, that if exceeded, will trigger permitting and emission control requirements, and establishes global warming potential factors which are used to calculate individual greenhouse gas emissions on an equivalent and comparable basis.

With this letter, the information submitted as a SIP revision to EPA in rule AM-17-10 permanently revises the Wisconsin administrative code to make it consistent with the federal tailoring rule. AM-17- J 0 modifies portions of chapters NR 400, and 405, Wis. Adm. Code.

Wisconsin requests EPA process this SIP submittal as soon as possible so that permitted sources benefit from the relief in the EPA tailoring rule.

If you should have any questions regarding this submittal, please call Andrew Stewart of my staff at 608 266- 6876 or email him at andrew.stewart@wisconsin.gov

Sincerely,

# /'-....1-l:"""""'"~Yt\.I)~ Jo H. Melby, Jr. /'
Di ctor, Bureau er Mana

d nr.wi.gov wisconsin.gov 

## Naturally 

## WISCONSINCC: Andrew Stewart

- AMi? Ralph Patterson

- AMi?

Attachments:

• SIP Checklist

• SIP Certification Form

• Public Hearing Notice

• Class I Public Hearing notice

• Rule-AM-I?-IO

• Background Memo

• DNR Green Sheet showing DNR Board's adoption of AM_I? _10 Page 2

# EPA Region V 

# Wisconsin SIP Submittal Completeness Review

Submittal Letter

1. Signed by Governor’s Designee (John Melby, Jr.)? Yes ___ No ___ 2. Date of Subm ittal

______________________________________ 3. WDNR Person in charge of SIP submittal. Name __Ralph Patterson__ Telephone __608-267-7546__ FAX Number ___608-267-0560______ E-MAIL Address______________________________ 4. WDNR Technical Person in charge of answering questions on SIP Submittal Name __Andrew Stewart___ Telephone __608-266-6876__ FAX Number ____608-267-0560____ E-MAIL Address___andrew.stewart@wisconsin.gov 

# Incorporation Into Wisconsin Administrative Code

5. Is evidence that the State incorporated the revision into the Wisconsin Administrative Code supplied in this SIP package? Yes _x_ The rule revision amends parts of NR 400, 405, and 407, Wis. Adm. Code. No__ if No explain.

6. The effective date of the regulation is or was __September 1, 2011___

7. Are test methods/rules incorporated by reference correctly? (Has approval been obtained from the state Attorney General

Yes_______ No_______ Not applicable __X_____ For No and Not applicable explain answer.

8. Has WDNR provided evidence that it has necessary legal authority under State law to adopt and implement the revision?

Yes __x _____ Please refer to AM-17-10_12A.pdf No _______ Additional Explanation (if necessary).

9. Did the State include a copy of the actual regulation or document for USEPA review?

Yes _X___ No_____ Additional Explanation (if necessary).2

10. Did the State provide evidence that it followed all of the requirements of its Administrative Procedures Act (ch. 227, Wis. Stats., Administrative Procedure and Review) in conducting and completing adoption/issuance of the revision?

Yes__x __ The public hearing notice and Class I publication are included. No______ Additional Explanation (if necessary)

11. Did the State include evidence that Public Notice was given of the revision, including date of publication? Yes__x__ No ____ Additional Explanation (if necessary)

12. Did the State provide a copy of the certification that public hearings were held in accordance with the information provided in the public notice (copy of notarized Class I paper proof).

Yes_x__ No___ Additional Explanation (if necessary).

13. Does the submittal contain a compilation of public comments and the State’s response?

Yes__X__ No____ Additional Explanation (if necessary).



# Technical Issues

14. Name the all the regulated pollutants a ffected by the revision? ___greenhouse gases________

15. Does the submittal identify the designation, status of the attainment plan and attainment date for the area(s)

Yes____ No__X___ Additional Explanation (if necessary) Not applicable

16. Does the submittal identify the location and types of affected sources?

Yes_____ No__X___ Additional Explanation (if necessary) Not applicable3

17. Does the submittal quantify the changes in SIP-allowable emissions and estimate or quantify the changes in actual emissions from affected sources?

Yes_X__ No____ Additional explanation (if necessary)

18. Has the State demonstrated that the NAAQS/PSD In crement/RFP demonstration/vi sibility will be protected if the revision is approved and implemented?

Yes____ No__X__ Additional explanation (if necessary) Not applicable

19. Has the State provided modeling information to support the revision.

Yes___ No____ Unnecessary__X__

20. Has the State provided evidence that emission limitations are based on continuous emission reduction technology?

Yes____ No__X__ Additional explanation (if necessary) Not applicable

21. Has the State provided evidence that the revision contains emission limitations, work practice standards and record keeping/reporting requirements where necessary, to ensure emission levels?

Yes___ No__X__ Additional explanation (if necessary) Not applicable

22. Does the submittal contain enforcement/compliance strategies including how compliance will be determined in practice, and at what frequency?

Yes___ No_X__ Additional explanation (if necessary) Not applicable4



# STATE APPROVABILITY CHECKLISTENFORCEABILITY

USEPA USE ONLY

SIP Package Number ___________ Date Received by USEPA ________________ Date Due_____________________________ State: WISCONSIN5



# WDNR Information

Subject Matter: Revisions to Wisconsin’s prevention of significant deterioration new source review SIP through the amending/creation of certain sections of NR 400 and 405, Wis. Adm. Code.



## Applicability

USEPA Question USEPA Requirement State Response What sources are being regulat ed? Clear discussion Specifica lly, this rule defines the greenhouse gases subject to regulation, establishes greenhouse gas emission thresholds, that if exceeded, will trigger permitting and emission control requirements, and establish global warming potential factors which are used to calculate individual greenhouse gas emissions on an equivalent and comparable basis for major sources and major modifications at major sources. What are criteria for exemption? Clear discussion Not applicable Is calculation procedure for exemption clearly specified? Supply example calculation or clear explanation of how to determine exemption (line by line, etc.) Not applicable

Is emission inventory listed in the background document of the attainment demonstration? Inventory including allowable and actual emissions in source category should be included, for enforcement purposes and independent of any Clean Air Act requirements, in the attainment demonstration if such data is necessary for determining baselines in regulations. Not applicable

Is the averaging time(s) used in the rule different from that of the ambient standard? The averaging time in the rule must be consistent with protecting the ambient standard in question. Normally, it should be equal to or shorter than the time associated with the standard. Longer term averaging is available only in limited instances provided that the ambient standard is not compromised. Not applicable

What are the units of compliance (lbs VOC per gallon of solids applied less water, grains per standard cubic foot?) Clearly stated in the rule. Not applicable

Is bubbling or averaging of any type allowed? If yes, state criteria. Could a USEPA inspector independently determine if the criteria were met?? Does Explicit description of how averaging, bubbling, or equivalency is to be determined. VOC equivalency must be on a “solids applied” basis. Any method must be independently reproducible. Provision must be explicit as to Not applicable6

USEPA have to approve each case? whether USEPA case-by-case approval is required. If provision intended to be “generic” then USEPA bubble policy must be met. If there is a redesignation, will this change the emission limitations? If yes, which ones and how? Regulation may not automatically allow for self nullification upon redesignation of area to attainment. New maintenance demonstration required to order to drop regulation. Not applicable



## Compliance Dates

USEPA Question USEPA Requirement State Response What is the compliance date? The compliance date must not be later than the approved or about to be approved date of attainment unless emission reductions are not necessary for attainment. In some cases, it will be necessary for the regulation to specify dates in compliance schedules that are required to be submitted by
source to state. September 1, 2011

What is the attainment date? Clearly defined. Not applicable



## Specificity of conduct

USEPA Question USEPA Requirement State Response What test method is required? Test method must be explic itly stated. Not applicable What is the averaging time in the compliance test method? Averaging time and application of limit must be explicit. Not applicable

Is a compliance calculation or evaluation required? (i.e., daily weighted average for VOC). Clearly defined. Not applicable

If a compliance calculation is necessary, list the formula, period of compliance, and/or evaluation method. Formula must be explicit. Not applicable



## Incorporation by reference

USEPA Question USEPA Requirement State Response What is the state authority for rulemaking. Clearly stated. Section 227.11(2)(a), Stats., gives state agencies general rulemaking authority. Section 227.14(1m)(b), Stats., allows the Department to use the format of federal regulations in preparing a proposed rule if it determines that all or part of a state environmental regulatory program is to be administered according to standards, requirements or methods7

which are similar to standards, requirements or methods specified for all or part of a federal environmental program. Section 285.11(1), Stats., gives the Department authority to promulgate rules consistent with ch. 285, Stats. Section 285.11(16), Stats., requires the Department to promulgate rules that specify the amounts of emissions that result in a stationary source bei ng classified as a major source. This section requires the rules to be consistent with but no more restrictive than the federal Clean Air Act.

Are methods/rules incorporated by reference in the right manner? Clearly stated. Not applicable



## Record keeping

USEPA Question USEPA Requirement State Response What records are required to determine compliance? Clearly stated. Not applicable

In what form or units (lbs/gal, gr/dscf, etc.) must the records be kept? On what time basis (instantaneously, hourly daily)? Records to be kept must be consistent with units of compliance in the performance requirements, including the applicable time period . Not applicable

Does the rule affirmatively require the records be kept? There must be clearly defined and distinguishable from what constitutes a violation. Not applicable



## Exemptions

USEPA Question USEPA Requirement State Response List any exemptions allowed. Must be clearly defined and distinguishable from what constitutes a violation. None allowed

Is the criteria for application clear ? Clearly stated. Not applicable



## Malfunction Provisions

USEPA Question USEPA Requirement State Response Are there any malfunction provisions in the rule? Rule must specify what exceedances may be excused, how the standard is to be applied, and who makes the determination. Not applicable

## capital Newspapers Proof of Publication Affidavit

Ad #: 1693132 Price: $520.08 Ad ID: AMLL-792 

### Retain 

### this portion for your records. Please do not remit payment until you receive your advertising invoice.

Mail to:



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DEC 20 2010



## AIR MANAGEMENT

STATE OF WISCONSIN }
Dane County

PWSJ 55. Corisa Urban being dUly sworn, doth depose and say that he (she) is an authorized representative of capital Newspapers, publishers of

Wisconsin State Journal

a newspaper, at Madison, the seat of government of said State, and that an advertisement of which the annexed is a true

copy, taken from said paper, was published therein on December 15th, 2010

(Signed) (Title) Principal Clerk

Subscribed and sworn to before me on 

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ENTBEFORE THE DEPARTMENT OF NATURAL RESOURCES

NOTICE OF PUBLIC HEARING Natural Resources Board Orders AM-17-10 and AM-48-10(E)

NOTICE IS HEREBY GIVEN THAT pursuant to ss. 227.16 and 227.17, Stats, the Department of Natural Resources, hereinafter the Departm ent, will hold a public hearing on pr oposed revisions to chs. NR 400, 405, and 407, Wis. Adm. Code, in permanent rule Or der AM-17-10, relating to major source permit thresholds for sources of greenhouse gas emissions on the date and at the time and location listed below. The proposed revisions relate to issues for St ate Implementation Plan approvability, and the State Implementation Plan developed under s. 285.11(6), Stats., will be revised.

NOTICE IS HEREBY FURTHER GIVEN THAT pursuant to s. 227.24 (4), Stats., the Department will, on the same date and at the same time and location, hold a public hearing on identical revisions in emergency rule Order AM-48-10(E), adopted by the Natural Resources Board on December 8, 2010 and which was published and became effective on December 15, 2010.

Hearing Information

Date and Time Location Friday, January 21, 2011 at 10:00 AM Natural Resources State Office Building Room G09 101 S Webster Street Madison, WI

Reasonable accommodations, including the provision of informational material in an alternative format, will be provided for qualified individuals with disabilitie s upon request. Contact Robert Eckdale in writing at the Department of Natural Resources, Bureau of Air Management (AM/7), 101 S Webster, Madison, WI 53702; by E-mail to Robert.Eckdale@wisconsin.gov ; or by calling (608) 266-2856. A request must include specific information and be received at l east 10 days before the dat e of the scheduled hearing.

Availability of the Proposed Rules and Fiscal Estimate The emergency order, proposed rule and supporting documents, including the fiscal estimate, may be viewed and downloaded from the Administrative Rule s System Web site which can be accessed through the link provided on the Proposed Air Pollution Control Rules Calendar at http://www.dnr.state.wi.us/air/rules/calendar.htm . If you do not have Internet access, a printed copy of the proposed rule and supporting documents, including the fiscal estimate, may be obtained free of charge by contacting Robert Eckdale, Department of Natural Resources, Bureau of Air Management (AM/7), 101 S. Webster St, Madison, WI, 53702, or by calling 608.266.2856.

Submitting Comments Comments must be received on or before Friday, January 28, 2011. Written comments may be submitted by U.S. mail, fax, E-mail, or through the Inter net and will have the same weight and effect as oral statements presented at the public hearing. Written comments and any questions on the proposed rules should be submitted to: Andrew Stewart Department of Natural Resources Bureau of Air Management (AM/7) 101 S Webster St, Madison, WI 53703

Phone: 608 266-6876 Fax: 608.267.0560 E-mail: Andrew.Stewart@wisconsin.gov Internet: Use the Administrative Rules System W eb site accessible through the link provided on the Proposed Air Pollution Control Rules Calendar at http://dnr.wi.gov/air /rule s/calendar.htmAnalysis Prepared by the Department of Natural Resources

Statute interpreted: Sections 227.11(2)(a), 227.14(1m)(b), 285.11(1) and (16), and 285.60, Stats. The State Implementation Plan developed under s. 285.11(6), Stats., is revised.

Statutory authority: Sections 227.11 (2) (a), 227.14 (1m) (b), 227.24(1)(a), 285.11 (1) and (16), Stats.

Explanation of agency authority: Section 227.11(2)(a), Stats., gives state agencies general rulemaking authority. Section 227.14(1m)(b), Stats., allows the Depar tment to use the format of federal regulations in preparing a proposed rule if it determines that all or part of a state environmental regulatory program is to be administered according to standards, requirements or methods which are similar to standards, requirements or methods specified for all or par t of a federal environmental program. Section 227.24(1)(a), Stats., gives the Department the authorit y to promulgate a rule as an emergency rule without complying with notice, hearing, and publicatio n requirements under ch. 227, Stats., if necessary for the preservation of public welfare. Section 285. 11(1), Stats., gives the Department authority to promulgate rules consistent with ch. 285, Stats. Se ction 285.11(16), Stats., requires the Department to promulgate rules that specify the amou nts of emissions that result in a stationary source being classified as a major source. This section requires the rules to be consistent with but no more restrictive than the federal Clean Air Act.

Related statute or rule: None

Plain language analysis: On April 1, 2010, US EPA promulgated the first standard for regulating motor vehicle gases contributing to climate change, i.e., greenhouse gases or GHG. Because of the way the Clean Air Act (CAA) is structured, once GHG emissions from motor vehicles are subject to regulation, stationary sources become regulat ed for these gases. Without further action by EPA, this standard has the unintended affect of subjecting literally tens of thousands of sources across the country to some of the most complex air permit and emission control regulations. In order to mitigate this unintended effect, EPA promulgated on June 3, 2010 (75 FR 31514), an additi onal "tailoring" rule that limits the number of sources subject to the permit and emission control regulations.

Under current state statutes and administrative code, Wisconsin sources will become subject to permit and emission control requirements on January 2, 2010. However, Wisconsin source s will not benefit from the tailoring rule limiting applicability under air permit and emission control regulations until revisions can be made to Wisconsin administrative code. This order pr oposes to revise the administrative code to make it consistent with the new federal rule.

Specifically, this proposal will define the greenhouse gases subject to regulation, establish greenhouse gas emission thresholds, that if exceeded, will tr igger permitting and emission control requirements, and establish global warming potential factors whic h are used to calculate individual greenhouse gas emissions on an equivalent and comparable basis.

Summary of, and comparison with, existing or proposed federal regulation: U.S. EPA promulgated rules in 40 CFR parts 51 and 70 as revised on June 3, 2010 (75 FR 31514) to relieve overwhelming permitting burdens that would, in the absence of these rule, fall on permitting authorities and sources. They accomplished this by tailoring the applicability criteria that determine which GHG emission sources become subjec t to the PSD and Title V programs of the CAA. In particular, EPA established with this rulemaking a phase-in appr oach for PSD and Title V applicability, and established the first two steps of the phase-in for the largest emitters of GHG.

Under these federal rules, the first step, which will begin on January 2, 2011, PSD or Title V requirements will apply to sources’ GHG emissions only if the sources are subject to PSD or Title V anyway due to their non-GHG pollutants. Therefore, EPA will not require source owners or ope rators to evaluate whether they are subject to PSD or Title V requirements solely on account of their GHG em issions. Specifically, for PSD, Step 1 requires that as of January 2, 2011, the a pplicable requirements of PSD, most notably, the best available control technology (BACT) requireme nt, will apply to projects that increase net GHG emissions by at least 75,000 tpy carbon dioxide equi valent emissions, but only if the project also significantly increases emissions of at least one n on-GHG pollutant. For the Title V program, only owners or operators of existing sources with, or new sour ces obtaining, Title V permits for non-GHG pollutants will be required to address GHG during this first step.The second step of the federal rules, beginning on Ju ly 1, 2011, will phase in additional large sources of GHG emissions. New sources as well as existing source s not already subject to Title V that emit, or have the potential to emit, at least 100,000 tpy carbon di oxide equivalent emissions will become subject to the PSD and Title V requirements. In addition, sources that emit or have the potential to emit at least 100,000 tpy carbon dioxide equivalent emissions and that undertake a modification that in creases net emissions of GHG by at least 75,000 tpy carbon dioxide equivalent emissions will also be subject to PSD requirements.

An important provision of these federal rules is that PSD and Title V permitting is only triggered when both the appropriate traditional mass-based applicability threshold, i.e., 100 tpy or 250 tpy, and the GHG carbon dioxide equivalent emis sion threshold are exceeded.

U.S. EPA also makes certain commit ments to conduct studies relat ed to potential regulatory burdens which could result from lowering the applicability thre shold from what is contai ned in the current rule. Except for these federal commitments, the rules prop osed here are consistent with the federal rules.

The greenhouse gas e ndangerment finding (74 FR 66496), EPA’s me morandum entitled “Interpretation of Regulations that Determine Pollutants Covered by F ederal Prevention of Significant Deterioration (PSD) Permit Program” (75 FR 17004) and the motor vehicle (75 FR 25324) and tailoring (75 FR 31514) rules have been challenged by various parties, nationally. In the event that courts or Congress stay or otherwise invalidate the finding, interpretation and both rules related to greenhouse gases the Department will act to invalidate the emergency rule and re-evaluate the need for a permanent rule in light of the court’s or Congressional actions.

Comparison with similar rules in adjacent st ates (Illinois, Iowa, Michigan, and Minnesota): The states of Illinois and Minnesota are US EPA delegated states so they do not need to amend their state rules to implement the provision of the federal tailo ring rule. Michigan and Iowa are SIP approved states like Wisconsin, so they will need to implement rules si milar to what are being proposed here in order to modify their permit program and implement the provisions of the federal rule.

Summary of factual data and analytical methodologies used and how any related findings support the regulatory approach chosen: The proposed rule is based on the federal rule changes. Information on the federal rule changes can be obtained from fe deral registers published on October 27, 2009 (74 FR 55292), October 30, 2009 (74 FR 56260), and June 3, 2010 (75 FR 31514).

Analysis and supporting documents used to determine the effect on small business or in preparation of an economic impact report: The Department did not conduct an independent analysis of the effect on small business, but is relying on t he analysis performed by the US EPA. This analysis can be found in US EPA’s rule docket for Prevention of Si gnificant Deterioration an d Title V Greenhouse Gas Tailoring Rule; Proposed Rule [EPA-HQ-OAR-2009- 0517; FRL-8966-7], Octo ber 27, 2009 (74 FR 55292).

Effect on small business: This proposal will prevent unintended impacts to small businesses resulting from promulgation by U.S. EPA of emission standards for GHG, by limiting the number that may become subject to the Title V and PSD permitting programs . The Small Business Regulatory Coordinator may be contacted at SmallBusiness@dnr.state.wi.us , or by calling (608) 266-1959.

Environmental Analysis The Department has made a preliminary determinati on 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 su mmarize the Department’s consideration of the impacts of the proposal and any reasonable alternatives.

Fiscal Estimate Summary This proposal limits the applicability of Department per mitting consistent with the federal permit program, resulting in fewer permit actions. This translates to an expected cost avoi dance for both the Department and the private sector over what costs will be imposed if the proposal is not approved. The following information and assumptions were used in estimating the cost avoidance, which are summarized in thetable below. (Note that estimates in this analysis are based on EPA proposed rules published in September, 2009. EPA's final rule es tablishes applicability thresholds much higher than originally proposed, therefore, the cost avoi dance numbers go up significantly from what is presented here.)

National average dollar per permit costs and national num bers of permits avoided comes from Tables 3-1 and 3-2 in US EPA’s Regulatory Impact Analysis for the Proposed Gree nhouse Gas Tailoring Rule, Final Report, September, 2009.

Number of permits avoided in Wisconsin was determ ined by taking a percentage of the national estimate of permits avoided.

Number of industrial sources subject to PSD - Curr ently the Department issues 8-10% of the nation's PSD permits annually due the historically large manu facturing base in Wisconsin. While there will be some correlation between the industrial base and source s of greenhouse gas emissions it is not expected to be as high as what the Department currently se es under the existing PSD program. For the purposes of this Fiscal Estimate 5% is being applied to the national estimate of 3,299 permits avoided, resulting in an estimated annual cost avoidance or $13,947,450 for the private sector and $7,647,750 for the Department.

Number of commercial and residential sources subject to PSD - Based on an assumption that Wisconsin's number of sources is proportional to percentage of the national population, 2% is being applied to the national estimate of 37,197 permits avoided, resulting in an estimated annual cost avoidance of $12,563,928 for the private sector and $3,709,584 for the Department.

Number of new industrial sources subject to Title V - Currently the Department issues approximately 3% of the nation’s Title V permits. Ther efore 3% of the national estimate of 195,895 permits avoided is used in this Fiscal Estimate resulting in an estimated one-time cost avoidance of $272,398,950 for the private sector and $115,706,376 for the Department.

Number of new commercial and residential sources subject to Title V - Based on an assumption that Wisconsin's number of sources is proportional to percentage of the national population, 2% is being applied to the national estimate of 5,956,513 permits avoided, resulting in an estimated one-time cost avoidance of $593,982,180 for the private sector and $235,6 39,140 for the Department.

US EPA notes that significant uncertainties exist in th eir estimates due to the lack of historical record and permitting experience upon which to base resource needs for including greenhouse gas sources in the PSD and Title V permitting programs. The Department doe s not have Wisconsin specific information that allows the estimates to be better re fined for this Fiscal Estimate.

Agency contact person: Andrew Stewart Department of Natural Resources Bureau of Air Management (AM/7) 101 S Webster St, Madison, WI 53703

Phone: 608 266-6876 Fax: 608.267.0560 E-mail: Andrew.Stewart@wisconsin.gov

Dated at Madison, Wisconsin: December 08, 2010

STATE OF WISCONSIN DEPARTMENT OF NATURAL RESOURCES

By ___ /S/ Matthew J.Frank

______ Matthew J. Frank, Secretary

### WiSCONSIN DEPARTMENT OF NATURAL RESOURCES

BUREAU OF AIR MANAGEMENT

STATE IMPLEMENT A nON PLAN REVISION CERTIFICATION

Pursuant to the requirements of40 CFR s. 5 

### 1.1 02(t), I hereby certify that the Wisconsin Department of Natural Resources held the hearing described below; that the hearing was held in accordance with the public notice (copy attached), as required by 40 CFR s. 51.1 02( d); and that I was the presiding officer at the hearing.

Subject:

Revisions to SIP relating to major source permitting thresholds for sources of greenhouse
gas emissions.

Hearing held:

Friday, January 21, 201 I in Madison, Wisconsin.

Written comments were received until January 28, 20 I I.



# Q

Margaret I. 

### Hoefer BUREAU OF LEGAL SERVICES

Subscribed and sworn to before me Thisi<H1._ day of

## fJ1~ ,201 I



### -UU(xTj

## s--(~0 

# . h" Notary Public, State of Isconsm My commission is permanent.

### 1 ORDER OF THE STATE OF WISCONSIN NATURAL RESOURCES BOARD AMENDING AND CREATING RULES

The Wisconsin Natural Resources Board adopts an order to amend 407.02 (4) (b) (intro.), and Table 3 in 407.05 (5) and to create NR 400.02 (74m), 400.03 (3) (om), and (4) (go) and (kg), 405.02 (28m), 405.07 (9), 407.02 (8m) and 407.075 relating to major source permitting thresholds for sources of greenhouse gas emissions and affecting small business.



### AM-17-10

Analysis Prepared by the Department of Natural Resources

1. Statute interpreted: Sections 227.11(2)(a), 227.14(1m)(b), 285.11(1) and (16), and 285.60, Stats. The State Implementation Plan developed under s. 285.11(6), Stats., is revised.

2. Statutory authority: Sections 227.11 (2) (a), 227.14 (1m) (b), 285.11 (1) and (16), Stats.

3. Explanation of agency authority: Section 227.11(2)(a), Stats., gives state agencies general rulemaking authority. Section 227.14(1m)(b), Stats., allows the Department to use the format of federal regulations in preparing a proposed rule if it determines that all or part of a state environmental regulatory program is to be administered according to standards, requirements or methods which are similar to standards, requirements or methods specified for all or part of a federal environmental program. Section 285.11(1), Stats., gives the Department authority to promulgate rules consistent with ch. 285, Stats. Section 285.11(16), Stats., requires the Department to promulgate rules that specify the amounts of emissions that result in a stationary source being cl assified as a major source. This section requires the rules to be consistent with but no more restrictive than the federal Clean Air Act.

4. Related statute or rule: None

5. Plain language analysis: On April 1, 2010, US EPA promulgated the first standard for regulating motor vehicle gases contributing to climate change, i.e ., greenhouse gases or GHG. Because of the way the Clean Air Act (CAA) is structured, once GHG emissions from motor vehicles are subject to regulation, stationary sources become regulated for these gases. Without further action by EPA, this standard has the unintended affect of subjecting literally tens of thous ands of sources across the country to some of the most complex air permit and emission control regulati ons. In order to mitigate this unintended effect, EPA promulgated on June 3, 2010 (75 FR 31514), an additional "tailoring" rule that limits the number of sources subject to the permit and emission control regulations.

Under current state statutes and administrative code, Wisconsin sources would have become subject to permit and emission control requirements on January 2, 2011. However, Wisconsin sources will not benefit from the tailoring rule limiting applicability under air permit and emission control regulations until revisions can be made to Wisconsin administrat ive code. The Department therefore promulgated emergency rule AM-48-10(E) to receive the relief intended under the federal tailoring rule. This order proposes to permanently revise the administrative code to make it consistent with the new federal rule.

Specifically, this proposal will define the greenhouse gases subject to regulation, establish greenhouse gas emission thresholds, that if exceeded, will tri gger permitting and emission control requirements, and establish global warming potential factors which are used to calculate individual greenhouse gas emissions on an equivalent and comparable basis.

6. Summary of, and comparison with, existing or proposed federal regulation: U.S. EPA promulgated rules in 40 CFR parts 51 and 70 as revised on June 3, 2010 (75 FR 31514) to 

### relieve overwhelming permitting burde ns that would, in the absence of these rule, fall on permitting authorities and sources. They accomplished this by tailoring the applicability criteria that determine which GHG emission sources become subject to the PSD and Title V programs of the CAA. In particular, EPA established with this rulemaking a phase-in approach for PSD and Title V applicability, and established the first two steps of the ph ase-in for the largest emitters of GHG.

### 2 Under these federal rules, the first step, whic h will begin on January 2, 2011, PSD or Title V requirements will apply to sources’ GHG emissions only if the sources are subject to PSD or Title V anyway due to their non-GHG pollutants. Therefore, EPA will not require source ow ners or operators to evaluate whether they are subject to PSD or Title V requirements solely on account of their GHG emissions. Specifically, for PSD, Step 1 requires that as of January 2, 2011, the applicable requirements of PSD, most notably, the best available control t echnology (BACT) requirement, will apply to projects that increase net GHG emissions by at least 75,000 tpy carbon dioxide equivalent emissions, but only if the project also significantly increases emissions of at least one non-GHG pollutant. For the Title V program, only owners or operators of existing sources with, or new sources obtaining, Title V permits for non-GHG pollutants will be required to address GHG during this first step.

The second step of the federal rules, beginning on Ju ly 1, 2011, will phase in additional large sources of GHG emissions. New sources as well as existing sources not already subject to Title V that emit, or have the potential to emit, at least 100,000 tpy carbon dioxide equivalent emissions will become subject to the PSD and Title V requirements. In addition, sources th at emit or have the potential to emit at least 100,000 tpy carbon dioxide equivalent emissions and that unde rtake a modification that increases net emissions of GHG by at least 75,000 tpy carbon dioxide equivalent emissions will also be subject to PSD requirements.

An important provision of these federal rules is that PSD and Title V permitting is only triggered when both the appropriate traditional mass-based applicability threshold, i.e., 100 tpy or 250 tpy, and the GHG carbon dioxide equivalent emission threshold are exceeded.

U.S. EPA also makes certain commitments to c onduct studies related to potential regulatory burdens which could result from lowering the applicability thres hold from what is contained in the current rule. Except for these federal commitments, the rules proposed here are consistent with the federal rules.

7. Comparison with similar rules in adjacent states (Illinois, Iowa, Michigan, and Minnesota): The states of Illinois and Minnesota are US EPA delegated states so they do not need to amend their state rules to implement the provision of the federal tailoring rule. Michigan and Iowa are SIP approved states like Wisconsin, so they will need to implement rules similar to what are being proposed here in order to modify their permit program and implement the provisions of the federal rule.

8. Summary of factual data and analytical methodologies used and how any related findings support the regulatory approach chosen: The proposed rule is based on the federal rule changes. Information on the federal rule changes can be obtai ned from federal registers published on October 27, 2009 (74 FR 55292), October 30, 2009 (74 FR 56260), and June 3, 2010 (75 FR 31514).

9. Analysis and supporting documents used to determine the effect on small business or in preparation of an economic impact report: The Department did not conduct an independent analysis of the effect on small business, but is relying on the analysis performed by the US EPA. This analysis can be found in US EPA’s rule docket for Prevention of Significant Deterioration and Title V Greenhouse Gas Tailoring Rule; Proposed Rule [EPA-HQ-OAR-2009-0517; FRL-8966-7], October 27, 2009 (74 FR 55292).

10. Effect on small business: This proposal will prevent unintended impacts to small businesses resulting from promulgation by U.S. EPA of emission standards for GHG, by limiting the number that may become subject to the Title V and PSD permitting programs.

11. Agency contact person: Andrew Stewart, 608-266-6876, andrew.stewart@wisconsin.gov

### 3 SECTION 1. NR 400.02 (74m) is created to read:

NR 400.02 (74m) “Greenhouse gases” or “GHG” means an air pollutant that is the aggregate of

carbon dioxide (CO 2 

### ), methane (CH 4 

### ), nitrous oxide (N 2 

### O), sulfur hexafluoride (SF 6 

### ), hydrofluorocarbons

(HFCs), and perfluorocarbons (PFCs).

SECTION 2. NR 400.03 (3) (om) and (4) (go) and (kg) are created to read:

NR 400.03 (3) (om) “SF 6 

### ” – sulfur hexafluoride

(4) (go) “GHG” – greenhouse gases

(kg) “PFC” – perfluorocarbon

SECTION 3. NR 405.02 (28m) is created to read:

NR 405.02 (28m) “Subject to regulation under the Act” means, for any air contaminant, that the

contaminant is subject to either a provision of the Ac t, or a nationally applicable regulation codified by

the administrator in title 40, chapter I, subchapter C of the CFR, that requires actual control of the

quantity of air emissions of the contaminant, and th at the control requirement has taken effect and is

operative to control, limit, or restrict the quantity of emissions of the contaminant released from the

regulated activity.

SECTION 4. NR 405.07 (9) is created to read:

NR 405.07 (9) (a) Emissions of greenhouse gases at a stationary source shall only be subject to

regulation under the Act as follows:

1. Beginning January 2, 2011, if the stationary source is any of the following:

a. A new major stationary source for a regulat ed NSR contaminant other than GHG, which will

emit or will have the potential to emit 75,000 tpy or more of GHG on a carbon dioxide equivalent basis.

### 4 b. An existing major stationary source for a re gulated NSR contaminant other than GHG, which

will have an emissions increase of a regulated NS R contaminant other than GHG, and an emissions

increase of 75,000 tpy or more of GHG on a carbon dioxide equivalent basis.

2. Beginning July 1, 2011, in addition to the provisi ons in subd. 1., if the stationary source is any

of the following:

a. A new stationary source that will emit or have the potential to emit 100,000 tpy or more of

GHG on a carbon dioxide equivalent basis.

b. An existing stationary source that emits or has the potential to emit 100,000 tpy or more of

GHG on a carbon dioxide equivalent basis, and the sour ce undertakes a physical change or change in the

method of operation that will result in an emissions increase of 75,000 tpy or more of GHG on a carbon

dioxide equivalent basis.

Note : The department intends to regulate GHG c onsistent with the 40 CFR 51.166 (June 3,

2010). In the event of litigation or congressional ac tion which impacts the federal regulations, the

department will commence rulemaking to remain c onsistent with the resu lting federal regulations.

(b) For purposes of this subsection, emissions of GHG on a carbon dioxide equivalent basis shall

be determined by multiplying the mass amount of emissions, in tons per year, for each of the constituent

gases in the pollutant GHG by the associated global wa rming potential for the gas in Table B, and then

summing the products obtained.

Table B Global Warming Potentials (GWP) Greenhouse Gas

(a) Chemical Abstract Service Number 1 

### (b) Chemical Formula

(c) GWP

(d) 1. Carbon dioxide 124-38-9 CO 2 

### 1 2. Methane 74-82-8 CH 4 

### 21 3. Nitrous oxide 10024-97-2 N 2 

### O 310 4. HFC-23 75-46-7 CHF 3 

### 11,700 5. HFC-32 75-10-5 CH 2 

### F 2 

### 650 6. HFC-41 593–53–3 CH 3 

### F 150 7. HFC-125 354-33-6 C 2 

### HF 5 

### 2,800 8. HFC-134 359–35–3 C 2 

### H 2 

### F 4 

### 1,000 9. HFC-134a 811-97-2 CH 2 

### FCF 3 

### 1,300 10. HFC-143 430–66–0 C 2 

### H 3 

### F 3 

### 300 11. HFC-143a 420-46-2 C 2 

### H 3 

### F 3 

### 3,800

### 5 Table B Global Warming Potentials (GWP) Greenhouse Gas

(a) Chemical Abstract Service Number 1 

### (b) Chemical Formula

(c) GWP

(d) 12. HFC-152 624–72–6 CH 2 

### FCH 2 

### F 53 13. HFC-152a 75-37-6 CH 3 

### CHF 2 

### 140 14. HFC-161 353–36–6 CH 3 

### CH 2 

### F 12 15. HFC-227ea 431-89-0 C 3 

### HF 7 

### 2,900 16. HFC-236cb 677–56–5 CH 2 

### FCF 2 

### CF 3 

### 1,340 17. HFC-236ea 431-63-0 CHF 2 

### CHFCF 3 

### 1,370 18. HFC-236fa 690-39-1 C 3 

### H 2 

### F 6 

### 6,300 19. HFC-245ca 679–86–7 C 3 

### H 3 

### F 5 

### 560 20. HFC-245fa 460–73–1 CHF 2 

### CH 2 

### CF 3 

### 1,030 21. HFC-365mfc 406–58–6 CH 3 

### CF 2 

### CH 2 

### CF 3 

### 794 22. HFC-43-10mee 138495-42-8 CF 3 

### CFHCFHCF 2 

### CF 3 

### 1,300 23. Sulfur hexafluoride 2551-62-4 SF 6 

### 23,900 24. Trifluoromethyl sulphur pentafluoride 373-80-8 SF 5 

### CF 3 

### 17,700

25. Nitrogen trifluoride 7783–54–2 NF 3 

### 17,200 26. PFC-14 (Perfluoromethane) 75-73-0 CF 4 

### 6,500 27. PFC-116 (Perfluoroethane) 76-16-4 C 2 

### F 6 

### 9,200 28. PFC-218 (Perfluoropropane) 76-19-7 C 3 

### F 8 

### 7,000 29. Perfluorocyclopropane 931–91–9 C-C 3 

### F 6 

### 17,340 30. PFC-3-1-10 (Perfluorobutane) 355-25-9 C 4 

### F 10 

### 7,000 31. Perfluorocyclobutane 115-25-3 C-C 4 

### F 8 

### 8,700 32. PFC-4-1-12 (Perfluoropentane) 678-26-2 C 5 

### F 12 

### 7,500 33. PFC-5-1-14 (Perfluorohexane) 355-42-0 C 6 

### F 14 

### 7,400 34. PFC–9–1–18 306–94–5 C 10 

### F 18 

### 7,500 35. HCFE–235da2 (Isoflurane) 26675–46–7 CHF 2 

### OCHClCF 3 

### 350 36. HFE–43–10pccc (H–Galden 1040x) E1730133 CHF 2 

### OCF 2 

### OC 2 

### F 4 

### OCHF 2 

### 1,870

37. HFE–125 3822–68–2 CHF 2 

### OCF 3 

### 14,900 38. HFE–134 1691–17–4 CHF 2 

### OCHF 2 

### 6,320 39. HFE–143a 421–14–7 CH 3 

### OCF 3 

### 756 40. HFE–227ea 2356–62–9 CF 3 

### CHFOCF 3 

### 1,540 41. HFE–236ca12 (HG–10) 78522–47–1 CHF 2 

### OCF 2 

### OCHF 2 

### 2,800 42. HFE–236ea2 (Desflurane) 57041–67–5 CHF 2 

### OCHFCF 3 

### 989 43. HFE–236fa 20193–67–3 CF 3 

### CH 2 

### OCF 3 

### 487 44. HFE–245cb2 22410–44–2 CH 3 

### OCF 2 

### CF 3 

### 708 45. HFE–245fa1 84011–15–4 CHF 2 

### CH 2 

### OCF 3 

### 286 46. HFE–245fa2 1885–48–9 CHF 2 

### OCH 2 

### CF 3 

### 659 47. HFE–254cb2 425–88–7 CH 3 

### OCF 2 

### CHF 2 

### 359 48. HFE–263fb2 460–43–5 CF 3 

### CH 2 

### OCH 3 

### 11 49. HFE–329mcc2 67490–36–2 CF 3 

### CF 2 

### OCF 2 

### CHF 2 

### 919 50. HFE–338mcf2 156053–88–2 CF 3 

### CF 2 

### OCH 2 

### CF 3 

### 552 51 HFE–338pcc13 (HG–01) 188690–78–0 CHF 2 

### OCF 2 

### CF 2 

### OCHF 2 

### 1,500 52. HFE–347mcc3 28523–86–6 CH 3 

### OCF 2 

### CF 2 

### CF 3 

### 575 53. HFE–347mcf2 E1730135 CF 3 

### CF 2 

### OCH 2 

### CHF 2 

### 374 54. HFE–347pcf2 406–78–0 CHF 2 

### CF 2 

### OCH 2 

### CF 3 

### 580

### 6 Table B Global Warming Potentials (GWP) Greenhouse Gas

(a) Chemical Abstract Service Number 1 

### (b) Chemical Formula

(c) GWP

(d) 55. HFE–356mec3 382–34–3 CH 3 

### OCF 2 

### CHFCF 3 

### 101 56. HFE–356pcc3 160620–20–2 CH 3 

### OCF 2 

### CF 2 

### CHF 2 

### 110 57. HFE–356pcf2 E1730137 CHF 2 

### CH 2 

### OCF 2 

### CHF 2 

### 265 58. HFE–356pcf3 35042–99–0 CHF 2 

### OCH 2 

### CF 2 

### CHF 2 

### 502 59. HFE–365mcf3 378–16–5 CF 3 

### CF 2 

### CH 2 

### OCH 3 

### 11 60. HFE–374pc2 512–51–6 CH 3 

### CH 2 

### OCF 2 

### CHF 2 

### 557 61. HFE–449sl (HFE–7100) Chemical blend 163702–07–6 163702–08–7 C 4 

### F 9 

### OCH 3 

### (CF 3 

### ) 2 

### CFCF 2 

### OCH 3 

### 297

62. HFE–569sf2 (HFE–7200) Chemical blend 163702–05–4 163702–06–5 C 4 

### F 9 

### OC 2 

### H 5 

### (CF 3 

### ) 2 

### CFCF 2 

### OC 2 

### H 5 

### 59

63. Sevoflurane 28523–86–6 CH 2 

### FOCH(CF 3 

### ) 2 

### 345 64. HFE–356mm1 13171–18–1 (CF 3 

### ) 2 

### CHOCH 3 

### 27 65. HFE–338mmz1 26103–08–2 CHF 2 

### OCH(CF 3 

### ) 2 

### 380 66. (Octafluorotetramethylene) hydroxymethyl group NA X-(CF 2 

### ) 4 

### CH(OH)-X 73

67. HFE–347mmy1 22052–84–2 CH 3 

### OCF(CF 3 

### ) 2 

### 343 68. Bis (trifluoromethyl)-methanol 920–66–1 (CF 3 

### ) 2 

### CHOH 195 69. 2,2,3,3,3-pentafluoropropanol 422–05–9 CF 3 

### CF 2 

### CH 2 

### OH 42 70. PFPMIE NA CF 3 

### OCF(CF 3 

### )CF 2 

### OCF 2 

### OCF 3 

### 10,300

1 

### The Chemical Abstract Service or CAS numbers refer to the unique chemical abstracts service registry number assigned to a specific chemical, isomer or mixture of chemicals or isomers and recorded in the CAS chemical registry system by the Chem ical Abstracts Service, PO Box 3012, Columbus OH 42310, phone: 1

− 614

− 447

− 3600. Note: The GWPs in Table B are based upon the GWPs codified by the EPA at 40 CFR part 98, Subpart A, Table A-1, as of October 22, 2010.

SECTION 5. NR 407.02 (4) (b) (intro.) is amended to read:

NR 407.02 (4) (b) (intro.) A stationary source that directly emits, or has the potential to emit, 100

tpy or more of any air contaminant subject to regulation under the Act other than particulate matter

emissions . For particulate matter emissions , a stationary source is a major source if it has emits , or has the

potential to emit, 100 tpy of PM 10 

### emissions . The fugitive emissions of a stationary source may not be

considered in determining whether it is a major source for the purposes of this definition, unless the

source belongs to one of the following categories of stationary sources:

SECTION 6. NR 407.02 (8m) is created to read:

### 7 NR 407.02(8m) “Subject to regulation under the Act” has the meaning given in s. NR 405.02

(28m).

SECTION 7. A column heading in Table 3 of NR 407.05 is amended, a new table entry added in

alphabetical order, and footnotes added to read:

NR 407.05 (5) Table 3

Air Contaminant Name Sources of Regulation (See Footnotes Below) Chemical Abstract Service Number 7 Inclusion Level (lbs/yr unless otherwise noted ) Greenhouse gases 10 * 10,000 tpy on a carbon dioxide equivalent basis 9

9 

### Emissions of GHG on a carbon dioxide equivalent b asis shall be determined according to s. NR

405.07 (9) (b).

10 

### Federal greenhouse gases listed under 40 CFR Part 70.

SECTION 8. NR 407.075 is created to read:

NR 407.075 Greenhouse gases . Emissions of greenhouse gases at a stationary source shall only be

subject to regulation under the Act if, on or after July 1, 2011, the source emits or has the potential to emit

100,000 tpy or more of GHG on a carbon dioxide equivalent basis. For purposes of this section, emissions

of GHG on a carbon dioxide equivalent basis shall be determined according to s. NR 405.07 (9) (b).

SECTION 9. EFFECTIVE DATE. This rule shall take effect on the first day of the month following

publication in the Wisconsin administrative register as provided in s. 227.22 (2) (intro.), Stats.

### 8 SECTION 10. BOARD ADOPTION. This rule was appr oved and adopted by the State of Wisconsin

Natural Resour ces Board on _______________________.

Dated at Madison, Wisconsin _________________________________.

STATE OF WISCONSIN DEPARTMENT OF NATURAL RESOURCES

By__________________________________ Cathy Stepp, Secretary

(SEAL)

### State of Wisconsin 

## CORRESPONDENCE/MEMORANDUM

DATE: March 18, 2011 FILE REF: 4530

TO: Natural Resources Board Members

FROM: Cathy Stepp, Secretary

SUBJECT: Background memo on request for adoption of Order AM-17-10, proposed rules affecting NR 400, 405 and 407, pertaining to major source permit thresholds for sources of greenhouse gas emissions.

Why is this rule being proposed? On May 13, 2010, the U. S. Environmental Protection Agency, (EPA) set greenhouse gas (GHG) thresholds and deadlines in rules generally referred to as the GHG Tailoring Rule to define when New Source Review Prevention of Significant Deterioration and Title V operating permits are required for new and existing industrial sources. This action was necessary because without it, the EPA’s emission standard for GHG for motor vehicles promulgated on April 1, 2010 would have had the unintended effect of subjecting literally tens of thousands of sources acr oss the country to some of the most complex air permit and emission control regulations.

However, in order for Wisconsin sources to benefit from EPA's policy to limit applicability of air permit and emission control regulations for GHG, revisions to the Wisconsin administrative code, consistent with the federal Tailoring Rule, were necessary by Ja nuary 2, 2011 when the EPA emission standard for GHG for motor vehicles became effective. This was accomplished on a temporary basis by the Board's adoption of emergency rules in Board Order AM- 48-10(E). The rules proposed for adoption here are identical to those emergency rules currently in e ffect, and are necessary to make them permanent.

The series of events leading to this proposal began with an Apri1, 2007 Supreme Court decision. In Massachusetts v. EPA , 549 US 497, the Supreme Court found that GHG are air pollutants covered by the Clean Air Act and directed the EPA to make a fi nding as to whether emissions of these gases from new motor vehicles cause or contribute to air pollution which may be reasonably anticipated to endanger public health or welfare. On December 7, 2009 EPA made their official finding, referred to as the “endangerment finding” establishing th e prerequisite to regulating GHG emissions from motor vehicles. Subsequent to this finding, the EPA and US DOT finalized regulations on April 1, 2010 establishing standards for GHG emissions from new light duty motor vehicles, starting with model year 2012. (Additional information on the endangerment finding and motor vehicle regulation can be found at: http://www.epa.gov/climatechange/endangerment.html & http://www.epa.gov/oms/climate/regulations.htm )

The combined effect of the Supreme Court decision a nd the finalized motor vehicle rule adds GHG to the list of pollutants that are regulated under the Clean Ai r Act. This in turn subjects stationary sources (i.e., electric utilities, factories, small business, etc.) to th e prevention of significant deterioration (PSD) & Title V permitting programs if their GHG emissions exceed established threshold amounts.

Prior to the series of federal actions described above , the Title V program applied to sources that emit or have the potential to emit 100 tons per year of crite ria pollutants, while the PSD program applied to sources in certain categories at a 100 tons per year leve l and to other sources at a 250 tons per year level. Sources regulated under the PSD program also had thr esholds that determined what was a significant increase in emissions for new projects at the source that would trigger a review of control requirements. These significant increase thresholds for pollutant s previously regulated under PSD ranged from 1200 pounds per year (lead) to 100 tons per year (carbon monoxide). No significance level for GHG previously existed under the PSD program.

### 2 EPA recognized it as unrealistic to apply these thres holds to sources of GHG for two primary reasons. First, carbon dioxide, a prevalent GHG, is emitted in amounts that are orders of magnitude higher than criteria pollutants such as particulate matter and su lfur dioxide. Applying these thresholds to sources of carbon dioxide emissions would bring literally hundreds of thousands, maybe millions, of sources into the PSD program nationwide forcing state agencies to process permits in numbers that far exceed what their current administrative resources could accommodate. Second, the combined emissions from the vast majority of these sources make up a small percen tage of the total. Regulating these sources under programs designed to control emissions from sourc es such as electric utilities, large manufactures and foundries would be highly ineffective and resu lt in little or no environmental benefit.

In order to prevent this from happening, EPA issu ed on June 3, 2010, a regulation known as the GHG Tailoring Rule. This rule establishes a GHG emissi on applicability threshold for the PSD and Title V programs at 100,000 tons per year and establishes a th reshold for what will be considered a significant increase in GHG emissions at 75,000 tons per year. In addition, this regulati on phases in PSD and Title V requirements in two steps.

The primary issue being addressed by this rule is to ma ke Wisconsin consistent w ith federal regulations in order to prevent the unintended a pplicability of the Title V and PSD program to small sources of GHG emissions in Wisconsin.

The following table shows the difference between the current thresholds in Wisconsin and the finalized thresholds for GHG under the federal tailoring rule. If Wisconsin does not revise its regulations, sources that emit between 100 and 100,000 tons per year GHG w ill be subject to legal uncertainty and potentially complex control determinations. In addition, thousan ds of sources which did not require a Title V permit before will now require one. The administrative burden for each of these programs is extremely high for both the permittee and the DNR since most of these pe rmittees are not used to being regulated under the Clean Air Act.

Comparison of GHG Thresholds

Current WI Thresholds Finalized Thresholds under the Federal Tailoring Rule

PSD Major Source Thresholds 100 and 250 tpy 100,000 tpy

PSD Major Modification Significance level 0 tpy increase 75,000 tpy increase

Title V permit threshold 100 tpy 100,000 tpy

Summary of the Rules The rule proposes to:

• Define greenhouse gases as the six pollutants liste d in the endangerment finding (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride);

• Define how to calculate carbon dioxide equivalency for the six pollutants;

• Define a major source of GHG emissions at 100,000 tons per year on a carbon dioxide equivalent basis;

• Define a significance level for PSD permitting at 75, 000 tons per year on a carbon dioxide equivalent basis;

• Establish a two step phased-in implementation schedule;

### 3 • Define an inclusion level for emission sources that will be included in a Title V permit; and

• Establish the global warming potential for the greenhouse gases being regulated.

The first five bullets summarize requirements identical to federal regulations. The last two however are not explicitly established in the federal tailori ng regulation and warrant further explanation.

Defining an inclusion level for emission sources that will be covered by a Title V permit. It is necessary to propose an inclusion level for smaller GHG emitting units at sources subject to Title V permitting requirements as it is the sum of GHG emissions from th ese smaller sources that are compared to the major source threshold being proposed. Existing inclusion levels in Wisc onsin’s Title V rules for other pollutants are generally set at 10 percent of a signifi cance level applicable to the pollutant of concern. With the exception of nitrous oxides, this order pr oposes to establish the inclusion level for the other greenhouse gases at 10 percent of the PSD majo r source threshold, or 10,000 tons of CO 2 

### e.

An inclusion level for nitrous oxide already exists in Wisconsin’s Title V rules, as it is regulated in Wisconsin as a hazardous air contaminant. The current level is lower than what would be established under this order so there is no need to revise it for greenhouse gas regulation.

Establishing the global warming potential for the greenhouse gases being regulated. It is necessary to propose the global warming potential (GWP) for the greenhouse gases being regulated as it is an essential component of how the carbon dioxide equivalency is cal culated which in turn determines whether or not a source is subject to regulation. In the federal tailoring rule, EPA applies the GWP values from the Mandatory Greenhouse Gas Reporting rule by reference to Table A-1 in Subpart A of 40 CFR Part 98, in its definition of carbon dioxide equivalency, omitti ng the specific GWP values themselves. This order proposes to establish GWP values directly in the rule, using the same EPA values in Table A-1 to 40 CFR Subpart 98. (See Table B in Section 4 of the proposed order)

How does this proposal affect existing policy? This proposal modifies existing policy by setting the major source threshold for sources of GHG emissions at 100,000 ton per year on a carbon dioxide equi valent basis rather than at 100 and 250 tons per year. It also increases the significance threshold for subjecting modifications to the PSD permitting program from 0 (any increase) to 75,000 tons of GHG per year on a carbon dioxide equivalent basis. In addition it establishes a phased-in implementation schedule.

January 2, 2011 – June 30, 2011

• Only sources currently subject to the PSD permitting program (i.e., those that are newly-constructed or modified in a way that significantly increases em issions of a pollutant other than GHGs) would be subject to permitting requirements for their GHG emissions under PSD.

• For these projects, only GHG increases of 75,000 tpy or more of total GHG, on a carbon dioxide equivalent basis, would need to determine the Best Available Control Technology for their GHG emissions.

• Similarly for the Title V operating permit program, only sources currently subject to the program (i.e., newly constructed or existing major sources for a pollu tant other than GHG) would be subject to Title V requirements for GHG.

• During this time, no sources would be subject to Cl ean Air Act permitting requirements due solely to GHG emissions.

July 1, 2011 and after

• PSD permitting requirements will cover for the first time new construction projects that emit GHG emissions of at least 100,000 tpy even if they do not exceed the permitting thresholds for any other pollutant. Modifications at existing facilities that increase GHG emissions by at least 75,000 tpy will

### 4 be subject to permitting requirements, even if th ey do not significantly increase emissions of any other pollutant.

• Title V operating permit requirements will, for the first time, apply to sources based on their GHG emissions even if they would not apply based on emissions of any other pollutant. Facilities that emit at least 100,000 tpy on a carbon dioxide equivale nt basis will be subject to Title V permitting requirements.

Hearing Synopsis
The Department held one hearing on the proposed rul es on January 21, 2011 in Madison. The hearing was conducted by Margaret Hoefer of DNR Legal Services . Andrew Stewart, Permit and Stationary Source Section Chief provided an overview of the proposed rule. Four people attended the hearing. Two registering as interests may appear and two not in dicting a position. No oral or written comments were submitted at the hearing.

Written comment was received from Alliant Energy re questing that language in a proposed footnote be more definitive and be established as enforceable rule requirements. Specifically, Alliant Energy strongly believes that specific provisions be included in the rule that would make this proposal no longer effective in the event that the underlying federal regulation wo uld be vacated or repealed. In addition, Alliant Energy recommends this proposal impose a requirement on the Department to revise its rules within six months of any action by EPA to repeal its rules, or any change to the federal regulation resulting from litigation or congressional action, in order to main tain consistency with the federal regulations.

No change is being made in response to this co mment. The Department is aware of the significant concern the public has with the continued uncertain ty of greenhouse gas regulation under the Clean Air Act and acknowledges this concern by including the following footnote in the rule:

Note : The department intends to regulate GHG cons istent with the 40 CFR 51.166 (June 3, 2010). In the event of litigation or congressional actio n which impacts the federal regulations, the department will commence rulemaking to remai n consistent with the resulting federal regulations.

The Department does not believe it is appropriate to include provisions in the rule that automatically abdicates its authority in response to action at the fe deral level or imposes required actions on itself. The Department is committed, to act quickly to address this type of situation, likely by using emergency rule procedures to ensure that Wisconsin’s air permitting program is consistent with federal requirements.

Minor changes and corrections have been made to the proposal in response to Legislative Council Rules Clearinghouse comments concerning Form, Style and Place ment in Administrative Code and Adequacy of References to Related statutes, Rules and Fo rms. Two comments regarding Clarity, Grammar, Punctuation and Use of Plain Language made by the Clearinghouse were not accepted for the following

reasons.

Comment asking whether it would be more appropr iate to change definition of GHG from “greenhouse gases” to “greenhouse gas”. The plural form of gases is more appropriate as the term GHG or greenhouse gases refers to 70 individual gases in this proposal.

Comment asking whether it is possible to define the term “physical change” in the proposal. No definition is being proposed as the terms literal meaning is applie d in practice. A list of physical changes that are excluded from being used in this proposal currently exists in s. NR 405.02(21)(b).

### 5 Information on environmental analysis. Under s. NR 150.03(3), Wis. Adm. Code, an environmen tal 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 does not significantly affect energy usage, and normally does not involve unresolved conflicts in the use of available resources.

Final Regulatory Flexibility Analysis.
The proposed rule does not have the potential to ha ve a significant impact on a substantial number of small sources. The purpose of the rule is to limit applicability of New Source Review construction and Title V operation permits and cont rol requirements to major sources of greenhouse gas pollution.Form 1100-001 

### NATURAL RESOURCES BOARD AGENDA ITEM Item No.

____________ (R 2/11)

SUBJECT: Request adoption of Board Order AM-17-10, proposed rules affecting chapters NR 400, 405 and 407 pertaining to major source thresholds for sources of greenhouse gas emissions.

FOR: APRIL 2011 BOARD MEETING

TO BE PRESENTED BY / TITLE: Andrew Stewart, Chief, Permits & Stat ionary Source Modeling, Bureau of Air Management

SUMMARY: On May 13, 2010, US EPA set greenhouse gas (GHG) thresholds and dead lines in rules generally referred to as the GHG Tailoring Rule to define when New Source Review Prevention of Signific ant Deterioration and Title V operat ing permits are required for ne w and existing industrial sources. This action was necessary because without it, the EPA’s emission standard for GHG for motor vehicl es promulgated on April 1, 2010 would have had the unintended effect of s ubjecting literally tens of thousands of sources across t he country to some of the most complex ai r permit and emission control regulations.

However, in order for Wisconsin sources to benefit from EPA' s policy to limit applicability of air permit and emission control regulations for GHG, revisions to the Wisconsin administrative code, consist ent with the federal Tailoring Rule, were necessary by January 2, 2011 when the EPA emission standard for GHG for motor vehicles became effective. This was accomplished on a temporary basis by the Board's adoption of emergency rules in Board Order AM-48-10(e). The rules proposed for adoption here are identical to those emergency rules currently in effect, and are necessary to make them permanent.

The Natural Resources Board authorized hol ding public hearings at the December 2010 meeting. One hearing was held on January 21

, 2011 in Madison. No comment was made at t he hearing which was attended by four people. Written comment was received from Allian t Energy requesting that language in a proposed footnote be more definitiv e and be established as code requirements. No change is being made in response to that comment. Minor changes and corre ctions have been made in response to Legislative Council Rules Clearinghouse comments.

While the Department does not antic ipate any controversy with this proposal, it is aware of the signific ant concern the public has with the continued uncertainty of greenhouse gas regulation under the Clean Air Act.

RECOMMENDATION: That the Board adopt Order AM-17-10.

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:

_______________________________________________________________ ________________________ Bureau Director, John H. Melby, Jr Date

_______________________________________________________________ ________________________ Administrator, Patrick Stevens Date

_______________________________________________________________ ________________________ Secretary, Cathy Stepp Date

cc: Board Liaison - AD/8 Linda Haddix - LS/8 Marney Hoefer - LS/8 R. Eckdale - AM/7STAFF REVIEW - DNR BOARD AGENDA ITEM

REMINDER

Have the following questions been answered under the summary section of this form?

- -Why is the rule needed? - -What are t he significant changes? - -What are the key issues/controversies? - -What was the last action of the Board?

LIST OF ATTACHED REFERENCE MATERI AL REQUIRED FOR RULE PROPOSALS:

Hearing authorization: Final adoption:

Background memo (if needed)* Background Memo (if needed)* Fiscal Estimate Response Summary Environmental Assessment (if needed) Fiscal Estimate Rule Environmental Assessment (if needed) Rule

*If all the questions listed in the REMINDER section above c an be adequately summarized on the Green Sheet (and a second sheet if needed), the Background Memo may be omitted.

Unit Reviewer Date Comments Management and Budget

Legal Services Marney Hoefer

Linda Haddix

Other (if applicable)