The statement of scope for this rule, SS 048-23 was approved by the Governor on July 28, 2023, published in Register No. 812A1 on August 7, 2023, and approved by the Natural Resources Board on September 27, 2023. This rule was approved by the Governor on insert date. ORDER OF THE STATE OF WISCONSIN NATURAL RESOURCES BOARD
REPEALING, RENUMBERING, AMENDING, AND CREATING RULES
The Wisconsin Natural Resources Board proposes an order to repeal NR 410.03 (1) (c), and (2) (o); to renumber and amend NR 410.03 (1) (a) 1., 2., 3., 4., 8., 9., and 10., (ae), (b) 1., 2., 3., 3m. and 4., (2) (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (L), (m), and (n); amend NR 410.03 (1) (a), and (e), and (2) (intro); and to create NR 410.03 (1) (a) 1. a. and b., 2. a. and b., 3. a. and b., 4. a. and b., 8. a. and b., 9. a. and b., 10. a. and b., (ae) 1. and 2., (b) 1. a. and b., 2. b., 3. b., 3m. a. and b., 4. a. and b., (2) (a) 1. and 2., (b) 1. and 2., (c) 1. and 2., (d) 1. and 2., (e) 1. and 2., (f) 1. and 2., (g) 1. and 2., (h) 2., (i) 1. and 2., (j) 1. and 2., (k) 1. and 2., (L) 1. and 2., (m) 1. and 2., (n) 1. and 2., and (p), (4) (c), (5), and (6) relating to revisions to fees for reviewing air pollution control construction permit applications and exemption determination requests and affecting small business. |
AM-10-23
Analysis Prepared by the Department of Natural Resources
1. Statute Interpreted: Sections 227.11 (2) (a), 285.11 (1) and (6), 285.14 (1) and 285.69 (1), Stats. 2. Statutory Authority: Sections 227.11 (2) (a), 285.11 (1) and (6), 285.14 (1), and 285.69 (1), Stats. 3. Explanation of Agency Authority:
Section 227.11 (2) (a), Stats., confers rulemaking authority to an agency where such rules are necessary to effectuate the purpose of existing statutory authority. The department is required under s. 285.11 (1), Stats., to promulgate and implement rules consistent with state air pollution statutes in ch. 285, Stats. Section 285.69 (1), Stats., authorizes the department to collect reasonable fees to fund the review of applications for, and issuance of, a construction permit for air pollution sources and for the review of a request for an exemption from the requirement to obtain an air pollution control permit. Section 285.11 (6), Stats., requires the department to prepare, develop and revise a state implementation plan (SIP) for the prevention, abatement and control of air pollution in the state. A control measure or strategy submitted by the department for inclusion in the SIP must be promulgated as a rule under s. 285.14 (1), Stats. 4. Related Statutes or Rules:
Pursuant to s. 285.69, Stats., ch. NR 410, Wis. Adm. Code, establishes requirements and procedures for the payment of fees by persons who are required to obtain construction permits for air contaminant sources or who request a determination of exemption from the requirement to obtain an air pollution control permit. Sections 285.61 and 285.66, Stats., and chs. NR 405, 406 and 408, Wis. Adm. Code, establish applicability, review requirements, and duration for construction permits. 5. Plain Language Analysis:
As required by the federal Clean Air Act (CAA), the department operates a new source review (NSR) construction permit program that applies to the construction, reconstruction, replacement, relocation, or modification of stationary sources that emit air contaminants. In most cases when a construction permit is required, a facility cannot construct or modify a source of air pollution before the construction permit is issued.
Since economic development relies on industry’s ability to quickly react to business opportunities and market changes, the department has long prioritized the timely issuance of construction permits and has introduced efficiencies whenever possible. For example, the department developed an online air pollution control permit database and implemented three registration permits, two general permits, several exemptions, and a plantwide applicability limit alternative for major sources. More recently, the department streamlined permit forms, created permit application checklists, automated certain applicable requirement determinations, standardized how federal standards are incorporated into permits, and introduced electronic signature and payment systems.
For the past several years, the construction permit program has experienced a significant deficit between its revenues and the expenses needed to operate the program. Several factors have contributed to this shortfall. Fees for construction permit reviews were last increased in January 2011 and have not kept pace with inflation and other costs. New federal air pollution regulations have increased the complexity of permit reviews over time, resulting in more time-consuming reviews. Additionally, air permit streamlining rules promulgated by the department in 2015 and 2020 in response to stakeholder requests created additional permit exemptions and other flexibilities requiring department action for which inadequate fees are collected.
Wisconsin’s construction permit program relies entirely on construction permit fees for its funding. Despite department efforts to downsize the program, cut expenses, and implement efficiencies, the revenue generated by these fees is no longer sufficient for the department to administer an effective construction permit program. The program account balance, which has been used to cover annual deficits, is expected to be exhausted by the end of fiscal year (FY) 2025. Increases in fees, along with other changes in the fee structure, are therefore necessary to ensure adequate funding for this program.
The department’s ability to accomplish core construction permitting activities is already significantly diminished, which is reflected in the permit program’s performance metrics. For example, permit issuance times, historically 3 to 4 months, were 7 to 9 months as of June 2024 and are expected to exceed 12 months by the end of 2024. More critically, it is increasingly difficult for the department to take timely action on permit requests important to economic development, such as those needed by utilities as they transition to cleaner energy generation while simultaneously facing increased demand. These adverse trends will continue unless the permitting program’s financial challenges are addressed.
To bring additional revenue to this account, this rule increases existing construction permit fees, creates several new fees, and adds an automatic adjustment factor to help revenues keep pace with increases in personnel costs over time. To mitigate the financial impact on permittees, the rule implements fee increases in two phases. The current and proposed fee amounts are shown in Appendix A.
This rule will reverse a decade-long decline in revenue, stabilize the construction permit account, and allow the department to gradually increase the construction permit program’s critically low staffing levels. Once implemented, the rule will essentially allow the program to operate in FY29 at its FY21 budgetary level, but with fewer staff (due to increases in per-staff costs over that period). This is expected to support a construction permitting program that can meet basic expectations and act on the more pressing permit requests from the regulated community. However, even after the fees in this rule are fully implemented, the permit program will be small, compared both to other states and its historical size, and remain considerably below its spending authority.
Decisions made in this rule to lessen the impact of the fee increases on applicants will constrain the program’s capacity to adapt, modernize and rebuild. The gradual increase in revenue following promulgation of this rule will allow staff to be added, but at a slow pace. This will limit the capacity of the program to undertake improvements, efficiencies, or activities like rulemakings that may be requested to streamline the program or address specific facility needs.
The size of the construction permit program deficit does not offer any alternatives to increases in permit fees. The department has implemented all available efficiencies to decrease program expenses without sacrificing the services most critical to the regulated community. No alternatives to the proposed fee changes are available for the department to address the construction permit program’s revenue deficit.
6. Summary of, and Comparison with, Existing or Proposed Federal Statutes and Regulations:
Section 110(a)(2)(E) of the CAA requires that each state has “adequate personnel, funding, and authority under State law” to carry out its State Implementation Plan (SIP), which includes the construction permit program. There are no existing or proposed federal regulations that mandate how states must fund their construction permit programs. As described in #8, state approaches to funding construction permit programs vary widely.
7. If Held, Summary of Comments Received During Preliminary Comment Period
and at Public Hearing on the Statement of Scope:
The Joint Committee for Review of Administrative Rules did not direct the department to hold a preliminary hearing or comment period on the statement of scope.
Following Natural Resources Board adoption of the statement of scope for this proposed rulemaking, the department held two informational sessions for stakeholders on November 9, 2023. The department also convened a technical advisory group (TAG) in accordance with s. 227.13, Stats., to serve in an advisory capacity on the proposed rulemaking. The TAG met twice during the department’s rule drafting phase and provided input that informed the initial fee revisions proposed in this rule. The department received additional feedback on this rule from several stakeholders during the economic impact comment period. That input, along with information gathered by the department in subsequent discussions with those commenters, informed additional changes in this rule. The more significant changes include:
— Adjustments to several of the proposed fee revisions.
— Phasing in the fee increases in two steps.
— Basing future automatic adjustments of fees on general wage adjustments, rather than inflation.
— Adding departmental reporting requirements related to this permit program.
