The EPA last week proposed to strengthen the primary National Ambient Air Quality Standard (NAAQS) for sulfur dioxide (SO2). The new rule is the first time EPA has tightened controls for SO2 since 1971.

Specifically, the EPA proposes to replace the existing annual and 24-hour primary SO2 standards with a new 1-hour SO2 standard and set a level between 50 and 100 parts per billion (ppb).  The proposed standard does not address the secondary SO2 standard, which the EPA is currently reviewing separately as part of a joint review of the welfare effects associated with SO2 and NO2 (expected to be completed in 2012).

The Clean Air Act requires EPA to set two types of national ambient air quality standards for “criteria” air pollutants. The primary standards protect public health, while secondary standards protect public welfare and the environment.

The rules are aimed at coal-fired power plants and other sources that produce SO2, such as industrial plants, locomotives, ships, and non-road equipment.

The proposed rule is the latest move by the current Administration to dramatically increase air quality regulations. Since taking office, the Obama Administration proposed mandatory greenhouse gas reporting regulations. In addition, the Administration issued proposed rules proposing to find that greenhouse gases endanger the public health and welfare, which could ultimately lead to the EPA regulating CO2 under the Clean Air Act. In addition, the EPA is currently reconsidering the 2008 8-hour ozone standard.

Hamilton Consulting will provide continuous updates on each of the proposed regulations.

Gov. Jim Doyle today vetoed AB 138, which would have removed the Governor’s authority to appoint the DNR Secretary and handed the authority to the Natural Resources Board. In his veto message, Gov. Doyle noted that the DNR Secretary is “an integral part of a Governor’s Cabinet, playing a regular and key role in interagency projects,” and that a Secretary appointed by the Governor “ensures a direct line of accountability for citizens concerned about the natural resources policy” of this state.

As we recently reported, it remains uncertain whether there will be enough enough votes (two-thirds majority) in each house to override the Governor’s veto.

The Wisconsin Policy Research Institute (WPRI) this week issued a study titled, “The Economics of Climate Change Proposals in Wisconsin,” which analyzes the costs associated with complying with the various policy recommendations contained in Wisconsin’s Governor’s Task Force on Global Warming Final Report.

The study predicts Wisconsin will lose 49,000 jobs over the next 11 years if all of the Task Force’s policies are adopted. This number may be a bit skewed because not all of the Task Force’s recommendations will be adopted, such as a state-specific cap-and-trade program. However, the study provides the most comprehensive analysis to date of the total costs associated with policies contained in the Governor’s Task Force Final Report.

Below are a few of the study’s major findings:

• Adopting a Low Carbon Fuel Standard, a policy aimed at prohibiting crude imported from Canada’s oil sands, would cost Wisconsin   $3.3 billion by 2020. Wisconsin receives a significant portion of its oil from Canada, which has the second largest crude oil reserve in the world.
• Adopting California’s Low Emission Vehicle standards would cost Wisconsinites $359 million in 2009 (assuming it is implemented that year).
• Amending Wisconsin’s current Renewable Portfolio Standard, which requires electric utilities to produce a certain percentage of electricity from renewable sources, would cost Wisconsin ratepayers $16.2 billion by 2025. Under current law, Wisconsin electric utilities are required to produce 10 percent of their energy from renewable sources by 2015. The Task Force’s Final Report recommends requiring utilities to meet the 10 percent goal by 2013, and then increases the goal to 20 percent by 2020 and 25 percent by 2025.

A final omnibus bill containing the Task Force’s recommendations is expected to be introduced in early December with public hearings commencing shortly thereafter.

The EPA yesterday announced that it sent to the White House its final endangerment finding. An endangerment finding paves the way for the EPA to regulate greenhouse gases under the Clean Air Act.

 In April, the EPA announced its findings (and technical support document) that greenhouse gases threaten the public health and welfare. EPA’s finding was in reaction to the U.S. Supreme Court’s decision, Massachusetts v. EPA. In that landmark decision, the Court found that greenhouse gases may be air pollutants covered under the Clean Air Act if the EPA Administrator determines that such emissions cause or contribute to air pollution and reasonably can be anticipated to endanger public health or welfare.

The EPA’s action could have an effect on the climate change legislation currently pending in Congress. If Congress does not enact climate change legislation, the EPA has announced that it will move forward with regulations that potentially could be much more stringent and harder to comply with than the currently drafted climate change legislation. This has led some larger utilities to call on Congress to pass federal climate change legislation. According to the Wall Street Journal, some power companies prefer a cap-and-trade program as opposed to EPA regulations because the former gives utilities greater flexibility. Some utilities also believe that a federal cap-and-trade legislation would be less costly to comply with than regulations under the Clean Air Act.

As we’ve previously reported, it’s not entirely certain that the Senate will be able to pass comprehensive climate change legislation this year due to other major pending issues, such as the health care legislation and annual agency spending bills. This kicks the controversial climate change legislation into an election year, which may make it difficult for the Senate to reach the necessary votes (60) to stave off a filibuster.

The Senate yesterday passed a measure that removes the Governor’s authority to appoint the Department of Natural Resources Secretary, handing the authority to those appointed to the Natural Resources Board. The Senate amended AB 138 to allow the Senate to confirm the Secretary after he or she is appointed by the Natural Resources Board.

Opponents argue that the bill provides less accountability by allowing unelected bureaucrats on the Natural Resources Board to decide who will run the influential agency. Critics note that even though the Natural Resources Board members are appointed by the Governor, they have staggered terms and therefore are not held accountable to the voters because a newly elected Governor has no authority to remove sitting Board members. Proponents of the bill counter that it takes the “politics” out of the DNR.

The bill’s ultimate fate is in question given Gov. Jim Doyle’s repeated threats to veto the bill. It takes two-thirds in each house to override the Governor’s veto. It remains to be seen whether there are enough votes in either house to sustain a veto override.