BOARD MEETING DATE: July 13, 2007
AGENDA NO. 26

PROPOSAL:

Update on Permit Streamlining Task Force Activities and Status Report of Recent Recommendations

SYNOPSIS:

This report provides the Board with an update on the status of activities of the Permit Streamlining Task Force (PSTF). These include efforts undertaken to review and evaluate various permitting steps and additional permit streamlining recommendations developed by the PSTF members and AQMD staff. The purpose of these additional recommendations is to further enhance permitting efficiency and customer service. Also included in this report is information related to the criteria to better define permit application backlog. The AQMD staff, along with PSTF members, will continue to implement new recommendations and examine ways to further enhance the AQMD's permitting program.

RECOMMENDED ACTION:

1. Endorse ongoing efforts by the PSTF and AQMD staff to prioritize and implement the newest set of permit streamlining recommendations during FY 2007-08, reporting semi-annual progress updates to the Stationary Source Committee; and
2. Receive and file report.

Barry R. Wallerstein, D.Env.
Executive Officer

I - Background

Initial Permit Streamlining Efforts

AQMD has been a pioneer in developing and implementing a wide range of permit streamlining measures. In the early 1990s, the AQMD developed several innovative measures to promote permit streamlining and other customer service programs. Some of these measures were subsequently incorporated into state law (California Health and Safety Code Section 42320 et seq) and made mandatory for state-wide implementation. In 1998 Governing Board Chairman Dr. William Burke announced a new Permit Streamlining Initiative to improve permitting efficiency. Shortly thereafter, in mid-1998, the Permit Streamlining Task Force (PSTF) was formed and as part of Chairman Burke’s Permit Streamlining initiative, it was directed to develop recommendations to expedite permitting and improve customer service for the businesses regulated by AQMD. PSTF members included Governing Board members and representatives from industry, local government, consultants, and environmental groups. Attachment #1 provides a listing of PSTF members as well as others who have participated and provided input in the PSTF meetings and discussions. (There has been minimal participation by environmental groups and limited participation by small business representatives).

At the same time, in order to facilitate and implement permit streamlining and to coordinate AQMD staff’s work with the PSTF, AQMD Executive Officer, Dr. Barry Wallerstein created the Permit Streamlining Ombudsman position, appointed Mohsen Nazemi to that position and formed a Permit Streamlining Team.

The PSTF discussed and evaluated suggestions from individual members, AQMD staff and other public members and held several meetings and brainstorming sessions with staff & businesses. An independent contractor was also hired to conduct a study of AQMD’s permitting program. As a result, a Permit Streamlining Report with 37 specific recommendations was prepared and was presented to and approved by the Governing Board in 1999. AQMD staff began implementation of these measures in early 2000.

These recommendations were developed in four basic areas and included measures to:

• Reduce steps required to issue permits,
• Improve communications internally and externally,
• Optimize permit structure and systems, and
• Enhance management and organizational effectiveness.

A summary of these recommendations is shown in Attachment #2.

II – Recent Activities of the Permit Streamlining Task Force

Permit Streamlining Task Force Reconvenes

As per Dr. Wallerstein’s recommendation, the PSTF was reconvened in 2005 and resumed discussions to examine, evaluate, identify and recommend further measures to improve and streamline permitting. As part of their efforts, PSTF and AQMD staff have engaged in various activities and discussions and completed the following:

• PSTF formed a sub-committee to be able to analyze and discuss various aspects of permitting in more detail to identify areas of permitting which can be enhanced;
• The PSTF and the sub-committee participated in a dozen meetings since the PSTF was reconvened to evaluate and examine all ideas and suggestions and maintained a running list of all ideas presented at these meetings;
• AQMD staff held two half-day sessions of permit processing walkthroughs to explain various steps in the permitting process and learn from PSTF members and other participants their business needs and concerns and to identify areas where further streamlining is feasible and appropriate;
• PSTF held a case study to use a few actual permitting projects which have already undergone permitting to better define areas which can be further enhanced to reduce the amount of time necessary to process permits in the future; and,
• As per the Governing Board’s and Dr. Wallerstein’s direction and as part of the June 2006 Rule 219 amendments, PSTF held a review session to evaluate the appropriateness of whether or not certain spray coating equipment should be exempt from permit requirements.

As a result of the above efforts the PSTF and AQMD staff developed a set of additional permit streamlining recommendations to further improve the permitting process. These latest recommendations, some of which have already been implemented, are intended to further enhance AQMD’s permit program in basic areas of customer service, specific permitting enhancements, the Title V program, organizational effectiveness and other areas. The PSTF members also felt that it would be important to provide the Governing Board with a progress report and status update of any further recommendations and efficiency improvements related to permit streamlining. These latest recommendations are discussed in a later section.

Designation of $2 Million for Permit Streamlining

One of the more significant recommendations of the PSTF members was to work with AQMD staff and the Governing Board to provide additional funding for permit streamlining to augment permitting resources and to further improve permitting efficiencies. The timing of this effort was such that it coincided with the adoption of AQMD’s FY 2006-07 Budget.

During the AQMD’s FY 2006-07 Budget adoption process the business community (specifically the California Council for Environmental and Economic Balance (CCEEB), Regulatory Flexability Group, Southern California Air Quality Alliance, Western States Petroleum Association (WSPA) and California Small Business Alliance) provided suggestions to AQMD to improve permitting efficiencies. These suggestions were presented to the AQMD Budget Advisory Committee and the PSTF and discussed with AQMD’s Executive Officer and permit streamlining staff.

On June 9, 2006 the AQMD Governing Board adopted the FY 2006-07 Budget. As part of the AQMD's FY 2006-07 Budget, the Governing Board approved a
$2 million fund specifically designated for Permit Streamlining.

To solicit ideas for expenditure of the $2 million designated by the Governing Board for permit streamlining, the AQMD staff consulted with members of the PSTF and other interested parties. As a result, there were three basic areas identified for expenditure of the funds which would benefit permit streamlining and improve permitting efficiencies. These areas include:

• Staff Enhancement/Augmentation
• Systems Enhancements
• Staff Training

Most of these recommendations were suggestions that were developed by the PSTF sub-committee during the previous meetings and were part of the running list of permit streamlining suggestions from PSTF. The result of the discussions and recommendations developed by PSTF and AQMD staff was then summarized and presented to the AQMD Governing Board.

On November 3, 2006 AQMD staff proposed, and the Governing Board approved, a set of recommendations for expenditure of the $2 million allocated for permit streamlining. Upon the Governing Board’s approval of the expenditures, AQMD staff began the implementation of the recommendations. Attachment #3 provides a summary of the recommendations for expenditure of the $2 million permit streamlining allocations as approved by the Governing Board. Attachment #4 provides a breakdown of the $2 million permit streamlining allocation fund associated with each one of the recommendations as approved by the Governing Board on November 3, 2006.

Recommended Definition for Permit Backlog

Based on the Governing Board’s and Dr. Wallerstein’s direction, the AQMD staff in coordination with PSTF members developed a definition for permit application backlog. The AQMD typically receives about 10,000 permit applications and processes about 10,000 permits each year. The permitting process is a two-step process. The first step is issuance of a Permit to Construct (PC), which is required before construction of new, modified or relocated equipment. The second step is a Permit to Operate (PO) which is issued after a PC is issued, equipment is constructed and inspected and tested. To streamline permitting, AQMD has implemented a policy that, in certain cases for permitting of standard, off-the-shelf type of equipment, a one-step permit called PC/PO is issued.

Although AQMD issues about 10,000 permits each year, since some of the permits for major and complex equipment are PCs, these applications continue to be a part of AQMD’s application inventory awaiting PO issuance while the equipment is constructed and tested. This is in addition to the approximately 10,000 new applications received each year. At this time AQMD has an application inventory of a little less than 7,000 applications.

In general, the application inventory consists of the following types and percentage of applications:

*Based on Total Application Inventory in April 2007

As noted in discussions during a recent Governing Board meeting, since AQMD receives about 800-1,000 new applications each month, not all 7,000 applications should be considered as “backlog”. Therefore, as per the Governing Board’s and Dr. Wallerstein’s direction, the AQMD staff worked with PSTF and developed a definition to identify which group of applications should be considered as backlog. The backlog was defined based on the type of application and how long the application has been in process of permitting. Attachment #5 provides a detailed description of the recommended backlog definition. Based on this new definition at this time, less than half (about 45%) of the total application inventory (or about 3,200 applications) is considered to be specified as backlog. Attachment #6 provides a comparison and detailed description of the numbers and types of applications in AQMD’s total application inventory and the specified application backlog.

Although one reason for having a backlog is due to limited engineering staff resources, there are a series of other reasons why some of the applications cannot be more readily processed. The most common reasons for not being able to process some of these applications are as follows:

Causes of Potential Delays in Permit

Evaluations and Final Actions

• Awaiting additional information pursuant to letter(s) sent to applicant requesting specific additional information
• Awaiting CEQA determination or certification by lead agency (Notice of Exemption or CEQA Document Certification which typically happens when the project may have an environmental impact)
• Awaiting verification of emissions and vendor or manufacturer guarantees
• Awaiting determination of Best Available Control Technology (BACT), if AQMD and applicant disagree on what BACT is
• Awaiting submittal of any required Emission Reduction Credits (ERCs) for offsets
• Awaiting completion of air dispersion modeling and health risk assessment
• Awaiting completion of 30-day public notice period, public meeting and or public comments
• Awaiting EPA review and comments for Title V permits
• Awaiting Statewide Compliance certification for a major stationary source prior to issuance of a PC
• Awaiting settlements for Notices of Violation and Notices to Comply
• Finance hold due to non-payment of fees or delinquent accounts
• Awaiting start or completion of equipment construction to be able to complete processing of final PO
• Awaiting completion of source tests and reports review by Source Testing Division to complete processing of PO
• For RECLAIM facilities, awaiting acquisition and transfer of RECLAIM Trading Credits (RTCs)
• Application on hold as per applicant’s request

III - Improvements in Permit Processing Efficiencies

As a result of the PSTF and AQMD staff efforts, efficiency in permitting has significantly improved over the years. Below is a comparison of the available engineering resources and applications processed in 1989-90 time frame compared to 2005-2006 time frames:

Engineering Resources vs. Applications Processed

As can be seen above, although the engineering staffing levels and total applications processed per year have decreased by almost 40% and 13%, respectively, the number of applications processed per year per engineer has actually increased by 47%. This is despite having more stringent and complex local, state, and federal toxics and criteria pollutant rules and regulations in place and adoption and implementation of new programs such as RECLAIM, Title V and public notification which take significantly more time for processing of permits.

As a result of the permit streamlining efforts of AQMD staff and the PSTF, and due to these improvements, the total application inventory that is pending permit issuance at AQMD has also significantly dropped over the years. Below is a comparison of the total number of applications pending permit issuance in 1990 compared to 2000 and 2006.

Applications Pending Permits
1990 to Present

As can be seen above, and although engineering staffing levels have been reduced by 40% since 1990, the number of applications pending permits have been reduced by 70% since 1990. Also the number of applications pending permit issuance has been reduced by more than 37% since 2000. The progress made in improving the permit processing efficiency is attributed to the efforts of PSTF members and AQMD staff through development and implementation of numerous permit streamlining measures.

IV – Further Permit Streamlining Recommendations

As indicated earlier, the PSTF was reconvened in 2005 and has held more than a dozen meetings to evaluate and discuss permit streamlining opportunities. In addition, AQMD staff has, in consultation with PSTF, reviewed and analyzed the permitting process to further optimize permitting efficiency. Based on these efforts, the following actions have been taken.

Permit Staff and Workload Reassignments

AQMD staff conducted a detailed and thorough evaluation of the engineering staffing and workloads in each of the five permitting teams in the Engineering and Compliance Office. This analysis consisted of evaluation of:

• The number of engineers and first and second level supervisory staff and the ratio of number of engineers per senior engineer and supervising engineer in each team, respectively,
• The number and type of applications assigned to each engineer in each team,
• The average time it has taken to process each type of application by engineers in each team, and,
• The projected amount of time that it will take to process the application workload assigned to engineers in each team.

Based on the result of the above study, the AQMD permitting staff and application workload for each permitting team were adjusted to reflect a better balance between engineer to supervisory ratio and application assignments per permitting team and per permitting engineer. Attachment #7 shows the results of this evaluation prior to and after the reassignment of staff and application workload.

In addition to the staffing and workload reassignments, the two largest teams in the Engineering and Compliance Office, which were both integrated with permitting and enforcement responsibilities in the same team and under the same Manager, were reorganized. These two teams were the Refinery and Energy Team and the Toxics and Waste Management Team. The reorganization of these teams divided permitting and enforcement in these two teams so that one Manager can focus on engineering and permitting activities and another Manager can focus on enforcement and compliance activities.

The above changes in the AQMD permitting staff and workload assignment has resulted in a much more balanced and focused effort on processing of permits and has caused the permitting process to be more efficient.

Reprioritization of the Permit Applications

Based on the discussions between PSTF members and AQMD staff, and in an effort to better respond to businesses’ and AQMD’s needs, application processing was reprioritized. The reprioritization took into account several criteria, some of which include expediting processing of:

• Oldest applications,
• Applications associated with installation of air pollution control equipment,
• Applications for PCs,
• Applications for POs in cases where equipment has been installed or modified without a prior PC,
• Applications for businesses which pay the optional higher fees for processing their applications on weekends and during overtime, and,
• Applications for Emission Reduction Credits

Attachment #8 provides a more detailed listing of the revised priorities associated with each type of application. AQMD staff, however, still recognizes that from time to time there may be a need to provide priority exceptions due to permits that need to be processed, for example, under orders by the Hearing Board, Courts or other administering agencies and based on businesses’ own priorities. These requests will obviously be evaluated and considered on a case-by-case basis. However, the general concept is to prioritize applications in order to reduce the inventory of older applications and to meet businesses’ needs to obtain permits so they can initiate construction of new equipment or modification of existing equipment.

Latest Recommendation by the PSTF

As a result of the discussions during several brainstorming sessions, case studies and PSTF subcommittee meetings since the PSTF was reconvened, the PSTF members and AQMD staff have developed a list of about 40 additional permit streamlining recommendations. These latest additional recommendations are grouped into four areas consisting of Customer Service, Permitting Enhancements, Title V, and other General recommendations.

Attachment #9 provides a detailed listing of these latest permit streamlining recommendations. Following are some examples of these recommendations:

• Customer Service
  • Better use of the web to access permitting information
  • Enhancements to application forms and permitting programs
  • Creation of permit processing templates and posting them on the web
  • Updating engineering policies and procedures
  • Formation of a Permit Application Review Committee

• Permitting Enhancements
  • Augmentation of permitting resources
  • Higher priorities for processing of applications for air pollution control equipment
  • Funding of permit engineer positions by individual companies
  • Development of management reports to track older applications
  • Development of additional categories of Streamlined Standard Permits
  • Increased staff training and guidance
  • Simplified permitting for applications with no increase in emissions

• Title V Program
  • Change Title V major source thresholds to reflect the change in ozone non-attainment status if a bump up to “Extreme Non-attainment” is not requested
  • Update Title V Guidance Document accessible through the web
  • Creation of frequently asked questions (FAQs) and posting them on the web

• Other General
  • Posting of Engineering Policies and Procedures on the web
  • Improve the use and functionality of Internet Permitting Page for engineers
  • Exclusion of applications that are on hold by applicants from the “backlog”

V – Conclusions

As indicated earlier, implementation of various permit streamlining measures has resulted in significant improvements in permitting efficiencies over the past several years. These improvements are due to the hard work and continuous efforts of PSTF members and AQMD staff. AQMD staff has begun implementation of the above-described latest additional permit streamlining recommendations and is at various stages of completion with some of the recommendations already fully implemented. The PSTF and AQMD staff recommend the Board endorse their intent to continue their efforts to implement the new recommendations as well as examine ways to further enhance permitting efficiencies and provide better customer service to businesses and the public.

To this end, AQMD staff recommends that:

1. The PSTF and AQMD staff work to prioritize and implement the newest set of permit streamlining recommendations during FY 2007-08; and
2. AQMD staff provide the Stationary Source Committee with semi-annual progress updates.

Attachments (DOC 222kb)