BOARD MEETING DATE: June 5, 2009
AGENDA NO. 38

PROPOSAL:

Amend Regulation III - Fees

SYNOPSIS:

Staff is proposing a limited number of amendments to Regulation III - Fees to better align program revenues with program costs. Other proposed amendments clarify rule provisions and have minor fee adjustments. Staff is also proposing administrative amendments that have no revenue impact. Staff is not proposing a CPI increase for this fiscal year.

COMMITTEE:

Stationary Source, April 17, 2009 and Administrative, May 8, 2009

RECOMMENDED ACTIONS:

Adopt the attached resolution:

1. Certifying the Notice of Exemption for Proposed Amended Rules 301 – Permitting and Associated Fees, 303 – Hearing Board Fees, 304 – Equipment, Materials and Ambient Air Analyses, 306 – Plan Fees, 307.1 – Alternative Fees for Air Toxics Emissions Inventory, 308 – On-Road Motor Vehicle Mitigation Options Fees, and Rule 313 – Authority to Adjust Fees and Due Dates.

2. Amending Rules 301 – Permitting and Associated Fees, 303 – Hearing Board Fees, 304 – Equipment, Materials and Ambient Air Analyses, 306 – Plan Fees, 307.1 – Alternative Fees for Air Toxics Emissions Inventory, 308 – On-Road Motor Vehicle Mitigation Options Fees, and Rule 313 – Authority to Adjust Fees and Due Dates.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Regulation III – Fees, establishes the fee rates and schedules associated with permitting, annual renewals, emissions and other activities that help fund most of AQMD's regulatory programs and services. Regulation III provides about 68% of all AQMD revenues. Staff is not proposing any overall (across-the-board) fee increase to Regulation III – Fees for the 2009/2010 fiscal year.

California Health and Safety Code Section 40500, et seq., established AQMD’s authority to adopt rules and regulations, including fee schedules intended to cover AQMD’s actual costs of cleaning the air. There are currently twelve rules within Regulation III - Fees that set fees and procedures in three major categories:

1. Permitting processing fees;
2. Annual fees; including Annual Permit Renewal and Annual Operating Emission fees for facilities that have the potential to emit or have emitted toxic or criteria air contaminants; and
3. Other District services including variances from the Hearing Board, compliance monitoring and testing such as source testing, review of emission control plans, registration programs, Rule 2202 plans etc.

California Health and Safety Code sections relating to the fees of the AQMD allow staff to align fees with the costs of services. The current proposal has eight recommendations to better align program revenues with program costs. Six of the eight recommendations slightly increase fees to better recover program costs and two reduce associated fees. Additional proposed amendments include clarifications, corrections, and no fee/negligible fee provisions.

Subsequent to the set hearing package, staff modified the proposed language in Rule 308 to better reflect current costs. The proposed fee for High AVR No-Fault inspections are lower than those originally proposed and will not be phased in over two years. These changes are highlighted by double underline and italicized strikethrough formatting.

Proposal
There is no overall (across-the-board) fee increase proposed for Regulation III – Fees. The amendments being considered focus on better aligning program revenues and costs for select categories and clarifying/correcting existing language in the rule. They include the following main recommendations (for a complete itemized list see Attachment A):

1. Establish a fee for voluntary expedited (emergency) review of Procedure 4 and 5 Plans for asbestos removal at fifty percent surcharge, to recover the cost of expedited emergency Procedure 4 and 5 Plan Evaluation requests which are responded to by staff on any unscheduled emergency basis;
2. Improve recovery of the cost of the initial Rule 2202 Employee Commute Reduction Program new Employee Transportation Coordinator training classes by increasing the fee to better recover training program costs;
3. Recover partially the costs for reviewing and enforcing of Smoke Management Plans, Burn Management Plans, Emergency Burn Plans and Post Burn Evaluation Reports which are mandatory pursuant to the provisions of Rule 444 as amended on November 7, 2008;
4. Cost Recovery fee for conducting High Average Vehicle Ridership (AVR) No-Fault Inspections requested by employers subject to Rule 2202;
5. Allow for the amendment of Employee Commute Reduction Programs (ECRP) that are alternative compliance option plans for parity with amendments allowed to Rule 2201 registrations;
6. Realigning the additional-day fee for Appeal petitions to establish parity with Group Variance additional-day fee petitions;
7. Establish new equipment categories for boilers fired on Landfill/Digester Gas; and
8. Reclassify “Plasma Arc Cutting” from the current higher fee Schedule C to the lower B1 fee schedule

Other proposals involve clarifications, corrections, and no fee or negligible fee changes. A complete listing of all of the proposals is detailed in the accompanying staff report. Table 1 below summarizes the preliminary estimated change in revenue for the above proposed amendments:

Table 1 - Summary of Estimated Cost Recovery Proposals

AQMP and Legal Mandates
The fee rules are not part of the AQMP. California Health and Safety Code §§ 40500 et seq. established the authority to “adopt fee schedules for the issuance of variances and permits to cover the reasonable cost of permitting, planning, enforcement, and monitoring related thereto,” and to assess fees for the approval of plans for the control of air contaminants and for regulatory programs affecting indirect and area sources (California Health and Safety Code §§ 40522 and 40522.5). California Health and Safety Code §§ 40500.1, 40510, 40510.5 and 40523 authorize AQMD to increase fees consistent with annual increases in the CPI.
 

CEQA
AQMD staff has reviewed the proposed amendments to Rules 301, 303, 304, 306, 307.1, 308, and 313, and because the proposed project involves the modification and structuring of charges by public agencies for the purpose of meeting operating expenses and financial reserve requirements, it is statutorily exempt from CEQA, pursuant to state CEQA Guidelines § 15273 – Rates, Tolls, Fares, and Charges. A Notice of Exemption will be filed with the county clerks immediately following adoption of the proposed project.
 

Socioeconomic Assessment
A socioeconomic assessment of the proposed amendments is included as an attachment (Attachment H) to this Board letter. The proposed amendments include nineteen (19) separate recommendations. Eight (8) of the these recommendations will have revenue impacts ranging from an estimated increase of $135,000 to an estimated decrease of $19,000 per year starting in FY 2009-10, while the remaining eleven (11) recommendations have minimal or no fiscal impacts. The costs of complying with the proposed amendments are very small compared to relative to industry output (less than 0.01%) and represent a small fraction of existing fee revenue (approximately 0.27%). The amount of AQMD fees paid by each industry is small relative to the industry’s economic output and the focus of the proposed changes to Regulation III is to better align program costs and revenues.
 

Resource Impacts
No additional resource impacts are expected.
 

Attachments (EXE, 938k)
A. Summary of Proposals
B. Abstract of FY 2009-10 Draft Budget and Work Program
C. Rule Development Process
D. Key Contacts
E. Resolution
F. Proposed Rule Language
G. Staff Report
H. Socioeconomic Report
I. Notice of Exemption