BOARD MEETING DATE: February 5, 2010
AGENDA NO. 35

PROPOSAL:

Proposal for Temporary Six-Month Permit Application Penalty Holiday for Businesses Filing Permit Applications to Operate Equipment

SYNOPSIS:

At the January 8, 2010 Board Meeting, Chairman Burke proposed to implement an initiative to establish a temporary and voluntary Permit Application Penalty Holiday for a six-month period and has requested staff to return to the Board at its February meeting on the framework and schedule of implementation.  This proposal applies to applications filed for Permit to Operate for existing equipment which had not previously obtained a Permit to Construct.

COMMITTEE:

Not Applicable

RECOMMENDED ACTIONS:

1. Approve the implementation framework and schedule to waive the penalty, as well as the higher permit processing fee and the past annual operating fees that are specified in Rule 301(c)(1)(D) for a period of six months for businesses filing applications for permits to operate equipment previously installed without a permit,
   
2. Set a Public Hearing on March 5, 2010 to adopt Proposed Rule 310.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

At the January 8, 2010 Board Meeting, Chairman Burke proposed to implement an initiative to establish a temporary and voluntary Permit Application Penalty Holiday for a six-month period.  The intent of this proposal is to provide businesses a six-month temporary relief from any penalties and from paying the higher permit processing fee and the past annual operating fees specified in Rule 301(c)(1)(D) for permit applications filed during this six month period for operation of equipment which was previously installed without first obtaining a permit.  The permit application penalty holiday is intended to level the playing field by encouraging businesses operating without required air permits to apply for the permits and by ensuring that businesses who did comply with the air quality requirements do not face unfair competition from those who did not.  This permit application penalty relief shall extend to applications filed for equipment operating in violations of AQMD permitting rules (Rule 201 - Permit to Construct, and Rule 203 - Permit to Operate).  However, all other AQMD, state and federal permitting and other applicable rules and regulations will still apply.

Current AQMDs Rule 301(c)(1)(D) assesses a higher permit processing fee (an additional 50% of the permit processing fee) for permit applications filed for equipment operated or constructed without first obtaining a Permit to Construct from AQMD.  In addition, Rule 301(c)(1)(D) requires the permit applicant to remit annual operating fees for the equipment for a full three (3) years, or the actual years of operation if less than three (3) years. 

The AQMD Governing Board had responded similarly during the tough economic situations faced by businesses, specifically small businesses, in the past, initially in 1990 and later on in 1995.  At that time also AQMD offered a temporary amnesty program during which AQMD waived the higher fees for a period of 6 months for businesses that were operating equipment without prior permit approval and in violation of AQMDs Rules 201 and 203.  

In 1995 the AQMD Governing Board adopted a rule (Rule 310 Amnesty For Unpermitted Equipment), initially on September 8, 1995 and subsequently amended on October 13, 1995.  Rule 310 waived the civil or criminal penalties and the higher permit processing fee in Rule 301(c)(1)(D), which then was 15% of the permit processing fee compared to the present higher fee of 50% of the permit processing fee, for a period of six months from October 3, 1995 to April 2, 1996.  However, in 1995 there was no requirement in Rule 301 to remit up to three (3) years of annual operating fees so no such waiver was included in Rule 310.  At that time, AQMD received over 600 permit applications during this six-month amnesty period in 1995, mostly from small businesses.   Rule 310 was then rescinded on May 14, 1999.

Proposal

To implement the Chairmans proposal, it is recommended that AQMD adopt a fee rule similar to the rescinded Rule 310.  This proposed rule shall establish a one-time, six-month permit application penalty holiday period during which facilities that voluntarily apply for permits for existing equipment would not be subject to any civil or criminal penalties, higher permit processing fees and up to three (3) years of annual operating fees for having violated the requirement to have a permit.  Similar to the Rule 310 adopted in 1995, the permit application penalty holiday will not apply to violations discovered by AQMD during inspections initiated by the AQMD.  As part of this proposal it is also recommended to set a public hearing on March 5, 2010 to adopt Rule 310.

Resource Impacts

No additional resource impacts are anticipated with this proposal.