BOARD MEETING DATE: March 5, 2010
AGENDA NO. 43

PROPOSAL:

Adopt Rule 310 – Amnesty for Unpermitted Equipment

SYNOPSIS:

Proposed Rule 310 – Amnesty for Unpermitted Equipment - will exempt owners and operators of unpermitted equipment that meet certain conditions from civil and criminal penalties and late filing fees if the necessary permit applications and fees are voluntarily filed and paid during the amnesty period of February 5 through August 4, 2010. This rule implements the Board Chairman’s January 8, 2010 proposal for a temporary and voluntary permit application penalty holiday.  

COMMITTEE:

Administrative, February 12, 2010, Recommended for Approval; Stationary Source, February 19, 2010

RECOMMENDED ACTION:

Adopt the attached resolution:

1. Certifying the Notice of Exemption for Proposed Rule 310 – Amnesty for Unpermitted Equipment; and

2. Adopting Rule 310 – Amnesty for Unpermitted Equipment.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

At the January 8, 2010 Board Hearing, Chairman Burke stated that the coming year would likely continue to be financially challenging to businesses already struggling with the economic downturn. Dr. Burke noted that: “Even though things are getting better, we are not out of the woods yet - times are still tough.” Dr. Burke continued to state that “the Board was keenly aware of the current downturn the economy is in” and therefore proposed a temporary voluntary permit fee penalty holiday to provide some fiscal relief particularly for small businesses. The Governing Board has acted similarly during challenging economic situations faced by businesses in the past. Initially in 1990 and later in 1995, the Governing Board offered a temporary waiver of permit application penalty fees for a temporary period of six months for businesses that were operating equipment without prior permit approval and in violation of AQMD’s Rules 201 and 203. The goal of this proposal is two-fold. First, to remove the additional financial burden for small business operators that may or may not have been aware of permitting requirements prior to operating equipment at their facilities and who wish to come into compliance with AQMD rules and regulations. Second, to create a level playing field with businesses that are complying, by paying appropriate permit fees, by encouraging operators of equipment that needs a permit to voluntarily come into the permitting system. Permitting of equipment is essential for compliance with AQMD rules and regulations and provides valuable information for planning efforts. 

In accordance with the Chairman’s direction, staff is proposing to adopt Rule 310 – Amnesty for Unpermitted Equipment to once again provide a temporary voluntary permit fee penalty holiday. A similar rule was adopted on September 8, 1995 when the region was experiencing a similar downturn in the economy. The rule was amended on October 13, 1995 to include some smaller equipment categories at major sources, and sunset on April 2, 1996 (the rule was officially rescinded on May 14, 1999).

Equipment operating without a permit is subject to surcharges and the payment of prior year annual operating fees. These supplemental fees were enacted to ensure that there is no economic advantage from operating without a permit and to recognize the additional staff resources needed to identify and permit these sources. However, in these extraordinary economic times, these supplemental fees can be an impediment to compliance for many source owners and operators. A temporary waiver of these fees is necessary and appropriate and also encourages voluntary compliance. Permitting of these sources enhances AQMD permitting, compliance, and planning operations. Permitting of these sources also levels the playing field with permitted facilities.

These fee provisions are detailed in Rule 301(c)(1)(D) as follows:

“When equipment is operated, built, erected, installed, altered, or replaced (except for replacement with identical equipment) without the owner/operator first obtaining a required Permit to Construct or Permit to Operate, the permit processing fee shall be 150 percent (150%) of the amount set forth in the Summary Permit Fee Rates tables of this rule unless the applicant is a Small Business as defined in this provision and the facility has no prior permit applications, Permit to Construct or Permit to Operate (as evidenced by a facility identification number) with the District in which case the permit processing fee shall be the amount set forth in the Summary Permit Fee Rates tables of this rule. If a facility has been issued a Notice of Violation (NOV), there shall be no waiver of the higher fee. The applicant shall also remit annual operating fees for the source for a full three (3) years, or the actual years of operation if less than three (3) years. The assessment of such fee shall not limit the District's right to pursue any other remedy provided for by law.”

Proposal

Staff’s proposal is to exempt businesses from the late filing fees portion of fees assessed for equipment being operated without prior permit approval (pursuant to Rule 201 – Permit to Construct and Rule 203(a) – Permit to Operate) provided an application is voluntarily filed and the regular permit processing fee is paid. Permit fee late filing provisions consisting of an additional 50% permit processing fee surcharge and up to three years of annual operating permit renewal fees, would be waived.

The six month period of the proposed waiver would begin retroactively for permits filed on February 5, 2010, with the adoption of this rule by the Governing Board on March 5, 2010, and would automatically sunset by rule provision on August 4, 2010. However, all other AQMD, federal, and state permitting rules and regulations will still apply. Furthermore the following situations would not exempt a source from paying late filing fees normally assessed, nor from civil or criminal penalties for rule violations:

1. violations at Title V facilities, unless the subject equipment qualifies as Schedule A, A1, or B in Table I, Rule 301- Permit Fees,

2. violations of Rule 201 and/or 203(a) discovered by the District as the result of an investigation initiated by the District, or

3. violations of Rule 201 caused by construction of equipment for which an application for a permit to construct has been filed but a permit has not been issued.

The AQMD received approximately 700 amnesty permit applications during the six month amnesty period in 1995, mostly from small businesses.

It is important to note that the amnesty program shall not exempt any permit application from any applicable District rule (including, but not limited to current New Source Review requirements) or state or federal laws pertaining to the issuance of permits, except that applications filed shall be exempt from late permit processing fees as established by Rule 301(c)(1)(D).

Examples for the Voluntary Temporary Permit Fee Penalty Holiday (Amnesty) Program

This section provides guidance on the scenarios where a source would or would not qualify for a Rule 310 permit fee penalty amnesty during the term of PR 310 and potential savings by permitted equipment type and schedule for sources that do qualify.

Scenario Examples

The following table highlights several scenarios under which owners/operators can utilize the provisions of PR 310.

Table 1 - Amnesty Scenarios

Fee Examples

The following table illustrates several different types of equipment and the potential fee savings under this proposal:

Table 2 - Examples of Potential Fee Savings

a – equipment constructed/operational for 1 year without permit
b – equipment constructed/operational for 2 years without permit
c – equipment constructed/operational for 3 years or longer without permit

CEQA

Pursuant to CEQA, the AQMD is the Lead Agency and has reviewed Proposed Rule 310 – Amnesty for Unpermitted Equipment, pursuant to CEQA Guidelines §§15002 (k)(1) and 15061 – Review for Exemption. The AQMD relies on permit fees to meet operating expenses such as employee wages; purchasing or leasing supplies, equipment, or materials; maintain services; etc. By establishing an amnesty period for owners of unpermitted equipment to pay applicable fees without penalty, the AQMD is expected to recover fees for operating expenses that might not otherwise be recovered. The proposed rule exempts owners and operators of unpermitted equipment that meet certain conditions from the late filing fee surcharge if the necessary permit applications voluntarily filed and fees are paid during the amnesty period. AQMD will also not refer applicants for civil or criminal action. AQMD staff determined the proposed project to be statutorily exempt from CEQA requirements pursuant to State CEQA Guidelines §15273 – Rates, Tolls, Fares, and Charges. A Notice of Exemption has been prepared pursuant to CEQA Guidelines §15062 - Notice of Exemption. The Notice of Exemption will be filed with the county clerks of Los Angeles, Orange, Riverside and San Bernardino counties immediately following the adoption of the proposed project.

Socioeconomic Assessment

Since Proposed Rule 310 (PR 310) does not significantly affect air quality or emissions limitations, a socioeconomic analysis is not required [H&SC 404408.7(a) and (b)]. PR 310 would exempt permit filers from late permit processing fees established by Rule 301(c)(1)(D) between February 5 and August 4, 2010. The exemption specifically applies to District Permit Rules 201—Permit to Construct and 203(a)—Permit to Operate. PR 310 provides additional flexibility to regulated entities with regard to permit filing requirements, which would lead to savings.

In summary, PR 310 does not increase the cost of compliance for any facility and therefore will not have any significant socioeconomic impacts. 

Resource Impacts

Resource impacts are expected to be minimal.

Attachments (EXE, 96k)

1. Resolution

2. Proposed Rule 310

3. CEQA – Notice of Exemption