Title of Proposed Rulemaking

Amend Clean Water State Revolving Fund - Permanent Rules. Chapter 340, Division 54

Statutory Authority or other Legal Authority

Statutes Implemented

The Oregon Department of Environmental Quality (DEQ) and the Environmental Quality Commission (EQC) have the statutory authority to address this issue under ORS 468.020 and 468.423 - 468.440.

Additional authority is provided by the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).

These proposed rules implement ORS 468.423 - 468.440.

Need for the Rule(s)

The American Recovery and Reinvestment Act of 2009 (the Act) was signed by President Obama in February 2009. The Act provides economic stimulus funds to the federal Clean Water State Revolving Fund (CWSRF) loan program administered by the U.S. Environmental Protection Agency (EPA). The EPA allocated $44 million in funds to DEQ’s CWSRF program. In April 2009, the EQC adopted temporary amendments to DEQ’s CWSRF program to ensure the program addressed all requirements of the Act and therefore was eligible to receive the $44 million capitalization grant.

By law, the temporary amendments adopted by the EQC in April will expire in 180 days (late October). This permanent rulemaking is necessary to ensure DEQ is able to meet the requirements of the Act and to receive possible additional funds from the Act if those funds become available after October 2009. The intention of this rulemaking is to permanently adopt the temporary amendments with only minimal changes in language necessary to ensure DEQ is able to utilize possible additional funds from the Act.

Documents Relied Upon for Rulemaking

The principal documents relied upon in preparing this rulemaking include:

•  The American Recovery and Reinvestment Act of 2009;

•  U.S. Environmental Protection Agency Memo dated 3/2/09 from the EPA Office of Wastewater Management – guidance document on awarding capitalization grants under the Act;

•  Oregon administrative rules, chapter 340, division 54.

These documents are available from DEQ's Water Quality Division, 811 SW Sixth Avenue, Portland Oregon. To make arrangements to review these documents call Larry McAllister, (503) 229-6412.

Requests for Other Options

Pursuant to ORS 183.335(2)(b)(G), DEQ requests public comment on whether other options should be considered for achieving the rule’s substantive goals while reducing negative economic impact of the rule on business.

Fiscal and Economic Impact, Statement of Cost Compliance

Overview

Adoption of the proposed rule amendments will allow DEQ's CWSRF program to incorporate certain requirements of the American Recovery and Reinvestment Act. As a result of addressing those requirements, DEQ's CWSRF loan program will be eligible for $44 million in funding from the Act. The additional funds will be utilized in loans incorporating zero percent interest rates and substantial principal forgiveness.

These loans with their generous incentives will be available to cities, counties and other public entities. The incentives within these loans will make it possible for borrowers to substantially reduce the cost of needed wastewater improvement projects. There are additional reporting requirements associated with the loans, but the costs of that reporting is expected to be negligible.

Impacts on the General Public

The adoption of the proposed rules will have no direct impact on the general public. Borrowers of these loans however will save considerable costs-depending on the size of the project- in financing their wastewater projects.

The public will benefit from the water quality improvements made possible by projects receiving CWSRF loans due to the additional subsidization provided. This additional funding for the CWSRF program will result in greater improvements to Oregon's water quality. Due to the many variables, quantifying specific direct and indirect fiscal impacts to the public due to this rulemaking is beyond the scope of this fiscal statement

Impacts to Small Business

(50 or fewer employees –ORS183.310(10))

Businesses are not eligible applicants to the CWSRF loan program, so the proposed rules will have no direct impact on Oregon's small businesses. Small businesses may be beneficially impacted indirectly if their wastewater service provider receives a CWSRF loan incorporating principal forgiveness.

Small businesses may also benefit indirectly from the additional funds being made available to the CWSRF loan program. DEQ’s funding of additional water quality improvement projects will increase the demand for many of the services provided by Oregon’s small businesses such as consulting services, construction services and materials.

Cost of Compliance on Small Business (50 or fewer employees –ORS183.310(10))

a) Estimated number of small businesses subject to the proposed rule

N.A. Small businesses are not eligible applicants to the CWSRF program and will not be directly impacted by the proposed rules.

b) Types of businesses and industries with small businesses subject to the proposed rule

There are various types and numbers of companies who might indirectly benefit from the proposed rules. These primarily include consultants and contractors who would be employed to design and construct funded projects.

c) Projected reporting, recordkeeping and other administrative activities required by small businesses for compliance with the proposed rule, including costs of professional services

Communities receiving funding by the Act will be required to provide additional reporting regarding jobs created and the status of project construction. Contractors involved in Act funded projects will also be required to provide this additional reporting.

d) The equipment, supplies, labor, and increased administration required by small businesses for compliance with the proposed rule

N. A. The additional reporting (see above) is the only identified additional administrative activities associated with CWSRF loans using Act funds.

e) A description of the manner in which DEQ involved small businesses in the development of this rulemaking

Small businesses were not involved in the development of the proposed rules.

Impacts on Large Business

(all businesses that are not “small businesses” under ORS183.310(10))

If adopted, the proposed rules are not expected to have any impact on Oregon's large businesses. Businesses are not eligible applicants to the CWSRF loan program and so would not be impacted directly by the proposed changes in the loan program.

Businesses rely on public wastewater infrastructure might indirectly benefit if the public entity providing the sewer service received a DEQ loan incorporating principal forgiveness. Any beneficial fiscal impact to such a company would be minimal.

Impacts on Local Government

Local governments are the primary borrowers of CWSRF loans. If these rules are not adopted, future Act funds including the generous incentives will not available to local governments. Projects will either not be started due to cost considerations, or the cost to local governments for those project will be measurably higher.

If adopted, a small community in Oregon with a population of 5,000 or less might qualify for 75% of the cost of their wastewater project being forgiven. Other communities with larger populations and more expensive projects would see a smaller, but smaller savings if the proposed rules are adopted.

The proposed rules and the related incentives will benefit those local governments receiving CWSRF loans. Due to the many variables, determining the amount of the benefit is outside the scope of this fiscal analysis.

Impacts on State Agencies other than DEQ

Because adoption of the proposed amendments is expected to bring additional federal funding to DEQ's CWSRF loan program, certain other state agencies may experience more demand for their services. For instance, the Department of Land Conservation and Development (LCD) plays a role in evaluating the environmental impacts of projects receiving CWSRF funding. Additional projects may result in additional requests for environmental review by staff at DLCD. It is beyond the scope of this fiscal statement to determine the exact impact to such state agencies, but the impact is expected to be negligible.

Impacts on DEQ

Adoption of the proposed rule amendments will have no significant impact on DEQ’s CWSRF program or the Department. The additional demand for loans and the related activities due to the availability of the Act funding will be addressed using current DEQ resources.

Assumptions

Additional funds from the Act will become available to DEQ in 2010 and without these permanent amendments to the CWSRF program rules; Oregon would not be eligible to accept these funds.

Housing Costs

DEQ has determined that this proposed rulemaking will have no measurable effect on the cost of development of a 6,000 square foot parcel and the construction of a 1,200 square foot detached single family dwelling on that parcel.

Administrative Rule Advisory Committee

An advisory committee was not used in developing this permanent rulemaking. A financial work group provided direction during the development of the earlier temporary rule language. Because the intention of this rulemaking is to make the temporary rules permanent -and does not address new policy issues- an advisory committee was not convened.