From: Jim Craven
Sent: Fri Feb 03 09:33:17 2012
To: PICKERELL Loretta
Cc: NUTTALL Christie; Bailey Payne; Becky Jarvis; Betty Patton; Craig Lorch; Erik Stromquist; Gail Zuro; Jason Linnell; Jeff Kuypers; Lee Fortier; Mary Jacques; Michael Moss; Mike Watson; Scott Klag; Tim Rocak; mrmnj@hotmail.com; katt.fretwell@tek.com; cspivey@ecsrefining.com; bhenry@bentonhabitat.org; walcorn@ce.org; Tricia Conroy; dkumar@warren-news.com; tirvine@TotalReclaim.com; paulpony4@hotmail.com; bpeterson@universalrecyclers.com; gregg.chason@pnf-usa.com; ddiaz@universalrecyclers.com; aeudis@wm.com; PERRY Marylou; WOODROW Beth; PALMERI Jordan; WILES Wendy; POLLOCK Andree; VANDEHEY Maggie
Subject: Re: Comment invite - follow up from E-Cycles Fee Advisory Committee Meeting 1/26/12
Importance: Normal
Loretta:
This is not a formal TechAmerica response because I haven't rec'd final input. You will get inputs from some our our members directly, I presume.
However, let me say that I echo the ongoing concerns about the high cost of the database project, and the concern that the current proposal doesn't include the invoicing module, which I assumed was a critical piece of the model. Is there any way we could vet these needs and costs with a neutral third party? Should the Legislative Joint Committee on Informational Technology be involved?
Finally, I note that there is no perfect fee structure that provides a smooth curve for all concerned. That being said, some middle ground is probably warranted that provides a modicum of equity and some long range assurance with caps.
hope this helps, and we appreciate the chance to provide input.
Jim Craven
On Sat, Jan 28, 2012 at 8:10 PM, PICKERELL Loretta <PICKERELL.Loretta@deq.state.or.us> wrote:
Committee members and interested stakeholders -
At its meeting on Thursday, January 26, the E-Cycles fee Advisory Committee discussed concepts for the registration fee rule: the fee structure, target revenue for the E-Cycles program, and the process for revisiting and revising target revenue. Committee members requested more time to consider these concepts. This email recaps the presentations and discussion questions from that meeting and invites additional comments from you. A “Recap to Support Additional Comment on Fee Rule Concepts” is provided below. You will find links to the presentations (including presentation notes) in the recap. Early next week we will post a more complete summary of the January 26 meeting on the E-Cycles fee rulemaking webpage (link provided below).
We would appreciate receiving your comments by Friday, Feb 3, so that we can consider them in drafting a fee proposal for discussion at our next Advisory Committee meeting (proposed for either 2/8 AM or 2/14 PM, see separate doodle poll to Committee) and for discussions with DAS. That will also give us more time to provide additional analysis or other information you may need for our next meeting.
We realize the presentations on the E-Cycles program’s revenue needs and the fee models condense a considerable amount of information. If you have questions or would like more explanation, please feel free to contact us. Jordan Palmeri, 503-229-6766 or palmeri.jordan@deq.state.or.us, is you best resource for the fee models, or you can contact me.
We appreciate your expertise and perspectives in this rulemaking,
Loretta
Loretta Pickerell, Manager
Solid Waste Policy and Program Development
Oregon Department of Environmental Quality
811 SW Sixth Ave.
Portland, OR 97204
503-229-5808, fax 503-229-6977
pickerell.loretta@deq.state.or.us
Recap to Support Additional Comment on Fee Rule Concepts
As discussed at the Advisory Committee’s first meeting, November 29, a key assumption for this rulemaking is that we will develop a registration fee structure that covers DEQ’s costs for administering the E-Cycles program – but with no blank checks. The fee proposal needs to address: the target revenue to be generated, a fee structure (model) that will generate the target revenue, and a process for revisiting and revising the target revenue as needed (up or down). As one member put it, we need to see “the deal.”
Below is a recap of Thursday’s discussion of these concepts for a fee proposal. The presentations referenced are from Thursday’s meeting. They are posted with presentation notes on DEQ’s E-Cycles fee rulemaking webpage http://www.deq.state.or.us/lq/ecycle/rulemaking.htm. [Until Monday morning, you will need to click on the small tan icon in the upper left corner of each slide to view the presentation notes--double click to scroll through or move a note. We will re-post the documents to show notes below slides so you can readily view or print the slides with notes.]
Fee models
Jordan Palmeri presented the three fee models, described in Oregon E-Cycles: Conceptual Registration Fee Models. The slide numbers below refer to this presentation. We invite comments on any of these three models. Based on the conversation at Thursday’s meeting, models #1 and #2 using tier structure B seemed to be favored. Following are some additional considerations for these two models.
Model #1 – “6-tier market share” using tier structure B (slides 8 - 10)
Considerations
a) Uses the same fee model as WA State, which may provide consistency for manufacturers operating in both programs.
b) Is simplest model – no caps with above-cap amounts to redistribute (Model #2); no surcharge to calculate (Model #3).
c) Is relatively easy to explain and understand.
d) The annual fee for any manufacturer is uncertain until market share is determined and the fee for each tier is calculated. Showing more modeling results will provide an indication of fee amounts/tier under different scenarios.
e) The fee/tier is based on the collective market share of all manufacturers in that tier and is influenced considerably by the number of manufacturers in that tier. To get a sense of how manufacturers have shifted between tiers over 4 years of Oregon E-Cycles data, refer to slide 7.
f) Compared to tier structure A, structure B puts more manufacturers into the top tier, which helps distribute costs more. This helps to avoid very high fees that could result if only the top 2-3 manufacturers were in the top tier.
g) This model does not push fees over a cap down to lower tier manufacturers as the cap model (#2) does.
h) Based on 4 years of data (and not including the ~120 minimum fee manufacturers), approximately 40 manufacturers will have lower fees and 6 manufacturers will have higher fees compared to the current fee structure.
Model #2 – “6-tier market share w/cap” using tier structure B (slides 11 and 12)
Considerations
a) Uses the same tier structure B as WA State, but this model adds a cap.
b) The annual fee for any manufacturer is uncertain until market share is determined and the fee for each tier is calculated – but larger manufacturers know their fees are capped.
c) The fee/tier is based on the collective market share of all manufacturers in that tier and is influenced considerably both by the number of manufacturers in that tier and any amounts over cap redistributed downward. To get a sense of how manufacturers have shifted between tiers over 4 years of Oregon E-Cycles data, refer to slide 7.
d) Compared to tier structure A, structure B puts more manufacturers into the top tier, which helps distribute costs more. This helps to avoid very high fees that could result if only the top 2-3 manufacturers were in the top tier.
e) The cap provides more certainty about the fee amount for larger manufacturers and less certainty for smaller manufacturers because it’s unknown each year how many fees will exceed the cap and by what amounts. All amounts over the cap will be distributed to lower tiers.
f) The higher the cap, the lower the fees for smaller manufacturers. Low cap ($20K) means potentially higher fees for smaller manufacturers compared to the current fee schedule.
g) A rule change would be required to increase or decrease the cap.
h) Data from 2010 and 2011 shows that approximately 70-80% of the market share was held by the 8-9 manufacturers that had over 5% market share (Tier 1 in tier structure B). If the market consolidates and only 2 manufacturers are in Tier 1 and hold 80% of the market share, for example, any cap will produce large over-cap fee amounts that will be pushed down to lower tiers and potentially cause significant increases in lower tier fees.
Questions:
1) What features do you like or dislike about each model? What features would you change?
2) Do you prefer tier structure A or B?
3) For model #2, what cap would you use?
4) For model #3, how would you distribute the surcharge (e.g., evenly among the top two tiers, among the top two tiers based on respective market share)?
5) For any model, what should the lowest tier fee, if any, be?
6) What other comments do you have?
Target revenue
Beth provided a recap of the E-Cycles program’s revenue needs and the target revenue for registration fees, E-Cycles Revenue Needs. The target revenue shown is $435,000/year, a slight increase over the $433,000 target discussed at our November meeting.
Beth explained that the E-Cycles revenue needs/target revenue presented at the first stakeholder meeting in November used initial cost estimates for the E-Cycles data system. Following that meeting, DEQ’s IT staff provided more definite costs estimates based on the design of the data system. We updated our plans for the data system with that new information. That resulted in small increase in revenue needs for the E-Cycles program ($2,200/year over 5 years) and the small increase in the target revenue. [The presentation E-Cycles Data System Project is also posted on the rulemaking page noted above.]
Questions:
1) Can you live with the target revenue of $435,000?
2) What concerns, comments or suggestions do you have?
Rule concepts
Loretta Pickerell presented concepts for the proposed fee rule to address the target revenue, a fee structure that will generate the target revenue, and a process for revisiting and revising the target revenue. The examples of potential rule concepts discussed included:
a) Target revenue is to cover but not exceed program costs.
b) Include a fee structure (model) that will generate any target revenue established.
c) Options for a process to set, revisit, revise target revenue:
(i) Establish target revenue in rule; revise the rule to change.
(ii) Establish target revenue for 2012/2013 in rule – and provide that DEQ will review the budget, revenue and expenditures annually (biennially?) with an advisory committee and then set the target revenue considering the committee’s advice.
(iii) Same as (ii), but cap increases allowed without a rule change.
(iv) Do not include target revenue in rule – follow process in (ii) to set, revisit and revise.
Questions:
1) What considerations are important for setting, revisiting, revising the target revenue? E.g., cost to implement, flexibility, cost controls, stakeholder involvement, oversight?
2) Which of the above examples – or others – best balance the considerations important to you?
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Jim Craven
Jim Craven Consulting
503-871-5171