From: GINSBURG Andy
Sent: Wed Dec 28 18:09:27 2011
To: WESTBROOK Esther; OLIPHANT Margaret; 'Logan Paul S'; ROICK Tom
Subject: RE: Title V Fee
Importance: Normal
Let’s see what Paul says. If we can handle both rule adoptions with one notice, I’d like to avoid a temporary rule.
Andy Ginsburg
Air Quality Administrator
Oregon Department of Environmental Quality
(503) 229-5397 - Office
(503) 572-7195 - Mobile
From: WESTBROOK Esther
Sent: Wednesday, December 28, 2011 3:09 PM
To: OLIPHANT Margaret; GINSBURG Andy; 'Logan Paul S'; ROICK Tom
Subject: RE: Title V Fee
I like the idea. My concern is that adopting the rules at two separate commission meetings would constitute two amendments for each rule setting our fees, which would both trigger the APA notice requirements. ORS 183.335 provides that “prior to the adoption, amendment or repeal of any rule, the agency shall give notice of its intended action…” as set forth in the statute. All of the fees are set forth in sections of the rules, so I would think that, for example, amending the fees in OAR 340-220-0040(2) in June and then (3) in September or later would both legally be amending OAR 340-220-0040. Complying with the notice and comment requirements in ORS 183.335 would essentially make this two rulemakings.
Paul – What’s your take?
Do we want to explore the idea of doing a temporary rulemaking for 2012 fees and then a permanent rulemaking for 2012 and 2013?
-Esther
From: OLIPHANT Margaret
Sent: Wednesday, December 28, 2011 7:34 AM
To: GINSBURG Andy; WESTBROOK Esther; 'Logan Paul S'; ROICK Tom
Subject: RE: Title V Fee
That’s exactly what I had in mind so that you could live another day!
From: GINSBURG Andy
Sent: Tuesday, December 27, 2011 7:01 PM
To: OLIPHANT Margaret; WESTBROOK Esther; 'Logan Paul S'; ROICK Tom
Subject: RE: Title V Fee
Margaret, you may be on to something here.
Let’s call this new option 4b. So, if I’m tracking, we would have one combined public notice for the 2012 fee and the 2013 fee, but we would adopt them separately at two commission meetings – adopting 2012 in July and 2013 in October or December. This would enable us to stay on schedule for the 2012 billing, and avoid having to do another full rulemaking complete with public notice for 2013. If we queue it up correctly at the July EQC, the subsequent adoption of the 2013 fee could be a 10 minute affair. We save 95% of the work of a second rulemaking, the sources get invoiced when they expect it, we don’t compress the schedule due to waiting for the 2012 CPI, we don’t lose revenue or get paid late, and I get to live a full and productive life.
Paul, Esther or Tom – can you see any downsides to 4b?
Andy
Andy Ginsburg
Air Quality Administrator
Oregon Department of Environmental Quality
(503) 229-5397 - Office
(503) 572-7195 - Mobile
From: OLIPHANT Margaret
Sent: Tuesday, December 27, 2011 2:52 PM
To: WESTBROOK Esther; 'Logan Paul S'; GINSBURG Andy; ROICK Tom
Subject: RE: Title V Fee
All,
I’m fairly certain that we had the Option 4 scenario in mind when we changed to the August CPI. That said, it really doesn’t work too well with an October EQC or even a special phone EQC in September!
Historically, we have prepared Title V invoices in July and August and collected Title V fees in September and October. We have prepared ACDP invoices in September and October and collected ACDP fees in November and December. Last year is the only time we deviated from that schedule and that is not a good plan going forward. We need to prepare the invoices at those appointed times in order to spread out the invoicing workload and receive the fees at those times to meet payroll. Also, businesses want to pay annual fees annually. In 2011, Title V sources had to pay two annual fees because our 2010 Title V billing didn’t arrive until January 2011.
Would it be possible to do a version of Option 4…go out for public notice with the 2011 CPI (2012 fee) filled in and the 2012 CPI (2013 fee) blank (with the caveats that Andy laid out below) and then have two EQC adoptions, the 2011 CPI in June and the 2012 CPI in October. It’s almost like two rules but not quite. It keeps the invoicing workload on schedule and keeps the money rolling in on time. If this isn’t possible, then I would suggest two separate rulemakings, one for the 2011 CPI and one for the 2012 CPI. I think that it is a better solution than bothering sources with a second invoice as proposed in Option 3.
Let me know what you think.
Margaret
From: WESTBROOK Esther
Sent: Thursday, December 22, 2011 11:47 AM
To: 'Logan Paul S'; GINSBURG Andy
Cc: OLIPHANT Margaret; ROICK Tom
Subject: RE: Title V Fee
Paul,
For either option, we are aiming to do only one rulemaking. Also, to clarify, the invoicing delay or extra round would come in 2012 because we are waiting for the 2012 CPI data needed to set 2013 fees. The 2013 invoicing could then be on the normal schedule.
-Esther
From: Logan Paul S [mailto:Paul.S.Logan@doj.state.or.us]
Sent: Thursday, December 22, 2011 11:33 AM
To: GINSBURG Andy
Cc: OLIPHANT Margaret; WESTBROOK Esther; ROICK Tom
Subject: RE: Title V Fee
Andy,
Option 3 is workable from a legal perspective. Administratively, you’d have two rounds of invoices for 2013 fees, and you’d have two rulemakings, but legally you’d be fine.
Option 4 is also workable from a legal perspective. You could minimize legal risk by proposing a range of CPI increases, based upon what you think the final CPI might be, and then finalizing the rule with the actual CPI. On that basis, the public would be made aware of the range of possible increases, and wouldn’t be a surprise out of the blue. As for the payment deadline, the fees would be due from sources 30 days after you mailed the invoices. OAR 340-220-0110(6)(b). As for timing of the rulemaking adoption, the final CPI data probably wouldn’t be available until mid-September 2012, and given your internal DEQ deadlines for preparing documents in advance of an EQC meeting, October might be the earliest you could adopt the rules (unless you could bend your internal rules). The upside of this option is that you’d do only one rulemaking, and have only one round of invoices for 2013 fees. The downside is that you’d collect your 2013 fees later than you normally do.
Paul Logan
Oregon Department of Justice, 971.673.1943
From: GINSBURG Andy [mailto:GINSBURG.Andy@deq.state.or.us]
Sent: Wednesday, December 21, 2011 8:58 PM
To: WESTBROOK Esther; ROICK Tom
Cc: Logan Paul S; OLIPHANT Margaret
Subject: RE: Title V Fee
And here I thought we were so clever in fixing this issue the last time we amended the statute! I see we didn’t fully think through the timing issues. Nice work laying out the issues and analysis, Esther.
So, first of all, we can’t do an option that will lose revenue. Otherwise, Margaret will kill me and I have a lot of things left to do before I die.
That said, I’m not convinced that option 1 would result in lost revenue since the fee is being paid based on past emissions in order to operate during 2012 (thus, it is not retroactive). However, it would result in a cash flow issue, since we would get paid late. Since we have very low ending balances, I think that would also be a problem and I would end up just as dead.
I really don’t like option 2 and I’d like to avoid that if at all possible. Here are two other options to consider – neither great, but possibly better than option 2.
3. Issue initial invoices for 2012 on the normal schedule using the 2011 fee rates, and inform sources that there will be a supplemental invoice in January after the fee increase is adopted in December. That adds cost for two invoices, but there are only about 100 Title V sources so it isn’t the end of the world. It allows us to use a hard number in the rule, and it doesn’t result in any lost revenue or cash flow problems. We have done this before, when we needed wait until after the legislative session to amend the fees.
4. Propose the rule with a blank for the 2012 CPI and 2013 fee, explain in the public notice document that the actual final CPI issued by the federal government will be available before adoption of the rule and will be used in the final rule, provide an estimate of what those numbers will be based on the year to date information, and explain how the 2013 fee will be calculated based on the final CPI. Then EQC would adopt the rule ASAP after the CPI is published in mid September - presumably October or even at a special phone EQC meeting earlier than that If needed. We would then invoice about a month or two late, but we could make up some of that time by giving less time between receipt of the invoice and payment. The more I think about it, the more I think this is what we must have had in mind when deciding to use the federal fiscal year as the fix to the timing issue.
Esther, I see you raised concerns about whether option 4 meets the spirit or letter of the APA. I don’t think it is a problem in this case since the blank number in question is published independently, is fairly easy to estimate within reasonable bounds from year to date information, and wouldn’t change the nature of comments. In other words, if someone felt we were overstaffed and didn’t need to raise fees, the fact that they would go up 2.1% vs. 2.3% wouldn’t change their argument. Or, they could say they oppose any fee increase above x%. But given that we are not choosing between raising fees by the CPI or by some other index, I don’t think the exact final number is needed for people to comment. Plus, based on a long history, no one comments other than NWPPA on occasion.
So, what do you all think of options 3 and 4?
Andy
From: WESTBROOK Esther
Sent: Wednesday, December 21, 2011 9:47 AM
To: GINSBURG Andy; ROICK Tom
Cc: 'Logan Paul S'; OLIPHANT Margaret
Subject: RE: Title V Fee
Dear Andy,
Thank you for the clarification. You are correct that in the last rulemaking, 2011 fees were set using 2010 CPI data. The plan for the upcoming Title V fee increase rulemaking was to use 2011 data (which we already have) to set 2012 fees, and 2012 data to set 2013 fees. The challenge has been in finding a way to include two years’ worth of CPI in one rulemaking due to the timing issue. In order to be able to issue invoices in August or shortly thereafter, the rulemaking would have to be completed before then. Our target date for adoption is the June 21-22, 2012 EQC meeting. The problem is that CPI data for the period ending on August 31, 2012 will not be available until mid-September.
I have discussed the various options with Paul Logan at DOJ. The two best options we found were:
1. Adjust the timeline to aim for rule adoption at December 2012 EQC meeting. This option has the lowest legal risk, and it was used in the last TV fee increase rulemaking. The problem is that it causes a big delay in invoicing, which in turn leads to administrative difficulties. It also causes DEQ to lose out on increased fees for part of the 2012-13 operating period because we cannot raise fees retroactively.
2. Stick with the June 2012 EQC adoption date, but leave 2013 fees somewhat undefined. We could accomplish this by drafting the rules to include fee amounts that DEQ could invoice up to but not exceed. These fees would be conservative estimates based on the available CPI data. The rules would also include language that references the statutory limits: the required CPI calculation method and the reasonable and necessary costs of the program as determined by the Commission. This is the option presented in the attached draft SRP. This option presents some risk according to Paul, because a reviewing court might not be sympathetic to DEQ’s scheduling concerns as a reason for making the rules more ambiguous. However, we should be able to determine whether this rule makes permittees and other stakeholders uncomfortable during the public comment process, and change the rulemaking strategy if necessary. With this option, DEQ would be able to issue invoices on time.
We also discussed keeping the June 2012 target date, but using an estimate for the remainder of the CPI increase in the absence of actual data. It does not appear that DEQ has authority to use an estimate. The statute and underlying language from the Clean Air Act are quite clear as to the method by which the CPI increase must be calculated, i.e. by counting from the 12-month period ending on 8/31/89. Similarly, I don’t believe DEQ would be able to use any time period other than 12 months to calculate the increase.
The last major option would be aim for rule adoption as soon as possible after the August 2012 CPI data is available. We would use “placeholder” numbers during the rulemaking process, and fill them in with actual numbers once the calculations have been done. I did not discuss this option in detail with Paul. My sense is that going through a rulemaking and conducting the public notice and comment portions with blank spaces throughout the rules would run afoul of the spirit, if not the letter, of the public notice requirements.
Please let me know which option you prefer, or if you have any questions or would like to discuss this further. Also, please let me know if you have any other ideas on how to accomplish this.
Thanks,
Esther
From: GINSBURG Andy
Sent: Tuesday, December 20, 2011 10:13 PM
To: ROICK Tom
Cc: 'Logan Paul S'; WESTBROOK Esther; OLIPHANT Margaret
Subject: RE: Title V Fee
Thanks. I’m copying Margaret also so she can verify that we are using the right years. It’s important to get this right or we risk losing revenue.
And now, looking back on my e-mail, I see I made an error. Esther will be adopting the fee for 2012 and 2013, so she will need the CPI for 2010 and 2011 according to my method below (as opposed to 2009 and 2010). That said, I could be wrong about this and maybe we intended to use the CPI for 2011 and 2012 to calculate the fee for 2012 and 2013. If so, you wouldn’t have the 2012 CPI when you propose the rule, so you would need to put in a place holder and wait to adopt it and invoice until after 8/31/12. Esther should check the rule package for the 2011 fee to see if we used 2009 or 2010 for that, and continue the same pattern. In the end, I think it is important to have the final fee published in the OAR, so we need to work out the timing to allow that to happen.
Sorry if I’ve confused this.
Andy
From: ROICK Tom
Sent: Tuesday, December 20, 2011 7:52 AM
To: GINSBURG Andy
Cc: 'Logan Paul S'; WESTBROOK Esther
Subject: RE: Title V Fee
Thanks Andy,
I appreciate you writing this up – I understand your perspective much better. Esther and I are meeting this afternoon, I had asked her to put together a list of options. We’ll recommend a path forward.
Esther has drafted an SRP. Our objective is to finalize it for presentation at the January EMT meeting.
Tom
From: GINSBURG Andy
Sent: Monday, December 19, 2011 6:47 PM
To: ROICK Tom
Cc: 'Logan Paul S'
Subject: Title V Fee
Tom,
In 2007, the legislature adopted SB 104, which among other things raised the fees to $31 and changed the rulemaking schedule to every two years. Our goal with the two years was to save money by doing less rulemaking, but it messed us up because we sometimes need to do rules more often. So, in 2009 the legislature adopted SB 107, which deleted the 2 year schedule. SB 107 also changed the CPI adjustment from calendar year to the 12 month period ending on 8/31. I attached a of the two bills copy, with the key part highlighted.
The change to the schedule was permissive – that is, we can do rulemaking on any schedule set by the commission. Our goal is still to do rules every other year whenever possible.
When you read the two bills together (and also look at the legislative history), it is clear that our intent was to calculate the 2 year fee schedule based on the prior two CPI years. That is, the fee for 2011 will be based on the CPI change from 9/1/89 to 8/31/09 and the fee for 2012 will be based on the CPI change from 9/1/89 to 8/31/10. The intent of moving to the federal fiscal year was that you would have both CPI values needed to calculate the 2 year fee schedule in time for the rulemaking.
Paul, chime in if you remember this differently.
Thanks.
Andy
Andy Ginsburg
Air Quality Administrator
Oregon Department of Environmental Quality
(503) 229-5397 - Office
(503) 572-7195 - Mobile
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