Oregon Department of Environmental Quality

Proposal to update Oregon Air Quality Permitting Program

Fiscal Advisory Committee

Meeting Notes and Committee Recommendations

November 4, 2013

Overview and purpose

The Oregon Department of Environmental Quality (DEQ) established the Permitting Program Updates Fiscal Advisory Committee to review the fiscal and economic impacts of DEQ’s proposed rulemaking to update the permitting program. DEQ requested that each of the Committee members provide comments and recommendations on the DEQ’s draft Notice of Proposed Rulemaking, which includes the Statement of Economic and Fiscal Impact and answer three questions derived from Administrative Procedures Act requirements for fiscal impact analysis (OAR 183.333) as follows:

•  Does the rules have a fiscal and economic impact?

•  What is the extent of that fiscal and economic impact?

•  Will the rule have a significant adverse impact on small businesses?

Committee members

Aubrey Baldwin, PEAC

Fred Bond, asphalt plant consultant

Kevin Emerick, Small Business Compliance Advisory Panel

Dona Hippert, Oregon Toxics Alliance and Northwest Environmental Defense Center

Ken Kinsley, Wellons

Chris Rich, Oregon Business Association

Others in attendance included DEQ staff Gary Andes, George Davis, Mark Fisher, Jill Inahara, Uri Papish, and Karen White-Fallon.

Proposed rule background

DEQ proposes changes to rules as a continuing effort to streamline, reorganize and update Oregon’s air quality permit programs to improve air quality with a more efficient and effective permitting program. Previous improvement efforts began with the Environmental Quality Commission’s adoption of Revisions to Point Source Air Management Rules in 2001 and Air Quality Permit Program Streamlining and Updates in 2007.

DEQ proposes changes to statewide particulate matter standards and the pre-construction permitting program that would align with EPA’s adoption of the ambient air quality standard for fine particulates, commonly called “PM_2.5,” and respond to problems identified with Oregon’s permitting program that must be addressed to protect air quality. Along with these changes, DEQ proposes additional pre-construction permitting flexibility for smaller businesses.

To improve community outreach, DEQ proposes rules to allow the use of technological advances when holding public hearings and meetings. DEQ proposes minor changes to the Heat Smart program and the gasoline dispensing facility program to improve implementation.

This notice organizes and describes the proposed rules under the following eight main categories:

1.  Clarify and update rules

2.  Update particulate matter standards

3.  Change permitting requirements for emergency generators and small natural gas or oil-fired equipment

4.  Change the pre-construction permitting program (also called New Source Review or “NSR”)

5. Designate Lakeview as a sustainment area (new designation created by the NSR revisions under item 4, above)

6.  Provide more flexibility for public hearings and meetings

7.  Update the Heat Smart program

8.  Remove annual reporting requirement for small gasoline dispensing facilities

Discussion summary

This meeting took place November XX, 2013, from 1 p.m. to 2:30 p.m. at DEQ Northwest Region. This meeting was tape recorded and that recording is incorporated by this reference. The Committee was provided DEQ’s draft Notice of Proposed Rulemaking that included the Statement of Economic and Fiscal Impact for the proposed rules, and a pre-public notice draft of the proposed rules. These materials are available upon request.

DEQ staff explained the need for the ACDP Fee Increase Rulemaking Advisory Committee and gave an overview of the proposed rule, House Bill 3238, the Administrative Procedures Act requirements for fiscal impact analysis, and the draft DEQ Statement of Need and Fiscal and Economic Impact. Staff explained that DEQ does not have an economist so this analysis is completed by scientists and engineers. Staff explained that it is difficult for DEQ to determine the number of small businesses holding ACDPs because this information is not always collected from permit holders or is not entered into DEQ’s permit database.

The Committee discussed whether or not inadequate program staffing would put new permittees at risk (e.g. risk of penalties). Without adequate staffing, permit issuance would be delayed. New permittees would be at risk if they operated a facility required to have an ACDP before obtaining the required permit; the permit must be obtained prior to operation.

The Committee discussed whether or not a permit backlog exists. There is a slight ACDP backlog which varies by office and office staff levels.

The Committee discussed whether the general fund for new full time equivalent (FTE) positions would go to the ACDP program. The general fund for new FTE does not go to the ACDP program. The ACDP fee increase would provide funding to maintain the ACDP program positions.

A Committee member asked what the fee increase will do to DEQ’s budget. The effect of the fee increase is best represented by FTE positions. DEQ provided Committee members a handout that illustrates how the fee increase would affect FTE in the ACDP program.

The Committee discussed what would happen if permitted sources started falling out of the program. DEQ does not expect this to have a significant impact on the ACDP program. Other sources are added to the program regularly and costs would be spread out.

A Committee member commented that, collectively, fee increases will have a larger impact on businesses. This includes increases in DEQ’s water quality fees, which are between 3 and 6 percent, and other fees assessed to businesses.

A Committee member commented that the general discussion is focused on Annual Fees. The fee increase is a hurdle to facilities engaging in new activities subject to Specific Activity Fees. DEQ agreed to make additional statements about the possible negative impacts of Specific Activity Fees (see Committee recommendations).

The Committee discussed the ACDP fee structure relative to other states’s permit fees, whether or not certain fee categories have a disproportionate impact, and whether or not all fee categories should be increased by 20 percent. DEQ staff compared ACDP fees to other states’ fees in 2001 and found that Oregon’s fees are comparable. DEQ agreed to review the justification of the current fee structure (ratio of fee levels compared to one another) (see Committee recommendations). ACDP fees were established in their current form during a fee overhaul in 2001 that DEQ believes improved equity among sources. The proposed rulemaking maintains equity among sources because it would raise fees 20 percent for all permit categories, rather than disproportionately affecting various categories.

A Committee member noted that statute requires DEQ to look at costs and benefits of impacts on the public and public health. Without a fee increase, the program may not be effectively implemented, which could result in increased pollution. DEQ agreed to make a statement about the economic and public health impacts affected by ACDP program funding (see Committee recommendations).

The Committee discussed whether or not the rule will have a significant adverse impact on small businesses. Results of this discussion are found in Committee recommendations, below.

Committee recommendations

The ACDP Fee Increase Rulemaking Advisory Committee was tasked with answering three main questions derived from OAR 183.333. The questions as well as the Committee’s answers are summarized below:

1.  Does the rule have a fiscal and economic impact?

Yes

2.  What is the extent of that fiscal and economic impact?

The extent of the impact is outlined adequately in the DEQ Statement of Need and Fiscal and Economic Impact. However, the ACDP Fee Increase Rulemaking Advisory Committee recommends adding the following information:

A) A statement about positive economic benefits which may come from improvements in public health and welfare resulting from an adequately funded ACDP program. A fee increase that provides sufficient resources for compliance and technical assistance may help avoid public health costs associated with lower compliance and potentially increased air pollution.

B) Additional statements about the possible negative impacts of Specific Activity Fees including discouraging out of state businesses from coming to Oregon and greater obstacles to new businesses needing ACDPs.

C) A statement about whether the current fee structure (ratio of fee levels compared to one

 another) is thought to be equitable among sources.

3.  Will the rule have a significant adverse impact on small businesses?

The ACDP Advisory Committee concluded that the rule could have a significant adverse effect on small business but it does not have enough information to conclusively make a finding to that effect. However, the Advisory Committee stated that despite any possible adverse effect on small business they did not believe there is a need at this time for additional mitigation steps as outlined in ORS 183.540. The benefits of an effective ACDP program, such as adequate service to businesses and continued protection of public health outweigh the potential fiscal burdens on small business. In addition, the fees are currently structured in a way that minimizes fiscal impacts on sources with smaller emissions, many of which are small businesses. If comments received during the public comment period reveal significant adverse fiscal impacts on small businesses, DEQ may reconsider the need for alternative mitigation.

Committee Conclusion

The Committee reviewed DEQ’s draft Statement of Need and Fiscal and Economic Impact and provided comments and recommendations. DEQ modified the document as recommended by the Committee.