Oregon Department of Environmental Quality

 Notice of Proposed Rulemaking

Increase Title V Permit Fees by the Consumer Price Index

Short summary 

DEQ proposes rules to increase Title V operating permit fees by the change in the consumer price index (CPI) as authorized by federal and state law. The proposed fee increases are necessary for DEQ to provide essential services associated with Oregon’s Title V permitting program.

The proposed rules would increase the fees in two phases. This approach would save administrative costs by holding a single public notice and comment period for the two rulemakings.

Phase one:  DEQ will propose the phase one rules at the commission’s meeting in June 2016. The proposed fee increase effective for the 2016 invoice year is 0.45 percent based on the Bureau of Labor Statistics September 2015 consumer price index for the period of September 2014 to August 2015. DEQ would apply this CPI increase to permit fees on the invoices DEQ will issue in August 2016 for annual emissions during 2015 and the operating period Nov. 15, 2016 to Nov. 14, 2017.

Phase two:  DEQ will propose the phase two rules at a commission meeting between December 2016 and May 2017. The proposed fee increase effective for the 2017 invoice year is 0.45 percent based on the Bureau of Labor Statistics September 2016 consumer price index for the period September 2015 to August 2016. This is an estimate identical to the 2016 increase. DEQ would apply this CPI increase to permit fees on the invoices DEQ will issue in August 2016 for annual emissions during 2016 and the operating period Nov. 15, 2017 to Nov. 14, 2018.

Brief history

Title V of the federal Clean Air Act requires each state to develop and implement a comprehensive operating permit program for major industrial sources of air pollution.

Oregon’s Title V program:

•  Administers federal health standards, air toxic requirements and other regulations to protect air quality;

•  Issues, renews or modifies Title V permits to prevent or reduce air pollution through permit requirements;

•  Completes required Title V inspections;

•  Ensures that existing sources of air pollution comply with state and federal air emissions standards;

•  Ensures that new sources of air pollution install controls such as filtration equipment, combustion controls and vapor controls needed to protect air quality;

•  Issues public notices and information about the Title V program; and

•  Provides other essential services such as emission inventories, technical assistance, inspections, enforcement, rule and policy development, data management and reporting to EPA.

Regulated parties

The proposed rules would affect facilities that currently have a Title V permit and any facility that applies for this type of permit in the future.

Request for other options

During the public comment period, DEQ requests public comment on whether to consider other options for achieving the rules’ substantive goals while reducing the rules’ negative economic impact on business.

What need would the proposed rule address?

EPA delegates authority to DEQ to operate the Title V program in Oregon and regularly reviews Oregon’s program for compliance with federal requirements. DEQ must comply with federal requirements to maintain a federally approved and delegated program.

The federal Clean Air Act requires each state to fully pay for its Title V program through permit fees. The Oregon Legislature established Oregon’s Title V fees in three categories:

•  Emission fees assessed per ton of emissions from individual sources per calendar year; and

•  Specific activity fees assessed when a source owner or operator modifies a permit.

The fees cover DEQ’s costs to operate the Title V program. Costs include a portion of air quality monitoring, planning and agency central services such as accounting and human resources. The Clean Air Act and state law authorize DEQ to increase fees by the annual change in the consumer price index to meet funding requirements by considering inflation.

Oregon’s Title V operating permit program requires additional funding to provide essential program services. Costs have increased over the last two years due to inflation. The Environmental Quality Commission last increased Title V fees in 2015 calculated to provide requisite program services up to August 2016. DEQ calculates the proposed fees would allow Oregon to provide requisite program services up to August 2018. Failure to increase Title V fees could affect DEQ’s ability to maintain adequate program staff and jeopardize effective program administration.

How would the proposed rule address the need?

The proposed rules would increase Title V permit fees by the change in the consumer price index, to pay for increased program costs.

How will DEQ know the rule addressed the need?

The rules will have addressed the need if the increased fees help the Title V program balance its budget and avoid a disruption in requisite services.

Lead division

Operations Division

Program or activity

Title V Operating Permit Program

Chapter 340 action

Statutory authority

ORS 468.020, 468.065, 468A.025, 468A.040, 468A.050, 468A.310 and 468A.315

Statute implemented

ORS468.065, 468A.050 and 468A.315

Documents relied on for rulemaking  ORS 183.335(2)(b)(D)

Fee Analysis

The proposed rules would increase existing Title V fees. EQC’s authority to act on the proposed fees is in ORS 468A.050.

Oregon’s Title V program administers federal health standards, air toxic requirements and other regulations to reduce the number of unhealthy air days and health risks from air toxics. The program issues, renews or modifies permits to prevent or reduce air pollution through permit requirements. In addition, it ensures existing pollution sources comply with state and federal air emissions standards and new sources of air pollution install controls such as filtration equipment, combustion controls and vapor controls needed to protect air quality. Other essential services include emission inventories, technical assistance, inspections, enforcement, rule and policy development, data management and reporting to EPA.

Brief description of proposed fees

The Oregon Legislature established Oregon’s Title V fees in three categories. The proposed rules would increase the annual base fees, emission fees and specific activity fees, described under the Statement of Need section above and based on the consumer price index described under the Summary section on page one.

Reasons

The proposed fees would address increased program costs.

Fee proposal alternatives considered

Federal law requires DEQ to perform requisite program services to retain delegation of the Title V program. Federal law also requires DEQ to fund the permit program entirely by permit fees. DEQ could decline to administer the program, shifting the program from DEQ to EPA; however, DEQ has chosen not to pursue this alternative to maintain regulatory consistency for the regulated public and citizens of Oregon.

Fee payer

Title V permit holders include many of the largest industrial facilities in the state and are the largest point sources of air pollution in the state. These facilities are mainly large employers and produce items for local and regional consumption. Title V permit holders are an important part of the Oregon economy.

Affected party involvement in fee-setting process

DEQ negotiated with Title V stakeholders when the fees were increased in the 2007 legislative session and again during the 2009 session when the statutory language related to annual Consumer Price Index increases was clarified.

During the public comment period, DEQ requests public comment on whether to consider other options for achieving the rule's substantive goals while reducing negative economic impact of the rule on business.

Summary of impacts

The proposed fee increase would affect the 115 facilities that currently have a Title V permit and any facility that applies for this type of permit in the future.

Fee payer agreement with fee proposal

DEQ has increased Title V fees regularly since the Title V program began in the early nineties. Fee payers generally do not oppose this annual fee increase equal to the rate of inflation.

Links to supporting documents for proposed fees

How long will the current fees sustain the program?

The current fees will not sustain the program.

How long will the proposed fee sustain the program?

The proposed fee increase will sustain the program up to August 2018.

Phase one:

Phase two:

Transactions and revenue

DEQ estimated revenue forecasts and expenditures based on the assumption that DEQ identified all facilities subject to the Title V program and that the number of Title V permits and facility emissions will remain approximately the same as invoiced in 2015. The revenue forecasts and expenditures are also based on the assumption that the 2016 change in the consumer price index will be the same as the 2015 change in the index.

Transactions include the number of invoices DEQ issues for annual permit fees in August of each year and the number of invoices DEQ issues for specific activity fees. DEQ issues specific activity fees throughout the year depending on the number of new permit applications and changes to existing permits. These fees are a small portion of program revenue.

Number of

Fee schedule

The following table shows the amounts of the proposed fees.

¹ Fees based on an estimate of the 2016 consumer price index.

Fiscal and Economic Impact

The increase in Title V permit fees would affect approximately 115 permit holders directly and increase annual program revenue by approximately 0.45 percent in the 2016 invoice year and an additional 0.45 percent in the 2017 invoice year.

The direct impact of the fee increase on permit holders is based on an assumption that emissions will remain the same in future years and that the 2016 change in the consumer price index will be the same as the 2015 change in the index.

Title V permit holders are subject to Oregon’s greenhouse gas reporting program and most of the permit holders are subject to the greenhouse gas reporting fees. The greenhouse gas reporting fee is equal to 15 percent of their Title V annual base and emission fees, up to a maximum greenhouse gas reporting fee of $4,500. Because the greenhouse gas reporting fee calculation is a percentage of the Title V fees, the proposed increase in Title V permit fees would result in a 0.45 percent increase in the greenhouse gas reporting fees for these permit holders in the invoices DEQ will issue in 2016, and an additional 0.45 percent increase in the invoices DEQ will issue in 2017. The cap of $4,500 remains unchanged.

Statement of Cost of Compliance  

1.  State and federal agencies

Direct Impacts: Oregon Health Sciences University is the only state agency that holds a Title V permit and paid Title V permit fees of $16,180.99 in 2015. The proposed rules would increase their permit fees by about $66 for 2016 and an additional estimated $69 for 2017. OHSU is also subject to greenhouse gas reporting fees equal to 15 percent of its annual emission fee and base fee. OHSU paid $2,110.56 in greenhouse gas reporting fees in 2015. As a result of the proposed rules, OHSU’s greenhouse gas reporting fees would increase by about $10 in 2016 and increase by an additional estimated $10 in 2017. No federal agencies hold Title V permits.

Indirect Impacts: Changes to fees could affect state and federal agencies indirectly if businesses holding Title V permits change the price of goods and services to offset any increased costs from paying a permit fee.

2.  DEQ  

Direct Impacts: DEQ has no facilities that require a Title V permit. The proposed fee increases would affect DEQ directly by providing funding necessary to perform requisite program services.

Indirect Impacts: Changes to fees could affect DEQ indirectly if businesses change the price of goods and services to offset any increased or decreased costs from paying a permit fee.

3.  Local governments

Direct Impacts: Oregon requires county and city local governments to obtain a Title V major source permit for municipal waste landfills. Fees would increase for two landfills operated by local governments:

•  Metropolitan Service District, St. Johns Landfill paid Title V annual permit fees of $9,646.75 in 2015. The proposed rules would increase their 2016 fees by about $38 and an additional estimated $41 increase for 2017. St. John’s Landfill is subject to greenhouse gas reporting fees equal to 15 percent of their annual emission fee and base fee. This fee would increase by about $6 in 2016 and increase an additional estimated $6 in 2017.

•  Deschutes County Solid Waste Department, Knott Landfill paid Title V annual permit fees of $10,302.40 in 2015. The proposed rules would increase their 2016 fees by about $48 and an additional estimated $51 for 2017. Knott Landfill is subject to greenhouse gas reporting fees equal to 15 percent of their annual emission fee and base fee. This fee would increase by about $7 in 2016 and increase an additional estimates $8 in 2017.

Indirect Impacts: Changes to fees could affect county and city local governments indirectly if businesses holding Title V permits change the price of goods and services to offset any increased costs from paying a permit fee.

4.  Public

Direct Impacts: Air pollution creates public health problems that can have negative economic impacts. The proposed rules could affect the public directly and positively if the proposed fee increases provide adequate resources for compliance and technical assistance and help avoid public health costs associated with lower compliance and increased air pollution.  

Indirect Impacts: Changes to fees could affect the public indirectly if businesses change the price of goods and services to offset any increased or decreased costs from paying a permit fee. DEQ expects any such price increases to be small and lacks available information upon which it could accurately estimate actual potential increases.

5.  Large businesses - businesses with more than 50 employees

Direct Impacts: Approximately 100 large businesses hold Title V permits and a fee increase would affect these permit holders directly. Estimated impacts are based on the assumption that DEQ identified all facilities subject to the Title V program and that the number of Title V permits and facility emissions remain constant.

The proposed annual base fees and emission fees are provided in the following table. The annual base fee is small in comparison to the emission fees paid by most sources. The rulemaking would also increase specific activity fees. Specific activity fees contribute a small portion of Title V program revenue.

¹ Fees based on an estimate of the 2016 consumer price index.

The requirement for a Title V permit is based on quantity of emissions from a facility. In general, lower emitting sources with less complex permits would experience a smaller annual dollar impact from the proposed fee increases. The table below shows the effect of the proposed fees on invoices issued to sources emitting 50, 250, 500 or 5,000 tons per year.

¹ Fees based on an estimate of the 2016 consumer price index.

Indirect Impacts: Changes to fees could affect businesses indirectly if other businesses change the price of goods and services to offset any increased or decreased costs from paying a permit fee.

Proposed Title

6.  Small businesses – businesses with 50 or fewer employees ORS 183.336

Direct Impacts: Most Title V permit holders are large businesses, but the requirement to hold a permit is based on potential emission levels rather than business size. Approximately 15 small businesses are required to hold Title V permits because their potential emissions exceed Title V applicability thresholds. None of the small businesses holding Title V permits emit more than 250 tons per year in a typical year. Businesses emitting 250 tons per year would experience a fee increase of $103 in 2016 over existing fees and an additional fee increase of $115 in 2017 over 2016 fees. None of the small businesses are subject to greenhouse gas reporting fees.

Indirect Impacts: Changes to fees could affect small businesses if other businesses holding Title V permits change the price of goods and services to offset any increased costs from paying a permit fee.

Documents relied on for fiscal and economic impact

Advisory committee

DEQ did not appoint an advisory committee for the proposed rules because federal law and Oregon statute authorize the fee increases.

Housing cost

To comply with ORS 183.534, DEQ determined the proposed rules may have an effect on the development cost of a 6,000-square-foot parcel and construction of a 1,200-square-foot detached, single-family dwelling on that parcel. It is possible that a permit holder could change the price of goods and services to pass on any fee changes to consumers, though any estimate of the possible impact would be speculative using information available at this time.

Request for other options

During the public comment period, DEQ requests public comment on whether to consider other options for achieving the rule’s substantive goals while reducing negative economic impact of the rule on business.

"It is the policy of this state that agencies shall seek to retain and promote the unique identity of Oregon by considering local conditions when an agency adopts policies and rules. However, since there are many federal laws and regulations that apply to activities that are also regulated by the state, it is also the policy of this state that agencies attempt to adopt rules that correspond with equivalent federal laws and rules..." ORS 183.332

Relationship to federal requirements

This section complies with OAR 340-011-0029 and ORS 468A.327 to clearly identify the relationship between the proposed rules and applicable federal requirements.

The proposed rulemaking is not different from, or in addition to, applicable federal requirements and impose stringency equivalent to federal requirements. The proposed rules implement federal requirements of the Clean Air Act and EPA rules (40 CFR Part 70) that Oregon’s Title V operating permit program be fully funded through permit fees.

What alternatives did DEQ consider if any?

During the public comment period, DEQ requests public comment on whether to consider other options for achieving the rule's substantive goals while reducing negative economic impact of the rule on business. Federal law requires DEQ to perform requisite program services to retain delegation of the Title V program. Federal law also requires DEQ to fund the permit program entirely by permit fees. DEQ could decline to administer the program, shifting the program from DEQ to EPA; however, DEQ has chosen not to pursue this alternative to maintain regulatory consistency for the regulated public and citizens of Oregon.

“It is the Commission's policy to coordinate the Department's programs, rules and actions that affect land use with local acknowledged plans to the fullest degree possible.”   OAR 340-018-0010

Land-use considerations

To determine whether the proposed rules involve programs or actions that are considered a land-use action, DEQ considered:

▪  Statewide planning goals for specific references. Section III, subsection 2 of the DEQ State Agency Coordination Program document identifies the following statewide goal relating to DEQ's authority:

 Goal    Title

5      Open Spaces, Scenic and Historic Areas, and Natural Resources

6      Air, Water and Land Resources Quality

11      Public Facilities and Services

16      Estuarial resources

19      Ocean Resources

▪  OAR 340-018-0030 for EQC rules on land-use coordination. Division 18 requires DEQ to determine whether proposed rules will significantly affect land use. If yes, how will DEQ:

◦  Comply with statewide land-use goals, and

◦  Ensure compatibility with acknowledged comprehensive plans, which DEQ most commonly achieves by requiring a Land Use Compatibility Statement.

▪  DEQ’s mandate to protect public health and safety and the environment.

▪  Whether DEQ is the primary authority that is responsible for land-use programs or actions in the proposed rules.

▪  Present or future land uses identified in acknowledged comprehensive plans.

Determination

DEQ determined that the proposed rules listed under the Chapter 340 Action section above do not affect existing rules, programs or activities that are considered land-use programs and actions in OAR 340-018-0030 or in the DEQ State Agency Coordination Program.

Advisory committee

DEQ did not convene an advisory committee because federal law and Oregon statute authorize the fee increases.

EQC prior involvement

DEQ shares general rulemaking information with EQC through the monthly Director’s Report.

DEQ did not present additional information specific to this proposed rule revision.

Public notice

DEQ provided notice of the proposed rulemaking and rulemaking hearing on January 15, 2016 by:

•  Filing notice with the Oregon Secretary of State for publication in the Oregon Bulletin on January 15, 2016

•  Notifying the Environmental Protection Agency, Region 10, Seattle by email

•  Posting the Notice, Invitation to Comment and Draft Rules on the web page for this rulemaking; located at: Title V CPI 2016

•  Emailing 7,617 interested parties on the following DEQ lists through GovDelivery:

◦  Agency Rulemaking

◦  DEQ Public Notices

◦  Air Quality Permits

◦  Title V Permit Program Public

•  Emailing 89 representatives of permit holders

•  Emailing the following key legislators required under ORS 183.335:

◦  

◦  

•  Emailing advisory committee members

•  Postings on Twitter and Facebook

•  Posting on the DEQ event calendar: DEQ Calendar

Public hearings

DEQ plans to hold a single public hearing for the phase one and phase two rulemakings described in this notice. The table below includes information about how to participate in the public hearing.

Before taking public comment and according to Oregon Administrative Rule 137-001-0030, the staff presenter will summarize the content of the notice given under Oregon Revised Statute 183.335 and respond to any questions about the rulemaking. The presiding officer will keep records of the hearing, including written and oral testimony, for the permanent public record.

DEQ will add the names, addresses and affiliations of all hearing attendees to the interested parties list for this rule if provided on a registration form or the attendee list. DEQ will consider all written comments received at the hearings listed below before completing the draft rules. DEQ will summarize all comments and respond to comments in the Environmental Quality Commission staff report.

Close of public comment period

The comment period will close on February 22, 2016 at 4:00 p.m.

Accessibility Information

You may review copies of all documents referenced in this announcement at:

Oregon Department of Environmental Quality

811 SW Sixth Avenue

Portland, OR, 97204

To schedule a review of all websites and documents referenced in this announcement, call Susan Carlson, Portland, at (503) 229-6918. (800-452-4011, ext. 5622 toll-free in Oregon).

Please notify DEQ of any special physical or language accommodations or if you need information in large print, Braille or another format. To make these arrangements, contact DEQ, Portland, at 503-229-5696 or call toll-free in Oregon at 1-800-452-4011, ext. 5696; fax to 503-229-6762; or email to DEQInfo. Hearing impaired persons may call 711.