Oregon Department of Environmental Quality Oregon Environmental Quality Commission meeting Sept. 13-14, 2018

Agency Staff Report Rulemaking, Action Item C

Water Quality Permit Fees 2018

Table of Contents

DEQ recommendation to the EQC  2

Overview  3

Statement of Need  5

Rules affected, authorities, supporting documents  7

Fee Analysis  8

Statement of fiscal and economic impact  10

Federal relationship  14

Land Use  15

Advisory Committee  17

Public Hearings  20

Summary of comments and DEQ responses  21

Comments  21

Implementation  31

Five-year review  32

Draft Rules – With Edits Highlighted  33

Draft Rules – With Edits Included  66

Supporting Documents  97

DEQ recommendation to the EQC

DEQ recommends that the Oregon Environmental Quality Commission adopt the proposed rules as seen on pages 33 through 65 of this report as part of Chapter 340 of the Oregon Administrative Rules.

Proposed EQC motion:

“I move that the commission adopt the proposed rule amendments, as seen on pages 33 through 65 of the staff report for this item, as part of Chapter 340 of the Oregon Administrative Rules Divisions 45 and 71”

Overview

Summary of recommended rule changes

The proposed rule amendments include three types of fee increases for different water quality permits, as well as corrections to past typographical and administrative errors.

Fee increase type one: The proposed rule amendments would increase water quality fees for fiscal year 2019 by seven percent for (federal) National Pollutant Discharge Elimination System permits and (state) Water Pollution Control Facility permits.

Fee increase type two: The proposed rule amendments would increase permit fees for the municipal separate storm sewer system permits, commonly called MS4. The 2017-19 Legislatively Adopted Budget authorizes DEQ to increase these permit fees. DEQ will apply the MS4 fee increase to the MS4 annual fees, which are not subject to the seven percent increase for this rulemaking.

Fee increase type three: The proposed rule amendments would implement a fee increase for general permits issued under ORS 468B.050 for motorized in-stream placer mining under permit 700-PM established in Senate Bill 3 in the 2017 Oregon Legislature.

The proposed typographical and administrative corrections would:

1)  Correct permitting fees for WPCF permits, system type E

2)  Restore the WPCF individual permit fee F to OAR 340-045-0075, Table 70C. The WPCF permit type F in Table 70C was inadvertently deleted when the permit type was added to the general permits in OAR 340-045-0075, Table 70G. The WPCF individual permit domestic F permit fees in Table 70C are existing fees and the seven percent increase is applied.

Proposed rule changes, in detail

DEQ recommends the following changes to OAR 340, divisions 45 and 71:

•  Increase water quality fees for fiscal year 2019 by seven percent. The seven percent increase applies to National Pollutant Discharge Elimination System permits and Water Pollution Control Facility permits. The seven percent increase consists of a three percent increase provided under ORS 468B.051 and a four percent increase approved in the 2017 Legislative session. The statute allows the EQC to increase fees for water quality permits in an amount that does not exceed the anticipated increase of the cost of administering the permit program, or three percent, whichever is lower, unless a larger increase is provided in the DEQ legislatively approved

budget,. The four percent increase covers approximately 30 percent of the cost of four new positions in the wastewater permitting program. The legislature approved these additional resources to help improve the performance of the water quality permitting program.

•  Increase fees for municipal separate storm sewer system permits, commonly called MS4. DEQ will apply the MS4 fee increase to the MS4 annual fees. These fees are not subject to the seven percent increase for this rulemaking described in the first bullet, above. The 2017-19 Legislatively Adopted Budget authorizes DEQ to increase MS4 permit fees to raise an additional $300,000 per year in fee revenue to fund two positions to implement the MS4 program.

These fee increases implement the Legislatively Adopted Budget for DEQ for 2017-19 and help the agency achieve its objective for a sustainable water quality permitting program.

DEQ’s goals for the program are to issue timely, high quality permits, as well as ensure compliance with permit conditions through inspections, enforcement, and reporting to EPA.

DEQ also recommends the following changes to clarify or make corrections to OAR 340, divisions 45 and 71:

•  Increase general permit fees issued under ORS 468B.050 for motorized in-stream placer mining under the 700-PM general permit. The 2017 Oregon Legislature passed Senate Bill 3. That bill established requirements for suction dredge mining in Oregon and approved a fee for the program. This fee change went into effect January 1, 2018. See, OAR 340-045-0075, Table 70G. The fees are $250 for the initial application for a permit and an annual fee of $250 (renewals also are subject to a

$250 fee); and

•  Correct an error in permitting Fees for Systems Not Subject To WPCF Permits, System Type E fee correction from $1,776 to $1,763 (a $13 difference). See, OAR 340-071-0140, Table 9B; and

•  Restore the WPCF domestic individual permit fee F to OAR 340-045-0075, Table 70C. The WPCF permit type F in Table 70C was inadvertently deleted when the permit type was added to the general permits in OAR 340-045-0075, Table 70G. The WPCF individual permit domestic F permit fees in Table 70C are existing fees and the seven percent increase is applied.

Affected parties

The proposed rules would affect individuals, business, and government agencies that hold or apply for National Pollutant Discharge Elimination System permits, Water Pollution Control Facility permits and MS4 permits.

Statement of Need

Rules affected, authorities, supporting documents

Lead division

Water Quality Division

Program or activity

Water Quality Permitting and Program Development

340-045-0075, 340-071-0800

Statutory authority – ORS

468.020, 468B.020 & 468B.035, 454.625, 468.020 & 468.065(2)

Statute implemented – ORS

468.065, 468B.015, 468B.035 & 468B.050, 454.745, 468.065 & 468B.050

Legislation

Senate Bill 3, 2017

Documents relied on for rulemaking

Fee Analysis

The Oregon Environmental Quality Commission approval of this rule proposal would increase existing fees. EQC authority to act on the proposed fees is ORS 468B.051 and ORS 468B.050.

Brief description of proposed fees

DEQ proposes rule amendments to increase water quality fees for fiscal year 2019 by seven percent above the fiscal year 2018 fees. These fee increases apply to National Pollutant Discharge Elimination System permits and Water Pollution Control Facility permits. DEQ also proposes to establish in rule a fee increase for municipal separate storm sewer system permits, commonly called MS4. DEQ will apply the MS4 fee increase to the MS4 annual fees.

To meet the MS4 revenue target the Legislature approved, DEQ is proposing a new MS4 permit fee structure. The new structure uses a cost-per-person, multiplied by the approximate population the permit covers. However, DEQ applies a flat rate to some counties depending on the permit category e.g., Phase I or Phase II. The cost-per-person for fiscal year 2019 is $0.113. The population data for the proposed fees are from Portland State University Population Research Center, Certified Population estimates as of July 1, 2017, and other sources. These other sources include:

•  Water Environment Services of Clackamas County provided population for Surface Water Management Agency of Clackamas County (SWMACC), Clackamas County Service District No. 1 (CCSD #1), and the City of Rivergrove

•  The web site of the Oak Lodge Sanitary District in the Clackamas County Group provided data for that area;

•  Clean Water Services provided data for incorporated cities and unincorporated areas within Washington County’s urban growth boundary; and

•  Rogue Valley Sewer Services provided population for Jackson County.

The MS4 fee increase is not subject to the seven percent increase in this rulemaking. EQC approval of these fee increases is necessary to carry out the Legislatively Adopted

Budget for DEQ for 2017-19. Without this increase, DEQ would need to reduce permitting staff and delay implementing improvements to the program as identified in the document: Recommendations and Implementation Plan. In addition, without the MS4 annual fee increase, DEQ likely would not: issue any new MS4 permits, all but one of which are currently expired; provide assistance to regulated entities; meet our federal requirements to apply the MS4 program to communities that have grown to exceed the population threshold at which federal law applies the MS4 program. Without this funding, water quality in urban streams and downstream waters is likely to be further degraded, with impacts on other regulated entities and communities that need federal approvals for financial assistance and federal permits.

The proposed fees would address:

•  New fee created by statute – Senate Bill 3 that establishes new restrictions and fees for suction dredge mining for motorized in-stream placer mining under permit 700-PM.

•  Fee increase allowed by statute - three percent increase provided under ORS 468B.051.

•  Fees increases approved in the Legislative session – four percent increase provided by Policy Option Package 125 and the MS4 revenue included in Policy Option Package 120 in the 2017 Legislative session.

Fee proposal alternatives considered

Not increasing fees

Without the fee increase, DEQ will be unable to provide ongoing permit program functions at the current service level. This could result in the loss of permit writer positions, or having to hold those positions vacant. DEQ would also be unable to implement recommended program improvements identified in a 2017 program evaluation. Without the MS4 annual fee increase, DEQ will not be able to issue any new MS4 permits.

Other ways to reduce program costs

DEQ has implemented cost savings measures over the past few biennia that, over time, should reduce program costs. For example, the creation of a permit writer team has resulted in some progress in issuance of NPDES permits over the last nine months. Another example is digitization of its water quality permit files, which is expected to save at least

$9,000 per year in reduced storage costs, as well as additional savings in staff time.

Statement of fiscal and economic impact

Fiscal and Economic Impact

Increasing NPDES and WPCF fees will increase costs for entities that hold the affected permits or that require fee-based services.

Statement of Cost of Compliance

State agencies

The effect of the seven percent increase on state agencies depends on the permit type. Oregon state agencies hold approximately 116 active water quality permits.

Examples of the seven percent fee increase on selected permit types are below:

•  Industrial NPDES fee permits for Tier 2 sources, dairies and fish hatcheries, and facilities that dispose of wastewater only by evaporation from watertight ponds or basins, will increase between $171 and $292. This increases costs for approximately five state agencies (OAR 340-045-0075, Table 70B).

•  Annual fees for WPCF individual permits will increase between $90 and $992. This increases costs for approximately five state agencies (OAR 340-045-0075, Table 70C).

•  Annual fees for general NPDES and WPCF permits will increase between $23 and $40. This increases costs for approximately 10 state agencies (OAR 340-045-0075, Table 70G).

•  Annual compliance determination fees for WPCF permits, depending on the type of permit will increase between $3 and $71. This increases costs for approximately eight state agencies (OAR 340-071-0140, Table 9D).

DEQ has a revenue agreement with the Oregon Department of Transportation to fund DEQ’s work associated with ODOT’s MS4 permit through June 20, 2019.

Local governments

The effect of the seven percent increase for NPDES and WPCF fees on local governments depends on the permit type. Oregon local governments hold approximately 620 total active water quality permits. This count excludes MS4 permit annual fees that are exempt from the seven percent fee increase for this rulemaking.

A local government includes water districts, irrigation districts, cities, towns, ports, sanitary districts, library districts, counties, and school districts. For the purpose of this fiscal analysis, DEQ considered ports and school districts as separate local governments even if

contained within a city or county government. Examples of the seven percent fee increase on selected permit types are as follows:

•  Industrial NPDES fee permits for Tier 1 and 2 sources, dairies and fish hatcheries, and facilities that dispose of wastewater only by evaporation from watertight ponds or basins, will increase between $171 and $292. Approximately eight local governments and their permit co-permittees affected (OAR 340-045-0075, Table 70B).

•  Domestic NPDES and WPCF individual permit annual fee increases will range from

$108 to $5,977. The $5,977 increase will affect approximately one local government (OAR 340-045-0075, Table 70C).

•  Annual fees for general NPDES and WPCF permits will increase between $17 and $70. There are approximately 293 local government permits in total. WPCF general permits in this category related to water reuse (e.g., WPCF 2401 and 2402) will not have a fee increase for this rulemaking (OAR 340-045-0075, Table 70G).

•  Annual permit processing fees for onsite systems and compliance determination fees for WPCF permits, depending on the type of permit, will increase between $3 for holding tanks to $71 for onsite sewage lagoon with no discharge. This affects approximately 67 local government permits (OAR 340-071-0140, Table 9D).

Municipal Separate Storm Sewer System fee increase

The impact to local governments of the MS4 fee increase for fiscal year 2019 depends on the amount each local government will pay compared to the previous year. To meet the

$300,000 per year revenue target the legislature approved, DEQ developed a proposed new MS4 permit fee structure. The new structure uses a cost-per-person multiplied by the approximate population covered by the permit, except counties where DEQ applies a flat rate depending on the permit category e.g., small, medium and large. The cost-per-person for fiscal year 2019 is $0.121.

Permittees under the cost-per-person structure will pay in the range of an additional $3.77 to

$72,517 over what they paid in fiscal year 2018. Four MS4 permittees will pay less than what they paid in fiscal year 2018, saving between $340 and $90 in fees for fiscal year 2019. The Portland Group MS4 permit, comprised of the City of Portland and Port of Portland, will have the largest increase followed by the Clean Water Services permit, and the Clackamas County Group permit.

Counties in the medium to large category will pay a flat rate of $15,000. Counties in the small category will pay a flat rate $2,500. Multnomah County will pay an additional

$10,000 over what they paid in 2018. Counties in the small category will pay an additional

$1,573 to $1,367 over what they paid in 2018.

Public

With existing data, DEQ cannot determine the extent to which the proposed fees would affect each consumer. DEQ anticipates impacts on the public if the permit holder were to increase the costs of goods and services or fees charged to ratepayers to offset the fee

increase. It is likely that the MS4 fee increase will have a larger direct impact on consumers in terms of increase for services. This is because, typically, the consumer covers the entire cost of the fees contained in OAR 340-045-0075, Table 70H, Municipal Separate Storm Sewer System Permits: Annual Fees.

Large businesses - businesses with more than 50 employees

The seven percent fee increase would affect approximately 150 wastewater permit holders that are large businesses. No information is available to determine how the fee increases would affect each individual permit holder or how each permit holder may elect to pass on or incorporate fees into their current business model.

Small businesses – businesses with 50 or fewer employees

According to 2017 data from the Oregon Employment Department, the fee increase may affect approximately 3,300 small businesses that hold water quality permits. Fiscal impact to a small businesses depends on the type of permit issued. The fee increase for new applications would increase in an amount between $91 to $2,760.

a.  Estimated number of small businesses and types of businesses and industries with small businesses subject to proposed rule.

DEQ estimates the fee increases for wastewater permits would affect approximately 3,300 small businesses.

Examples of small businesses that have wastewater permits are food processors, mining operations, dairies, fish hatcheries, smelting and refining operations, timber processing, wood products manufacturing, retail operations, seafood processors, gravel mining, wineries, construction companies, petroleum hydrocarbon cleanup operations, and vehicle and equipment wash water operations.

b.  Projected reporting, recordkeeping and other administrative activities, including costs of professional services, required for small businesses to comply with the proposed rule.

No additional activities are required to comply with the proposed rules.

c.  Projected equipment, supplies, labor and increased administration required for small businesses to comply with the proposed rule.

No additional resources are required to comply with the proposed rules.

d.  Describe how DEQ involved small businesses in developing this proposed rule.

On April 12, 2018, DEQ met with a fiscal advisory committee composed of a diverse group of stakeholders representing a wide-cross section of DEQ’s permit holders. DEQ requested input that those stakeholders regarding potential impacts to small businesses.

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

Documents relied on for fiscal and economic impact

Federal relationship

Relationship to federal requirements

ORS 183.332, 468A.327 and OAR 340-011-0029 require DEQ to attempt to adopt rules that correspond with existing equivalent federal laws and rules unless there are reasons not to do so.

The proposed rules are “in addition to federal requirements” because there are no comparable federal requirements.

Land Use

Land-use considerations

In adopting new or amended rules, ORS 197.180 and OAR 340-018-0070 require DEQ to determine whether the proposed rules significantly affect land use. If so, DEQ must explain how the proposed rules comply with statewide land-use planning goals and local acknowledged comprehensive plans.

Under OAR 660-030-0005 and OAR 340 Division 18, DEQ considers that rules affect land use if:

•  The statewide land use planning goals specifically refer to the rule or program, or

•  The rule or program is reasonably expected to have significant effects on:

◦  Resources, objectives or areas identified in the statewide planning goals, or

◦  Present or future land uses identified in acknowledged comprehensive plans

To determine whether the proposed rules involve programs or actions that affect land use, DEQ reviewed its Statewide Agency Coordination plan, which describes the DEQ programs that have been determined to significantly affect land use. DEQ considers that its programs specifically relate to the following statewide goals:

Statewide goals also specifically reference the following DEQ programs:

•  Nonpoint source discharge water quality program – Goal 16

•  Water quality and sewage disposal systems – Goal 16

•  Water quality permits and oil spill regulations – Goal 19

Determination

DEQ determined that the following proposed rules affect programs or activities that the DEQ State Agency Coordination Program considers a land-use program: OAR 340-018-0030(5)(c) and OAR 340-018-0030(5)(d).

DEQ’s statewide goal and local plan compatibility procedures adequately cover the proposed rules. Oregon Administrative Rule 340-018-0050(2)(a) ensures compatibility with acknowledged comprehensive plans by requiring parties to submit a land-use compatibility statement.

Advisory Committee

Background

DEQ convened a fiscal advisory committee. The committee included representatives from groups representing diverse stakeholders including: local governments, domestic and industrial permit holders, environmental and citizen involvement organizations. The committee met one time. The committee’s web page is: Water Quality Permit Fees 2018.

As ORS 183.33 requires, DEQ asked for the committee’s recommendations on:

•  Whether the proposed rules would have a fiscal impact,

•  The extent of the impact, and

•  Whether the proposed rules would have a significant adverse impact on small businesses; if so, then how DEQ could comply with ORS 183.540 to reduce that impact.

The committee members were:

The committee reviewed the draft fiscal and economic impact statement and documented its findings in its minutes dated April 12, 2018.

Committee discussions

In addition to the recommendations described under the Statement of Fiscal and Economic Impact section above, the committee found the following during its fiscal impact review:

•  When DEQ increases water quality permit fees for NPDES and WPCF permits, local governments consider costs related to the optional fees that local governments can collect. Governments use these fees, called system development charges, to fund the costs of capital improvements for new infrastructure development, including water, stormwater and sewer. For example, local governments may use system development charges for improvements to remain in compliance with their DEQ permit.

•  MS4 fees paid by counties that to do not have a rate base may use general or other funds to pay for DEQ permits, and in doing so may need to reduce other services they provide.

Meeting minutes and recordings are available by request from DEQ or from the advisory committee webpage at: Water Quality Fee Rulemaking Advisory Committee.

Meeting notifications

To notify people about the advisory committee’s activities, DEQ:

•  Sent GovDelivery bulletins, a free e-mail subscription service, to the following lists on March 30, 2018:

•  Rulemaking

•  Water Quality Permits

•  Added advisory committee announcements to DEQ’s calendar of public meetings at DEQ Calendar.

•  DEQ provided notice of meetings and links to committee information through postings on Facebook and Twitter on March 30, 2018.

EQC prior involvement

DEQ shared general information with EQC about this rulemaking proposal in the monthly Director’s Report for the May 2018 EQC meeting in The Dalles, Oregon.

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 Tuesday, May 15, 2018 by:

•  Filing notice with the Oregon Secretary of State for publication in the June 1, 2018, Oregon Bulletin;

•  Posting the Notice, Invitation to Comment and Draft Rules on the web page for this rulemaking, located at: Water Quality Permit Fees Rulemaking 2018

•  Emailing 10,293 interested parties on the following DEQ lists through GovDelivery:

•  Rulemaking

•  Water Quality Permits

•  Emailing the following key legislators required under ORS 183.335:

◦  Senator Lew Frederick, Co-Chair, Natural Resource Ways and Means Subcommittee

◦  Representative Brad Witt, Co-Chair, Natural Resource Ways and Means Subcommittee

◦  Representative Ken Helm, Chair, House Energy and Environment Committee

•  Postings on Twitter and Facebook

•  Posting on the DEQ event calendar: DEQ Calendar

Request for other options

During the public comment period, DEQ requested public comment on whether to consider other options for achieving the rules’ substantive goals while reducing the rules’ negative economic impact on business. This document includes a summary of comments and DEQ responses.

Public Hearings

Public hearings

DEQ held one public hearing. DEQ received no comments at the hearing. Later sections of this document include a summary of the comments received during the open public comment period, DEQ’s responses, and a list of the commenters.

Original comments are on file with DEQ.

Presiding Officers’ Record

Hearing 1

Date: Monday, June 18, 2018 Start time: 1 p.m.

End time: 1:40 p.m.

Place: 700 NE Multnomah Street, Suite 600, Portland, OR 97232-4100 Presiding Officer: Michele Martin

The presiding officer convened the hearing, summarized procedures for the hearing, and explained that DEQ was recording the hearing. The presiding officer asked people who wanted to present verbal comments to sign the registration list, or if attending by phone, to indicate their intent to present comments. The presiding officer advised all attending parties interested in receiving future information about the rulemaking to sign up for GovDelivery email notices.

As Oregon Administrative Rule 137-001-0030 requires, the presiding officer summarized the content of the rulemaking notice.

One person attended the hearing in person and no people attended by teleconference. No person commented orally and no person submitted written comments at the hearing.

Public comment period

DEQ accepted public comment on the proposed rulemaking from May 15, 2018, until 4 p.m. on June 22, 2018.

Summary of comments and DEQ responses

For public comments received by the close of the public comment period, the following table organizes comments by commenter. DEQ’s response follows each comment summary. Original comments are on file with DEQ.

DEQ changed the proposed rules in response to comments described in the response sections below.

Commenters

The table below lists people and organizations that submitted public comments about the proposed rules by the deadline. Original comments are on file with DEQ.

Comments

1.  Commenter: Multnomah County

Comment #1: Multnomah County supports DEQ to fund two new positions in the NPDES MS4 stormwater program, and in concept, the permit fee increase to fund these positions.

Response: DEQ appreciates your input.

Comment #2: Multnomah County’s NPDES stormwater permit covers some urban roadways, five Willamette River bridges, and a few urban residential areas. Despite Multnomah County’s smaller permit coverage compared to the population covered

by the City of Gresham, DEQ has assigned a larger NPDES fee for Multnomah County than the Gresham Group permit (includes The City of Gresham and The City of Fairview).

Response: DEQ appreciates your input and considered it when finalizing the fee table. DEQ has reduced the Phase I MS4 permit fee for large counties to $10,000.

Comment #3: The county’s stormwater management program resources is limited by several factors. The county does not have a means to collect a stormwater fee like other cities. This limitation is because the county’s urban roadways are within other cities, and because the population in the urban pockets are so miniscule that administration of fee collection would dwarf any reasonable fee for these areas. As a result, the county does not have dedicated stormwater fund. Resources used to fund the county’s water quality program’s one staff is funded out of the Road Fund, which is derived from the gas tax and vehicle registration.

Response: DEQ appreciates your input and acknowledges that some permit holders do not have a rate base from which to acquire additional funding.

Comment #4: DEQ does not provide any rational for how the MS4 fees were developed by the committee.

Response: The 2017-19 Legislatively Approved Budget authorizes DEQ to increase MS4 permit fees to raise an additional $480,000 in fee revenue for a total of $600,000 for the biennium ($300,000 per year). The fees are to fund two full-time positions to implement the MS4 program.

DEQ established a workgroup for this rulemaking to provide input about various options for how to equitably calculate fees for MS4 permits to meet the revenue target the legislature approved. Concepts for the first of the two workgroup meetings used a table with fees corresponding to population ranges, similar to the current fees in OAR 340-045-0075 Table 70H for MS4 fees. The initial concepts also included a base fee. At the second of the two workgroup meetings, DEQ provided the three following concepts from input provided by stakeholders at the first meeting:

1.  Concept A that used a table with fees corresponding to population ranges, but unlike the concept in the first workgroup meeting, Concept A had more population ranges, no base fee, and a flat rate for Phase I and Phase II counties;

2.  Concept B used population multiplied by a cost-per-person, except counties where a fixed rate applied; and

3.  Concept C was derived from a recommendation provided by a workgroup member to use city mileage (miles provided by Oregon Department of Transportation), except counties where a fixed rate applied.

DEQ provided Concept B to the Fiscal Advisory Committee and during the public notice for this rulemaking. The cost-per-person rate provided in Concept B is calculated by subtracting the sum of the county fees from $300,000 to establish the revenue target for the

cost-per-person based fees, then dividing that amount by the total population of the permittees subject to the cost-per-person fee.

DEQ included a flat rate for counties because workgroup members identified counties as having different challenges when paying for MS4 fees. For example, Multnomah County has an individual Phase I MS4 permit and does not have a population base to use for a cost-per- person rate. Therefore, DEQ determined that the permit fees should be commensurate with the rest of the Phase I MS4 permit fees.

The population data used for the fee table is from Portland State University Population Research Center, Certified Population Estimates as of July 1, 2017. Other population data came from the following sources: Water Environment Services of Clackamas County provided population for Surface Water Management Agency of Clackamas County (SWMACC), Clackamas County Service District No. 1 (CCSD #1), and the City of Rivergrove; population data for Oak Lodge Sanitary District in the Clackamas County Group came from Oak Lodge Sanitary District’s website; Clean Water Services provided population for incorporated cities and unincorporated areas within Washington County’s urban growth boundary; and population for Jackson County is provided by Rouge Valley Sewer Services.

2.  Commenter: City of Portland, Bureau of Environmental Services

Comment #5: Both Phase I and Phase II permittees will benefit from a fully funded, resourced, and accountable MS4 program, and in recognition of the benefits, the city generally supports a permit fee increase. The city’s support is based on assurances that DEQ will only use the fees exclusively for MS4 program administration.

Response: The MS4 fee table was designed to generate sufficient funding to support two full time positions to do MS4 work. DEQ intends to fill these two positions and, once filled, will be able to produce accounting records to demonstrate that DEQ is conducting at least two FTE worth of MS4 work.

Comment #6: City of Portland has concerns about the proposed methodology for MS4 permit fees based on population. The City of Portland has the largest population across the MS4 communities, but approximately 30 percent of Portland’s population is serviced by its MS4 system with the remaining area being served by underground injection controls or the combined sewer system that are regulated through individual WPCF and Wastewater NPDES permits. The new fees appear to be disproportionate to the level of effort needed to administer each of the permits. It’s unlikely that managing a permit with two co-permittees will require

almost twice the resources for managing a permit with 13 co-permittees, regardless of jurisdictional population.

Response: The final MS4 fee structure based on population was selected with the intent to have an equitable cost distribution on a cost-per-person basis and because it is clear, simple, and reproducible.

Comment #7: The City of Portland is supportive of paying higher fees than permittees with much smaller population, but the current fee methodology is too heavily based on population size of permittees. Fees should be more commensurate with the anticipated resources required to effectively administer a permit.

Response: See response to comment #6 above.

Comment #8: The following is a proposed MS4 alternative fee methodology: 1) develop a consistent base fee for Phase I to administer a basic Phase I permit; 2) develop a lower or two-tiered base fee for Phase II general permits; and 3) in addition to a base fee, apply another fee based on the proportion of the population served by the MS4 permit for Phase I permittees, or reduce the cost-per-person multiplier and apply the new rate to each permittee’s base fee.

Response: DEQ appreciates the suggestions and has evaluated these as well as a number of suggestions that were provided during the MS4 fee workgroup process. The final MS4 table was selected with the intent to have an equitable cost distribution on a cost-per-person basis and because it is clear, simple, and reproducible.

3.  Commenter: Clean Water Services

Comment #9: Proposed OAR 340-045-0075(6) describes Table 70H as listing applicable annual fees for MS4 general permits, which is consistent with the title of Table 70H. The District and several other Oregon municipalities hold individual, rather than general, MS4 permits. To avoid confusion the table and references to it should be corrected to describe the permits that are subject to these fees.

Response: In response to this comment, DEQ removed the word “General” from OAR 340-045-0075(6) and 340-045-0075 Table 70H to avoid confusion for general and individual MS4 permit holders.

Comment #10: Table 70H identifies for “Counties* small and other (special districts, hospitals, school districts etc.)” an annual fee of $2,500. Proposed OAR 340-045-0075(6) describes 340-045-0075 Table 70H as applying to individual permits. Clean Water Services is a special district holding an individual integrated permit encompassing the MS4.

Anticipating that this is not the fee anticipated by DEQ, to avoid confusion either OAR 340- 045-0075(6) or Table 70H should clarify expectations for special districts.

Response: DEQ changed OAR 340-045-0075 Table 70H to read “Counties, Phase I” and “Counties, Phase II” to avoid confusion, and clarified the Phase II county fee also applies to “non-traditional MS4s, hospitals, public universities, etc.”

Comment #11: DEQ should describe and publish the methodology for calculating the per- person method for transparency and to allow municipalities and districts to budget.

Response: Please see response to comment #4.

Comment: #12: It appears that the District’s population used to calculate that projected fee only included the population of incorporated cities in Washington County. In addition to the incorporated cities, the District also serves unincorporated areas of Washington County and very small portions of Multnomah and Clackamas counties within the Urban Growth Boundary.

Response: DEQ revised the population in the MS4 fee calculations to reflect the population provided by Clean Water Services for the unincorporated area within the urban growth boundary equal to an additional 213,756 people. To remain consistent with the data, DEQ used the total population for the incorporated cities and unincorporated areas within Washington County’s urban growth boundary provided by Clean Water Services.

Comment #13: While the District appreciates the necessity to increase funding for DEQ water-quality activities, it does not appear and is disappointing that DEQ considered alternatives other than not increasing fees and reducing program costs.

Response: For the past several years, DEQ has been operating the MS4 permit program with less than one FTE. While two FTE is not an adequate level of resources to fulfil DEQ’s responsibilities for the more than 35 jurisdictions that operate MS4s, and other program requirements associated with Oregon’s federal delegation of the Clean Water Act, this fee increase is a step forward to be able to issue timely and effective permits. While DEQ did consider multiple alternatives prior to submitting the policy option package in 2016 as part of the DEQ Agency Request Budget, DEQ determined that the program requires additional resources to meet the program needs.

Comment #14: DEQ’s stated intention to use the MS4 fees only for the MS4 work must instead be a firm and verifiable commitment to do so.

Response: Please see response to comment #5.

4.  Commenter: City of Corvallis, Public Works Stormwater Program

Comment #15: We support reinstatement and creation of MS4 positions at Oregon DEQ. We highly recommend these staff work closely with MS4 municipality staff to determine which permit language will most efficiently translate into cleaner water ways.

Response: Thank you for your input. DEQ is focused on ensuring all of our water quality permits that are issued meet our regulatory requirements under the federal Clean Water Act and state water quality regulations.

5.  Commenter: Water Environment Services

Comment #16: Fees paid to DEQ by MS4 permit holders should only be used for MS4 program fees. None should be diverted to fund other DEQ programs.

Response: Please see response to comment #5

Comment #17: Request for DEQ to send separate invoices to co-permittees on the shared Clackamas County Group MS4 permit.

Response: DEQ will work to issue separate invoices to the co-permittees mentioned in the Clackamas MS4 permit as requested.

Comment #18: Surface Water Management Agency of Clackamas County (SWMACC) is not listed on the rulemaking document for MS4 fees. SWMACC joined the WES ORS 190 Municipal Partnership in 2017 and should be added to the list of communities who will pay MS4 permit fees in the future.

Response: DEQ added SWMACC to the list of permittees under Water Environment Services on the Clackamas County Group MS4 permit. Water Environment Services provided the population for SWMACC of 500.

Comment #19: Information that the Clackamas County Service District No. 1 (CCSD #1) will join the WES, ORS 190 Municipal Partnership on July 1, 2018 on the Clackamas County Group permit.

Response: Thank you for this update.

Comment #20: Are DEQ’s proposed MS4 fees based on a community’s total population or on the portion of the community’s population that is served by the MS4 permit?

Response: The MS4 fees are based on a cost-per-person model for a community’s total population for those that have a population base and a flat rate for the counties.

Comment #21: For population-based permit fees, the fee should be calculated using the population of who is served by the MS4, not the community’s total population.

Response: We appreciate your comment. DEQ determined that it is most appropriate to calculate the fees based on total population to ensure simple, transparent, and equitable fees for all of the permit holders.

Comment #22: The MS4 permit in Washington County regulates a large unincorporated, urbanized area. Please include these previously uncounted residents in the updated version of the fee document.

Response: Thank you for your input. DEQ has included the portion of unincorporated Washington County that was previously not included in the draft fees, and revised the cost-per-person and county fee amounts accordingly.

Comment #23: Why did DEQ propose to generate $340,000 (includes $40,000 attributed to ODOT)? Is the additional $40,000 for ODOT (above the stated need of

$300,000) needed to support DEQ’s MS4 permit program?

Response: DEQ and ODOT currently have a separate intergovernmental revenue agreement that pays for DEQ’s work to renew ODOT’s MS4 permit; therefore, ODOT is not paying the MS4 permit fees in OAR 340-045-0075 Table 70H. Additionally, the revenue agreement with ODOT funds a position that is not included in the 2 FTE funded by the $300,000 in MS4 fees. If the DEQ and ODOT agreement is terminated, ODOT will begin paying the direct MS4 fees again, which is why ODOT is included in the fee table.

Comment #24: If the additional $40,000 for ODOT is unnecessary, can DEQ reduce all MS4 permit fees by a modest amount to reach $300,000?

Response: The MS4 fee schedule was developed to generate $300,000 annually for two full-time positions. This does not include the $40,000 fee for the ODOT separate intergovernmental revenue agreement.

Comment #25: DEQ’s MS4 permit fee document indicates that a greater percent of the total revenue need is generated by the total Phase I permit fees. If the percent of work devoted to Phase II permit holders is greater than what is indicated by the less amount of total revenue generated by Phase II permit holders, those MS4 permit holders should be asked to pay a similar portion of the revenue need as Phase I permit holders.

Response: Since DEQ has had less than one FTE doing MS4 permit work for the past several years, DEQ does not have a workload model that is commensurate with the amount of resource needed to renew the MS4 permits that are both timely and effective. In addition, DEQ understands from stakeholders that small communities have fewer options to spread the costs to their rate-payers.

6.  Commenter: League of Oregon Cities, Oregon Association of Clean Water Agencies, Special Districts Association of Oregon & Association of Oregon Counties

Comment #26: DEQ must improve outreach to stakeholders and should clearly communicate (to both stakeholders and to legislators) proposed fee increases that are in excess of the three percent, including articulation of anticipated program improvements and accountability for anticipated program improvements.

Response: DEQ recognizes that fee increases have very tangible impacts on fee payers and stakeholders. Effective communication and outreach to those interested in the work DEQ does is an important aspect of our work. DEQ conducted a variety of outreach activities on the Agency Request Budget and Governors Recommended Budget before the 2017 legislative session with the intention of keeping stakeholders informed of developments along the way. This included presentations to the Environmental Quality Commission during the development of the Agency Request Budget, stakeholder meetings during both the Agency Request Budget and Governor’s Recommended Budget phases, and responding to numerous requests from individuals. We appreciate your comments and continuously seek to improve communications with stakeholders.

DEQ directly communicated with stakeholders in email, for example, on January 30, 2017, who inquired about the Policy Option Package: “If policy package 125 (Water Quality Permit Program Improvements) is approved as proposed in the Governor’s Recommended Budget, DEQ would likely implement the fee increase in conjunction with the CY 2018 statutorily permitted 3% increase. The combined fee increase in CY 2018 would be approximately 7%.”

Comment #27: We question if it was clear to the legislature that passed policy option package 125 that the result would be a four percent increase on NPDES and WPCF permits.

Response: The “Other Fund” language in Policy Option Package 125 refers to fees. DEQ will endeavor to be more explicit about the amount of fee increases in budget materials and communications with legislators and stakeholders in the future.

Comment #28: Anticipated improvements from the four percent increase have not been clearly articulated to fee payers. It’s unclear how the increase in revenue will support implementation of the MWH recommendations. Concern that the [four percent] fee increase will result in increased costs for local governments and their ratepayers with potentially no improvements to the water quality program.

Response: The Policy Option Package language in the Governor’s Recommended Budget book outlined the work associated with the new positions. The funding establishes four new positions to support wastewater permit issuance and oversight

by performing essential administrative and information management functions. These positions directly address some of the MWH report recommendations by timely delivering data to permit writers. In addition, these new positions resulted in DEQ’s ability to realign its resources and create dedicated permit writers who spend more time on tasks essential to developing and renewing permits. DEQ anticipates that the four new positions will continue to help with the water quality permit program improvement work. DEQ has already realized benefits to the program by having these positions focused on a reliable and integrated data delivery system that ensures permit writers have the data available to them when needed.

Comment #29: Before the MS4 Permit Fee Workgroup Process, it was not clear that fees for some entities would need to be increased to the extent communicated in this rulemaking. The estimated percentage increase for MS4 permits was not communicated through the agency request budget process, the governor’s recommended budget process, or through the legislative budget adoption process. Similar to the legislative process for water quality permit fee increases, we question whether the legislature was made adequately aware of the actual impact that passage of policy option package 120 would have on permittees.

Response: During the budget process, DEQ engaged stakeholders as early as May 2016 to solicit input on the Policy Option Package and to present a “conceptual” fee table to show how fees might change if the Policy Option Package were approved. DEQ explained that the information was “conceptual” because the fee table would be finalized through rulemaking after the legislative session if the Policy Option Package was approve. There would also be a robust public process at that time to get input.

The budget documents for Policy Option Package 120 explicitly state the total amount of Other Fund limitation (i.e., fee revenues) DEQ would need to afford the new positions, but did not discuss what this would mean in terms of percent fee increase for fee payers. DEQ will endeavor to be more explicit about this information, even if only in general terms, in future budget documents.

Comment #30: Request reassurance from DEQ staff and from the EQC that the two MS4 positions will be dedicated to the stormwater permitting program, and not reassigned to do other work in DEQ programs, including the Water Quality program.

Response: Please see response to comment #5

Comment #31: The Fiscal Impact Statement needs to be expanded to include the impact on ratepayers of the affected permit holders in the Fiscal and Economic Impact section.

Response: DEQ acknowledges this comment and anticipates that permit holders may pass fee increases onto ratepayers or customers. However, given the diversity of municipal, industrial, and commercial permit holders across the state, DEQ cannot accurately predict how each will obtain the revenue necessary to pay the increased fees.

Comment #32: Some of permittees or co-permittees may be prohibited from increasing rates without a vote of their citizens – these communities may absorb increased state costs passed onto them through reductions to staff, services, operations, or infrastructure investments.

Response: DEQ recognizes that fee increases have very tangible impacts on fee payers. However, DEQ does not have the information to determine how each permittee will obtain the revenue necessary to pay the increased fees.

Implementation

Notification

The proposed rules would become effective upon filing with the Secretary of State, anticipated to occur shortly after the EQC meeting on Sept. 13 and 14, 2018. DEQ would notify affected parties by email, posting information on its web site and direct outreach.

Compliance and enforcement

•  Affected parties - The proposed rules would affect individuals, business, and government agencies that hold or apply for, National Pollutant Discharge Elimination System permits, Water Pollution Control Facility permits, and MS4 permits.

•  DEQ staff – Water Quality, business office, and information technology.

Systems

•  Website – Update all applicable information including fee tables, forms, and other relevant information.

•  Invoicing – All systems related to invoicing will need to be updated.

Five-year review

Requirement

Oregon law requires an agency to review new rules within five years after adoption. ORS 183.405. ORS 183.405(4) states that this requirement does not apply to the amendment of a rule. As a result, this requirement does not apply to this amendment of rules setting fees for federal NPDES permits, MS4 stormwater permits, and fees for in-stream mining permits.

Proposed Rules – With Edits Highlighted

Key to Identifying Changed Text:

Strikethrough (regardless of color): Deleted Text Underline (regardless of color): New/inserted text

DEPARTMENT OF ENVIRONMENTAL QUALITY

340-045-0075

Permit Fee Schedule

(1)  OAR chapter 340, division 71 contains the fee schedule for onsite sewage disposal system permits, including WPCF permits, and graywater reuse and disposal system WPCF individual permits.

(2)  DEQ establishes fees for various industrial, domestic and general water quality permits:

(a)  Table 70A lists the application and modification fees that apply to industrial NPDES and WPCF individual permits.

(b)  Table 70B lists the annual fees that apply to industrial NPDES and WPCF individual permits.

(c)  Table 70C lists application, modification and annual fees for domestic NPDES and WPCF individual permits.

(d)  Table 70D lists annual population fees.

(e)  Table 70E lists annual pretreatment fees applicable to domestic wastewater systems.

(f)  Table 70I lists application, annual and surcharge fees for Underground Injection Control rule authorizations and general permits.

(3)  DEQ must consider the following criteria when classifying a facility for determining applicable fees. For industrial sources that discharge to surface waters, discharge flow rate refers to the system design capacity. For industrial sources that do not discharge to surface waters, discharge flow refers to the total annual flow divided by 365:

(a)  Tier 1 industry. A facility is classified as a Tier 1 industry if the facility:

(A)  Discharges at a flow rate that is greater than or equal to 1 mgd; or

(B)  Discharges large biochemical oxygen demand loads; or

(C)  Is a large metals facility; or

(D)  Has significant toxic discharges; or

(E)  Has a treatment system that will have a significant adverse impact on the receiving stream if not operated properly; or

(F)  ) Needs special regulatory control, as DEQ determines.

(b)  Tier 1 domestic facility. A facility is classified as a Tier 1 domestic facility if the facility:

(A)  Has a dry weather design flow of 1 mgd or greater; or

(B)  ) Serves an industry that can have a significant impact on the treatment system.

(c)  Tier 2 industry or domestic facility: A facility is classified as Tier 2 if it does not meet Tier 1 qualifying factors.

(4)  New- permit application fee. Unless this rule does not require itwaived by this rule, the applicant must submit the applicable new- permit application fee listed in Table 70A, 70C, 70G, or 70I with each application. The facility category and type of permit (e.g., individual vs. general) determines the amount of the fee.

(5)  Permit modification fee. Tables 70A and 70C list the permit modification fees. Modification fees for Individual WPCF Underground Injection Control permits are contained in Table 70I. Permit modification fees vary with the type of permit, the type of modification and the timing of modification as follows:

(a)  ) Modification at time of permit renewal:

(A)  ) Major modification — involves an increase in effluent limitations or any other change that involves significant analysis by DEQ;

(B)  ) Minor modification — does not involve significant analysis by DEQ.

(b)  Modification prior to permit renewal:

(A)  ) Major modification — involves an increase in effluent limitations or any other change that involves significant analysis by DEQ. DEQ may require a permittee requesting a significant modification to their permit to enter into an agreement to pay for these services

according to ORS 468.073. ORS 468.073 allows DEQ ". . . to expedite or enhance a regulatory process by contracting for services, hiring additional staff or covering costs of activities not otherwise provided during the ordinary course of department business . . . .;"

(B)  ) Minor modification — does not involve significant analysis by DEQ.

(6)  Annual fees. Tables 70B and 70G list applicable annual fees for general and industrial permit holders. Table 70H lists applicable annual fees for Municipal Separate Storm Sewer general permits. Annual fees for domestic sources may also be found in Tables 70C, 70D, and 70E also list annual fees for domestic sources and include the following:

(a)  Annual fee. This is based on the type of treatment system, the dry weather design flow, and the duration assigned to the permit before a renewal application is required;

(b)  Population-based fee. A permit holder with treatment systems other than Type F (septage alkaline stabilization facilities) must pay an annual population-based fee. Tables 70D lists the applicable fee;

(c)  ) Pretreatment fee. A source DEQ requires to administer a pretreatment program under federal pretreatment program regulations (40 C.F.R.C.F.R., Part 403; January 29, 1981, and its amendments) must pay an additional annual fee plus a fee for each significant industrial user specified in their annual report for the previous year. Table 70E lists the applicable fee.

(7)  Technical activities fee. Tables 70F lists the technical activity, plan review and administrative fees. They are categorized as follows:

(a)  All permits. A permittee must pay a fee for NPDES and WPCF individual and general permit-related technical activities. DEQ will charge a fee for initial submittal of engineering plans and specifications. DEQ will not charge fees for revisions and re-submittals of engineering plans and specifications or for facilities plans, design studies, reports, change orders, or inspections.;

(b)  General permits. A permittee must pay the technical activity fee shown in Table 70F when the following activities are required for application review:

(A)  Disposal system and environmental management plan review;

(B)  ) Site inspection and evaluation.

(8)  For permits the Oregon Department of Agriculture administers, the permit applicant or permit holder must pay the permit fees following the fee schedule the Oregon Department of Agriculture establishes.

(9)  Administrative activity fees are listed in Table 70F:

(a)  The electronic reporting requirement waiver fee applies to permit holders who qualify for a temporary waiver exempting them from submitting data and reports electronically.

(b)  A permittee must pay a fee for a transfer of ownership as specified under OAR 340-045- 0045 and for requests to change the legal or common name on the permit issued to the facility.

OAR 340-045-0075

Table 70G

General NPDES and WPCF Permits: Application and Annual Fees

 Residential and Commercial Graywater and Industrial Reuse Water  

Tier 1 graywater reuse and disposal system for

1200-Z  NPDES  Stormwater: Industrial  $9811,050  $1,009 1,080

 Mining General Permits  

 Other General Permits  

DOM-F  WPCF  Septage alkaline stabilization facilities  $1,0831,159  $444475 All other permits not elsewhere classified.  $559598  $574614

1.  New permit applications must include both the new permit application fee and the first year’s annual fee.

2.  Stormwater construction and industrial permits are also administered by public agencies and local districts under contract with DEQ.

Statutory/Other Authority: ORS 468.020, 468B.020 & 468B.035 Statutes/Other Implemented: ORS 468.065, 468B.015, 468B.035 & 468B.050 History:

DEQ 34-2017, minor correction filed 12/13/2017, effective 12/13/2017 DEQ 16-2015, f. 12-10-15, cert. ef. 1-1-16

DEQ 15-2017, amend filed 10/31/2017, effective 11/01/2017 DEQ 13-2014, f. 11-14-14, cert. ef. 12-1-14

DEQ 8-2013, f. 10-23-13, cert. ef. 11-1-13

DEQ 6-2012, f. 10-31-12, cert. ef. 11-1-12 DEQ 15-2011, f. & cert. ef. 9-12-11

DEQ 9-2011, f. & cert. ef. 6-30-11 DEQ 7-2010, f. 8-27-10, cert. ef. 9-1-10

DEQ 8-2008, f. 6-27-08, cert. ef. 7-1-08 DEQ 5-2007, f. & cert. ef. 7-3-07

DEQ 11-2006, f. & cert. ef. 8-15-06 DEQ 5-2005, f. & cert. ef. 7-1-05 DEQ 7-2004, f. & cert. ef. 8-3-04 DEQ 2-2002, f. & cert. ef. 2-12-02

DEQ 15-2000, f. & cert. ef. 10-11-00 DEQ 4-1998, f. & cert. ef. 3-30-98 DEQ 20-1994, f. & cert. ef. 10-7-94 DEQ 30-1992, f. & cert. ef. 12-18-92 DEQ 10-1992, f. & cert. ef. 6-9-92 DEQ 9-1992, f. & cert. ef. 6-5-92 DEQ 10-1991, f. & cert. ef. 7-1-91 DEQ 18-1990, f. & cert. ef. 6-7-90 DEQ 9-1987, f. & ef. 6-3-87

DEQ 12-1983, f. & ef. 6-2-83

DEQ 18-1981, f. & ef. 7-13-81

DEQ 31-1979, f. & ef. 10-1-79

DEQ 129, f. & ef. 3-16-77

DEQ 113, f. & ef. 5-10-76

Division 71

ONSITE WASTEWATER TREATMENT SYSTEMS

340-071-0800

Tables

OAR 340-071-0220

TABLE 3

SLOPE, EFFECTIVE SOIL DEPTH RELATIONSHIP

OAR 340-071-0100

TABLE 6

SOIL TEXTURAL CLASSIFICATION CHART