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PROPOSAL:

1997 Annual Report, FY 1998-99 Program Cost Estimate and Fee Adjustments for FYs 1997-98 and 1998-99 for Implementing the Air Toxics "Hot Spots" Information and Assessment Act (AB 2588)

SYNOPSIS:

This item was continued pursuant to Board meeting procedures. Staff is recommending Board action on a subpart of the original item. For FY 1997-98, staff recommends that $100,000 from the AB 2588 Air Toxics Fund be used to lower fee increases for major program sources. With this adjustment, major sources will see a 10 percent AQMD increase; without it, major sources will experience an approximate 25 percent increase over last year’s AQMD fees.

COMMITTEE:

Administrative, February 20, 1998 and March 20, 1998;
Stationary Source, February 20, 1998 and March 20, 1998; Reviewed.

RECOMMENDED ACTION:

Approve use of the AB 2588 Air Toxics Fund to finance an AQMD fee adjustment to AB 2588 major program sources for FY 1997-98 for an additional $100,000 beyond the $700,000 approved by the Governing Board on March 3, 1997.

Barry R. Wallerstein, D.Env.
Acting Executive Officer

Background

At the March 13, 1998 Board meeting, the Governing Board did not approve staff’s proposal for implementing the Air Toxics "Hot Spots" Information and Assessment Act (AB 2588) to: include the AQMD in the statewide AB 2588 fee regulation for FY 1998-99, and use the AB 2588 Air Toxics Fund and industrywide fees to finance AQMD fee adjustments to AB 2588 major program facilities for FY 1997-98, FY 1998-99, and FY 1999-2000.

As noted at the hearing, AQMD will proceed to develop its own AB 2588 fee regulation by May 1999 in lieu of requesting inclusion in the statewide regulation.

In keeping with the Board’s direction to minimize fee increases for participating facilities, staff recommends use of the unencumbered Air Toxics Fund to offset a portion of this fiscal year’s fee increases. This proposal addresses FY 1997-98 fee adjustments which the AQMD plans to collect in June of this year. FY 1998-99 fee actions will be addressed in a future proposal brought back to the Governing Board for approval.

At the May, 1998 Board meeting, staff will request approval to issue a Request for Proposals to contract reviews of health risk assessments. This will expedite the completion of this key review component of the program.

Legislative Changes

Assembly Bill 564 (Cannella) exempted lower-risk facilities from paying fees for the Air Toxics "Hot Spots" program, leaving fewer sources to bear program costs. The implementation of this legislation began in FY 1996-97 and has continued through FY 1997-98. The new legislation exempted numerous low-risk facilities from fees, recategorized a number of moderate risk facilities to lower fees, and therefore requires facilities with high-risk values to pay significantly higher fees.

Despite a number of AQMD streamlining activities, substantial efforts are still needed to complete reviews of health risk assessments for a small group of major sources. Staff expects the bulk of this work to be completed by the year 2000.

Fee Adjustment

On March 3, 1997, staff proposed and the Governing Board approved a fee adjustment of $700,000 to offset expected AQMD fee increases. This estimate was based on best available information on the anticipated effects of Assembly Bill 564.

During the period of March 3 through July 1, 1997, staff conducted reviews of the emissions and status for facilities in the main program. In July, these refined facility counts and fee categorizations were reported to CARB for the FY 1997-98 fee regulation. The final numbers showed that a larger number of sources than estimated in March became exempt and moved to lower fee categories. Without providing an additional adjustment, AQMD’s fees will significantly increase by 25% in FY 1997-98.

To limit FY 1997-98 AQMD fee increases to only 10%, staff has determined that an additional $100,000 would need to be transferred from the AB 2588 Air Toxics Fund. The fund balance is currently projected to be approximately $1,223,000.fees. Sufficient money is available in this account to adjust fees as recommended by staff. Staff recommends holding the remainder of the available funds for future use, including the proposed RFP for a contract to review health risk assessments, which will come before the Board in May.

Summary

By approving this recommendation, the Board is increasing the FY 1997-98 fee adjustment by $100,000.

Attachments

Resolution

March 13, 1998 Board Letter

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