BOARD MEETING DATE: Jun 12, 1998 AGENDA NO. 35
PROPOSAL:
Amend Rule 301 – Permit Fees
SYNOPSIS:
At its May 8, 1998 meeting the Board adopted Proposed Amended Regulation III – Fees. Adopted Regulation III amendments include restoring the higher processing fee from 15% to 50% for failure to obtain a Permit to Construct prior to installing and operating permittable equipment except for small businesses with no permit history. The Board directed staff to review the Rule 301 (b) Small Business definition as it relates to this amended provision to determine if the definition accurately reflects current small business practices relating to number of employees and total gross annual receipts.
COMMITTEE:
Administrative, May 22, 1998; Stationary Source, May 22, 1998; and Local Government and Small Business Assistance Advisory Group, June 5, 1998, Reviewed
RECOMMENDED ACTION:
Amend Rule 301 – Permit Fees, pursuant to the attached Resolution, Certify the Notice of Exemption.
Barry R. Wallerstein, D.Env.
Acting Executive Officer
Background
At its May 8, 1998 meeting the Board adopted Proposed Amended Regulation III – Fees. Adopted Regulation III amendments include restoring the higher processing fee from 15% to 50% for failure to obtain a Permit to Construct prior to installing and operating permittable equipment which is specified in section (c)(1)(D) of Rule 301, Higher Fee for Failing to Obtain a Permit. The Board adopted additional amended language in that Small Businesses that have no prior AQMD permit applications, Permit to Construct or Permit to Operate (as evidenced by a facility identification number) with the District are excluded from paying the higher fee as specified in Rule 301(c)(1)(D).
The Board directed staff to review the Small Business definition in section (b) of Rule 301 as it relates specifically to this amended provision to determine if the definition accurately reflects current small business practices relating to number of employees and total gross annual receipts. Further, staff was requested to evaluate potential revenue impacts to the District’s budget in the event the Small Business definition was modified.
This Board letter and its attachments serve as the staff report for proposed amendments to Rule 301 – Permit Fees.
Policy Issues
Staff examined AQMD’s various current Small Business definitions and those presently used by other government agencies. A chart which summarizes these definitions is provided below.
|
Small Business Definition |
SCAQMD
(Pays lower permit application fee)
excess emission fees) |
Independently owned and operated and meets the following criteria:
a) number of employees is 10 or fewer; and b) total gross annual receipts are $500,000 or less; or c) not-for-profit training center. |
SCAQMD
Rule 102 Definition |
Independently owned and operated and meets the following criteria:
a) number of employees is 100 or fewer; or b) total gross annual receipts are $5,000,000 or less |
SCAQMD
exemption from BACT requirements |
a) number of employees is 100 or fewer; or
b) total gross annual receipts are $2,000,000 or less; c) privately held and not publicly traded; d) not a major stationary source (does not emit more than 50 tons of a single pollutant or 75 tons combined), e) subject to Reg. XIII (NSR) and not Rule 2005 (RECLAIM) |
|
Other Government Agencies |
Small Business Definition |
|
State of CA
|
a) Principal office is located in CA
b) Owners or officers are domiciled in CA c) Independently owned and operated and not dominant in its field of operation d) Three years annual receipts must fall under established industry group dollar thresholds |
|
State of CA
(AB 2588 – Fees) |
Independently owned and operated and meets the following criteria:
a) number of employees is 10 or fewer; b) annual receipts are $1,000,000 or less; c) annual receipts of the facility’s CA operations is $5,000,000 or less |
|
Federal Small Business Definition
(Used by IRS, EPA, District) |
Independently owned and operated and not dominant in its field. Definition also:
a) classifies and defines eligibility by industry category;
|
As part of this review process, staff also investigated other local air pollution control agencies to determine if they offered small business discounts for permit processing. Staff’s findings are listed below.
Options
Several options were examined for purposes of the surcharge for failing to obtain a permit to construct. They included the following:
1) Maintain only one small business definition in Regulation III – Fees; or
2) Increase the number of employees for small businesses from 10 to 25 with total gross annual receipts of $500,000; or
3) For non-manufacturers increase the number of employees from 10 to 25 with total gross annual receipts of $1,000,000 or less and for manufacturers increase the number of employees from 10 to 50 with annual receipts of $5,000,000 or less.
Potential revenue impacts were calculated using data from previously submitted permit applications. Based on the number of employees only and assuming the small business definition/surcharge was expanded for first time applicants, the estimated revenue forgone is provided below. The potential revenue impacts of the proposed amendments are not considered to be large relative to AQMD’s overall budget.
| Projected Revenue Forgone | ||||
| Option | Number of Employees | Total Gross Annual Receipts | CY 1996 | CY 1997 |
| 1 | 1-10 | $500,00 | $30,604 | $40,804 |
| 2 | 1-25 | $500,00 | $39,985 | $58,522 |
|
3
(staff recommen-dation) |
1-25
(non-manufacturer)
1-50
|
$1,000,000
$5,000,000 |
$37,204
$3,294 |
$56,706
$2,017 |
Proposed Amendments
Staff is recommending that the Board adopt the following rule language for Rule 301 section (c)(1)(D) to address the small business definition as it pertains only to this rule:
When equipment is operated, built, erected, altered, or replaced (except for identical equipment) without the owner/operator first obtaining a required Permit to Construct or Permit to Operate, the permit processing fee shall be 150 percent (150%) of the amount set forth in the Summary Permit Fee Rates tables of this rule unless the applicant is a Small Business as defined in this provision and the facility has no prior permit applications, Permit to Construct or Permit to Operate (as evidenced by a facility identification number) with the District in which case the permit processing fee shall be the amount set forth in the Summary Permit Fee Rates tables of this rule. The assessment of such fee shall not limit the District’s right to pursue any other remedy provided for by law. Fees are due and payable within thirty (30) days of receipt of notification.
For purposes of assessing a higher fee for failing to obtain a permit only, small business shall be defined as a business which is independently owned and operated and not an affiliate of a non-small business entity and meets the following criteria:
(ii) If a manufacturer, the number of employees is 50 or less and the total gross annual receipts are $5,000,000 or less; or
(iii) Is a not-for-profit training center.
CEQA
Staff has reviewed the proposed amendments to Rule 301 – Permit Fees, pursuant to state CEQA guidelines §§ 15002(k)(1) and 15061(b)(2). Since the proposed project involves the modification and structuring of charges imposed by a public agency for the purpose of meeting operation expenses and financial reserve requirements, it is statutorily exempt from CEQA (state CEQA Guidelines § 15273 – Rates, Tolls, Fares, and Charges). A Notice of Exemption has been prepared pursuant to state CEQA Guidelines § 15062 – Notice of Exemption, for the proposed project and will be filed with the four county clerks within the jurisdiction of the AQMD immediately following the project’s adoption by the Board.
Resource Impacts
Current AQMD resources are sufficient to implement and enforce proposed Rule 301 amendments.
Attachments
Notice of Exemption
Resolution
Rule 301 Language
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