BOARD MEETING DATE: May 14, 1999 AGENDA NO. 32

The AQMD Governing Board is scheduled to adopt the FY 1999-2000 Budget at its May 14, 1999 meeting. Both the budget and the fee rules are required by state law to be adopted before May 15 of each year. In order to help fund the FY 1999-2000 Budget, ten fee rules are proposed for amendment. Additionally, staff is proposing to rescind Rules 301.2 - Annual Operating Permit Emission Fee – Reduced Penalty for Underpayments, and 310 - Amnesty for Unpermitted Equipment, which have effective dates that have already passed and are no longer relevant.

Staff is proposing to delay for one year, to FY 2000-2001, the second half of the fee increases adopted last year for gasoline fuel dispensing nozzles and Title V evaluations. This will allow time to evaluate compliance and permit streamlining to determine whether these increases are still necessary. Recommendations from the Permit Streamlining Task Force and the Fee Structure Study will be considered in next year’s Regulation III amendments, due to additional studies required and the statutory requirements for rule development. This proposal recommends an across-the-board 2.0 percent increase in fees, corresponding to the California Consumer Products Index (CPI) for

1998, and is not a major restructuring of the fee regulation. A few new fees are proposed to recover the cost of programs currently being implemented, such as transactions for Mobile Source Emission Reduction Credits (MSERCs). Adjustments are proposed for permit processing fees charged for some spray booths and associated multiple controls.

Other proposed amendments to Rule 301 – Permitting and Associated Fees include the addition of administrative procedures for Rule 222 – Filing Requirements for Specific Emission Sources Not Requiring a Written Permit Pursuant to Regulation II. New source categories have been added for equipment recently requiring permits as specified in the September 1998 amendments to Rule 219 – Equipment Not Requiring a Written Permit Pursuant to Regulation II. Language pertaining to portable equipment is proposed in order to redefine "statewide equipment" and delete permitting fees associated with the AQMD’s statewide portable equipment program, which has been replaced by CARB’s Statewide Portable Equipment Registration Program. The proposal assesses a new fee to cover the costs of review and evaluation of inter-basin, inter-district, and interpollutant offset transfers of emission reduction credits which are allowed pursuant to Health and Safety Code ї40709 and Rule 1309 subdivisions (g) and (h). The proposal scales fees for asbestos and lead demolition notifications dependent on job size, which is reflective of the compliance efforts needed. The proposal also assesses a late fee for notifications not made in the required timeframe. Certain web-type coating lines have been reclassified in order to more accurately reflect the level of effort required for permitting. The proposal to delay for one year, to FY 2000-2001, the second half of the fee increases adopted last year for gasoline fuel dispensing nozzles and Title V evaluations, is based on the need to evaluate the results of studies to determine streamlining and compliance issues.

The proposed 2.0 percent increase is the only proposed amendment to Rules 303 – Hearing Board Fees, 304 – Equipment, Materials, and Ambient Air Analyses, and 306 – Plan Fees. The proposed amendments to Rule 304.1 – Analyses Fees, in addition to the CPI increase, include a fee for a procedure previously sent to outside laboratories now performed in-house. There is no increase in cost to industry. Proposed Amended Rule 307 – Fees for Air Toxics Emissions Inventory, defers the fee assessments for FYs 98-99 and 99-2000, to Rule 307.1 – Alternative Fees for Air Toxic Emissions Inventory. The proposed amendments to Rule 307.1 provide a mechanism to implement, in a local rule, the state AB 2588 fee regulation for the Toxic Hot Spots Program without changing fees. The fees are the same as in the state’s regulation.

Minor changes in language are proposed for Rule 308 – On-road Motor Vehicle Mitigation Options Fees, to more closely reflect the Rule 2202 Implementation Guidelines. The

thresholds for Employee Commute Reduction Program submittals are raised to 250 employees due to SB 432 legislation. A small new fee is proposed for Rule 309 – Fees for Regulation XVI, to reflect the level of effort needed to track Mobile Source Emission Reduction Credit (MSERC) trades. Only the registration fee in Rule 311 – Air Quality Investment Program (AQIP) Fees is proposed for the 2.0 percent increase because the investment fees, previously established by the Governing Board, are placed in a separate account, and do not need to be raised.

Staff proposes that Rules 301.2 – Annual Operating Permit Emission Fee – Reduced Penalty for Underpayment, and 310 – Amnesty for Unpermitted Equipment, be rescinded, as their effective dates are past and no longer relevant.

The budget and fee options were available for public review and comment during the later part of March and early April. These were discussed at the Stationary Source Committee meeting March 19, 1999. Three public workshops were held on these topics. The Public Workshop for Proposed Amended Regulation III rules was held March 10, 1999. The Budget Public Workshop and the Governing Board Public Workshop on budget and fees occurred on April 13 and 23, 1999, respectively.

The fee rules are not part of the AQMP. California Health and Safety Code її 40500 et seq. establishes the authority to "adopt fee schedules for the issuance of variances and permits to cover the reasonable cost of permitting, planning, enforcement, and monitoring related thereto," and to assess fees for the approval of plans for the control of air contaminants and for regulatory programs affecting indirect and area sources (H&S її 40522 and 40522.5).

The AQMD has reviewed the proposed amendments to Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311 and rescinding Rule 301.2 and 310 and found they are exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to ї 15273 - Rates, Tolls, Fares, and Charges. A Notice of Exemption will be filed immediately following adoption of the proposed project.

A Socioeconomic Assessment is included as an addendum to the staff report. Impacts include an estimated increase of $1,089,000 for Emission Fees, Annual Operating Fees and Permit Processing fees. Most of this increase is due to the across the board

2.0% CPI increase. Minimal impacts are expected from the change for some spray booths with multiple control equipment used in series.

Summary of Proposed Amendments
Rule Development Process
Resolution
Notice of Exemption
Proposed Rule Language
Staff Report
Socioeconomic Assessment

Rule 301 – Permit Fees

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Change rule name to "Permitting and Associated Fees".

Define "relocation" and clarify fees assessed to reflect current permitting practice and coincide with Regulation XIII – New Source Review.

Redefine "statewide equipment" and delete permitting fees associated with the AQMD’s statewide portable equipment program which has been replaced by CARB’s Statewide Portable Equipment Registration Program. Retain enforcement inspection fees.

Delay second step increase in compliance fees for gasoline fuel dispensing nozzles from $12 per nozzle to $24 per nozzle until next fiscal year.

Delay second step increase in Title V permitting fees until next fiscal year.

Add language to clarify permitting requirements for expired permits.

Add language to clarify administrative procedures for Rule 222 sources.

Separate Emission Reduction Credit (ERC) fees from permit processing fees in tables for clarification.

Add equipment no longer exempt by Rule 219 to the fee tables with fees assessed at Schedule A for the first year following the September 11, 1998 amendment to Rule 219 and Schedule B thereafter. Equipment types affected are rubber presses and molds and wet gate printing equipment using perchloroethylene.

Add a new fee for inter-basin, inter-district, or interpollutant offset transfers of ERCs.

Combine categories for web type coating and drying equipment resulting in a fee increase for two types of coating lines.

Clarify fee structure for some spray booths with multiple control equipment used in series.

Assess asbestos and lead demolition notification fees on a sliding scale reflective of job size to be consistent with the way fees are assessed for renovation and abatement projects, and increase the lowest fee for renovation and abatement projects to a level more reflective of compliance efforts and administrative burden to staff.

Assess a fee for late submittal for asbestos/lead demolition and renovation projects.

Rule 301.2 – Annual Operating Permit Emission Fee – Reduced Penalty for Underpayments

Rescind rule.

Rule 303 – Hearing Board Fees

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Rule 304 – Equipment, Materials, and Ambient Air Analyses

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Rule 304.1 – Analyses Fees

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Assess fees for micro-Fourier transform infrared spectroscopy analyses now performed by the AQMD laboratory, previously paid by industry to outside laboratories.

Rule 306 – Plan Fees

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Rule 307 – Fees for Air Toxics Emissions Inventory

Require the fee assessments for FY 98-99 and FY 99-2000 to be covered by Rule 307.1.

Rule 307.1 – Alternative Fees for Air Toxic Emissions Inventory

Provide a mechanism to implement state AB 2588 fee regulation without changing fees.

Rule 308 – On-Road Motor Vehicles Mitigation Options Fees

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Make minor changes in language to more closely reflect the Rule 2202 Implementation Guidelines.

Revise thresholds to 250 employees due to SB 432 legislation.

Rule 309 – Fees for Regulation XVI

Increase fees at a rate equal to the 2.0% change in the California CPI for 1998.

Change title to Fees for Regulation XVI

Add a new fee for transfer of Mobile Source Emission Reduction Credits (MSERC) reflective of the transaction fee for RECLAIM credit trading.

Rule 310 – Amnesty for Unpermitted Equipment

Rescind rule.

Rule 311 – Air Quality Investment Program (AQIP) Fees

Increase fees for registration and returned checks at a rate equal to the 2.0% change in the California CPI for 1998.

Maintain AQIP investment fees at their current level.

Regulation III – Fees

A Resolution of the Governing Board of the South Coast Air Quality Management District certifying the Notice of Exemption from California Environmental Quality Act (CEQA) requirements for proposed amendments to Rules 301 – Permitting and Associated Fees, 303 – Hearing Board Fees, 304 – Equipment, Materials, and Ambient Air Analyses, 304.1 – Analyses Fees, 306 – Plan Fees, 307 – Fees for Air Toxic Emissions Inventory, 307.1 – Alternative Fees for Air Toxics Emissions Inventory, 308 – On-road Motor Vehicle Mitigation Options Fees, 309 – Fees for Regulation XVI, and 311 – Air Quality Investment Program (AQIP) Fees and proposed recission of Rules 301.2 – Annual Operating Permit Emission Fee – Reduced Penalty for Underpayments, and 310 – Amnesty for Unpermitted Equipment.

A Resolution of the South Coast Air Quality Management District Board amending Regulation III – Fees, including Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311 and rescinding Rules 301.2 and 310.

WHEREAS, South Coast Air Quality Management District staff reviewed the proposed project and determined that it is exempt from the requirements of CEQA; and

WHEREAS, the South Coast Air Quality Management District Board obtains its authority to adopt, amend, or repeal rules and regulations from Sections 40000, 40001, 40440, 40500, 40500.1, 40506, 40510, 40510.5, 40512, 40522, 40522.5, 40523, 40463, 40702, 40725 through 40728, and 44380 of the California Health and Safety Code; and

WHEREAS, the South Coast Air Quality Management District Board has determined that a need exists to amend Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311 and to rescind Rules 301.2 and 310, in order to fund the Fiscal Year 1999-2000 Budget; and

WHEREAS, the South Coast Air Quality Management District Board has determined that Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended and Rules 301.2 and 310, as proposed to be rescinded, are written or displayed so that their meaning can be easily understood by the persons directly affected by them; and

WHEREAS, the South Coast Air Quality Management District Board has determined that Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended and Rules 301.2 and 310, as proposed to be rescinded, are in harmony with, and not in conflict with or contradictory to, existing statutes, court decisions, or state or federal regulations; and

WHEREAS, a public hearing has been properly noticed in accordance with all provisions of Health and Safety Code Section 40725; and

WHEREAS, the South Coast Air Quality Management District Board has held a public hearing in accordance with all provisions of law; and

WHEREAS, the South Coast Air Quality Management District Board, in amending and rescinding these rules, references the following statutes which the District hereby implements, interprets, or makes specific: Health and Safety Code Sections 40500, 40500.1, 40510, 40510.5, 40512, 40522, 40522.5, 40523, 41512, and 44380; and

WHEREAS, the South Coast Air Quality Management District Board has determined that Health and Safety Code Section 40920.6 is not applicable to Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended, and Rules 301.2 and 310, as proposed to be rescinded, since the proposed amended rules in Regulation III are not Best Available Retrofit Control Technology rules and do not regulate air contaminants; and

WHEREAS, the South Coast Air Quality Management District Board has determined that Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended, and Rules 301.2 and 310, as proposed to be rescinded, do not impose the same requirements as any existing state or federal regulation and are necessary and proper to execute the power and duties granted to, and imposed upon, the District; and

WHEREAS, the proposed amendments Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311 include new fees and fee increases above 2.0%, the change in the California CPI applicable for the year 1998; Health and Safety Code Sections 40510 and 40510.5 require that before making any individual permit fee increase in excess of the percentage increase of the California CPI, findings of fact should be made, supported by relevant information in the public record, that the fee increases are necessary and will provide an equitable apportionment of fee payment responsibilities, however, no such permit increases are made in the proposed rule amendments; and

WHEREAS, the South Coast Air Quality Management District Board has determined that the socioeconomic impact assessment of Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended, and Rules 301.2 and 310, as proposed to be rescinded, is consistent with the March 17, 1989 Board Socioeconomic Resolution for rule adoption.

NOW, THEREFORE, BE IT RESOLVED, that the South Coast Air Quality Management District Board does hereby certify the Notice of Exemption for Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended, and Rules 301.2 and 310, as proposed to be rescinded, completed in compliance with State CEQA Guidelines Section 15273 - Rates, Tolls, Fares, and Charges; and

BE IT FURTHER RESOLVED, that the South Coast Air Quality Management District Board finds that Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, as proposed to be amended, and Rules 301.2 and 310, as proposed to be rescinded, establish fees charged for the purposes of meeting operating expenses, including employee wages and fringe benefits; purchasing and leasing supplies, equipment and materials; meeting financial reserve needs and requirements; and obtaining funds for capital projects necessary to maintain mandated services, all of which are necessary to carry out AQMD’s programs; and

BE IT FURTHER RESOLVED, that South Coast Air Quality Management District Board does hereby approve the Socioeconomic Impact Assessment; and

NOW, THEREFORE, BE IT RESOLVED, that the South Coast Air Quality Management District Board does hereby amend Rules 301, 303, 304, 304.1, 306, 307, 307.1, 308, 309, and 311, and rescind Rules 301.2 and 310, pursuant to the authority by law, as set forth in the attached and incorporated herein by this reference.