Air Program Advisory Forum Fee Stakeholder Meeting March 2, 2020 - - PowerPoint PPT Presentation

Air Program Advisory Forum Fee Stakeholder Meeting

March 2, 2020

Overview

Today kicks off discussion about Air Program fees Topics include:

• Background
• Program Funding
• Timeline
• Discussion!

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Department of Natural Resources Director’s Office Division of Environmental Quality

Air Quality Planning Emily Wilbur - 16 FTE Air Quality Analysis Steve Hall - 17 FTE

Public Information & Legal 2 FTE

Air Pollution Control Program Program Director Darcy Bybee & Admin – 4 FTE Missouri Air Conservation Commission

Regional Offices 22 FTE Environmental Services Program 18 FTE Other Direct Funded Positions

Permits Kendall Hale - 25 FTE Fiscal and Budget Deedra Beye-Stegeman - 3 FTE Compliance & Enforcement Richard Swartz - 17 FTE GVIP David Offu - 7 FTE

Air Pollution Work – Funded by Air Fees

• Air Pollution Control Program
• Five Department Regional Offices
• St. Louis, Kansas City, Northeast, Southeast, & Southwest
• Environmental Services Program
• Air Pollution Work—Funded by Local Fees
• Local Air Agencies
• St. Louis County, St. Louis City, Kansas City, & Springfield
• Work dependent on agency

Total: approximately 150 full-time staff

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Air Program Overview

• Air Program’s web site:

http://www.dnr.mo.gov/env/apcp/index.html

• Overview of Air Pollution Control Program staffing and work

duties: https://dnr.mo.gov/env/apcp/airadvisory/docs/2019- 03-01-regform-overview-presentation.pdf

• 2014-2016 Fee Stakeholder information:

https://dnr.mo.gov/env/apcp/airadvisory/index.html

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Background

Air Program and fee authority:

• Missouri Air Conservation Law, 643 RSMo
• RSMo 643.079

‘… the DNR may review fees and propose changes after holding stakeholder meetings…’ ‘… the DNR shall submit a proposed fee structure with stakeholder agreement to the air conservation commission…’

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Background on Fees

Fees adjusted based on 2014/2015 Fee Stakeholder discussions:

• Emission Fee – $48/ton (increased from $40), effective 2016
• Permit Fees – effective 2017
• $75 per hour for construction permit review (increased from $50)
• New tiered approach for operating permit
• New filing fees for construction permits and portable plants
• Asbestos Fees – effective 2017
• GVIP Fees – unchanged

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What We’ve Done – Examples (1 of 3)

 Rule Changes:

 Removed Basic Operating permits  Removed Open Burning permits  Red Tape Reduction process eliminated rule backlog

 Monitoring network savings

 Outsourced filter weighing, remote quality checks, discontinued sites and equipment, plan for equipment replacement, reduce sample frequency

 Discontinued evaluation of certain federal area source rules

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What We’ve Done – Examples (2 of 3)

 Shared lease of building will save rent  Continue and expand electronic systems

 Scanning hardcopy reports  Converting to electronic fileroom  Electronic correspondence

 Eliminated one copier and one printer

 Multi-function machines save under contract

 General streamlining of workflows

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What We’ve Done – Examples (3 of 3)

 Only essentials:

 Training costs, electronic options when possible  Office supplies  “Core function duty” travel

 Reduced spending on commission meetings  Scrutinize every vacancy prior to filling

These are some of the items we’ve done, and we’ll continue to look for savings

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These are some of the items we’ve done, and we’ll continue to look for savings

Ozone Concentration  Year 

• St. Louis

Kansas City Rural

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215,582 140,040 $8,623,280 $6,721,920 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000 $7,000,000 $7,500,000 $8,000,000 $8,500,000 $9,000,000 100,000 120,000 140,000 160,000 180,000 200,000 220,000 240,000

2010 2011 2012 2013 2014 2015 2016 2017 2018

Chargeable Emissions and Fees Due

Chargeable Emissions from Point Sources in Missouri Emission Fees Due

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Emission Fee: $40/ton Emission Fee: $48/ton

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$25.70 $31.00 $33.00 $34.50 $40.00 $34.00 $48.00 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Fee Per Ton

Emission Year

Historic Trend of the Emission Fee Rate

MDNR Emission Fee EPA Emission Fee

What are other states doing?

Researched 10 states around Missouri

• Fees vary by permit type
• Flat fee by industry and/or permit type
• Smaller emitters pay less or nothing
• Similar fee structure states: $70/ton IA, NE; $53/ton KS

Unique fee structures

• Pay on allowable emissions
• Pay higher of industry-type inspection fee or emission fee
• Vary fee by pollutant
• Set funding amount needed to operate program, divide by tonnage to get fee/ton annually

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Title V 21% Non-Title V 79%

2018 Facilities by Permit Type

Title V 94.97% Non-Title V 5.03%

2018 Total Emissions by Permit Type

• While air quality continues to improve…fee

revenues to operate program decrease

• We’ve reduced workload where we can, but it

is not reducing proportionally.

• We do expect expenditures to increase.

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Today’s Focus: Long term funding viability

Program Funding

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$10,000,000 $10,500,000 $11,000,000 $11,500,000 $12,000,000 $12,500,000 $13,000,000 $13,500,000 $14,000,000 $14,500,000

FY13 Actual FY14 Actual FY15 Actual FY16 Actual FY17 Actual FY18 Actual FY19 Actual

Actual Operating Expenditures Excludes Pass Through, All Fund Sources

Air Stakeholder Meeting March 02, 2020

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• 5 year trends
• Pending projects
• Input from facilities
• Future federal regulations

Factors for Future Emission Fee Revenue

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Annualized Revenue Assumptions

• Reflects projected 5 year (FY2023-2027) average for all funds
• Federal, Permit, Asbestos, and GVIP projections held constant
• Includes projected emission fee revenues at current emission fee
• f $48/ton:

FY2020 to FY2022 – sustainable FY2023 – 6% reduction from FY2019 actuals FY2024 – 2% reduction from FY2023 projection FY2025-2027 – same as FY2024; further reductions unknown This is our best projection of revenue.

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$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

Actual and Projected Air Pollution Revenue (excludes Pass Through)

GVIP Fees Asbestos Fees Other Federal Federal 105 Non Title V Fees Title V Fees

Actual Projected

Air Stakeholder Meeting March 02, 2020

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Title V Fees $5,576,705

Non-Title V Fees $1,025,857

Federal § 105 Performance Partnership Grant $2,339,470

Other Federal $723,611 Asbestos Fees $561,185

GVIP Fees $2,183,605

Projected Annual Revenues (excludes Pass Through) 5-Year Average (FY23-FY27) All Fund Sources Total $12,410,433

Air Stakeholder Meeting March 02, 2020

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$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

Actual and Projected Air Pollution Operating Expenditures (excludes Pass Through)

GVIP Activity Asbestos Activity Other Federal Activity Federal 105 Activity Non Title V Activity Title V Activity

Air Stakeholder Meeting March 02, 2020

Actual Projected

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New Projected Expenses (Pay Plan)

Assumptions:

• The pay plan includes cost of living, market adjustments, and “above and

beyond” for FY23-FY27

• 1% annual growth on fringe rate (capped at 62%)

Revised (Post-Governor Recommendation) FY21-FY28 Pay Plan (Annual) FY21 – 3% FY22 Forward – 3.5% Fringe 1% annual growth FY21 – 58% FY22 – 59% FY23 – 60% FY24 – 61% FY25 forward – 62%

Personal Services $7,587,227 Fringe $4,661,139 Operating E&E $1,542,443

Statewide Central Services, DNR Administration, OA ITSD, Leases/Rents $2,799,330

Miscellaneous (Refunds, Work Comp, Unemp) $32,307

Projected Annual Expenditures (excludes Pass Through) 5-Year Average (FY23-FY27) Total $16,622,447

Air Stakeholder Meeting March 02, 2020

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Average Annual Shortfall Projection

Projection Period FY23-FY27 Title V Shortfall $ 2,991,747 Non Title V Shortfall

+

$ 911,776 Emission Fee Fund Shortfall $ 3,903,523 Asbestos Fee Fund Shortfall $ 216,607 GVIP Fund Shortfall

+

$ 91,886 Average Annual Shortfall $ 4,212,016

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$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 FY23 FY24 FY25 FY26 FY27

Projected Annual Operating Expenses and Revenue Excludes Pass Through, All Fund Sources

Operating Expenses Revenue

Air Stakeholder Meeting March 02, 2020

Shortfall

$3,157,430 $3,778,834 $4,269,688 $4,702,564 $5,151,560

5 Year Average Shortfall $4,212,016

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Projected Operating Expenditures (excludes Pass Through) 5-Year Average (FY23-FY27) All Fund Sources Total $16,622,447

Air Stakeholder Meeting March 02, 2020 Title V Activities $8,568,452 Non-Title V Activities $1,937,632 Federal §105 Performance Partnership Grant Activities $2,339,470 Other Federal Activities $723,611 Asbestos Activities $777,792 GVIP Activities $2,275,490

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Title V Emission Fees $5,576,705 Shortfall for Title V Emission Fees $2,991,747 Non-Title V Emission and Permit Fees $1,025,857 Shortfall for Non-Title V Emission Fees $911,776 Federal §105 Performance Partnership Grant $2,339,470 Other Federal $723,611 Asbestos Fees $561,185 Shortfall for Asbestos Fees $216,607 GVIP Fees $2,183,605 Shortfall for GVIP Fees $91,886

Projected Operating Expenditures (excludes Pass Through) 5-Year Average (FY23-FY27) All Fund Sources

Total $16,622,447

Air Stakeholder Meeting March 02, 2020

$0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000

FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

Projected Revenues, Expenditures and Fund Balances (excludes GVIP and Asbestos)

Operating Expenditures Revenue Fund Balance

Actual Projected

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NOTE: Fiscal Year 2023 begins July 1, 2022

Timeline

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Timeline- Stakeholder Meetings

March-May 2020: Fee Stakeholder Discussions

• Early April and Early May for next meetings/calls
• Meeting or conference call(s)?
• Draft proposal and send out via GovDelivery and emails?

Monday April 6 Tuesday May 5 Tentative Meeting Dates

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Timeline –

• Stakeholder Meetings: March-May?
• Present to MACC: April-July?
• Public Hearing: August-October
• File by: December 1, 2020
• Legislative Review: January-March 2021
• Fees Collected by: June 1, 2022 (for emission/calendar year 2021)

Timeline – Paying Fees

• June 1, 2022: First fee payments due under new fee/structure

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Discussion!

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Reminders:

• Projecting ~$4M average shortfall, beginning in FY 2023
• Emission Fee:
• Largest projected discrepancy
• EPA’s fee is currently $52.03/ton (reevaluated annually)
• Permit/Asbestos Fees:
• Leave these as-is until there’s evidence they’re not covering themselves?
• Can still discuss!
• Challenging to compare fee structure to other states:
• Similar fee structure states:
• $70/ton IA, NE
• $53/ton KS

Emission Fee Scenarios

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Emission Fee Scenario

• Today’s fee discussions are just that – discussions
• All materials are available after the meeting on the

Air Program Advisory Forum webpage dnr.mo.gov/env/apcp/airadvisory/index.html

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Emission Fee Scenarios

Staying the same:

• The pollutants subject to emission fees (CO, PM2.5,

NH3 still exempt)

• Fee due date stays June 1
• Maintain statutory requirements:

Maintain 1 ton minimum fee Charcoal facilities pay no fees by statute (11 facilities) Local agency fees still deducted from amount due to state (around $100k)

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What are other states doing?

Researched 10 states around Missouri

• Fees vary by permit type
• Flat fee by industry and/or permit type
• Smaller emitters pay less or nothing
• Similar fee structure states: $70/ton IA, NE; $53/ton KS

Unique fee structures

• Pay on allowable emissions
• Pay higher of industry-type inspection fee or emission fee
• Vary fee by pollutant
• Set funding amount needed to operate program, divide by tonnage to get fee/ton

annually

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Fee Scenario #1: Fee per Ton

Change the emission fee rate from $48/ton

• At 2018 emission levels, there were 140,042 chargeable tons
• At 2018 fee level of $48/ton, fees were $6,722,016
• Local agency fees were $97,384, and that comes off the total fees

charged

To make up a shortfall of $4 million, fee per ton would need to be $80/ton with no other changes

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Fee Scenario #1: Fee per Ton/EPA rate

Change the emission fee rate from $48/ton to EPA rate

• If program were administered by EPA,

their presumptive minimum fee per ton is $52.03 in 2019

• Same caps and chargeable pollutants
• Project the rate into the future using

linear interpolation

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y = 0.8964x + 28.113 R² = 0.9952

$0.00 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027

EPA Presumptive Minimum Fee per Ton Projection

Total Linear (Total)

Fee Scenario #1: Fee per Ton/EPA rate

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Year Actual EPA Fee Year Projected EPA Fee Year Projected EPA Fee 2015 $48.49 2020 $53.11 2025 $57.69 2016 $48.88 2021 $54.11 2026 $58.59 2017 $49.85 2022 $55.01 2027 $59.49 2018 $51.06 2023 $55.90 2028 $60.38 2019 $52.03 2024 $56.80

Fee Scenario #2: Pollutant Cap

Change the pollutant cap from 4,000 tons per pollutant

• Facilities only pay for first 4,000 tons of a pollutant, and
• nly 12,000 tons total for all pollutants
• Only 7 facilities hit the cap on one or more pollutants,

and no facilities reach the 12,000 ton cap

• Keep $48/ton emission fee

To make up a shortfall of $4 million, pollutant cap would need to be 27,000 tons per pollutant with no facility total cap

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Fee Scenario #3: Fee and Cap

Change the emission fee rate from $48/ton and pollutant cap from 4,000 tons per pollutant

• See Calculator Tool to try out combinations

Fee per Ton Per Pollutant Cap Facility Total Cap $50/ton 2021 to 2023, $55/ton 2024 and after 15,000 40,000 $55/ton 2021 to 2023, $60/ton 2024 and after 12,000 30,000 $60/ton 2021 to 2023, $65/ton 2024 and after 8,000 24,000

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Questions?

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Contact Us!

Darcy A. Bybee, Director Air Pollution Control Program 1659 E. Elm Street Jefferson City, MO 65102 (573) 751-7840 (573) 751-7946 direct line darcy.bybee@dnr.mo.gov Call toll-free (800) 361-4827

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Thank you!

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