TITLE 9. ENVIRONMENT
Title of Regulation: 9VAC5-80. Permits for Stationary
Sources (Rev. K16) (amending 9VAC5-80-320, 9VAC5-80-340,
9VAC5-80-2270, 9VAC5-80-2280, 9VAC5-80-2310, 9VAC5-80-2330, 9VAC5-80-2340;
adding 9VAC5-80-342, 9VAC5-80-2282, 9VAC5-80-2342).
Statutory Authority: § 10.1-1308 of the Code of
Virginia; federal Clean Air Act (§§ 110, 112, 165, 173, 182, and Title V);
40 CFR Parts 51, 61, 63, 63, 70, and 72.
Public Hearing Information:
July 6, 2017 - 10 a.m. - Department of Environmental
Quality, 629 East Main Street, 2nd Floor Training Room, Richmond, VA
Public Comment Deadline: July 28, 2017.
Agency Contact: Gary E. Graham, Department of
Environmental Quality, 629 East Main Street, P.O. Box 1105, Richmond, VA 23218,
telephone (804) 698-4103, or email gary.graham@deq.virginia.gov.
Basis: Section 10.1-1308 of the Virginia Air Pollution
Control Law (§ 10.1-1300 et seq. of the Code of Virginia) authorizes the State
Air Pollution Control Board to promulgate regulations abating, controlling, and
prohibiting air pollution in order to protect public health and welfare.
Federal requirements: The federal statutory basis for the
regulation is Title V, §§ 501-507 of the federal Clean Air Act (Act) (42 USC
7401 et seq., 91 Stat 685).
The 1990 Clean Air Act Amendments (CAAA) created a major change
to the approach taken by the United States Congress in previous promulgations
of the federal Clean Air Act. Title V of the CAAA requires states to develop
operating permit programs to cover all stationary sources defined as major by
the Act. Permits issued under the permit programs must set out standards and
conditions that cover all applicable requirements of the Act for each emission
unit at each individual stationary source. Section 502 of the Act requires that
states develop permit fee programs to pay for the costs of the state's Title V
Permit Program.
Section 502(b)(3) of the CAAA sets out the minimum elements
that must be included in each state's permit fee program. The owner or operator
of all sources subject to the requirements to obtain a permit must pay an
annual fee, or the equivalent over some other period, sufficient to cover all
reasonable (direct and indirect) costs required to develop and administer the
permit program requirements of Title V, including the cost of the small
business technical assistance program. Section 502(b)(3)(A) specifies what is
meant by reasonable costs, as follows:
1. Reviewing and acting upon any application for a permit.
2. Implementing and enforcing the terms and conditions of the
permit, but not including any court costs or other costs associated with any
enforcement action.
3. Emissions and ambient monitoring.
4. Preparing generally applicable regulations or guidance.
5. Modeling, analyses, and demonstrations.
6. Preparing inventories and tracking systems.
Section 502(b)(3)(B) specifies the requirements for the total
amount of fees to be collected by the state permitting authority, as follows:
1. The state must demonstrate that, except as otherwise
provided, the program will collect in the aggregate from all sources subject to
the program an amount not less than $25 per ton of each regulated pollutant, or
such other amount as the U.S. Environmental Protection Agency (EPA)
administrator may determine adequately reflects the reasonable costs of the
permit program.
2. "Regulated pollutant" means (i) a volatile organic
compound; (ii) each pollutant regulated under § 111 or 112 of the Act; and
(iii) each pollutant for which a national primary ambient air quality standard
has been promulgated (except carbon monoxide).
3. In determining the amount to be collected, the permitting
authority is not required to include any amount of regulated pollutant emitted
by any source in excess of 4,000 tons per year of that pollutant.
4. The requirements of paragraph 1 above will not apply if the
permitting authority can demonstrate that collecting an amount less than $25
per ton of each regulated pollutant will meet the requirements of
§ 502(b)(3)(A).
5. The fee calculated under paragraph 1 above shall be
increased (consistent with the need to cover the reasonable costs authorized by
§ 502(b)(3)(A) in each year beginning after the year of the enactment of the
Act by the percentage, if any, by which the Consumer Price Index for the most
recent calendar year ending before the beginning of such year exceeds the
Consumer Price Index for the calendar year 1989.
Section 502(b)(3)(C) specifies the requirements of a federal
permit fee program if the EPA administrator finds that the fee provisions of a
state program are inadequate or if the Title V operating permit program itself
is inadequate and EPA has to administer the fee program itself. This section
allows the EPA administrator to collect additional fees to cover the
administrator's costs of administrating a federal fee program and specifies that
the EPA administrator may collect additional penalties and interest for failure
to pay fees.
Section 502(b)(4) specifies that the minimum elements for the
permit program include requirements for adequate personnel and funding to
administer the program.
Section 507(f) specifies that the state may reduce any fee
required under Title V to take into account the financial resources of small
business stationary sources.
The federal regulatory basis for the Title V Fee Program is 40 CFR
70.9.
40 CFR 70.9(a) specifies that the state program require
that the owners or operators of part 70 sources pay annual fees that are
sufficient to cover the permit program costs and that any fee required by this
section will be used solely for Title V permit program costs.
40 CFR 70.9(b)(1) specifies that the state establish a fee
schedule that results in the collection and retention of revenues sufficient to
cover the permit program costs. These costs shall include, but are not limited
to:
1. Preparing generally applicable regulations or guidance
regarding the Title V permit program or its implementation or enforcement;
2. Reviewing and acting on any permit application including the
development of an applicable requirement;
3. General administrative costs of running the permit program,
including the supporting and tracking of permit applications, compliance
certification, and related data entry;
4. Implementing and enforcing the terms of any Title V permit;
5. Emissions and ambient monitoring;
6. Modeling, analyses, or demonstrations;
7. Preparing inventories and tracking emissions; and
8. Providing direct and indirect support to sources under the
Small Business Stationary Source Technical and Environmental Compliance
Assistance Programs in determining and meeting their obligations under the
Title V permit program.
Section 70.9(b)(2) provides a fee schedule that EPA will
presume meets the requirements of 40 CFR 70.9(b)(1), which includes collecting
not less than $25 per year per ton of actual emissions of each regulated pollutant
adjusted annually for increases in the Consumer Price Index as of August 31 of
the most recent calendar year. The presumptive fee includes a greenhouse gas
(GHG) adjustment based upon the hourly burden for GHG permit activities. This
section also provides certain exclusions from the actual emissions calculation
that the state may use, including a 4,000 ton per year cap on actual emissions
of regulated pollutants used in the calculation, the actual emissions used in
the minimum fee calculation, and actual emissions from insignificant activities
not required in the Title V permit application pursuant to 40 CFR 70.5 (c).
"Actual Emissions" is defined for 40 CFR Part 70 sources as follows:
"Actual emissions" means the actual rate of emissions
in tons per year of any regulated pollutant (for presumptive fee calculation)
emitted from a part 70 source over the preceding calendar year or any other
period determined by the permitting authority to be representative of normal
source operation and consistent with the fee schedule approved pursuant to this
section. Actual emissions shall be calculated using the unit's actual operating
hours, production rates, and in-place control equipment, types of materials
processed, stored, or combusted during the preceding calendar year or such
other time period established by the permitting authority pursuant to the
preceding sentence.
Section 70.9(b)(3) specifies that the state's fee schedule may
include emissions fees, application fees, service-based fees, other types of fees,
or any combination thereof to meet the fee schedule requirement to cover Title
V permit program costs. It further specifies that nothing in 40 CFR 70.9 shall
require the permitting authority to calculate fees on any particular basis or
in the same manner for all sources, provided that the permitting authority
collects a total amount of fees sufficient to meet the program support
requirements of 40 CFR 70.9(b)(1).
Section 70.9(b)(5) specifies that the state shall provide an
accounting that its fee schedule results in the collection and retention of
revenues sufficient to cover the permit program costs if (i) the state sets a
fee schedule that would result in collections less than the presumptive fee
schedule, or (ii) EPA has serious questions as to whether the state's fee
schedule is sufficient to cover the program costs.
Sections 70.9(c) and (d) further require the state to provide a
demonstration that the collection of fees is sufficient to meet all of the
Title V program requirements and that the fees are used solely to cover the
costs of meeting those program requirements.
State requirements: Section 10.1-1308 of the Code of Virginia
authorizes the State Air Pollution Control Board to promulgate regulations
abating, controlling and prohibiting air pollution in order to protect public
health and welfare.
Section 10.1-1322 of the Code of Virginia authorizes the State
Air Pollution Control Board to adopt requirements for permits and to collect
fees from air pollution sources.
Section 10.1-1322 B authorizes the State Air Pollution Control
Board to provide for the collection of annual permit program emissions fees
from air pollution sources, based upon actual emissions of each regulated
pollutant not to exceed 4000 tons per year of each pollutant for each source.
The annual permit program emissions fees are not to exceed a base year amount
of $25 per ton using 1990 as the base year and are to be adjusted annually by
the Consumer Price Index. Permit program fees for air pollution sources that
receive state operating permits in lieu of Title V operating permits shall be
paid in the first year and thereafter shall be paid biennially. The statute
directs that the fees approximate the direct and indirect costs of
administering and enforcing the permit program as required by the Clean Air
Act. This section also authorizes the board to collect permit application fee
amounts not to exceed $30,000 from applicants for a permit for a new major
stationary source.
Section 10.1-1322.1 of the Code of Virginia specifies that all
moneys collected pursuant to §§ 10.1-1322 and 10.1-1322.2 be paid into the
state treasury and credited to a special nonreverting fund known as the Air
Pollution Permit Program Fund. Any moneys remaining in this fund are not to
revert to the general fund but are to remain in the fund. Utilization of the
fees collected pursuant to this section is to be limited to the agency's direct
and indirect costs of processing permits.
Item 369 B 1 of Chapter 780 of the 2016 Acts of Assembly
continued language initially included in Item 365 B 1 of Chapter 3 of the 2012
Acts of Assembly, Special Session 1, authorizing the board to adjust permit
program emissions fees collected pursuant to § 10.1-1322 of the Code of
Virginia and to establish permit application fees and permit maintenance fees
sufficient to ensure that the revenues collected from all fees cover the direct
and indirect costs of the program, consistent with the requirements of Title V
of the Clean Air Act. It further specified that (i) permit application fees
collected not be credited toward the amount of annual emissions fees owed
pursuant to § 10.1-1322, (ii) that all fees be adjusted annually by the
Consumer Price Index, (iii) that regulations initially implementing these
provisions be exempt from Chapter 40 (§ 2.2-4000 et seq.) of Title 2.2, Code of
Virginia (the Administrative Process Act), and (iv) that any further amendments
to the fee schedule beyond those initially implementing these provisions would
not be exempt from provisions of the Administrative Process Act.
Purpose: The purpose of 9VAC5-80 is to minimize the
emissions of regulated air pollutants from new and modified stationary sources
through air permit programs. Minimizing those emissions protects the health,
safety, and welfare of the general public. Title V of the federal Clean Air Act
requires that Title V permit programs be fully funded through Title V program
fees. As the permit programs achieve their goal of reducing emissions, Title V
permit program fee revenue has decreased and is projected to decrease to the
point that it will no longer cover the costs of the Title V permit programs.
The purpose of this regulatory action is to (i) increase Title V fees so that
they continue to fully fund the Title V permit program, and (ii) to restructure
the Title V fee schedule to better reflect the actual costs of the Title V
permit program, thereby improving program revenue stability. Fully funding the
Title V permit program is essential to continuing to reduce air pollutant
emissions in the Commonwealth and continuing to protect the health, safety, and
welfare of the citizens of Virginia.
Substance: The substantive provisions were developed
based on the consensus proposal of a stakeholder advisory group established by
the Department of Environmental Quality that consisted of representatives from
industry, environmental groups, and department staff; department analysis; and
information gathered from the federal statutes, regulations, and policies. In
addition, the new and increased fees more accurately reflect and evenly
distribute the permitting and compliance assurance costs incurred by the
department.
1. Definitions of "greenhouse gases" and
"regulated pollutant (for fee calculation)," are added and the
definition of "actual emissions" is revised so that emissions of
greenhouse gases will be excluded from the calculation of permit program
emissions fees.
2. A new section is added to Chapter 80, Part II, Article 2
providing an equivalent method of calculating permit program emissions fees
applicable to future billing years. In this new section, permit program
emission fee rates for billing years 2018 and 2019 are specified, reflecting
incremental 18.6% and 15% increases in the permit program emission fee rates
over those two years, respectively. Also, a new and equivalent method of
calculating CPI adjustments is provided for billing years after 2019. That new
method of calculating CPI adjustments for permit program emissions fees is the
same method that is currently used for annual CPI adjustments for permit
application fees and annual permit maintenance fees. Provisions for excess
emissions fees are unchanged. Various changes are made to the existing permit
program emissions fee calculation section as necessary to conform to and
implement this new section.
3. A new section is added to Chapter 80, Part II, Article 10
specifying new, increased base permit application fee amounts that will be
applicable in future years. Annual CPI adjustments are applied as before except
the annual adjustment for 2019 is specified to be 10% more than the permit
application fee rates applicable in the previous calendar year. Provision is
made for applications filed before the effective date of this amendment and
modified on or after that date such that the new permit application fee
structure is applicable to that application but any permit application fee
amount previously paid for that application is credited toward the new permit
application fee amount. Various changes are made to the existing permit
application fee calculation section as necessary to conform to and implement
this new section.
4. A new section is added to Chapter 80, Part II, Article 11
specifying new, increased base permit maintenance fee amounts that will be
applicable in future years. Annual CPI adjustments are applied as before except
that the fee adjustments for certain permit types are individually specified
for billing years 2019 and 2020. A new minimum permit maintenance fee is
specified for synthetic minor sources and that fee is also adjusted annually.
Various changes are made to the existing permit maintenance fee calculation
section as necessary to conform to and implement this new section.
Issues: The primary advantage to the public of this
proposed action is that it ensures that the Title V permit program will
continue to protect the health and welfare of the Commonwealth's citizens and
ensures that the Commonwealth will continue to maintain control over the
implementation of the Title V permit program within the Commonwealth. The
primary disadvantage of this proposed action is that some increases in the
direct and indirect costs of the Title V permit program will be borne by
businesses in the Commonwealth and will be passed along to the citizens of the
Commonwealth. Changing the fee structure will affect different businesses
differently; some will pay proportionally more in fees, some proportionally
less.
The primary advantage to the department of this proposed action
is that the permit Title V permit program will continue to be fully funded and
fully staffed. There are no disadvantages to the department.
Department of Planning and Budget's Economic Impact
Analysis:
Summary of the Proposed Amendments to Regulation. The Air
Pollution Control Board (Board) proposes to raise all of its emissions and maintenance
fees, and most of its application fees, for stationary source air pollution
permits. The Board also proposes to institute a new maintenance fee for
synthetic minor sources of air pollution.
Result of Analysis. Because the program funded by these fees is
required by both state and federal law, and the costs of non-compliance would
likely be greater than these proposed fee increases, the benefits of the
Board's proposed changes likely outweigh their costs.
Estimated Economic Impact. The Department of Environmental
Quality (DEQ) and the Board currently manage the stationary source air
pollution permitting program required by Title V of the federal Clean Air Act.
This program is required by federal law to be self-funding. DEQ staff reports
that emissions that are subject to fees per ton have been dropping. While this
is beneficial for the environment as it means that air quality is improving, it
also means that fee revenue that supports this program has been decreasing. In
order to maintain this program as required by law, the Board now proposes to
increase the fee per ton of emissions for all but one of the permit application
fees and increase all of the annual permit maintenance fees. The Board also
proposes to institute a new maintenance fee for synthetic minor source
pollution emitters that only emit, or have the potential to emit, a regulated
pollutant at less than 80 percent of the threshold that would qualify them as a
major source emitter. Board staff reports that this program has been understaffed
so fee increases will allow staffing increases in addition to maintaining
current oversight on permit holders. Board staff additionally reports that the
number of permits has been basically the same over the past several years.
Proposed fee increases will increase costs for permit holders going forward.
DEQ reports that large businesses will easily be able to absorb those costs.
Small businesses may have a harder time paying increased fees without business
disruption; the Board has attempted to minimize any adverse impact of fee
increases for small businesses by phasing in some of the larger increases. The
costs of these proposed changes are likely outweighed by the benefits to
stakeholders of maintaining this state program as the alternative would have the
federal government setting up a program in the state to manage Title V
permitting. Such a program would likely be more expensive for permit holders
and would likely also be less flexible and responsive to their concerns. All
current fees and proposed fees are set, as required by federal law, using the
Consumer Price Index (CPI) for all urban consumers. Current fees for 2017 and
proposed fees for 2018 and going forward are laid out below.
VA.R. Doc. No. R17-4981; Filed May 10, 2017, 9:02 a.m.