1.

NOTICED PUBLIC HEARING:

REVISIONS TO RULE 40 –PERMIT AND OTHER FEES

2.

NOTICED PUBLIC HEARING:

ADOPTION OF NEW RULE 41 - INDEMNIFICATION, DEFENSE AND SECURITY

3.

NOTICED PUBLIC HEARING:

ADOPTION OF AMENDMENTS TO RULE 177 - INSPECTION OF PUBLIC RECORDS

4.

LOWER EMISSION SCHOOL BUS FUNDING DISTRIBUTION

APCD 1.

SUBJECT:

NOTICED PUBLIC HEARING:

REVISIONS TO RULE 40 –PERMIT AND OTHER FEES (DISTRICT: ALL)
 

State law authorizes air pollution control districts to adopt a schedule of fees to recover permitted stationary source program costs not otherwise funded.  These proposed amendments to Rule 40 are in accordance with Board direction of June 17, 1998 (APCB #4), adopting recommendations of a Fee Review Group made up of large and small local business representatives (Attachment III).  Over the ten-year period from Fiscal Year (FY) 1991-92 through FY 2001-02, permit-related fee revenue has increased 0.1% for a very low average rate of 0.01% per year.  This is due in part to the Air Pollution Control District Fee Reduction Act (Supervisors Jacob and Slater, 3/7/95, APCB #1) authorizing using Vehicle Registration fees for allowable District activities, thus reducing emissions fees charged to businesses, and a one-time 10% fee discount proposed for FY 2001-02.  Even without the proposed 10% discount, permit-related fees would have increased only 11% over the ten years, or an average of 1% per year.

One-year Fee Discount

Over the last 12 months, there has been an unusually high number of vacancies in the stationary source program permit-related activities, particularly in technical positions in Engineering and Compliance.  Despite efforts to recruit qualified candidates, higher salaries in other sectors lured qualified technical candidates away.  After months of focused recruiting efforts, lists of qualified candidates are growing, and vacancies are now being filled. 

Permit-related fees paid in FY 2000-01 were based on staffing as budgeted and, because several vacancies continued throughout the fiscal year, it is appropriate to return associated salary savings of approximately $636,000 to permitted businesses.  Therefore, it is recommended that the revised FY 2001-02 permit-related fees be discounted by 10% for one year only.  The projected savings to fee payers is 10% ($638,656) of FY 2000-01 revised permit-fee revenue ($6,386,560).  The revenue shortfall caused by discounting the FY 2001-02 fees would be offset with District fund balance which increased due to salary savings.

The ten percent (10%) refund is based on salary savings in stationary source permit-fee-offset programs only.  Other District savings (approximately $559,000) will be retained in management reserves to meet increased, but not yet known, costs for office space and utilities.  A new lease in progress for the existing District office will be completed this summer.  Although a 90% increase ($324,900) is projected for FY 2001-02 budgeting purposes (from $360,600 to $685,500), the building owner has provided no cost proposals to date and, of course, utility costs will be excessive but unpredictable.

Fee Impacts

Compared to FY 2000-01, without the 10% discount FY 2001-02 permit-related fee revenue would increase from $6,073,838 to $6,386,560, an increase of $312,722 (5.1%).  With the discount, fee revenue will decrease from $6,073,838 to $5,747,904, a decrease of $325,934 (5.4%).  Compared to projected actual FY 2000-01 fee revenue, without the 10% discount, FY 2001-02 fee revenue will increase from $6,060,323 to $6,386,560, or $326,237 (5.4%), and with the discount will decrease $312,419 (5.2%).  Annual fee revisions are necessary because some fee schedules decrease and others increase after recalculating the most recent five-year average labor hours, as required by the fee methodology.  Also, permit-related program costs have increased, primarily due to salary increases ($225,314), and additional services and supplies costs ($87,408), primarily for fuel, training, and litigation.

Cost increases ($600,200) related to the ten new positions approved by your Board on February 14, 2001 (APCB #1), are offset by increased state subvention funding and do not impact FY 2001-02 permit-related fees. 

For FY 2001-02 and the remaining years of the County Information Technology contract, the District will receive a General Fund allocation offsetting increased Information Technology costs, thus avoiding passing the increases on to District permitted customers.  The FY 2001-02 allocation is $189,261.

Permit Renewal Fees 

Permit renewal fees are calculated to recover costs related to permit inspections and permit system maintenance.  Fixed permit renewal fees are based on the average actual renewal hours for each specific type of equipment times the Rule 40, Fee Schedule 94, labor rates.  Average renewal hours for each fee schedule are based on data for the last five years.  Over 99% of permitted equipment is charged fixed renewal fees.  Less than one percent (<1%) is charged time-and-materials (T&M) fees.

Without the 10% discount, permit renewal fixed fee schedules would increase an average of $14, ranging from a $767 (37%) decrease to a $266 (12%) increase.  With the 10% discount, permit renewal fixed fee schedules will decrease an average of $33, ranging from an $896 (106%) decrease to a $181 (99%) increase.  There are 191 existing renewal fee schedules, including 169 (88%) with fixed fees and 22 (12%) with T&M fees.  Without the 10% discount, 60 (36%) of the fixed fee schedules would decrease an average of $75, 102 (60%) would increase an average of $67, and 5 (3%) would remain the same.  With the 10% discount, 109 (65%) of the fixed fee schedules will decrease an average of $69, 56 (33%) would increase an average of $44, and two (1%) would remain the same.  Two (1%) obsolete fees schedules will be deleted.  The largest increase (with the 10% discount) is $181 (99%) resulting from increased labor hours to resolve compliance issues with the rule and testing methodology.  A new testing methodology was developed for stationary crucibles (metal melting devices).  Finally, eight T&M fees are becoming fixed fees because sufficient labor data is available to establish average hours per unit of permitted equipment. 

District regulations require separate fee schedules for facilities with high renewal costs causing the fee for other facilities in the same equipment category to increase by more than 10%.  One new fee schedule will be established for such a facility whose costs far exceeded the average in a specific category of permitted equipment.  The higher costs for this facility were incurred providing assistance and oversight to bring this facility into compliance.

Application Fees

Application fees recover costs related to evaluating applications for Authority to Construct or a Permit to Operate equipment subject to District regulations.  Fixed fees are based on the average hours to complete the evaluation of an initial permit application or modification for the type of equipment being evaluated.  Fixed fees are established for equipment or processes with relatively consistent evaluation hours, as documented by labor tracking data.  T&M fees are used for equipment or processes where labor hours vary significantly from one application to another.  T&M fees are also used where there have been no (or few) recent applications and there is little basis for estimating the hours to complete an application evaluation.

Without the 10% discount, application fixed fee schedules would increase an average of $42, ranging from a $312  (19%) decrease to a $141 (82%) increase.  With the 10% discount, application fixed fee schedules will decrease an average of $74, ranging from a $447 (27%) decrease to a $110 (64%) increase.  There are 196 application fee schedules, including 63 (32%) fixed fees and 133 (68%) T&M fees.    Without the discount, eight (13%) of the fixed fee schedules would decrease an average of $69, 52 (82%) would increase an average of $59, and three (5%) would remain the same.  With the 10% discount, 59 (94%) of the fixed fee schedules will decrease an average of $84 and four (6%) will increase an average of $72.  The largest increase, $141 ($110 with the 10% discount), is related to evaluating applications for portable concrete batch plants.  This fee was new in FY 98-99.  This revision is based on more years of actual labor data and, therefore, more accurately reflects actual costs.  Two obsolete T&M fee schedules will be deleted.

Customer Friendly Text Revisions

In addition to recalculating and revising the FY 2001-02 fee schedules, the text portion of the Rule 40 - Permit and Other Fees has been reformatted to align with other District rules, including adding a reference number or letter for every operative paragraph.  This will facilitate communications between customers and staff regarding a specific requirement in the rule.  Also, worksheets have been added to assist customers with estimating required fees.

Emissions Fees

The Emissions Fee will remain $82 per ton per year.  Emission fees recover the full-cost of indirect permit-related activities paid.  With the proposed discount, the FY 2001-02 emissions fee will be $74 per ton per year for one year only.  The emissions fee per ton for facilities emitting five or more tons of Criteria Pollutant Emissions per year is based on the most recent emissions inventory.  Facilities with less than five tons per year will continue to pay at the rate of one ton per year, based on average emissions of such facilities. 

There were no revisions to the source testing fees.  However, each fee will be discounted 10% for FY 2001-02 only. 

Non-Permit-Related Fees (10% discount does not apply)

The 10% discount will not apply to State Toxic Hot Spots fees, Hearing Board Fees, or Asbestos Notification Fees. 

Rule 40 Workshop

A workshop on Rule 40 - Permit and Other Fees was held at 2:00 p.m., May 21, 2001, at the Air Pollution Control District.  All applicants, permit holders, consultants, and other parties that receive District notices were notified.  Only two persons attended and neither had any questions or comments on the Rule 40 revisions.  Also, no written comments were received by the District concerning Rule 40.  Accordingly, no Workshop Report is attached.
 

Permit-related costs are increasing $312,722 (5.1%) in FY 2001-02.  Without the recommended 10% discount, permit-related fee revenue would also increase $312,722.  However, the recommended 10% one-year fee discount results in a $325,934 (5.3%) decrease.  District fund balance would offset reduced program revenue from the fee discount.  These proposed changes are reflected in the Change Letter, requesting changes to the proposed FY 2001-03 District Operational Plan.
 

AIR POLLUTION CONTROL OFFICER

Make appropriate findings, as required by Section 40727 of the Health and Safety Code, and adopt the Resolution amending Rule 40 - Permit and Other Fees.  This would amend Rule 40 to reflect District costs, including (a) revising permit application and renewal fees, (b) restructuring the text portion to make it more “user friendly” and consistent with the organizational format of other District Rules and Regulations, and (c) approving a one-year-only 10% permit-related fee discount to be offset by District fund balance.
 

ON MOTION of Member Jacob, seconded by Member Cox, the Members of the Air Pollution Control Board closed the hearing and took action as recommended, and pursuant to Section 40727 of the Health and Safety Code, adopting Findings as presented by County Counsel.

AYES:       Cox, Jacob, Slater, Roberts, Horn

ABSENT:  Roberts
 

APCD 2.

SUBJECT:

NOTICED PUBLIC HEARING:

ADOPTION OF NEW RULE 41 – INDEMNIFICATION, DEFENSE AND SECURITY (DISTRICT: ALL)
 

The Air Pollution Control District scheduled and advertised a public hearing for June 20, 2001, to adopt new Rule 41 – Indemnification, Defense, and Security. 

The Air Pollution Control Officer is requesting this item be withdrawn from the June 20, 2001, hearing to allow time to fully address public comments and concerns raised after the notice of public hearing was issued.  When these issues are resolved, a new public notice will be issued for a new hearing date.
 

AIR POLLUTION CONTROL OFFICER

Withdraw “Adoption of New Rule 41 – Indemnification, Defense, and Security” from the June 20, 2001, Board Hearing.
 

ON MOTION of Member Jacob, seconded by Member Slater, the Members of the Air Pollution Control Board closed the hearing and took action as recommended, on Consent.

AYES:       Cox, Jacob, Slater, Horn

ABSENT:  Roberts
 

APCD 3.

SUBJECT:

NOTICED PUBLIC HEARING:

ADOPTION OF AMENDMENTS TO RULE 177 - INSPECTION OF PUBLIC RECORDS (DISTRICT: ALL)
 

As mandated by state law, Rule 177 specifies the requirements and obligations of the District and the public regarding inspection of public records.  The proposed revisions reflect amended law.  Specifically, the amended rule will allow 10 rather than 5 working days to determine if requested records can be made available and an additional 14 days, if necessary, to complete this determination.  Provisions have also been added requiring the requestor to be notified as soon as possible as to when they may inspect the records, or if the requested records cannot be made available, the specific reason must be provided to the requester in writing with the names and titles of each person responsible for making the determination. 

Rule 177 also specifies the administrative procedures that apply when public records contain materials identified as “trade secret.”  Trade secret materials may include procedures, formulas, production data or other information which is not patented, if it allows the user to maintain a business advantage over competitors who do not know or use it.  While material usage and production data may be classified as trade secret, the resulting air pollution emission data may not be classified as such.  The criteria and procedures for classifying submitted materials as "trade secret" are specified in Rules 175 - General and Rule 176 - Information Supplied to District.  Recent revisions in state law pertaining to public records contained no substantive changes regarding records designated as “trade secret.”  Accordingly, sections of Rule 177 addressing public review of records labeled trade secret contain only minor administrative changes for clarification.

A public workshop was held on May 23, 2001.  There were no comments.
 

The recommended action will have no fiscal impact on the District.
 

AIR POLLUTION CONTROL OFFICER

Adopt the resolution adopting amendments to Rule 177 – Inspection of Public Records of the District Rules and Regulations and make appropriate findings:

(i)    of necessity, authority, clarity, consistency, non-duplication and reference as   required by Section 40727 of the State Health and Safety Code;

(ii)    that pursuant to Health and Safety Code section 40001 the adoption of the amendments will make the rule consistent with state law, and that the rule amendments will not interfere with the attainment of ambient air quality standards; and

(iii)   that an assessment of the socioeconomic impact of the proposed amendments is not       required by Section 40728.5 of the State Health and Safety Code because the proposed   amendments will not affect air quality or emission limitations.
 

Noting for record,  revisions to subsection D, indicated in Board of Supervisors Exhibit 3, ON MOTION of Member Jacob, seconded by Member Slater, the Members of the Air Pollution Control Board closed the hearing and took action as recommended, on Consent; and pursuant to Section 40727 of the Health and Safety Code, adopting Findings as presented by County Counsel and adopting the following Resolutions, entitled: 

01-178  RESOLUTION AMENDING RULE 177 OF REGULATION IX OF THE                 RULES AND REGULATIONS OF THE SAN DIEGO COUNTY AIR                                    POLLUTION CONTROL DISTRICT; and

01-179   RESOLUTION ADOPTING AMENDMENTS TO RULE 40 – PERMITS AND      OTHER FEES OF THE RULES AND REGULATIONS OF THE SAN DIEGO                      COUNTY AIR POLLUTION CONTROL DISTRICT.

AYES:  Cox, Jacob, Slater, Horn

ABSENT:  Roberts
 

APCD 4.

SUBJECT:

LOWER EMISSION SCHOOL BUS FUNDING DISTRIBUTION
 

On October 25, 2000 (APCB #3), your Board authorized the District to apply for and accept state Lower Emission School Bus Program (School Bus Program) funding for replacing or retrofitting pre-1987 diesel school buses to reduce Oxides of Nitrogen and particulate matter (PM) emissions from diesel-fueled engines.  Oxides of Nitrogen are precursor pollutants for ozone production in the atmosphere.  The Air Resources Board (ARB) has identified diesel-fueled engine exhaust as a toxic air contaminant.  Statewide $25 million was designated to purchase compressed-natural-gas (CNG) buses reducing NOx and PM emissions, $12.5 million for intermediate diesel buses (cleaner diesel buses certified to reduce both NOx and PM emissions), and $12.5 million to retrofit existing diesel buses with PM traps. 

State guidelines require the air district provide a 10% match of the state replacement bus funds if the funds are administered (distributed) by the air district.  The guidelines also require a 25% match (up to $25,000) from school districts receiving replacement bus funds.  Funds under air district control cannot be used for the school district match.  Neither air district nor school district matching funds are required for state PM trap retrofit funds.

On April 25, 2001 (APCB #3), your Board allocated $340,000 for the required 10% match to locally administer the replacement bus funds, based on the preliminary estimate of $3.4 million being provided to the San Diego Region.  However, when the program award was received May 2, 2001, the replacement bus allocation was actually $3.11 million, requiring only a $311,000 match. 

Subsequently, on May 23, 2001 (APCB #3), your Board approved reducing the previously allocated $340,000 match by $29,000, leaving $311,000 as the match.  The $29,000 reduction, $50,000 from an unapproved project, and $34,541 not yet allocated were combined with a $600,000 allocation for a total of $713,541 to supplement the School Bus Program.  In that same action, your Board directed these funds be awarded separately through a Request for Proposal (RFP) using modified Vehicle Registration Fund criteria that includes particulate matter emissions as a cost-effectiveness factor.  The $311,000 local match and $713,541 in supplemental funds have been appropriated in the Vehicle Registration Fund. 

Appropriations in the amount of $4,193,000, the total state award amount, are now requested.  Total funding includes $3,421,000 for replacement buses ($3,110,000 from the state award and $311,000 local match) and $1,083,000 for PM trap retrofits.  The mandated split of the $3,421,000 for replacement buses is 2/3 for CNG buses ($2,280,667) and 1/3 for intermediate diesel buses ($1,140,333). 

School Bus Program Applications

A master list of 42 school districts was developed and reviewed by the County Board of Education to insure every district was included.  Program guidelines exclude school districts that do not own and operate their own bus fleet.  The 42 school districts were invited to attend a Pre-Application Workshop on February 23, 2001.  Approximately 29 school districts were represented.  Program guidelines were discussed and several attendees indicated their district could not participate, some because they do not own and operate their bus fleet, and at least one, the Santee district, because they could not provide the required school district match (25% up to a maximum of $25,000), or even a special reduced match for qualifying districts (where 20% or more of their buses are pre-1977) that effectively reduces the match to $15,000. 

The workshop included a discussion of proposed lottery processes that would meet program requirements.  There was general agreement on a lottery process and on establishing a maximum of 20% of the total replacement bus funding being awarded to any one school district, thereby ensuring funds would be distributed to more than one district. 

On March 1, 2001, the Program Opportunity Notice and application forms were sent to all forty-two school districts.  Twenty-one applications were received, representing 26 school districts (the San Dieguito Transportation Cooperative represents six districts), requesting approximately $12 million for replacement buses ($6 million for CNG and $6 million for intermediate diesel buses) and $5 million for PM trap retrofits. 

School Bus Program Lottery

On May 18, 2001, the lottery was held to distribute program funding.  As indicated in the Program Opportunity Notice, no one school district was eligible for more than 20% of the total replacement bus funding.  Replacement bus awards equaled the total of the cost of the bus (from the state’s bid list), plus sales tax, less the required school district match (25% up to a maximum of $25,000).  In addition, awards for CNG buses could include 10% of the cost of the bus for infrastructure, if requested in the application.  Particulate trap retrofits at $7,000 per retrofit ($6,500 for equipment costs and $500 for the differential cost of low sulfur diesel, required to preserve the life of the trap) were awarded in groups of up to 10.

Each of the 21 school districts that applied received funding in one or more categories, as shown in the following chart.

Remaining Program Funds

After the last funded award in each category was drawn, a remainder was left that would only partially fund the next bus or retrofit on the list.  The remainders are $62,914 for CNG buses, $24,252 for intermediate diesel, and $5,000 for retrofits.  It is recommended these remainders be carried over and combined with FY 2001-02 state School Bus Program funding expected in July 2001.  The statewide funds are expected to be around $19,000,000.  Proportionally, this would result in $1,592,000 for the San Diego Region.  The same program guidelines would apply, resulting in an award of $1,194,000 for replacement buses and $398,000 for retrofits.  A $119,400 (10%) air district match would be required to administer the replacement bus portion of the program locally.  Accordingly, it is recommended that $119,400 from Vehicle Registration funds be allocated and appropriated as the replacement bus match for the FY 2001-02 school bus funding expected in July 2001, and that the Air Pollution Control Officer be authorized to apply for and accept the state funding when offered.
 

These recommendations have no fiscal impact on District operations and will provide additional funding for reducing harmful school bus emissions.  Detailed fiscal impact statements are attached for the Vehicle Registration and School Bus Program funds.
 

AIR POLLUTION CONTROL OFFICER

1.   Establish appropriations of $4,193,000 in the Air Quality School Bus Program Fund based on unanticipated revenue from the state FY 00-01 Lower Emission School Bus Program.  (4 VOTES)

2.   Establish appropriations of $119,400 for Fiscal Year 2001-02 in the Air Quality Trust Fund for the FY 01-02 state Lower Emission School Bus Program local match, based on fund balance available.  (4 VOTES).  

3.  Authorize the Air Pollution Control Officer to apply for and accept state School Bus Program funding for FY 2001-02 and distribute awards according to state program guidelines.
 

AYES:      Cox, Jacob, Slater, Roberts, Horn

ABSENT:  Roberts