FISCAL NOTE

Date Requested: January 29, 2019
Time Requested: 03:50 PM
Agency: Environmental Protection, Department of
CBD Number: Version: Bill Number: Resolution Number:
1610 Introduced HB2711
CBD Subject: Environment


FUND(S):

Varies

Sources of Revenue:

Other Fund General, Special or Federal depending on the type of permit.

Legislation creates:

Creates New Expense, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    This HB requires a public hearing for any air quality permit application meeting either a minimum size of 25,000 square feet or an investment value of $25 million. Even though the bill would amend only Section 12 which addresses major sources that are already operational, the fiscal note assumes that this criterion would apply to both construction permits & Title V operating permits.
    
    This house bill (HB) will have a substantial impact on the Division of Air Quality (DAQ) agency costs of approximately $1 million annually. Ambient air is defined by the Clean Air Act to be at or beyond the property line. With a size criterion of a little more than a ½ acre (the lot size for many homes), the majority of sources seeking permits from DAQ will be subject to a public hearing based on the size criterion. The DAQ further estimates approximately 75% of minor source construction applications and 100% of major source construction (Prevention of Significant Deterioration (PSD)) and major source operating (Title V) applications would also meet the $25 million criterion.
    
    Because 100% of the sources are expected to meet the size criterion, an estimated 462 public hearings would be required annually based on the average number of permits issued over the last three years. This is a frequency of nine (9) public hearings per week. The costs reflect the addition of eight (8) new employees that would be required. The value criterion would result in an estimated 373 public hearings annually based on the number of permits issued over the last three years. Because the criteria are written as an “or” and not “and”, the size criterion was used in calculating the fiscal note.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 978,340 975,000
Personal Services 0 591,016 591,016
Current Expenses 0 355,984 355,984
Repairs and Alterations 0 0 0
Assets 0 31,340 28,000
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    There is a distinction between public meetings and public hearings, primarily the more informal public meetings are more informative and provide immediate feedback to the public’s questions whereas the formal public hearing does not provide immediate feedback to questions and are listening only sessions.
    
    Current expenses for DAQ meetings (not hearings) that are requested by the public, include travel from Charleston (as needed) to the county of the permitting action for a minimum of 4 employees including the DAQ Director, the DAQ Permitting Program Manager, the DAQ Permit Engineer, and the DAQ Information Specialist. Public meetings do not require additional legal notice and do not require the use of a court reporter for transcription. In the past 10 years, DAQ held 18 public meetings for sources seeking construction permits. The only denied request for a public meeting pertained to a floodplain issue that was not air quality related. The construction permit program provides for a public meeting if requested; however, the Title V permit program provides for a public hearing if requested. Since 2011, no requests have been received for a public hearing on a Title V operating permit.
    
    The public hearing costs used in this fiscal note are based on prior expenses and experience with public meetings. The increased expenses are based on a July 1, 2019 effective date for the following:
    
    • All permitting actions are handled out of the Charleston office.
    
    • The average number of construction permits issued from 2016 - 2018 is 356, including 7 major source PSD permits.
    
    • The average number of total permits issued from 2016 - 2018 is 462 including construction, Title V operating and Acid Rain permits.
    
    • Permitting actions would equate to future hearing events. These are considered new expenses because the average number of public meetings over the past 10 years is 2 per year.
    
    • The average number of general permits issued from 2016 - 2018 is 166. The average cost of a legal notice is $76.23. Currently, general permits only require notice by the applicant and do not require an additional public notice by DAQ. This would be a new expense of $12,654.
    
    • The additional FTE’s were calculated using the number of events and the amount of time required per event (preparation, travel, actual meeting) based on experience. Using the 150-mile scenario, eight (8) FTEs would be required. The personnel costs are based on eight (8) full time employees. The team make-up was modified from the existing make-up by substituting the Director and the Permitting Supervisor with other positions because it would no longer be practical for them to attend each public hearing. Average DEP salaries were used for each of the 4 job classifications and a multiplier of 1.43 was used to account for benefits. Total annual cost would be $591,016.
    
    • Court reporters are required for public hearings (not public meetings). The minimum amount is based on no public speakers at the hearing with focus and introductory text for a listening-only style session. The maximum amount is based on a transcript with a public meeting-style explanatory discussion with questions and answers from the audience. This is a new expense because public meetings do not require use of a court reporter, as do hearings. The range would be $43,890 - $124,740.
    
    • It is estimated that 50% of the public hearings would be 150 miles from Charleston, in large part because of the location of the natural gas permitting actions and to account for hearings in the panhandles as well as those closer to Charleston. This criterion was also used to calculate possible overnight travel because the public hearings typically conclude at 9:00 pm. Employee expenses for overnight travel if required is $560/event for 231 events covering 4 people totaling $129,360.
    
    • Vehicle expenses for gas and maintenance are based on the 2019 IRS standard mileage rate of $0.58/mile and travelling 138,600 miles - $80,388.
    
    • Vehicle use to travel to the public hearings used the same 300-mile roundtrip, 462 events totaling 138,600 miles, and the state vehicle replacement requirement of replacing state vehicles after 4 years and 125,000 miles. This mileage would result in a new vehicle each year. The average cost of a standard/large size SUV of $25,000 - $28,000 was provided by the DEP Fleet Coordinator.
    
    • The FOIA rate for copies was used for the 1-page handout that is typically provided (50 copies). Attendance varies between 50-100 people at a public meeting. Cost for handouts are projected to be $5,775. The cost for a venue (if outside DEP headquarters) is as low as $20 and as high as $790 paid in 2018 at the Ranson Civic Center in Jefferson County.
    
    • Two additional laptops, projectors, screens, and miscellaneous cables - additional equipment needed given the projected frequency were calculated using state contract pricing. This is a start-up expense of $3,340.
    



Memorandum


    Areas of Vagueness
    
    • W.Va. Code §22-5-12 applies only to Title V operating permits for major sources that are already operational; having already received a construction permit prior to start-up.
    
    • Section 11 of Article 5, however, applies to construction or modification permits required for stationary sources of air pollutants permitted under 45CSR13, 45CSR14 (PSD), or 45CSR19.
    
    • For this fiscal note, DAQ interpreted “any permit” to mean any permit issued under both section 11 and section 12 of Article 5 of the State Code. If the scope was intended to include only major construction (PSD) permits, then the correct section of code would be 11 not 12 and should specify major source PSD.
    
    • DAQ holds “public meetings” (upon request) for construction permits, not “public hearings”. There is a significant difference between the two. “Public meetings” are much more informative and provide a sharing of information; whereas “public hearings” are listening sessions that require a court reporter and transcription.
    
    • This HB does not specify the types of permits, either by specifying PSD permits as was done under SB371, or by specifying permits for a new facility (as opposed to amendments or modifications to the permits). DAQ interpreted “any” to literally mean “any” application that would meet the size or value criteria.
    
    • DAQ does not request the investment value or size of the facility in the permit application. The vast majority of all sources applying for an air permit would have a footprint larger than 25,000 square feet (a 1/2 - acre lot). By making educated guesses coupled with some research, the investment value criterion of $25 million would be exceeded for sources such as hospitals and hotels that are issued air quality permits for boilers and emergency generators, as well as every natural gas well pad.
    
    Technical Defects
    
    • Adding a requirement to hold a public hearing for every Title V operating permit is more stringent than the federal requirement that requires procedures for the public to request a hearing. W.Va. Code §22-5-4(a)(4) states that air quality rules cannot be more stringent than the federal counterpart. The amended code would conflict with existing code.
    
    • The applicable section(s) of Article 5 pertaining to construction and/or operating permits to be amended may be incorrect as discussed above.
    
    • General Permits establish a set of requirements for a class of industrial sources. The DAQ provides a public notice period when the General Permit requirements are established. Source may then register to use the General Permit. This registration requires an application and a 30-day public notice period initiated by the registrant. General Permit registrations are required by rule to be issued in 45 days which includes a 30-day public notice period initiated by the applicant. HB 2711 as interpreted would require a public hearing and notice by DAQ. If a public hearing were required for every general permit registration, it would not be feasible to meet the 45-day statutory deadline. Furthermore, the advantage of the General Permit Program would be lost, thus creating a hardship for the industries that rely upon this program. Industries that rely on the General Permit program include coal preparation plants, asphalt plants, the natural gas industry, and others.
    
    • It is increasingly difficult to find locations to hold public meetings. Locations that historically have been open and free for DAQ public meetings such as libraries and high school auditoriums are turning down requests due to security, liability, insurance and other issues.
    
    • The summary of the bill and the actual wording in the code disagree on the square footage.
    
    Special Issues
    
    • In the past 10 years, DAQ has honored every request for a public meeting for sources seeking construction permits, except one because the concern provided with the request was a floodplain issue and was not air quality related.
    
    • In close to 10 years, DAQ has not received any requests for a Title V public hearing.
    
    • Major sources, such as chemical manufacturing plants, could have 7-8 public hearings for their facilities each year, as this HB is written.
    



    Person submitting Fiscal Note: Jean Sheppard
    Email Address: JEAN.J.SHEPPARD@WV.GOV