Note: These questions and answers pertain to the 2022 Fee Regulations Proposed Revisions. The information was current at the time of posting, but may be outdated after the adoption of regulations.

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Why is the Division of Air Quality updating its fees?

Alaska Statutes require that the Department of Environmental Conservation (the Department) evaluate fees and establish revised fees in regulation.  The Department is required under AS 46.14.240(b) (for permit administration fees) and AS 46.14.250(g) (for emission fees) to evaluate fees for services.  Alaska Statutes additionally require that the results of the fee study be published in a report.  As a result of the current fee study, the Department is proposing revised fees in the Air Quality regulations, 18 AAC 50, Article 4, User Fees.

Why is the Department updating fees now?

The Department is required under statutes AS 46.14.250(f) & (g) to update fees every four years.  It has not conducted a fee study since 2015 and was delayed in part by the recent pandemic.  In comparison to past fee updates, this fee study report showed that a larger adjustment to emission fees is needed to recover the actual costs of the air permitting program.  Information on the fee review, changes in federal guidance, and the calculation of fees can be found in the fee study report.  Because the Department is overdue in evaluating its air program fees and is required to update the fees in accordance with the actual costs associated with administering the program, the Department proposed this fee regulation update.  The Department also intends to conduct a fee study within the next four years to ensure that delays do not occur in the future and permittees are being accurately charged on a more timely basis according to the workload associated with their stationary sources.

Why have many of the fees increased?

The cost of administering the Program has increased over time primarily due to the increasing complexity of federal regulations.  Permits are required to incorporate these new regulations, and, in turn, it takes more time to process permit applications and conduct compliance evaluations.  Additionally, emissions are on a downward trend.  Based on emissions reporting over the last 10 years, the Department has seen a reduction in emissions and consequently a reduction in revenue based on emission fees.

How has federal guidance on Title V permit program fees changed since the last fee study?

The Department reviewed the latest guidance from the Environmental Protection Agency (EPA) related to allowable fees and rate setting for fees for Title V permit programs.  EPA issued updated guidance in 2018 in response to recommendations from the EPA Office of Inspector General (OIG).  The OIG report reviewed 9 state permit programs and found that Title V fees were inadequate to cover expenses.  Many reasons were identified, including outdated EPA guidance.  The March 27, 2018, EPA guidance on fees replaced the fee guidance last provided in 1993.  This guidance resulted in changes to the Department’s approach to fees in this fee evaluation period.  The March 27, 2018, memorandum and guidance document are available at: EPA 2018 Updated Fee Guidance.

Why is the Department proposing to charge fees for pollutant emissions of less than 10 tons per year?

The Department believes that the exclusion for less than 10 tons per year emissions has become outdated, adds unneeded complexity to the emissions fee accounts, and is a potential loss of revenue for the Program. In early years of the program, costs associated with invoicing and collecting fees for the less-than-10-ton emissions sources exceeded the revenue generated. This has changed with modern automated billing systems and accurate emissions inventory databases. There is no regulatory requirement to exclude these emissions, only guidance that such exclusions were, and remain, allowable [AS 46.14.250(d)]. Further, the Department thinks it will be more equitable to all sources in the program if emission fees are simply collected on all applicable air pollutants based on the amount actually released or permitted to be released rather than screening out at the 10-ton level.

Therefore, the proposed regulations eliminate the current provision of 18 AAC 50.410(a) which states “The emissions fee is assessed per ton for each air pollutant for which projected emissions are 10 tons per year or greater.” This provision currently precludes the Department from collecting emissions fees on the small quantity of emissions of less than 10 tons per year of any pollutant. This provision was initially enacted with a goal of benefitting small operators; however, analysis during this study has shown examples of both large and small emitting facilities that have certain pollutants below the 10-ton limit which are being excluded from emission billing calculations. Some of these low tonnage pollutants are hazardous air pollutants, and they still require oversight by the Department.

The 10-ton limit provision was enacted early in the Air Quality Program history, prior to 2002, to address, it is believed, a portion of AS 46.14.250(d) which states, in part, “…the department shall consider factors such as exemptions or reduced rates for small amounts of emissions...”. The Department believes this statute brings forward a similar requirement from 40 C.F.R. 71.9(c)(5)(iii) to exclude fees on insignificant emissions as defined in 40 CFR 71.5(c)(11) (incorporated by reference in 18 AAC 50.040(j)(3)) from the fee structure of the Title V program. However, as it is a 40 CFR Part 71 requirement, it only addresses Title V-level fee programs and not minor sources. Also, insignificant emissions have never been defined to state that 10 tons per year constituted insignificant emissions. Those activities defined in 18 AAC 50.326(d)-(i) define what the Program considers insignificant activities and emission rates, but nowhere is any 10-ton per year amount specifically stated.

The Department welcomes feedback on this proposal and potential impacts to companies with permitted sources.

How did the Department calculate the new proposed fees?

The Department evaluated the costs associated with maintaining the Program over a 10-year period.  The proposed revisions consider both the administrative and emissions fees for a variety of sources.  The change in fees is based on the amount of time spent over that period for each stationary source category under 18 AAC 50.400(a)(1)-(9).  The evaluated costs include permitting and compliance activities, as well as monitoring and non-point mobile sources program activities related to stationary sources.

Where can I find more information on how the Department analyzed and projected costs for this fee update? (new information added to answer)

The Department has a fee study report available that outlines the method used in analyzing and evaluating the fees charged by the Air Quality Division.  The appendix to the report contains details on the costs and calculations used in generating the proposed fees identified in the regulation.  The fee study report can be found at:  https://dec.alaska.gov/air/anpms/sip/2022-fee-regulations.

The Department received a request for the Fee Study analysis spreadsheets.  The Permit Fees Excel file has now been posted on the webpage listed above.  The worksheets that are likely to be most useful for evaluating the fees are titled "Costs by Fee Before Footnote", "TV1R PA Cost Adj for Footnote", and "Combo File".  Please note that some worksheets contain a lot of data, particularly the "Combo File", and may be burdensome to print in their entirety.  The Emission Fee Rates Excel file is also posted.

When will the fee increases take effect?  Will 2021 assessable emissions be subject to new rates?

Fee increases will take effect upon the effective date of the regulations.  DEC will issue adjusted, prorated billing (or crediting) based on the new fee increases (or decreases) for the remainder of the fiscal year in order to maintain sufficient funds for permitting services.

DEC will need to bill or credit based on the revised fees when the fee regulations become effective.  The proposed language in 18 AAC 50.420(a) will update the dates for supplemental billing procedures for the permit administrative and emission fees to reflect the current fiscal year and effective date of the regulations.  The supplemental billing will cover the difference between already billed fees for the current fiscal year, based on the current regulations, and the updated fees.  The updated fees will be in effect for the remainder of the current fiscal year following the effective date of the revised regulations.  These supplemental billing procedures have been in place since the fee revision regulations that became effective on September 26, 2015.

Additional information:

You may submit written questions relevant to the proposed action to DEC by submitting questions electronically via our public notice site at https://dec.alaska.gov/comment/ by March 16, 2022.  Alternately, you may submit questions to Rebecca Smith at rebecca.smith@alaska.gov.

The department will aggregate its response to substantially similar questions and make the questions and responses available on this page.  The department may, but is not required to, answer written questions received after the March 16, 2022, deadline for submitting questions.

Documents for the proposed regulation changes may be found at: 2022 Fee Regulations Webpage