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«Concise Explanatory Statement Chapter 173-224 WAC Wastewater Discharge Permit Fees Summary of rulemaking and response to comments September 2015 ...»

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Concise Explanatory Statement

Chapter 173-224 WAC

Wastewater Discharge Permit Fees

Summary of rulemaking and response to comments

September 2015

Publication no. 15-10-039

Publication and Contact Information

This publication is available on the Department of Ecology’s website at


For more information contact:

Ecology Water Quality Program

P.O. Box 47600

Olympia, WA 98504-7600

Phone: 360-407-6600 Washington State Department of Ecology - www.ecy.wa.gov

• Headquarters, Olympia 360-407-6000

• Northwest Regional Office, Bellevue 425-649-7000

• Southwest Regional Office, Olympia 360-407-6300

• Central Regional Office, Union Gap 509-575-2490

• Eastern Regional Office, Spokane 509-329-3400 Ecology publishes this document to meet the requirements of the Washington State Administrative Procedure Act (RCW 34.05.325) To request ADA accommodation including materials in a format for the visually impaired, call Water Quality Program at Ecology, 360-407-6600. Persons with impaired hearing may call Washington Relay Service at 711. Persons with speech disability may call TTY at 877-833-6341.

Concise Explanatory Statement Chapter 173-224 WAC Wastewater Discharge Permit Fees Water Quality Program Washington State Department of Ecology Olympia, Washington 98504-7600 This page is purposely left blank.

Table of Contents Introduction

Reason for Adopting the Rule

Differences Between the Proposed Rule and Adopted Rule

Response to Comments

Appendix A: Copies of all written comments

Appendix B: Transcript from public hearing.

Appendix C: Citation List

i This page is purposely left blank.

ii Introduction

The purpose of a Concise Explanatory Statement is to:

• Meet the Administrative Procedure Act (APA) requirements for agencies to prepare a Concise Explanatory Statement (RCW 34.05.325).

• Provide reasons for adopting the rule.

• Describe any differences between the proposed ruleand the adopted rule.

• Provide Ecology’s response to public comments.

This Concise Explanatory Statement provides information on the Washington State Department of

Ecology’s (Ecology) rule adoption for:

–  –  –

To see more information about this rulemaking or other Ecology rulemakings please visit our web site: http://www.ecy.wa.gov/laws-rules/index.html Reason for Adopting the Rule Adopting this rule will allow continued funding of Ecology’s wastewater and stormwater permit programs that protect surface and ground waters of the state.

Brief History Leading to this Rule Adoption:

Ecology has been issuing federal National Pollutant Discharge Elimination System (NPDES) permits and State Waste Discharge Permits since the 1970’s. The permit program was initially funded out of state general fund monies. However, in 1988, Initiative 97 was passed by Washington State voters mandating that Ecology create a fee program for issuing and administering wastewater discharge permits.

The wastewater permit fee portion of Initiative 97 was later codified as RCW 90.48.465 – Water Discharge Fees. This law requires Ecology to establish fees to cover its expenses for issuing and administering wastewater and stormwater permits. In response to this mandate, Ecology adopted a rule, Chapter 173-224 WAC – Wastewater Discharge Permit Fees, which establishes annual fees for over 165 categories and subcategories of permit types.

Over the years, the law has been amended by the Washington State Legislature, but changes have not been made to the rule. As a result of those amendments, inequities were created between fee categories in the rule, and Ecology has not been allowed to recover its true costs for issuing and managing some fee types.

Inequities created within the law include:

• Capping fees for municipal publicly-owned treatment works.

• Establishing and capping fees for dairies.

• Setting base fees for certain aquatic pest control permits.

• Requiring Ecology to mitigate impacts of fees for small business.

Further inequities were established when Initiative 601 was passed in 1993 by Washington State voters. That initiative created a calculation that allows the Washington Expenditure Limit Committee to determine the percentage rate that state fee programs could increase their fees. This limit is called the fiscal growth factor.

Between the inequities established in the law and Ecology’s only being allowed to increase fees to the fiscal growth factor limit, some fee category types became over-payers, meaning the fees they pay are greater than the costs of managing their permits, and some category types are underpayers, meaning the fees they pay are less than the costs of managing their permits. Monies received from the over-payers subsidize the costs of managing permits for the under-paying fee types. As a result of this, over-payer fee types have requested Ecology to eliminate the subsidy and have all permit fee types pay their own costs.

Historically, when increasing fees, the Office of Financial Management (OFM) directed all state agencies to seek legislative authority for the fee increases, which Ecology has done over the last several biennia. However, an opinion from the Attorney General’s Office informed Ecology that legislative approval was not needed for the imposition or increase of fees. Ecology was told by OFM that under current state law (RCW 90.48.465) it could seek to increase fees by the fiscal growth factor via the rulemaking process.

Current Proposed Amendments In this rulemaking proposal, Ecology is using its legislative authority for increasing fees and has

begun addressing the inequities among fee payers by doing the following:

• Increase fees for the following fee types (overpaying fee payers) by:

• 3.25% for fiscal year 2016 • 3.21% for fiscal year 2017

• Increase fees for the following fee types (underpaying fee payers) by:

• 5.31% for fiscal year 2016 • 5.27% for fiscal year 2017

• Increase fees for publicly-owned treatment works with greater than 250,000 residential

equivalents (RE’s) by:

• 12 cents per RE in 2016 • 14 cents per RE in 2017

• Create new fee categories for Wineries issued general permit coverage, In-Water Vessel Deconstruction, and Bridge Washing.

The fiscal growth factor increases, totaling 4.22 percent for state fiscal year 2016 and 4.19 percent for state fiscal year 2017, are assumed in the Office of Financial Management’s (OFM) fund balance projections for the 2015-2017 biennium.

Differences Between the Proposed Rule and Adopted Rule RCW 34.05.325(6)(a)(ii) requires Ecology to describe the differences between the text of the proposed rule as published in the Washington State Register and the text of the rule as adopted, other than editing changes, stating the reasons for the differences.

There are some differences between the proposed rule filed on July 22, 2015, and the adopted rule filed on November 18, 2015. Ecology made these changes for all or some of the following


• In response to comments Ecology received.

• To ensure clarity and consistency.

• To meet the intent of the authorizing statute.

The following content describes the changes and Ecology’s reasons for making them.

Ecology is correcting two errors made on the fee schedule filed with the Code Reviser’s Office.

OTS-7225.2 is being changed in the following manner:

Original Language

–  –  –

Ecology received comments regarding the proposed fee increase for Aluminum and Magnesium Reduction Mills. Based on those comments, the proposed fee increase has been reduced to reflect

the following:

Original Language

–  –  –

Response to Comments Ecology accepted comments between July 22, 2015, and September 9, 2015. Each comment is identified by the commenter using the Commenter Index below. Responses are directly below each comment. Appendix A of this document contains all of the comments received during the public comment period in their original form.

Commenter Index The table below lists the names of individuals and the organizations they represent who submitted a comment on the rule proposal and where you can find Ecology’s response to the comment(s).

No oral comments were received during the public hearing. Identification codes beginning with “W” indicate comments submitted in writing. Comments have been paraphrased from the original documents submitted. However, the original written document can be found in Appendix A in its original form.

–  –  –

Comments Concerning Construction Stormwater Permit Fee Increases Comment W-1 In reviewing the costs associated with stormwater discharge permit fees paid by the Peninsula Housing Authority from 2008-2014 (last payment made), the cost for one of our permits on a 5 acre parcel has increased 39%.

While I understand the reasoning that a permit system should be self-sustaining, I am not certain what additional services we have received over the past 6 years that could account for this large fee increase which seems to be annually adjusted upward.

The site noted in the above permit has complete on-site detention/infiltration with no discharge off site. None. My question is what is driving these increases and can you more clearly explain the equitable distribution of costs?

Ecology Response:

Permit fees are not a fee for service. Even though fees for construction stormwater permit holders have increased by the state fiscal growth factor for the last several years, the increases have not allowed Ecology to recover its costs for operating the construction stormwater permit program.

Ecology received revenue from construction stormwater permit holders totaling $1.7 million dollars for fiscal year 2014 but the costs to manage the construction stormwater permit program totaled $2.6 million dollars. This resulted in other permit holders (over-payers) subsidizing construction stormwater permittees by $964,000 +. This is unacceptable to the over-payers. This rule proposal begins to address the over-payer/under-payer issues. It is the goal that in the future, monies received from construction stormwater permit holders will fund the operation and management of the construction stormwater permit program.

Comments Concerning Aluminum Reduction Mills

Comment W-2 Aluminum reduction plants have long been considered NPDES fee over-payers. This remains true.

In October 2011 Ecology, as part of its efforts to reduce and consolidate permit categories, placed aluminum reduction mills in a new metals category with nine other unrelated sources. The entire metals category was initially listed as an over-payer, so the change did not affect the status of the aluminum reduction mills. The agency then created a job code for the metals category, and the information collected showed the category was actually under-paying the permit fee costs. The outcome of using an overly broad category, without consideration of the difference in the sources, resulted in aluminum reduction plants being placed into an under-payer designation despite the fact that the plants continue to pay the third highest fees among all NPDES categories. Alcoa requests that Ecology correct the proposed fee rule and apply the over-payer fee increase rate to aluminum reduction plants.

When aluminum reduction plants were placed in the new larger category with non-related sources, and that larger category was reclassified to under-payer, it resulted in an under-payer designation for aluminum reduction plants. Classifying aluminum reduction plants, that are each paying $98,554.00 per year ($492,770.00 for a five year permit cycle). As under-payers is not reasonable.

This incorrect classification would have negative impacts well beyond the biennium in question.

Alcoa, therefore, requests that the FY16 3.25% and FY17 3.21% fee increases, proposed for overpayers, be applied to the NPDES permits for aluminum reduction plants. It is also requested that aluminum reduction plants be assigned a specific job code. Using the same job code for the broad metals group does not adequately identify under and over payers within the category. The specific job codes should provide data to correctly identify over or under payer status in future biennium’s.

Ecology response:

All permit holders in the various metals fee categories will no longer be assigned the same job code. Ecology is developing a plan to assign a specific job code for each metal fee type in the future that will enable it to capture data to determine who is an over-payer versus under-payer.

Ecology has also decided to change aluminum reduction plants from the under-payer fee designation to the over-payer fee designation for this rulemaking. This means aluminum reduction mills will be assessed fees by 3.25% for fiscal year 2016 and 3.21% for fiscal year 2017.

General Comments Concerning Fee Increases for Over-Payers

Comment W-3 “The Executive Summary accompanying the state register notice includes an accurate discussion on the evolution of the permit fee structure to ultimately create what are now pathetically referred to as “over-payer” source categories. Less convincing is the assertion that this proposed regulation amendment does something to “address(ing) the subsidy issue” or to respond to the structural inequities in the permit fee schedule. After two biennial budget cycles where Ecology chose to freeze some over-payer source category fees, this regulation amendment now proposed fee increases of 3.25% and 3.21% in coming biennium. This is going in the wrong direction.

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