Policy Research Shop
Creating a Financially Sustainable Permit
Fee Structure
Prepared for the New Hampshire Department of
Environmental Services, Air Resources Division,
by Michael Sanchez, William de Chatellus, Peter
Kim, and Michael Altamirano
Support for the Policy Research Shop is provided by the Ford Foundation and by the Fund for
the Improvement of Postsecondary Education, U.S. Department of Education.
Policy Research Shop
Three challenges currently face the NHDES
Decreased Funding
State and federal grants
combined comprise 32%
of NHDES revenue
Increased Mandates
Increased federal
mandates from the EPA,
usually without
concurrent increases in
funding
Decreased Revenue
In the past 5 years, NH
emissions fell by ~37%
120,000
100,000
80,000
60,000
40,000
20,000
0
1994
NHDES deficit margin will grow without intervention
Source: NHDES, EPA
1998
2002
2006
2010
Policy Research Shop
Goals for NHDES
• Remain financially sustainable
• Maintain environmental quality and public health
• Cooperate with state businesses
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Establish Fees for Toxic or Hazardous
Emissions
Vermont Example
Carcinogens (high potency)
Carcinogens (low potency)
Chronic (high potency)
Chronic (low potency)
Irritant
Hazardous Air Contaminant Surcharge
$15/lb
$0.825/lb
$0.03/lb
$0.0225/lb
$0.012/lb
Maine Example
Air quality surcharge for hazardous air pollutants
Source: VTEC, MDEP
$2.08 per 1,000 air quality units
(toxicity score of hazardous air
pollutant multiplied by estimated
emission)
Policy Research Shop
Increase Emission Charge on SOx
Sulfur Dioxide
(SOx)
Represents ~72% of New Hampshire emissions (5-year average)
• 5-year average annual decrease of 9%
• Includes 33% 2010-2011 YoY decrease
• 4-year (2006-2010) average annual decrease is 3%
Nitrogen Dioxide
(NOx)
Represents ~14% of New Hampshire emissions (5-year average)
• 5-year average annual decrease of 10%
• Emissions increased in only 3 out of 17 years surveyed
Carbon Monoxide
(CO)
Represents ~13% of New Hampshire emissions (5-year average)
• 5-year average annual increase of 15%
• Includes 91% 2007-08 YoY increase
Source: NHDES
Policy Research Shop
SOx Revenue Estimated to Increase by
2% per Year
Assumptions
SOx-revenue 5-yr CAGR: 2%
5-yr avg. annual decrease of SOx:
-9%
2012(e)
$2,161,761.07
5-yr avg. annual increase of per-ton fee:
+12%
2013(e)
$2,203,266.88
5-yr avg. exempt tonnage:
48%
2014(e)
$2,245,569.61
2015(e)
$2,288,684.54
2016(e)
$2,332,627.29
2017(e)
$2,377,413.73
5-year increase: 10%
Source: NHDES
Policy Research Shop
Increase the Fee for SOx from 12% to 23%
Why 23%?
SOx-revenue 5-yr CAGR: 12%
Would not scare business away
2012(e)
$2,374,076.89
May encourage more efficient business
2013(e)
$2,657,304.26
2014(e)
$2,974,320.66
2015(e)
$3,329,157.11
2016(e)
$3,726,325.56
2017(e)
$4,170,876.20
5-year increase: 76%
Source: NHDES
Policy Research Shop
Charge Progressive Rates for Different
Amounts of Emissions
Massachusetts Example
Emissions < 100 tons
100 tons < Emissions < 250 tons
250 tons < Emissions < 5,000 tons
Emissions > 5,000 tons
$3,000 + $6/ton
$5,500 + $8/ton
$7,500 +
$25/ton
$100,000 +
$25/ton
Rhode Island Example
Emissions < 10 tons/yr
10 tons/yr < Emissions < 20 tons/yr
20 tons/yr < Emissions < 50 tons/yr
Emissions > 50 tons/yr
$240,000
$4,000
$210,000
$3,500
$180,000
$3,000
$150,000
$2,500
$120,000
$2,000
$90,000
$1,500
$60,000
$1,000
$30,000
$500
$0
$0
10 560 1110 1660 2210 2760 3310 3860 4410 4960
Source: MDEP, RIDEM
0
10
20
30
40
$480
$1,134
$1,962
$3,488
50
60
Policy Research Shop
Eliminate State Programs to Focus on
Federal Mandates
Increase Per-Ton
Fees All
for Sulfur
Dioxide
RI: Eliminate
Nearly
State
Initiatives
• Pursued by Rhode Island in the face of increasing unfunded
mandates from the federal government
• Saves money by cutting costs associated with state initiatives
• Cutting such initiatives may negatively impact the community the
NHDES serves
Source: NHDES
Policy Research Shop
Introduce Vehicle Emissions Surcharge
VT: Inspection Sticker Fee
Uses annual vehicle
inspections, along with
inspection sticker fees ($5
per vehicle)
Increase in $0.50 to the
inspection sticker
CT: Vehicle Emissions Fee
CA: Smog and Vehicle Fees
Adopted the emissions
surcharge with the
creation of the Title V fee
system
Implemented a smog
abatement fee of $12 (now
at $20) per year
Totaling $3.4 million, (32.8
percent)
Included a separate $8
smog transfer fee
Included a $8 fee
application for decal
(California Vehicle Code)
Mobile emitters are largest source of air pollution
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Reducing Personnel Costs
RI: Directly Eliminate Staff Positions
ME and SC: Evaluate Vacant Positions
Reduced the number of staff positions
from 30 to 23 in the past five years
Allows for reducing personnel costs
without terminating active
employment
Source: EPA
Policy Research Shop
Introduce New Application, Review, and
Processing Fees
RI: Differentiates Permit Application Fees
Permit application fees could be
differentiated by source type.
Rhode Island differentiates between
five types: major source, complex
minor source, minor source, toxic
operating sources, and second tier
Source: EPA
CT: Charge Fees For Late Payment
Implemented late fees for tardy
compliance with fee deadlines
Policy Research Shop
Request General Fund Assistance
Increase Per-Ton
Fees for
Sulfur Dioxide
SC: Request
General
Fund
Assistance
• Compensated for lower fee revenue by requesting increases in
general fund assistance, with little political contention
• Viability of option for NH depends on legislative willingness to
allocate more funding to NHDES grants
• Temporary general fund allocation would allow NHDES to remain
fiscally solvent while it explores more long-term, programmatic
changes
Source: NHDES
Policy Research Shop
Summary of Options
•
Introduce vehicle emissions registration surcharge
•
Increase emission charge on SOx
•
Introduce new application, review, and process fees
•
Implement toxic/hazardous emission surcharge
•
Develop progressive emission fees
•
Reduce personnel costs
•
Reduce state initiatives to focus on federal mandates
•
Request General Fund assistance