1. Policy Research Shop 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 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

2. Policy Research Shop Three challenges currently face the NHDES NHDES deficit margin will grow without intervention Decreased FundingDecreased RevenueIncreased Mandates Increased federal mandates from the EPA, usually without concurrent increases in funding State and federal grants combined comprise 32% of NHDES revenue In the past 5 years, NH emissions fell by ~37% Source: NHDES, EPA

3. Policy Research Shop Goals for NHDES Remain financially sustainable Maintain environmental quality and public health Cooperate with state businesses

4. Policy Research Shop Establish Fees for Toxic or Hazardous Emissions Air quality surcharge for hazardous air pollutants $2.08 per 1,000 air quality units (toxicity score of hazardous air pollutant multiplied by estimated emission) Hazardous Air Contaminant Surcharge Carcinogens (high potency)$15/lb Carcinogens (low potency)$0.825/lb Chronic (high potency)$0.03/lb Chronic (low potency)$0.0225/lb Irritant$0.012/lb Vermont Example Maine Example Source: VTEC, MDEP

5. Policy Research Shop Increase Emission Charge on SOx Source: NHDES 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

6. Policy Research Shop SOx Revenue Estimated to Increase by 2% per Year Source: NHDES 2012(e) $2,161,761.07 2013(e) $2,203,266.88 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% 5-yr avg. annual decrease of SOx:-9% 5-yr avg. annual increase of per-ton fee:+12% 5-yr avg. exempt tonnage:48% AssumptionsSOx-revenue 5-yr CAGR: 2%

7. Policy Research Shop Increase the Fee for SOx from 12% to 23% Source: NHDES 2012(e) $2,374,076.89 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% Would not scare business away May encourage more efficient business Why 23%?SOx-revenue 5-yr CAGR: 12%

8. Policy Research Shop Charge Progressive Rates for Different Amounts of Emissions Emissions < 100 tons$3,000 + $6/ton 100 tons < Emissions < 250 tons$5,500 + $8/ton 250 tons < Emissions < 5,000 tons $7,500 + $25/ton Emissions > 5,000 tons $100,000 + $25/ton Emissions < 10 tons/yr$480 10 tons/yr < Emissions < 20 tons/yr$1,134 20 tons/yr < Emissions < 50 tons/yr$1,962 Emissions > 50 tons/yr$3,488 Massachusetts ExampleRhode Island Example Source: MDEP, RIDEM

9. Policy Research Shop Source: NHDES Eliminate State Programs to Focus on Federal Mandates Source: NHDES Increase Per-Ton Fees for Sulfur Dioxide 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 RI: Eliminate Nearly All State Initiatives

10. Policy Research Shop Introduce Vehicle Emissions Surcharge Mobile emitters are largest source of air pollution VT: Inspection Sticker Fee CA: Smog and Vehicle Fees CT: Vehicle Emissions Fee Adopted the emissions surcharge with the creation of the Title V fee system Totaling $3.4 million, (32.8 percent) Uses annual vehicle inspections, along with inspection sticker fees ($5 per vehicle) Increase in $0.50 to the inspection sticker Implemented a smog abatement fee of $12 (now at $20) per year Included a separate $8 smog transfer fee Included a $8 fee application for decal (California Vehicle Code)

11. Policy Research Shop Reducing Personnel Costs Source: EPA RI: Directly Eliminate Staff PositionsME 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

12. Policy Research Shop Introduce New Application, Review, and Processing Fees Source: EPA 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 Implemented late fees for tardy compliance with fee deadlines RI: Differentiates Permit Application FeesCT: Charge Fees For Late Payment

13. Policy Research Shop Source: NHDES Request General Fund Assistance Source: NHDES Increase Per-Ton Fees for Sulfur Dioxide 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 SC: Request General Fund Assistance

14. 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