WSR 16-23-161 PROPOSED RULES DEPARTMENT OF ECOLOGY [Order 16-06—Filed November 23, 2016, 9:50 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 16-15-048.
Title of Rule and Other Identifying Information: Chapter 173-305 WAC, Hazardous waste fee regulation, this chapter establishes regulations for fees associated with the use of hazardous substances and the generation of hazardous waste.
Hearing Location(s): Lacey, Department of Ecology, Auditorium, 300 Desmond Drive, Olympia, WA 98503, in-person combined with a webinar on January 4, 2017, at 10:00 a.m.; presentation, question and answer session followed by the formal public hearing.
Ecology is holding this hearing via webinar and in-person. Webinars are an online meeting forum that you can attend from any computer using internet access.
To join the webinar go to the following link for more information and instructions http://www.ecy.wa.gov/programs/hwtr/laws_rules/HWFee/1606inv.html.
Date of Intended Adoption: April 5, 2017.
Submit Written Comments to: John Ridgway, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, e-mail hwtrrulemaking@ecy.wa.gov, fax (360) 407-6715, by January 23, 2017.
Assistance for Persons with Disabilities: Contact ecology at (360) 407-6700, to request ADA accommodation including materials in a format for the visually impaired. Persons with impaired hearing may call Washington relay service at 711. Persons with speech disability may call TTY 877-833-6341.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This rule making will focus on:
Ecology is doing this rule making to align the rule with existing fee calculation practices, which are consistent with the hazardous waste and toxics reduction goals and purposes of chapter 70.95C RCW.
Reasons Supporting Proposal: See Purpose above for this information.
Statutory Authority for Adoption: RCW 70.95E.030 … , The department shall adopt a fee schedule by rule after consultation with typical affected businesses and other interested parties ….
Statute Being Implemented: Chapter 70.95E RCW.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of ecology, public [governmental].
Name of Agency Personnel Responsible for Drafting, Implementation, and Enforcement: John Ridgeway, Department of Ecology, Olympia, Washington, (360) 407-6713.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Small Business Economic Impact Statement
Terminology: The terms "hazardous waste" and "dangerous waste" are interchangeable for the purposes of this report.
Executive Summary: It is important to note that the proposed rule would codify current practice, which is not part of the baseline under the Regulatory Fairness Act (RFA) (chapter 19.85 RCW).
Based on research and analysis required by RFA – RCW 19.85.070 – ecology has determined the proposed rule (chapter 173-305 WAC, Hazardous waste fee regulation) would have a positively disproportionate impact on small business, as compared to the baseline of the existing rule. This means, compared to the language of the existing rule, the proposed rule would reduce costs per employee for a typical small business, while leaving costs per employee unchanged for the typical largest ten percent of businesses it covers. Therefore, ecology did not include disproportion-minimizing features in the rule.
A small business is defined by RFA as having fifty or fewer employees. Estimated costs are determined as compared to the existing regulatory environment, the way hazardous waste fees would be regulated in the absence of the rule amendments, based solely on the rule language. The small business economic impact statement (SBEIS) only considers costs to "businesses in an industry" in Washington state. This means that impacts, for this document, are not evaluated for nonprofit or government agencies.
Chapter 1: Introduction and Background:
Based on research and analysis required by RFA – RCW 19.85.070 – ecology has determined the proposed rule (chapter 173-305 WAC, Hazardous waste fee regulation) would have a positively disproportionate impact on small business, as compared to the baseline of the existing rule. This means, compared to the language of the existing rule, the proposed rule would reduce costs per employee for a typical small business, while leaving costs per employee unchanged for the typical largest ten percent of businesses it covers. Therefore, ecology did not include disproportion-minimizing features in the rule.
It is important to note that the proposed rule would not change fee calculations from current practice, which is not part of the baseline under RFA.
This SBEIS presents the:
This document is intended to be read with the associated cost-benefit analysis (ecology publication #16-04-025).
A small business is defined by RFA as having fifty or fewer employees. Estimated costs are determined as compared to the existing regulatory environment, the way hazardous waste fees would be regulated in the absence of the rule amendments, based solely on the rule language. The SBEIS only considers costs to "businesses in an industry" in Washington state. This means that impacts, for this document, are not evaluated for nonprofit or government agencies.
The existing regulatory environment and rule language are called the "baseline" in this document. It includes only existing laws and rules at federal and state levels. It is important to note that the proposed rule would codify current practice.
1.1 Description of the proposed rule: The proposed rule amendments make the following changes not required by other laws or rules:
1.2 Reasons for the proposed rule:
1.2.1 Price deflator: The hazardous waste fee regulation specifies the price deflator ecology must use when adjusting for inflation. The price deflator directs how to adjust for inflation for the total amount ecology can annually collect through the administration of this fee. This is an early step in order to later calculate individual fees. The rule's original "Implicit Price Deflator for gross National Product" is no longer published by the United States BEA.
Ecology is proposing to use BEA's updated "Implicit Price Deflator for gross Domestic Product." This is the measure currently reported on the table taken from the national income and product accounts reported by BEA.
The proposed rule also provides an option if the state and local measure is unavailable. This proposal also helps avoid the need for similar rule making if there is another BEA name change.
If adopted, this newer price deflator definition will not change how inflation calculations are carried out. Ever since the "National" price deflator went away, ecology has successfully used the "Domestic" price deflator as the best available replacement. In effect, there will be no change to fee calculations compared to prior years.
1.2.2 Fee calculation exclusions: Ecology has been collecting hazardous waste fees since 1983. In 1989, an initiative passed by the people of Washington encouraged the legislature to revise the hazardous waste fees to provide an incentive for hazardous waste reduction and recycling (RCW 70.105A.035). As a result, chapter 70.95E RCW was passed by the legislature in 1990. In that statute, the legislature directed the department of ecology to adopt a fee schedule by rule after consultation with typical affected businesses and other interested parties. The result was chapter 173-305 WAC. Ecology's policies and information management capabilities have changed since 1990 when chapter 173-305 WAC was promulgated. These changes led ecology to modify the way they determined the types of waste subject to the fee.
This rule making proposes to explicitly add the above wastes as exclusions to the calculation of hazardous waste pounds used in the fee calculation. This will clearly maintain these exclusions in future fee calculations, and bring the rule into line with current practice.
It is important to note that these proposals reflect the status quo of what has been carried out for many years by ecology. If adopted, there will be no change to those specific fee calculation procedures.
1.3 Regulatory baseline: The baseline for our analyses generally consist of existing rules and laws, and their requirements. This is what allows us to make a consistent comparison between the state of the world with and without the proposed rule amendments.
For this proposed rule making, the baseline includes:
It is important to note that the proposed rule would codify current practice. Under RFA and for this analysis, current practice is not included in the baseline.
The hazardous waste fee funds "implementation of RCW 70.95C.200 and 70.95C.040. These fees are to be used by the department, subject to appropriation, for plan review, technical assistance to facilities that are required to prepare plans, other activities related to plan development and implementation, and associated indirect costs."1 The fee is based on a facility's pounds of dangerous waste and pounds of emissions per WAC 173-305-220.
1 RCW 70.95.030.
Ecology must first calculate the total fees that they can collect based on the inflation-adjusted total from the previous year, then allocate individual fee burden based on the amounts of emissions, hazardous waste and extremely hazardous waste generated. The burden is affected by a 10-to-1 ratio for extremely hazardous waste versus hazardous waste. The parameters set on the fee by law (chapter 70.95E RCW) include:2
2 Bullets 1, 2, and 4 are in 1990-dollars, and are annually adjusted for inflation.
Chapter 2: Compliance Costs: It is important to note that the proposed rule would codify current practice, which is not part of the baseline under RFA (chapter 19.85 RCW).
Every year, individual fees are calculated based on the most current year's emissions and hazardous waste generated as reported by individual planners. It's expected that emissions and amounts of hazardous waste generated change each year, both for planners and in total.
The proposed rule reallocates the aggregate fee across hazardous waste planners, as compared to the baseline rule language. This means some fees would be higher under the proposed rule than under the baseline existing rule, while others would be lower. However, the proposed exclusions have been in practice for many years. So, if the proposed exclusions are adopted, there would be no real change from existing fee practice.
Per the baseline and limitations set by the authorizing statute (see Chapter 1), the aggregate fee (total across all parties paying the fee) charged is not affected by the proposed rule. Under both the baseline and proposed rule, the total fees collected shall not exceed the maximum fee allowed by the authorizing statute (chapter 70.95E RCW).
Ecology calculated and compared the fees for existing planners and potential new planners (who currently pay no fee) based on:
We found the following changes to fees across five hundred forty-three of the roughly six hundred thirty existing or potential new fee-paying planners, as compared to the baseline.
Table 1: Number of planners with fee increases, decreases, or no change compared to the baseline rule:3
3 Comparison is an estimate based on 2015 dangerous waste reports and the 2014 toxics release inventory.
The ranges of fee change are broad, with extremes of fees decreasing $11 - $20,063, or increasing $4 - $5,351. Only a few planners would experience the largest fee changes, as compared to the baseline language. More representative values for a typical planner are:
Businesses that would be charged higher fees could experience reduced sales or revenues if the fee changes would significantly affect the prices of the goods they sell. Similarly, businesses that would be charged lower fees could experience increased sales or revenues if the fee changes would significantly affect the prices of the goods they sell. The degree to which this could happen is strongly related to each business's production and pricing model (whether fees significantly affect marginal costs), as well as the specific attributes of the markets in which they sell goods, including the degree of influence of each firm on market prices, as well as the relative responsiveness of market demand to price changes.
Chapter 3: Quantification of Cost Ratios: Ecology began quantification of cost ratios of fee change (compared to the baseline – the existing rule language) relative to employment by identifying small and large businesses. To determine employment at fee-paying planner businesses, ecology used a representative random sample (ninety-nine) of planners in Washington state. We collected employment information from available state records at the employment security department, as well as company web sites, reports to shareholders, and federal filings. This process also identified whether planners were not-for-profit or public entities. Because many employment values were ranges, we used the low-end employment number to maintain conservative assumptions about whether businesses were small or large.
Table 2: Proportions of planner businesses by size:
The average employment at a small business was twenty employees, while it was seven hundred forty-six thousand five hundred at the largest ten percent of businesses.4
4 Employment data is gathered from data reported to the state, business web sites, reports, and filings, and third-party reporting sites.
We then used the employment information for the representative sample, as well as the estimated fee change under the proposed rule as compared to the baseline, to estimate the average cost per employee at the sampled businesses. We found that on average the proposed rule:
The proposed rule therefore does disproportionately impact small businesses, but does so positively in comparison to its impact on the largest ten percent of businesses. Recall that this is as compared to the baseline of the existing rule language, and is not likely to be reflected in practice. This is because the proposed rule would codify existing practice.
Chapter 4: Action Taken to Reduce Small Business Impacts: The proposed rule would have a positive disproportionate impact on small businesses, reducing fees by over $21 per employee, as compared to near $0 change per employee for the largest ten percent of businesses. This is as compared to the baseline existing rule language; actual change from current practice would be zero, as the proposed rule would codify current practice. Ecology, therefore, did not add elements to the proposed rule that reduce disproportionate costs to small businesses.
Chapter 5: Small Business and Government Involvement: Ecology involved small businesses and local government in its development of the proposed rule, using:
The likely interested audiences included:
Webinar attendees included identified representatives from:
In-person public meeting attendees did not identify themselves as representing an organization or business.
Chapter 6: North American Industry Classification System (NAICS) Codes of Impacted Industries: The proposed rule covers planners in a variety of industries. Based on a representative sample of planners in Washington state, ecology identified the following likely impacted NAICS codes.
Table 3: NAICS codes of likely affected industries:
Chapter 7: Impact on Jobs: Ecology used the Washington state office of financial management's (OFM) 2007 Washington input-output model5 to estimate the impact of the rule on jobs in the state. The model accounts for interindustry impacts and spending multipliers of earned income and changes in output.
5 See the Washington state OFM's site for more information on the input-output model http://www.ofm.wa.gov/economy/io/2002/default.asp
The proposed rule would result in planners in various industries paying increased or decreased fees to the government sector, as compared to the baseline existing rule language. As the OFM model does not include the general public sector, we treated these increased or reduced fee expenditures as increased or decreased contribution to producing output, without transfers of money to another sector.
We based our jobs calculation on the same representative sample used to calculate costs per employee, for which we had NAICS codes and fee changes under the proposed rule as compared to the baseline, as well as the same conservative assumption that for businesses with a range of reported employees, the low-end number of employees determines whether we identify them as small or large businesses. The OFM model determined that the proposed rule is not likely to affect the total number of jobs in the state. Moreover, the proposed rule would codify existing practice, so planners would not see real changes in fees as a result of the proposed rule.
A copy of the statement may be obtained by contacting John Ridgway, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, phone (360) 407-6713, fax (360) 407-6715, e-mail john.ridgway@ecy.wa.gov.
A cost-benefit analysis is required under RCW 34.05.328. A preliminary cost-benefit analysis may be obtained by contacting John Ridgway, Department of Ecology, P.O. Box 47600, Olympia, WA 98504-7600, phone (360) 407-6713, fax (360) 407-6715, e-mail john.ridgway@ecy.wa.gov.
November 23, 2016
Polly Zehm
Deputy Director
AMENDATORY SECTION (Amending WSR 00-16-103, filed 8/1/00, effective 9/1/00)
WAC 173-305-020 Definitions.
Any terms not specifically defined in this section, for the purposes of this chapter, have the same meaning as given in WAC 173-303-040. The following terms are defined for the purposes of this chapter:
(1) "Additional fee" means the annual fee imposed under chapter 70.95E RCW against hazardous generators and hazardous substance users required to prepare plans;
(2) "Base fee" means the annual fee imposed under chapter 70.95E RCW against hazardous waste generators doing business in the state of Washington;
(3) "Business activities" means activities of any person who is "engaging in business" as the term is defined in chapter 82.04 RCW. Specifically, "engaging in business" means commencing, conducting, or continuing in business and also the exercise of corporate or franchise powers as well as liquidating a business when the liquidates thereof hold themselves out to the public as conducting such business;
(4) "Dangerous waste" means any discarded, useless, unwanted, or abandoned nonradioactive substances including, but not limited to, certain pesticides, or any residues or containers of those kinds of substances that are disposed of in a quantity or concentration that would pose a substantial present or potential hazard to human health, wildlife, or the environment because those wastes or constituents or combinations of those kinds of wastes:
(a) Have short-lived, toxic properties that may cause death, injury, or illness or have mutagenic, teratogenic, or carcinogenic properties; or
(b) Are corrosive, explosive, flammable, or may generate pressure through decomposition or other means.
"Dangerous wastes" specifically includes those wastes designated as dangerous by chapter 173-303 WAC;
(5) "Department" means the department of ecology;
(6) "Emissions" means the substances released to the environment that must be reported under toxic chemical release reporting, 40 C.F.R. Part 372;
(7) "EPA/state identification number" means the number assigned by the environmental protection agency (EPA) or by the department of ecology to each generator or transporter or both, and to each treatment facility, or storage facility, or disposal facility, or a treatment, storage, and disposal facility;
(8) "Extremely hazardous waste" means any dangerous waste that:
(a) Will persist in a hazardous form for several years at a disposal site and which, in its persistent form:
(i) Presents a significant environmental hazard and may be concentrated by living organisms through a food chain or may affect the genetic make-up of man or wildlife; and
(ii) Is highly toxic to man and wildlife;
(b) If disposed of at a disposal site in quantities that would present an extreme hazard to man or the environment.
"Extremely hazardous waste" specifically includes those wastes designated as extremely hazardous by chapter 173-303 WAC;
(9) "Facility" means any geographical area that has been assigned an EPA/state identification number or in the case of a hazardous substance user, means all buildings, equipment, structures, and other stationary items located on a single site or on contiguous or adjacent sites and owned or operated by the same person;
(10) "Generate" means any act or process that produces hazardous waste or first causes a hazardous waste to become subject to regulation;
(11) "Hazardous waste" includes all dangerous and extremely hazardous wastes but, for the purposes of this chapter, excludes all radioactive wastes or substances composed of both radioactive and hazardous components;
(12) "Hazardous waste generator" means all persons whose primary business activities are identified by the department to generate any quantity of hazardous waste in the calendar year for which the fee is imposed.
(13) "Interrelated facility" means multiple facilities owned or operated by the same person;
(14) "Person" means an individual, trust, firm, joint stock company, partnership, association, state, public or private or municipal corporation, commission, political subdivision of a state, interstate body, the federal government including any agency or officer thereof, and any Indian tribe or authorized tribal government;
(15) "Plan" means the plan provided for in RCW 70.95C.200;
(16) "Price deflator" means the figures reported by the United States Department of Commerce Bureau of Economic Analysis((,)) on the table for "implicit price deflator for gross ((national)) domestic product ((for government purchases of goods and services for state and local government))." The department must use a price deflator for "State and Local Government." If a "State and Local Government" figure is not included on the table, the department must use a price deflator figure applicable to general government.
(17) "Primary business activity" means a business activity that accounts for more than fifty percent of a business' total gross receipts or in the case of more than two business activities, the activity which has the largest gross receipts. Where a business engages in multiple activities and one or more of those activities generate hazardous waste, the gross receipts from all waste generating activities will be combined to determine their ratio to the total gross receipts of the business.
(18) "Recycled for beneficial use" means the use of hazardous waste, either before or after reclamation, as a substitute for a commercial product or raw material, but does not include:
(a) Use constituting disposal;
(b) Incineration; or
(c) Use as a fuel.
(19) "Substantially similar processes" means processes that are essentially interchangeable, inasmuch as they use similar equipment and materials and produce similar products or services and generate similar wastes.
(20) "Waste generation site" means any geographical area that has been assigned an EPA/state identification number.
AMENDATORY SECTION (Amending WSR 00-16-103, filed 8/1/00, effective 9/1/00)
WAC 173-305-220 Hazardous waste planning fee.
(1) The department shall calculate the adjusted fees, annual fee, and maximum total fees using the formula in subsection (3) of this section. The formula uses a risk factor of one for dangerous waste and emissions, and a multiplication factor of ten for extremely hazardous waste. For purposes of this section, hazardous waste reported on the annual dangerous waste generator report as having been either recycled on-site or recycled for beneficial use offsite, including initial amounts of hazardous substances introduced into a process and subsequently recycled for beneficial use, may not be used in the calculation of hazardous waste generated. A facility may petition the director to exclude hazardous wastes recycled for beneficial use even if they were not reported as such on the annual dangerous waste generator report. Documentation from the hazardous waste handling facility that the hazardous waste was recycled for beneficial use must be submitted along with the petition.
(2) Fees in subsection (3) of this section are based on the following definitions:
(a) Dangerous waste is the number of pounds of dangerous waste reported that are not recycled for beneficial use, calculated so that the following wastes are excluded:
(i) Wastewater discharged under permit by rule under WAC 173-303-802 ((is excluded.)); or
(ii) Dangerous waste that is treated on-site by the generator according to WAC 173-303-170 (3)(b) and (c); or
(iii) Nonrecurrent dangerous waste as reported on the annual dangerous waste generator report required under WAC 173-303-060(5).
(b) Emissions is the number of pounds of emission reported under Toxic Chemical Release Reporting, 40 C.F.R. Part 372, by a company. If emissions are reported in ranges, the middle value of the reported range will be used in the calculation.
(c) Extremely hazardous waste is the number of pounds of extremely hazardous waste reported that are not recycled for beneficial use, calculated so that the following wastes are excluded:
(i) Wastewater discharged under permit by rule under WAC 173-303-802 ((is excluded.
The price deflator is the "Implicit price deflator for gross national product for government purchases of goods and services for state and local government.")); or
(ii) Extremely hazardous waste that is treated on-site by the generator according to WAC 173-303-170 (3)(b) and (c); or
(iii) Nonrecurrent extremely hazardous waste as reported on the annual dangerous waste generator report required under WAC 173-303-060(5).
The total risk pounds for a facility or set of interrelated facilities is equal to ten times the number of pounds of extremely hazardous waste generated, plus the number of pounds of dangerous waste generated, plus the number of pounds of emission reported by that facility.
(3) The annual fee for a facility or set of interrelated facilities is equal to the rate per risk pound times the total risk pounds. The rate for the risk pounds must be calculated by the department so that the maximum total fee in (a) of this subsection can be obtained. The annual fee for each facility or set of interrelated facilities is subject to the limitations in (b) and (c) of this subsection.
(a) The maximum total fees collected must be determined based on the maximum total fee for the previous year, multiplied by the most current price deflator, and divided by the price deflator used in the numerator for the previous year. The price deflator used in the denominator for the first adjustment is the second quarter price deflator for 1990. The maximum total fees for 1990 must be one million dollars.
(b) The maximum fee for any facility or interrelated facility must be determined based on the maximum total fee for the previous year, multiplied by the most current price deflator, and divided by the price deflator used in the numerator for the previous year. The price deflator used in the denominator for the first adjustment is the second quarter price deflator for 1990. The maximum annual fee for 1990 must be ten thousand dollars.
(c) The maximum annual fee for a generator who generates between two thousand six hundred forty and four thousand pounds of dangerous and extremely hazardous waste must be determined based on the maximum total annual fee for the previous year, multiplied by the most current price deflator, and divided by the price deflator used in the numerator for the previous year. The price deflator used in the denominator for the first adjustment is the second quarter price deflator for 1990. The maximum annual fee for 1990 must be fifty dollars.
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