ENVIRONMENTAL AND PUBLIC PROTECTION CABINET

ENVIRONMENTAL AND PUBLIC PROTECTION CABINET

Department for Environmental Protection

Division of Water

(New Administrative Regulation)

401 KAR 9:020. Section 401 Water Quality Certification Fees.

RELATES TO: KRS Chapter 224, 350.060

STATUTORY AUTHORITY: KRS 224.10-100, 224.16-050, 33 U.S.C. 1341

NECESSITY, FUNCTION, AND CONFORMITY: KRS 224.10-100 authorizes the cabinet to establish a fee for the cost of processing applications for permits authorized under KRS Chapter 224. KRS 224.16-050 authorizes the cabinet to certify, pursuant to 33 U.S.C. 1341, that applicants for a federal permit for the construction or operation of facilities which may result in a discharge into the waters of the Commonwealth will comply with the applicable provisions of the Federal Water Pollution Control Act, 33 U.S.C. 1251. This administrative regulation establishes fees for processing applications for Section 401 Water Quality Certifications.

Section 1. Definitions. (1) "Family farm" means one (1) or more tracts of land, used for agricultural purposes, that are held in private ownership by one (1) or more people related by birth or marriage.

(2) "Natural person" means an individual distinguished from a person as defined in KRS 224.01-010.

(3) "Personal residence" means a natural person’s primary place of abode.

Section 2. Fee Remittance. Fees for water quality certifications shall be remitted to the Kentucky State Treasurer, which shall be for the sole use of the cabinet in administration for the 401 water quality certification program and shall be in addition to any money appropriated by the General Assembly for the use of the cabinet.

Section 3. Fees for Individual Water Quality Certification for Stream Impacts. Fees for the review of individual water quality certification for stream impacts shall be as follows:

(1) $100 for an impact of less than 100 linear feet;

(2) $250 for an impact of 100 to 500 linear feet;

(3) $1,000 for an impact greater than 500 but less than 1,000 linear feet;

(4) $2,500 for an impact of 1,000 to 5,000 linear feet; and

(5) $5,000 for an impact greater than 5,000 linear feet.

Section 4. Fees for individual water quality certification for wetland impacts. Fees for the review of individual water quality certification for wetland impacts shall be $500 per acre of impacted wetland.

Section 5. Fees for General Water Quality Certification. (1) Fees for the review of general water quality certification shall be $100.

(2) Family farms and personal residences shall be exempt from general water quality certification fees.

ROBERT D. VANCE, Secretary

APPROVED BY AGENCY: February 29, 2008

FILED WITH LRC: March 3, 2008 at 3 p.m.

PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on April 22, 2008 at 10 a.m. at the Conference Room D-16 of the Department for Natural Resources at #2 Hudson Hollow, Frankfort, Kentucky. Individuals interested in being heard at this hearing shall notify this agency in writing by April 15, 2008, five (5) workdays prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be canceled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until April 30, 2008. Send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person.

CONTACT PERSON: Abigail Powell, Regulations Coordinator

Division of Water,14 Reilly Road, Frankfort, Kentucky 40601, phone (502) 564-3410, fax (502) 564-0111.

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

Contact Person: Sandy Gruzesky, Assistant Director

(1) Provide a brief summary of:

(a) What this administrative regulation does: This regulation creates cost-based fees for water quality 401 certifications that previously did not have fees.

(b) The necessity of this administrative regulation: The Kentucky 401 Water Quality Certification program is currently operating at a significant monetary loss due to no permitting fees. The 401 Water Quality Certification Section operates well below optimum staffing levels as a partial result of this shortfall. As a result of this shortfall in economic and human resources, the Division accumulated a significant backlog. This backlog results in increased scrutiny by Federal regulators and leads to processing times that barely meet, or exceed, the regulatory periods expected for review.

(c) How this administrative regulation conforms to the content of the authorizing statutes: KRS 224.10-100(20) authorizes the cabinet to establish a fee for the cost of processing applications for permits authorized under KRS Chapter 224. KRS 224.16-050 authorizes the cabinet to certify pursuant to 33 U.S.C. 1341 that applicants for a federal permit for the construction or operation of facilities which may result in a discharge into the waters of the Commonwealth will comply with the applicable provisions of the Federal Water Pollution Control Act, 33 U.S.C. 1251. The cabinet analyzed the actual costs associated with the review of the water quality certifications and is proposing a fee structure that represents the current actual cost for review. The costs are calculated for each application class on a specific basis utilizing recent data to project the actual numbers for each type of certification. The cabinet believes that KRS 224.10-100(20) prevents the collection of fees from public facilities. Therefore, no attempt to collect or transfer the cost of review for public facilities is included in this regulation.

(d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This regulation delineates fees for certain categories of 401 Water Quality Certifications for which a fee may be charged. The cabinet is charged with the responsibility of reviewing these certifications; therefore, the cabinet must have monetary resources with which to accomplish this mission. One source of funding is certification application fees. These fees will partially support the cabinet in its attraction and retention of the staff necessary to implement the statutes.

(2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

(a) How the amendment will change this existing administrative regulation: Amendment is not applicable. This is a new administrative regulation.

(b) The necessity of the amendment to this administrative regulation: N/A

(d) How the amendment will assist in the effective administration of the statutes: N/A

(3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: The cabinet processed approximately 228 individual certifications during the year 2007. This included work proposed by federal government (6), state government (45), city/county governments (15), industrial, commercial, and residential developers (90), coal industry (53), urban and rural residents (15), and others (5).

(4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

(a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: The regulated entities will have to pay a cost-based fee for water quality certification issuance.

(b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): Individual Water Quality Certification for Stream Impacts (only): Activities that do not qualify for a General Water Quality Certification are assessed water quality certification review fees in the following manner: The water quality review fee for less than 100 linear feet of impact is $100. The water quality review fee for 100 to 500 linear feet of impact is $250. The water quality review fee for greater than 500 but less than 1,000 linear feet of impact is $1,000. The water quality review fee for greater than 1000 but less than 5,000 linear feet of impact is $2,500. The water quality review fee for impacts 5,000 linear feet or great is $5,000. Individual Water Quality Certification for Wetland Impacts (only): The water quality review fee for impacts to wetlands is $500 per acre of impacted wetland. General Water Quality Certification (only). The general water quality review fee for nationwide certification is $100. Family farms and personal residences shall be exempt from general water quality certification fees.

(c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The current processing delays for water quality certifications are largely a result of inadequate funding for the 401 Water Quality Program. This backlog results in increased scrutiny by Federal regulators of both the regulated entities and of the cabinet. This regulation will provide increased funding for the cabinet and the 401 Water Quality Certification Program in particular. An increase in economic and human resources for the cabinet will lead to a reduction in the time needed for the regulated entities to obtain the water quality certifications necessary to conduct business. Kentucky’s fee structure will remain competitive for attracting industry. Fees for industry are still below those in most states, such as Illinois, Virginia, Ohio, and Indiana. Additionally, the fees imposed on small businesses and individuals will be comparable to those in surrounding states.

(5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:

(a) Initially: Minimal additional burden is anticipated. The cabinet will alter existing mechanisms that are already in place to collect and process water quality certification fees.

(b) On a continuing basis: No additional burden is anticipated. An existing mechanism is in place for collection of fees.

(6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation? Funding will come from the fees generated by the water quality certification application.

(7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No additional fees or funding are necessary to support this regulation.

(8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: This administrative regulation will establish fees for the program.

(9) TIERING: Is tiering applied? Yes, tiering of fees is applied by this administrative regulation. This tiered structure regulates cost-based fees for water quality certifications based upon the linear feet of stream impacts and acres of wetland impacts.

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

1. Does this administrative regulation relate to any program, service, or requirements of a state or local government (including cities, counties, fire departments, or school districts)? Yes

2. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Water Quality Branch/Water Quality Certification Section processed approximately 175 individual certifications during the year 2007. Of these certifications, 6 were for federal government work, 45 were for state government work, and 15 were for city/county governments. Any applicant seeking 401 certification will be affected.

3. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. KRS 224.10-100 authorizes the cabinet to establish a fee for the cost of processing applications for permits authorized under KRS Chapter 224. KRS 224.16-050 authorizes the cabinet to certify pursuant to 33 U.S.C. 1341 that applicants for a federal permit for the construction or operation of facilities which may result in a discharge into the waters of the Commonwealth will comply with the applicable provisions of the Federal Water Pollution Control Act, 33 U.S.C. 1251.

4. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect.

(a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? The average revenue expected from the administrative regulation will be $436,000 per year for DOW and approximately $140,600 for DMP.

(b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? The average revenue expected from the administrative regulation will be $436,000 to $500,000 per year for DOW and approximately $140,600 for DMP. This will vary be based on the actual number and type of water quality certification received.

(c) How much will it cost to administer this program for the first year? Based on an average of 200 permits per year, the cost to administer this program will be $470,000 for the first year. The Division of Mine Permits estimates a cost of $160,200 for the first year.

(d) How much will it cost to administer this program for subsequent years? The average cost to administer this program in subsequent years will be $470,000 to $550,000 per year for DOW and $160,200 for DMP. This will vary be based on the actual number and type of water quality certification received.