COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 2745-03
BILL NO.: SCS for SB 577
SUBJECT: Department of Natural Resources; Drycleaning solvent management
TYPE: Original
DATE: February 21, 2000
FISCAL SUMMARY
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| General Revenue | $0 | ($335,209) | ($301,323) |
| Dry-Cleaning Environmental Response Trust Fund | $0 | $1,050,480
to $1,365,998 |
$634,002
to $1,365,998 |
| Total Estimated
Net Effect on All State Funds |
$0 | $715,271
to $1,030,789 |
$332,679
to $1,064,675 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| None | $0 | $0 | $0 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 9 pages.
ASSUMPTION
Officials from the Office of Administration - Budget and Planning and the Office of the State Treasurer assume their agencies would not be administratively impacted by this proposed legislation. Officials from the Department of Revenue assumes there would be little or no administrative impact to their agency.
Officials from the Office of the Secretary of State assume that based on experience with other divisions, the rules, regulations and forms issued by the Hazardous Waste Management Commission could require as many as approximately 18 pages in the Code of State Regulations. For any given rule, roughly half again as many pages are published in the Missouri Register as in the Code because cost statements, fiscal notes and the like are not repeated in Code. These costs are estimated. The estimated cost of a page in the Missouri Register is $22.50. The estimated cost of a page in the Code of State Regulations is $26.50. Therefore, the estimated costs for FY 01 are $1,084.50. The actual costs could be more or less than the numbers given. The impact of this legislation in future years is unknown and depends upon the frequency and length of rules filed, amended, rescinded or withdrawn.
Officials from the Department of Health will request one-half of an Environmental Specialist III FTE position. This amount was estimated using information provided by the DNR regarding the number of cleanups they estimate to be done each year. In addition, office equipment, computer equipment, rent, travel expenses, and network connection fees will be requested. The costs were estimated using the Missouri Department of Health FY00 Fiscal Note Cost Data Sheet.
The new employee will conduct risk assessments to determine the risk from exposure to dry cleaner's releases and/or spills. The employee will determine health-protective cleanup levels for cleaning the site. He/she will review risk assessments and cleanup levels determined by the DNR contractors or responsible parties to assure the accuracy and completeness of those assessments. This employee will also consult with DNR staff and responsible parties and/or their representatives to clarify, make recommendations, and redesign risk assessments or reviews of risk assessments at dry cleaning establishments.
Officials from the Department of Natural Resources (DNR) assumes approximately 531 facilities (using sic code 7216 - Dry-cleaning plants, except rug cleaning) are located in the state of Missouri. 397 of these facilities submitted 1998 Emission Inventory Questionnaires to the department. Thirty-two (32) of the facilities reported using non-chlorinated solvents with an average of 1,802 gallons used per facility. 365 facilities reported using chlorinated solvents with
ASSUMPTION (continued)
an average of 167 gallons used per facility.
In addition, the department realizes there are dry-cleaning facilities (using sic code 7215-coin operated laundries and dry-cleaning) that would be subject to the payment of these surcharges. The department assumes there are approximately 336 coin laundries located in Missouri and it is estimated that approximately 15% or 50 of these facilities would have dry-cleaning equipment. Using the same percentage of facilities reporting usage of chlorinated versus non-chlorinated solvents to the department, the department assumes that 92% or 46 of these facilities would be using chlorinated solvents and 8% or 4 of these facilities would be using the non-chlorinated solvents.
Based on the 1998 Emission Inventory Questionnaires data regarding solvent usage, the dry-cleaning facilities fall into the following categories:
61.2 % fall in the category of small facilities (243 facilities out of 397 total)
29.2 % fall in the category of medium facilities (116 facilities out of 397 total)
9.6 % fall in the category of large facilities (38 facilities out of 397 total)
Based on this information, the department assumes the annual revenues to the Fund would be approximately:
Registration surcharges:
Small facility registration surcharges = $136,782 per year (based on approximately 447 dry-cleaning facilities x 61.2 % x $500 surcharge)
Medium facility registration surcharges = $130,524 per year (based on approximately 447 dry-cleaning facilities x 29.2% x $1,000 surcharge).
Large facility registration surcharges = $64,368 per year (based on approximately 447 dry-cleaning facilities x 9.6% x $1,500 surcharge)
$686,370 per year assuming 411 (365 reported plus 46 - 7215 sic code) facilities using chlorinated solvents with an average of 167 gallons used per facility and a $10 surcharge per gallon on these solvents (411 facilities x 167 gallons x $10.00 charge per gallon)
$32,436 per year assuming 36 (32 reported plus 4 - 7215 sic code) facilities using non-chlorinated solvents with an average of 1,802 gallons per facility and a $0.50 surcharge per gallon on these solvents (36 facilities x 1802 gallons x $0.50 charge per gallon)
ASSUMPTION (continued)
Estimated annual revenue:
$ 331,674 - Registration surcharge
$ 32,436 - Dry-cleaning solvent surcharge @ $.50 per gallon
$ 686,370 - Dry-cleaning solvent surcharge @ $10 per gallon
$1,050,480- Total estimated annual revenue
If the total universe of 531 facilities (sic code 7216) plus the appropriate percentage of dry-cleaning facilities included in coin-operated laundries (approximately 50 facilities sic code 7215) would be subject to the surcharges proposed in this bill, the department assumes the revenues to the Fund would be approximately:
$177,786 per year in registration surcharges based on approximately 581 (531 sic code 7216 plus 50 sic code 7215) dry-cleaning facilities x 61.2% x $500 surcharge.
$169,652 per year in registration surcharges based on approximately 581 dry-cleaning facilities x 29.2% x $1,000 surcharge.
$83,664 per year in registration surcharges based on approximately 581 dry-cleaning facilities x 9.6% x $1,500 surcharge.
$893,450 per year assuming 535 (531 total x 92% = 489 plus 46 7215 sic code) facilities using chlorinated solvents with an average of 167 gallons used per facility and a $10 surcharge per gallon surcharge on these solvents (535 facilities x 167 gallons x $10.00 charge per gallon)
$41,446 per year assuming 46 (531 x 8% = 42, plus 4 - 7215 sic code) facilities using non-chlorinated solvents with an average of 1,802 gallons per facility and a $0.50 surcharge per gallon on these solvents (46 facilities x 1802 gallons x $0.50 charge per gallon)
$431,102 - Registration surcharge
$ 41,446 - Dry-cleaning solvent surcharge @ $.50 per gallon
$893,450 - Dry-cleaning solvent surcharge @ $10 per gallon
$1,365,998 - Total estimated annual revenue
The legislation requires the Hazardous Waste Management Commission to develop performance standards for dry-cleaning facilities. The proposal provides additional requirements beyond existing state and federal laws. The proposal provides that the moneys in the Fund be used for the costs of administering and enforcing these standards. Therefore, the department assumes they would be required to inspect dry-cleaning facilities for compliance with these standards.
ASSUMPTION (continued)
The department assumes that they would inspect 581 dry cleaning facilities every 7.5 years. An average inspection time is 40 hours based on the EPA standard for RCRA inspections (file searches, travel time, inspection, report preparation). The department also assumes ten percent of the facilities inspected would result in enforcement activities. Assuming that each enforcement case would take approximately 90 hours, the department would request two (2) Environmental Specialist III's to perform these activities [(581 facilities/7.5 yr. x 40 hours per inspection/1,800 hrs. per year) + (77 inspections x 10% x 90 hours per enforcement case/1,800 hrs. per year)].
The department assumes the Dry-Cleaning Environmental Response Trust Fund will participate in the department's Cost Allocation Fund.
The proposed legislation states that moneys in the Fund cannot be expended until the balance in the Fund reaches $2 million. Since the legislation requires the department to administer and enforce these standards, the department will be requesting general revenue for at least two years to cover these costs until the fund balance reaches the level required by this proposal. The department assumes general revenue will not be used for site remediation. Therefore, no cleanups will be performed until the fund balance reaches $2 million. Once this level of funding is reached, the department will phase in the needed resources to do site remediation. Since the costs for the resources needed for remediation fall outside the fiscal note period, they are not shown as fiscal note expenditures.
The department has estimated between 447 and 581 active Missouri drycleaning facilities. For the following analysis, the department will use an average 514 dry cleaners ((447 + 581)/2). Based on the experience of other states with similar programs, the department assumes that of the 514 facilities, 23% or 188 facilities will make application to the fund over the first four years.
Also based on other states information, the department assumes that 90% of the dry cleaning facilities in Missouri making application have existing contamination that would be eligible to be cleaned up using the fund. Therefore, the department assumes 106 facilities with documented contamination in Missouri, will be eligible to be cleaned up by the fund within the first four years. (118 drycleaning facilities making application x 90%).
The department assumes it will take approximately 2.5 years to complete a site remediation. Assuming a universe of106 facilities / 4 years x 2.5 years to complete, the department would be managing approximately 26.5 projects per year. Therefore, the department would need to request two (2) Environmental Engineer III's, .5 Geologist II, and .5 Environmental Specialist III to perform these duties. These estimates do not take into consideration any sites that may make application after the fourth year.
ASSUMPTION (continued)
The department assumes that they would be providing management of the Fund cleanups. The department proposes to contract the remediation activities related to the contaminated sites.
Oversight assumes the annual DNR expenses for professional positions, with travel, to be $5,400 per employee. Additionally, Oversight assumes the annual ongoing expenses for clerical positions to be $1,000 per employee. These computations are based on projections of annual expenses received from other state agencies.
Oversight has also adjusted DNR staffing costs to reflect amounts in their fiscal estimate for a similar proposal from the 1999 session, plus 1%.
Additionally, Oversight has adjusted DOH's Personal Services to reflect a more reasonable starting salary for the one-half FTE requested. DOH requested that this one-half FTE commence in FY01, but since DNR will not start their FTE until FY02, Oversight deferred the one-half FTE requested by DOH until FY02. Oversight also adjusted DOH's Expense and Equipment by eliminating the rental space. Furthermore, DOH requested all such expenses to be paid from the Dry-Cleaning Environmental Response Trust Fund. Oversight has reflected these expenses to be paid from the General Revenue Fund for purposes of this fiscal note because expenses can not be paid from the Dry-Cleaning Environmental Response Trust Fund until the balance reaches $2 million.
Oversight assumes the Dry-Cleaning Environmental Response Trust Fund would accumulate a balance in excess of $2 million in FY 2003. Therefore, the balance could reach $2,731,996 if the maximum estimated annual revenue is collected. Oversight has shown a range of expenditures for cleanup costs of $0 to $731,996 to the fund during that year.
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(10 Mo.)
GENERAL REVENUE FUND
Cost - Department of Natural Resources
Personal Service - (5 FTE) $0 ($185,894) ($190,541)
Fringe Benefits 0 ($57,162) (58,591)
Expense and Equipment 0 (57,428) (23,976)
Total Cost - DNR $0 ($300,484) ($273,108)
FISCAL IMPACT - State Government FY 2001 FY 2002 FY 2003
(continuing) (10 Mo.)
Cost - Department of Health
Personal Service - (0.5 FTE) $0 ($16,888) ($17,310)
Fringe Benefits $0 ($5,193) ($5,323)
Expense and Equipment $0 ($12,644) ($5,582)
Total Cost - DOH $0 ($34,725) ($28,215)
Estimated Net Effect on
GENERAL REVENUE FUND $0 ($335,209) ($301,323)
DRY-CLEANING ENVIRONMENTAL
RESPONSE TRUST FUND
Income - Department of Natural Resources
Registration and solvent fees $1,050,480 $1,050,480
to to
$0 $1,365,998 $1,365,998
Cost - Department of Natural Resources
Reimbursements for cleanup costs $0
to
$0 $0 ($731,996)*
Estimated Net Effect on
DRY-CLEANING ENVIRONMENTAL
RESPONSE TRUST FUND $1,050,480 $634,002
to to
$0 $1,365,998 $1,365,998
*Monies in fund can be spent to reimburse cleanup costs after the balance reaches $2 million
FISCAL IMPACT - Local Government FY 2001 FY 2002 FY 2003
(10 Mo.)
$0 $0 $0
FISCAL IMPACT - Small Business
The proposed legislation establishes fees for dry cleaners and dry-cleaning fluids. Fees paid into the fund established under this legislation would be available for site remediation, subject to the deductibles specified in the bill.
The proposed legislation also increases the paperwork requirements on small businesses through registration reporting and maintenance of records for surcharge payments.
DESCRIPTION
This proposal establishes a Dry Cleaning Solvent Environmental Response Trust Fund to provide moneys for investigation, assessment, and remediation of releases of solvents from dry cleaning facilities. The Fund is administered by the Hazardous Waste Management Commission.
The act requires the Hazardous Waste Management Commission to establish, within one year, standards for new dry cleaning facilities, including requirements for solvent delivery, solvent storage, solvent disposal, prohibition of solvent discharges and containment structures for dry cleaning units. The Commission shall meet with industry and interested parties prior to initial
rulemaking. The Commission shall establish a schedule for upgrading existing dry cleaning
facilities to the new standards within three years and shall determine facility closure procedures and appropriate completion requirements for corrective actions in response to a release.
Payments from the Fund for any particular contamination site may not exceed a total of $2 million and may not exceed twenty-five percent of the moneys in the Fund during any fiscal year. There is a $10,000 deductible for active facilities and a $25,000 deductible for abandoned sites. Moneys from the Fund may not be used if the release was caused by illegal operating practices, if the facility operator obstructs actions by the Department of Natural Resources, or if the operator is in arrears for payments to the Fund. An owner or operator must meet performance standards to participate in the fund.
Operators of active facilities must register annually with the Department and pay an annual registration surcharge to the Fund. The surcharge is set at $500 for small facilities, $1000 for medium facilities and $1500 for large facilities.
Sellers of dry-cleaning solvents must pay a solvent surcharge of $10 per gallon for chlorinated solvents and 50 cents per gallon for nonchlorinated solvents, collected quarterly. All surcharges are subject to a late fee of 15% plus 10% per annum interest on unpaid balances. If the unobligated balance of the Fund exceeds $5 million, the facility registration and solvent surcharges are not collected until the Fund balance falls below $2 million.
Violators of any provisions of this act are subject to civil penalties of up to $500 per violation, DESCRIPTION (continued)
payable to the Fund.
The act contains a sunset clause which will terminate the provisions of the act on August 28, 2007.
This legislation is not federally mandated and would not require additional capital improvements or rental space, but could duplicate other regulations. Portions of this proposed legislation may duplicate existing state and federal laws. DNR noted that the dry-cleaning industry is already regulated under the hazardous waste law (Section 260.350 through 260.481) and the Hazardous Waste Management Commission; however, this legislation provides greater specificity in the regulation of these facilities.
SOURCES OF INFORMATION
Department of Health
Department of Natural Resources
Department of Revenue
Office of Administration
Budget and Planning
Office of the Secretary of State
Office of the State Treasurer
Jeanne Jarrett, CPA
Director
February 21, 2000