*» i UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
APR 2 1 1968
SOLID WASTE ANO EMERGENCE RES!
MEMORANDUM
SUBJECT: RCRA Del 1st ing Review Fee
TO: Sylvia K. Lowrance, Director
Office of solid Waste
FROM: Michael Northridge, (Attorney-Advisor
lannn and Information
THRU : MicKaer Gruiber , Ijir ector
Office of Policy, Planning and Information
Attached is an analysis of the feasibility of charging a
fee for Agency review of RCRA delisting petitions. As you may
know, the Agency-wide Task Force on user fees recommended that
such an analysis be conducted. The Administrator accepted the
Task Force's recommendations and subsequently directed OSWER to
evaluate the possibility of such a fee.
The analysis concludes that the feasibility of a delisting
fee depends on two factors: (1) the effect that the relisting
program will have on the delisting program, and (2) the effect
that the fee itself might have on the percentage of petition
reviews that include a facility visit. Direction from your
office regarding these two factors would help us to make a
definitive determination. Alternatively, the analysis could
simply be forwarded as currently drafted to the Assistant
Administrator and Deputy Assistant Administrator for their
consideration.
Below Z have summarized some of the highlights of the
analysis. The Agency-wide Task Force established six criteria
for program offices such as OSW to use in reviewing possible
fees. Thus, the analysis is organized according to these six
criteria: legislative; administrative; financial; acceptance by
States; economic; and environmental.
Legislative - the Agency clearly has the legal authority
(and perhaps even an obligation) under the Independent Offices
Appropriations Act to charge a delisting petition review fee.
It does not, however, have legal authority to retain the fee
receipts. At present, any receipts would be deposited into a
special EPA fund within the UcS. Treasury. EPA could not use
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the funds, however, until Congress had authorized such
disbursement in a subsequent appropriation. Note that OMB,
which strongly supports user fees, would be likely to x
accommodate the Agency on any budgetary restraints we might
experience as a result of delays in receiving these funds.
Administrative - some difficulties exist but none seem
insurmountable. A two-tiered fee, consisting of an initial
base fee plus an additional hourly fee for review of incomplete
petitions, would provide an incentive for we11-prepared
petitions. Key details surrounding the exact design would need
to be resolved during the development of a regulation
establishing the fee. OSW's experience with Superfund
timesheets should prove useful in designing procedures for
documenting time spent on petitions.
Financial - the fee would raise about $1 million annually.
This figure could increase significantly, up to $2.6 million,
if EPA included a facility visit as part of every petition
review. On the other hand, the figure would ba much lower if
the relisting program drastically reduces the future number of
delisting petitions. (The estimates above assume that
relisting will cut the number of future delisting petitions in
half). Administrative costs are estimated to range from
$23,000 to $80,000, which is far less than gross revenue.
Acceptance by States - the States strongly oppose any RCRA
fee, fearing that EPA will preempt them from charging their own
RCRA fees. The analysis seriously questions this position,
noting that the Agency only has legal authority to charge fees
for services that it provides. In other words, EPA is not
authorized to charge fees for services provided by others
(e.g., the States). Therefore, we cannot preempt a fee that a
State is charging a firm for a service that the state provides.
Economic - the fee, which would average roughly $15,000,
would probably not have a significant economic impact. A
grandfathering provision would minimize any inequitable
result*.
Environmental - the fee would probably have a very small
positive impact on the environment.
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Finally, I am not aware of how familiar you are with the
work of the RCRA user fee study group to date. I would be
happy to brief you on the subject if you so desire.
Attachment
cc: Bruce Weddle
Study group on RCRA delisting petition review fee
- Terry Grogan, PSPD/OSW
- Scott Maid, PSPD/OSW
- Terry Grist, PSPD/OSW
- Suzanne Rudzinsfci, PSPD/OSW
- Alex Wolfe, PSPD/OSW
- Wayne Anthofer, OPMS/OSW
- Catherine Smith, OPMS/OSW
- Tina Kaneen, OGC
- David Rowson, OARM
- Bryan Dixon, Texas
- Ron Nelson, Maryland
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FEASIBILITY OF USER FEES
FOR RCRA DELISTING PETITIONS
U.S. Environmental Protection Agency
Office of Solid Waste
Office of Policy, Planning & Information
Policy Analysis Staff
April 21, 1988
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ACKNOWLEDGEMENTS
The OSWER study group on RCRA user fees is chaired by
Michael NQrthridge, OPPI/OSW. The principal study group members
for the delisting fee analysis are listed below:
- Debora Martin, formerly OPPI/OSW
- Myles Morse, formerly PSPD/OSW
- Scott Maid, PSPD/OSW
- Suzanne Rudzinski, PSPD/OSW
- Jim Michael, PSPD/OSW
- Wayne Anthofer, OPMS/OSW
- Catherine Smith, OPMS/OSW
- Yvonne Garbe, formerly CAD/OSW
- Carolyn Szumal, formerly OARM
- David Rowson, OARM
- Bryan Dixon, Texas
- Ron Nelson, Maryland
The group's membership has recently changed. Most notably,
Terry Grogan recently became acting chief of the delisting
section/ thus replacing Myles Morse. Next, Alex Wolfe is now
acting chief of PSPD's implementation section, replacing Jim
Michael. Finally, Terry Grist, who has recently joined the
delisting section, has been added to the group.
*
ICF, Inc. conducted some of the preliminary analysis,
including writing several initial drafts of this paper. The
study group would like to thank Rena Kieval, the ICF project
officer, plus Irene Witt, Karina Thomas, Meg Widmer and
especially David Lennett for their efforts. In addition, the
delisting program was assisted in its review of the draft
analysis by its contractors, including Terry Grist, then of
SAIC, and Howard Finkel/ICF.
The author would like to acknowledge the assistance of
several individuals who have made significant contributions to
the study group. In particular, special gratitude is expressed
to Marcia Williams/ former director of OSW, for her thorough
review of the draft analysis; Lillian Bagus and George Garland/
PSPD/OSW, for their review of the paper's discussion of State
authorization; Robert Scarberry, CAD/OSW, for his review of the
paper's discussion of generic petitions and the relisting
program; nil Gillis, OWPE, for his help in developing the
economic atfTordability analysis; Joe Smith/ Boo z-All en and
Michael Burns/ OPPI/OSW for their help in developing the revenue
estimate analysis; Robert Brennis, OPTS and Richard Nalesnik,
ORO for their help in crafting the discussion of previous Agency
attempts to establish a fee; Kennan Garvey, formerly of
OPMS/OSW/ for his help in educating the study group on OSW's
•previous efforts in the area'of fees; Ben Smith and Doreen
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Sterling, CAD/OSW, for their help in developing the analysis
regarding the relisting program; Chris Prins, OPPE, for his
contribution of materials regarding other federal fees; and
Phyllis Garnett, Arkansas, for her help in securing State
representation for the study group.
The author would also like to recognize the assistance
provided by the following Agency individuals: Jackie Krieger,
Larry Rosengrant, David Croxton, Ron Burke, Cliff Rothenstein,
James Craig, Nathan Wilkes, Ron Updegraff, Carolyn Cunningham,
Steve Levy, Michael Gruber, OPPI/OSW; Elizabeth Cotsworth, James
Kent, Wendel Miser, Linda Cessar, Alex Wolfe, Marty Madison,
Barbara Foster, Susan Bromm, PSPD/OSW; Ron Kolpa, formerly on
detail to PSPD/OSW; Robert Brown, OPMS/OSW; Florence Richardson,
Wanda LeBleu-Biswas, Matthew Straus, Barry Lesnik, CAD/OSW;
Michael Flynn, WMD/OSW; David O'Brien (OUST), formerly of OSW;
Patrick Garvey, OSWER; Steve Hirsch, Tina Kaneen, Nandan
Kenkeremath, Howard Hoffman, OGC; Gerald Yetter, Leslie Baldwin,
Robert Cluck, OARM; and Jim Home and John Adams, both formerly
of OARM. Thanks also to Joan Flatten, OEA and the Agency
library staff for their help in securing reference materials for
this paper.
The following EPA personnel participated in analysis of
fees for RCRA exceptions/waivers other than delisting petitions
(i.e., double liner waivers, surface impoundment retrofit
waivers, land ban petitions): Dave Eberly, Chris Rhyne, Terry
Grogan, PSPD/OSW; Steve Weil, CAD/OSW; Gary Jonesi, formerly
CAD/OSW; James Bachmaier, Walter DeRieux, Les Otte, Ken Skahn,
Paul Cassidy, Lauris Davies, WMD/OSW.
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FEASIBILITY OF USER FEES FOR RCRA DELISTING PETITIONS
Introduction
The EPA Task Force on User Fees proposed 11 fees to the
Administrator for extensive study in its Draft White Paper of
April 1986. In the RCRA program specifically, the Task Force
recommended further study of the following RCRA
waivers/exceptions:
Delisting petitions;
Land disposal ban petitions;
Double liner waivers; and
Surface impoundment retrofit waivers.
In response to the Administrator's directions, the Office of
Solid Waste and Emergency Response (OSWER) established a study
group within the Office of Solid Waste (OSW) to examine the
feasibility of user fees for these four categories of RCRA
waivers/exceptions. The task of the OSWER study group was to
apply the criteria established by the Agency Task Force in
evaluating the candidate waivers/exceptions fees and assess
potential problems in implementing user fees in the RCRA
program. Appendix A contains a list of detailed questions for
each criterion.
This paper evaluates the feasibility of imposing a user fee
specifically for the review of delisting petitions. The paper
is divided into eight sections as follows. The first section
presents background discussion on the delisting petition
program, including a description of how EPA lists wastes a.s
hazardous, the rationale for the delisting procedure, a summary
of the delisting petition requirements, and the effect that the
relisting initiative may have on the delisting program in the
future. The next six sections discuss the feasibility of user
fees for delisting petitions according to the six criteria
developed by the Agency Task Force. Section Two examines the
legal issues concerning the creation of a delisting fee; Section
Three presents administrative issues in designing and
implementing, the fee; Section Four analyzes the financial
feasibility"" of the fee; Section Five assesses environmental
impacts froa imposing such a fee; Section Six discusses issues
concerning the fee's acceptability to States; and Section Seven
discusses the econoaic impacts of the fee. The final section
presents a summary of delisting fee issues and conclusions
regarding such a fee's feasibility.
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!• Background on the Delistina Proarag
1.1 Current Program for Delisting
In Part 261 of the hazardous waste regulations, the Agency
lists approximately 90 industrial waste streams as hazardous and
approximately 360 commercial chemical products as hazardous when
they are discarded or intended for discard. These wastes are
listed because they typically and frequently: (1) exhibit one or
more of the characteristics of hazardous wastes; and/or (2)
contain certain specific constituents that are known to be toxic
or otherwise hazardous at levels restricted by the regulations.
The process by which EPA. lists wastes as hazardous forms the
basis for the delisting procedure. EPA lists a waste as
hazardous if it meets at least one of the following three
criteria:
1. It exhibits any of four hazardous waste
characteristics: ignitability, corrosivity, reactivity,
or extraction procedure (EP) toxicity; or
2. It has been found to be fatal to humans or to cause
or contribute to serious or incapacitating irreversible
illness; or
3. It contains one of the hazardous constituents listed
in Appendix VIII of Part 261 and the Administrator
concludes that the waste can pose a substantial hazard if
improperly managed or disposed.
At a particular facility, however, a listed waste may not be
hazardous. This situation would occur, for example, if a
facility uses different processes or raw materials than were
assumed when the regulations were written. In that case, a
listed waste may not actually be hazardous if the waste: (1)
does not exhibit the characteristics or contain the constituents
for which it was originally listed1; (2) contains those
constituents but at relatively low concentrations; or (3)
contains the listed constituents, but in an immobile fora.
The generator can submit a petition to delist its waste
under 40 CXH sections 260.20 and 260.22. Sines 1981, generators
from various industries have submitted to the Agency about 735
1 Prior to the Hazardous and Solid Waste Amendments of
1984 (HSWA), petitioners were required to demonstrate only that
the waste was not hazardous based on the criteria used in
listing it; HSWA revisions require the Agency to also consider
other factors than those for which the wasta was listed.
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dalisting petitions under this authority. The industries most
heavily represented among the petitioners are electroplating and
metal finishing, oil refining, and multiple waste treating
Although tfce_.process for reviewing delisting petitions that are
submitted from different generators is similar, the time and
resources involved in reviewing each petition depends on the
completeness of the supporting analytical data that the Agency
requires (e.g., sampling results) and the scope of the petition.
As discussed later in Section 6.1, EPA has performed a
majority of the delistings thus far, although States can be
authorized to make delisting decisions in lieu of EPA. However,
an authorized State's decision to delist a waste has no legal
effect outside the State. Exhibit 1.1 presents a schematic
representation of the current process used by EPA Headquarters
to review delisting petitions submitted under §§ 260.20 and
260.22. The process begins when petitions are received,
logged in, and filed with the Public Docket and with the
Assistance Branch of OSW.3 A person from the delisting staff
is assigned to review the petition and correspond with the
petitioner. Frequently, several data gathering "loops" between
the Agency and the petitioner are required in order to complete
the petition. In a few cases, the Agency has visited the
petitioner's site in order to verify the information submitted
in the petition. The Agency has found inaccurate or
2 This is a recently modified version of the schematic
diagram from Petitions to Delist Hazardous Wastes. A Guidance
Manual. U.S. EPA, OSW, April 1985.
3 A proposal to integrate delisting and permitting
procedures was published in the Federal Register last year (52
FR 20914, June 3, 1987). Under the proposal, a permit applicant
could provide the Agency basic information on the waste to be
treated and on hazardous constituents anticipated in the treated
residue. As part of the permit conditions, EPA would set
specific levels for each of the constituents identified. If the
constituent levels in tha treated wastes were below the permit
levels, and if no additional constituents were identified, the
waste wouX&be considered nonhazardous. Note, however, that
this provision, once promulgated, will only be automatically
effective Tri unauthorized States. It will be effective in an
authorized State only if that State decides to specifically
adopt it. In other words, authorized States may choose to
conduct a more stringent program and, hence, may decide to not
allow integration of delisting with permitting.
*
4 The Agency targets site visits where it suspects
problems with the accuracy or completeness of a petition. As of
September 1986, EPA visited 37 sites (approximately 6 percent)
and had performed a complete sample analysis for 28. (Note:
this is not a statistically valid sample.) At over 70 percent
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Modified
Petition Review Process
Notifying Region
°ewion Peceiot
Log In
Reviewer Assigned
Form Latter
to Petitioner
Acknowledging Receipt
Reviewer Checks for
Complete Petition
Prioritize:
identify Political
Fast Track
Petitions
Petitioner
Responds
Representative Samples
Complete Process Description
Waste Quantity, Etc.
Reviewer
Makes Preliminary
Assessment of Whetner
Petition Can 8e
Denied
limit:
6 Months
Identify Spot
Cheek VieMriv
nduds)
Paragraph
SfftttflQ
Limit I LOO
Additional
Information
Required
Letter Sent
Requesting Additional
Information
Lener Sent
Informing Petitioner of
Deny/Withdrawal Option
Reviewer Recommends to
Grant or Deny Petition
Reviewer Prepares
Proposal and AH
Associated Documentation
Memo to
Region to
Ensure
Appropriate
Reviewer Prepares
Final Notice and
Associated Documentation
Internal Review
Takes Comments
and Evaluates
of Pact Sheet
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incomplete data during many of these visits. In light of this
the General Accounting Office (GAO) recently recommended that '
the Agency increase the number of site visits or implement other
controls £o_ensure better information.5 Limited resources
prevent the Agency from increasing such site visits.
After a petition is judged to be complete, the Agency
staffer completes his or her review and makes a tentative
decision to grant or deny the petition. A draft Federal
Register notice is sent to a delisting workgroup (unless the
petitioner withdraws the petition based on a preliminary denial
decision). The workgroup, consisting of representatives from
OSW and other offices within EPA, evaluates the draft notice and
responds with comments to OSW. The proposed and final Federal
Register notices go through a sign-off loop from Section Chief
to Office of the General Counsel to Office Director or Assistant
Administrator for OSWER.
As of April 1988, 129 petitions were still pending final
Agency decision. The petitions were at various stages of the
review process, including review of technical information by the
petition reviewer, workgroup review, preliminary decision to
grant or deny petition, and Federal Register notification. Many
of the outstanding petitions were incomplete and missing
necessary sampling or analytical data. Other petitions vere
of these sites (20 of 28), EPA found problems such as the wastes
or waste management practices differing from those described in
the petition. "Hazardous Waste: EPA Has Made Limited Progress
in Determining the Wastes to Be Regulated," GAO/RCED-87-27
(12/23/86)(hereinafter referred to as 12/86 GAO report).
5 GAO does not elaborate on its reference to "other
controls" that would ensure better petition data. During the
development of this paper, Marcia Williams, then director of
OSW, urged that steps other than site visits bo explored.
Analysis on different steps to improve the data depends on the
nature of the problem with the data. For example, if the data
is inaccurate because the wrong sampling method was used, then
EPA could consider requiring the petitioner to use SW-846 test
methods. 4CAD, in fact, is beginning to develop a regulatory
proposal requiring certain quality control procedures in SW-846
to be used.] If the inaccuracy is a result of the correct
sampling method being conducted improperly, then EPA could
consider requiring minimum qualifications regarding training for
the employee who does the sampling. If the problem lies with
dishonesty by petitioners, then EPA could consider requiring
that sampling be done by an independent third party. Note that
the alternatives to site visits might result in costs to the
petitioner as large or greater than the cost imposed by a site
visit fee. Thus, replacing site visits with other controls may
not necessarily result in a reduction of petitioners' costs.
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nearly complete.
Agency time and expense vary greatly from one petitioner *o
another since delisting petitions themselves vary in complexity
and completeness. Inadequate petitions lengthen the review
process and substantially increase the number of information
exchanges between EPA personnel and petitioners. The general
process for reviewing a delisting petition is the same, however,
for all petitions in all industries. Note that review costs do
not vary significantly once the petitions are complete.
1.2 Future Program for Oelisting
Proposed changes in the listing program may dramatically
affect the future of the delisting program. At present, the
Agency is planning to amend the Subtitle C regulations so that a
generator would no longer be automatically required to comply
with the Subtitle C regulations for his listed waste. Instead,
the Agency would specify exemption levels that will most likely
resemble concentration limits for each waste listed. Only a
generator whose waste exceeds these levels will be required to
comply with the hazardous waste requirements for that waste.
This relisting program, as it is known, is currently in an
early stage. The first regulatory proposal was sent by OSWER
into the Agency's review process in December 1987. The final
rule is scheduled to be promulgated within a year. Most of the
other relistings would follow within one to four years.
The impact of the relisting program on the delisting program
can be seen by analyzing three categories of wastes:
(1) wastes for which exemption levels have not been
established;
(2) wastes which exceed the levels established by the
relisting program; and .
(3) wastes which are below the levels established by the
relisting program.
First, a generator who believes that his waste is not
hazardous but does not have an exemption level to use to prove
his case, abviously can still submit a delisting petition. As
noted abovli; the Agency expects to finalize the majority of
relistings within a few years. For most wastes then, the
potential for petitions is limited to a short, interim period
(i.e., ona to four years). For th« remaining wastes (i.e.,
wastes for which levels will not be sat for quits a while, if
ever), the potential for petitions extends to the forsaaabla
future.
Second; a generator who believes that his waste is not
hazardous even though it contains hazardous constituents above
the exemption levels will also still be able to submit a
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delisting petition. Such a petition would obviously be futile
if the delisting staff merely used the same criteria that were
employed to set the exemption level in the first place. The
delisting^staff is currently considering various options in this
area (e.g., whether to consider site-specific factors rather
than generic ones). The current draft of oswER's first
relisting proposal specifically requests public comment on this
issue.
Third, a generator whose waste is below the exemption level
has no need to submit a delisting petition. By meeting the
level set by the relisting program, his waste is already
considered nonhazardous.5 with this group then, the relisting
program will likely result in a significant decrease in future
delisting petitions.
The issue of how the Agency will implement the relisting
program becomes relevant with this final group. OSWER has
proposed a one-time notification for any generator wishing to
take advantage of the relisting exemptions. This notification
would primarily include information about the waste (e.g.,
description, quantity). Under this self-implementing approach,
generators would not have to submit any additional information,
such as their test data, for EPA review. If they did, then EPA
could recover its review costs through a fee (i.e., sort" of a
"relisting petition" review fee).
In order to quantify the effect that the relisting program
would have, one needs to determine how many generators will fall
in this third group versus how many will belong to the first two
groups. The greater the number of generators in the third
group, the smaller the number of generators who potentially
might submit delisting petitions, and vice versa. Although
difficult to determine, it appears likely that a substantial
number of generators will fall into this third group. In other
words, it appears likely that the number of delisting petitions
will decrease substantially in the near future due to the
relisting program.
1.3 Generic Delisting Petitions
As noted above, petitions submitted under sections 260.20
and 260.2tare intended to exclude a waste produced at a
particular-facility. The Agency also occasionally receives
6 However, if relistings are not retrospective, such a
generator may still need to submit a delisting petition. Final
delistings are completely retrospective; accordingly, the
delisted waste is considered to never have been hazardous. If
relistings are not similarly retrospective, then generators may
still be held accountable to hazardous waste standards for the
period prior to the effective date of the relisting.
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"generic" delisting petitions from trade associations or other
interested parties. These petitions seek to exclude a certain
waste but ara not specifically tied to a particular facility
Such petitions are authorized under section 260.20, which
broadly authorizes any petition to modify or revoke any
provision in Parts 260 through 265 and 268. Some generic
delisting petitions are handled by the Variance Section in the
Permits and State Programs Division, while others are reviewed
by the Listing Section in the Characterization and Assessment
Division.
The process for reviewing generic petitions is similar to
the review process for facility-specific petitions, except that
a much broader range of data is required for the decision and
different EPA staff are responsible for the review. Data
required for a generic petition are not limited to the
descriptive and sampling data from one facility, but must
include representative samples from all handlers of the waste to
be delisted. Due to the difficulty and cost of providing these
data, generic petitions have typically been submitted by trade
associations which can centrally coordinate data collection or
by small groups of petitioners for wastes that are not widely
handled. For wastes that are not widely handled, the data
collection and sampling required for a generic petition is much
less burdensome. Fewer generic petitions than facility-specific
petitions have historically been submitted. As of May 1987,
less than 20 generic delisting petitions were pending versus 129
facility-specific petitions.
2. Legislative Feasibility
2.1 Introduction
/ Unlike certain other environmental statutes, such as the
,Glean Air Act (CAA), Marine Protection, Research, and
Sanctuaries Act (MPRSA), and Toxic Substances Control Act
(TSCA), RCRA does not contain a provision that expressly
authorizes the Agency to charge user fees for programs under the
statute.. It is possible that such a provision could be included
in RCRA during the next reauthorization, tentatively scheduled
for November 1988.
Another: option is for the Agency to rely on Title V of the
7 Memorandum from Jenny Utz, Work Assignment Manager for
Science Applications International Corporation (SAIC), to Myles
Morse, EPA, dated 6/2/87, "Summary of Generic Petitions and
Petitions for Multi-waste Treatment Facilities'*. See also
memorandum from Jeannine A. Lehman, Midwest Research Institute,
to Matt Straus, EPA, dated 4/7/87, on status of rulemaking
petitions under task 13, EPA contract no. 68-01-7287, work
assignment no. 14.
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Independent Offices Appropriations Act of 1952 (IOAA) Title v
of the IOAA authorizes the Agency to assess fees for a "service
or thing of value" provided by the Agency.
Currently, EPA does not impose a fee based solely on IOAA
authority. The President's fiscal year 1987 (FY 87) budget for
EPA included four environmental user fees. Two of the four fees
(TSCA premanufacture notices and MPRSA ocean disposal permits)
were specifically authorized under environmental statutes. The
third fee (pesticides registration) is at least partly based on
specific authorization in an environmental statute. Briefly,
the Agency already charges a fee for setting limits on residues
of pesticides on food. These "tolerance petition" fees 'are
specifically authorized by the Federal Food, Drug and Cosmetics
Act. The Agency proposed to expand this program and charge fees
for other aspects of pesticide registration (51 FR 42974, ,
11/26/86). The proposal was based on IOAA authority; however,
specific authority may be included during the next
reauthorization of the Federal Insecticide, Fungicide, and
Rodenticide Act. Finally, the fourth fee involves recovering
costs for the Agency's quality control program for water
samples. This fee is based solely on IOAA authority (51 FR
32386, 9/16/86). Public comments on both of these proposals
have been overwhelmingly negative on the issue of the Agency's
IOAA authority.. In conclusion, these latter two fees will
provide an important precedent for EPA fees based largely on
IOAA authority.
The balance of this section will provide a general outline
of the types of user fees the IOAA allows, the adequacy and
limitations of the IOAA authority for the purposes of developing
and charging a delisting fee, and the proposed legislative
solutions to these limitations.
2.2 Independent Offices Appropriations Act of 1952 (IOAA)
The IOAA contains a provision, commonly referred to as the
"User Charge Statute," that allows Federal agencies to charge
fees for a service or thing of value provided by the Agency if
certain criteria are met. According to the statute, the amount
of the fees shall be "fair; and based on the costs to the
Government, the value of the service or thing to the recipient,
public policy or interests served, and other relevant factors."
Offic*"of Management and Budget (OMB) Circular A-25 provides
additional guidance as to the types of governmental activities
that constitute a service or thing of value.3 According to
the Circular, a fee should be imposed where a service or
privilege provides special benefits to an identifiable recipient
8 Initially issued in 1959, the Circular was revised last
year (52 Fed. Reg. 24890, 7/1/87),
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above and beyond those which accrue to the public at large.
Such special benefits include services performed at the request
of the recipient that are above and beyond the services
regularly^received by other members of the same industry or
group.
Since the enactment of the IOAA, Supreme Court and lower
court decisions have narrowed the scope of the statute. The
IOAA, as refined by judicial interpretation, authorizes an
agency to charge user fees if the following tests are satisfied:
(1) A reasonable relationship between the fee and
private benefits conferred must exist.
(2) The service produces a private benefit, as
contemplated by OMB Circular A-25.
(3) Fees assessed must be limited to the recovery of
direct and indirect costs of providing the special
service or thing of value (e.g., fees must be broken out
into component costs to demonstrate expenses incurred for
performing the service or providing the thing of value).
(4) Where the fee produces a public benefit independent
of the private benefit, the fee must be reduced by the
portion of the Agency's cost attributable to that public
benefit.
2.3 The Adequacy of IOAA Authority
The Agency believes the IOAA provides sufficient legal basis
for charging user fees. To begin with, other government
agencies, including the Interstate Commerce Commission (ICC),
Nuclear Regulatory Commission (NBC), and the Federal Energy
Regulatory Commission (FERC), have used IOAA authority to
develop and levy user fees for services they provide under their
respective programs. Second, the Agency has evaluated the
delisting fee with respect to the four tests outlined above.
Preliminary results indicate that the delisting fee satisfies
all four tests.
To satisfy Test 1. the Agency must ensure that EPA expenses
bear the requisite "nexus" or relationship, to the benefit
derived. Without this nexus, a charge for delisting petitions
may be characterized as a tax, which is not authorized by the
IOAA. To satisfy the nexus test, the fee must bear a
"reasonable relationship" to the Agency expenses, taking into
account "administrative convenience" in calculating the
expenses. In other words, the fee must be "roughly
proportional" to the expenses associated with each petition.
A fee based on the average of all costs would likely not
pass the nexus test. As explained earlier in section 1.1,
Agency expense in reviewing petitions can vary greatly from one
petition to another, depending on petition quality. The expense
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in reviewing a complete petition would therefore likely be
significantly less than the average expense.
The nexus test would be satisfied by a two-tiered fee, with
an initial charge covering the average costs of reviewing'a
complete petition and an additional fee for the additional cost
incurred in reviewing an incomplete petition. A base charge
would pass the nexus test because review costs do not vary
significantly once the petitions are complete. The additional
charge would pass the nexus test so long as it was roughly
proportional to the additional costs actually incurred. This
could be ensured by having Agency staff track the actual costs
incurred (e.g., by filling out time sheets for each review of an
incomplete petition). Alternatively, the Agency may be able to
establish categories based on petition quality. Whether a fee
based on the average costs associated with the categories passes
the nexus test would depend on the magnitude of the differences
within the categories. The administrative hurdles posed by an
additional charge are discussed later in section 3.3.
A delisting fee also passes Test 2. The Agency's review is
performed at the petitioner's request.9 In addition, the
value of the Agency's review is received by the petitioner, not
the general public (although the public may indirectly benefit
through possible price decreases). In the case of generic
petitions, the beneficiaries include the trade association or
other petitioners as well as the firms that handle that waste.
By definition, these firms must be identifiable, in order for
the petitioner to collect and provide the sample data required
as a part of the petition.
To pass Test 3. the Agency must be able to calculate the
costs that it incurs in reviewing delisting petitions. As
discussed later in Section 4, the Agency is generally able,
albeit with some difficulty, to calculate these costs. Indirect
component costs of a delisting can be estimated through analysis
of the review process and of.past delisting experiences. The
costing exercise for facility-specific delisting petitions
should be possible to perform since the process steps and
affected Agency personnel, as indicated by Exhibit 1.1, are
clearly identified. Since the generic delisting petition review
process is essentially the same as the facility-specific review
process (except that different EPA offices are involved and a
wider rangaft of data is required), costing should also be
possible folf these reviews.
Finally, a delisting fee does not involve any independent
9 For further discussion of the "request" standard, see
"The Assessment of Fees by Federal Agencies for Services to
Individuals," 94 Harv. Law Review 439 (1980), particularly p.
444 and fn 21 on p. 442.
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public benefits that would trigger Test 4. Public benefits are
not deemed independent if they are a "necessary consequence of
the Agency's provision of the relevant private benefits".**
Under this^criterion, the public benefits associated with
processing delisting petitions (e.g., public hearing, Federal
Register notice) are not independent.
This last test may prohibit the levying of fees on Federal,
State, and/or local government petitioners since these
generators could be presumed to represent their citizens, with
public benefits resulting from a delisting decision. Even if
not legally prohibited, a fee might not be levied on government
entities as a policy matter. Circular A-25 allows the Agency to
recommend exceptions when any "condition exists that, in the
opinion of the Agency head or his designee, justifies an
exception." ii EPA may recommend to OMB that the fee bo
waived for government entities.12
In summary, the IOAA provides an adequate legal basis to
establish a delisting fee, although several issues affecting the
specific design of the fee need to be satisfactorily resolved.
2.4 Limitations of the IOAA
Although the IOAA provides a legal basis for charging user
fees, it also presents some implementation difficulties and
legal uncertainties. These difficulties and uncertainties need
to be evaluated to determine if they impose significant
constraints on the feasibility of a delisting fee.
A key uncertainty regarding the IOAA concerns the lack of a
clear precedent for EPA user fees. Although the proposed fees
for pesticide registration and water sample quality control may
provide important precedents (see Section 2.1), implementation
of a delisting fee based on the IOAA may nevertheless be delayed
by litigation.
10 Central & Southern Motor Freight Tariff Association
Inc. v. United States. 777 F.2d 722, 729 (D.C. Cir. 1985).
.-*• •
11 Circular section 6.c(2)(b). since this provision is
ambiguous/ it may be useful to review the provision it
replaced. Specifically, old section S.b allowed agencies to
waive fees when "the recipient is engaged in a nonprofit
activity designed for the public safety, health, or welfare1* or
when "payment of the full fee by a State, local government, or
nonprofit group would not be in the interest of the program."
12 However, another OMB bulletin suggests that fees not be
waived for State and local government entities. See section
7(e) of OMB Circular A-97 (dated 8/29/69, revised 3/27/81).
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Another important limitation of the IOAA is that it does net
provide for the return of fee receipts to the budget of the
Agency th^t, performed the service. Federal law (31 u.s.c.
§3302(b)) requires all revenues collected by the government to
be deposited immediately into the General Fund of the Treasury
unless another statute allows an Agency to retain the funds. No
existing statute expressly allows EPA to retain the revenues it
would collect from charging a delisting fee. However, as
discussed in the following section, the FY 88 appropriations
bill for EPA does contain a provision allowing the Agency to
retain certain fee receipts. This provision apparently covers
any possible delisting fee.
2.5 Proposed Legislative Solutions
The Agency Task Force on User Fees discussed several
legislative options for user fees, including amendments to the
IOAA, amendments to specific program statutes, or entirely new
legislation. Regarding establishment of a fee, IOAA provides
sufficient legal authority, although it does pose several
important restrictions (e.g., the nexus test). Thus, a
legislative solution is not necessarily required, although a
proposal to eliminate or modify the lOAA's restrictions is
possible. Such a proposal may not be politically feasible since
many of the IOAA restrictions represent reasonable components of
any fee.
Despite the finding that the IOAA provides a sufficient
legal basis for a delisting fee, it may be desirable to include
a provision that specifically authorizes such a fee during the
next reauthorization of RCRA (tentatively scheduled for November
1988). As past experience demonstrates, the Agency has
found it easier to establish a fee when such specific authority
exists (sea Section 2.1). A specific provision in RCRA would
also avoid the legal uncertainty resulting from the lack of
precedents on EPA fees under the IOAA. The threat of a' legal
challenge by industry would be significantly lessened if
specific authority existed.
A significant drawback in using the next RCRA amendments to
introduce delisting fees legislation is that it likely involves
waiting until 1989 or 1990, assuming delays occur as they did
with the jprevious reauthorizations of RCRA and Superfund. Delay
in implementation of the fee would result in a lost opportunity
13 GAO has previously recommended that EPA use RCRA
reauthorization to obtain specific authority to charge fees.
'•Hazardous Waste Management Programs Will Not Be Effective:
Greater Efforts Are Needed," CED-79-14, 1/23/79. Although
intended for the 1980 reauthorization, the recommendation is
apparently still valid.
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to collect revenue. In addition, by the time reauthorization
occurs, proposed changes in the listing program (described in
Section 1.2) may have already reduced the need for a delistina
program. -Arguably this point could be used to justify delay
i.e., it may be preferable to delay establishment of a fee when
the revenue base is potentially subject to dramatic change in
the near future.
Another drawback in using the next RCRA reauthorization or
any other legislative option relates to potential political
opposition in the House or Senate. The extent of political
opposition is not yet clear. However, if there are no changes
in the listing program, the Agency could expect some resistance
from members of Congress who represent jurisdictions containing
large numbers of potential petitioners. Political opposition
would most likely originate in the heavily industrialized
mid-Atlantic and southern States where many electroplating and
metal and oil refining firms are located. It is not likely,
however, that this potential political opposition would amount
to "veto power" capable of stopping a bill.
The Agency is also interested in the disposition of
receipts. As noted earlier in Section 2.4, Federal law
currently does not allow the return of fee receipts to the
budget of the government agency that performed the service.
However, OMB recently amended Circular A-25 to make it easier
for agencies to retain fee receipts. It may be desirable to
have the receipts from a delisting fee returned to EPA. Several
options for effecting this exist. They include amending RCRA,
passing new legislation, or including a provision in a future
appropriation.
First, work on a RCRA amendment to allow the Agency to
retain the receipts would require less Agency resources than
would a new legislative mechanism. However, the timing drawback
noted earlier, i.e., waiting until.1989 or longer, also applies
here.
The second option involve* passage of a bill authorizing the
Agency to retain fee receipts. The Agency forwarded draft
language for such legislation to Congress two years ago. It was
never introduced as a separate bill, although it was attached to
a larger Rises of legislation. The language was deleted before
the largs
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A' third option would be to include language in the Agency's
appropriations bill, authorizing EPA to retain all receipts.
This option was recently used to grant EPA the authority to
retain receipts. Specifically, the FY 88 appropriations bill
for EPA authorizes the Agency to collect up to $25 million in
fees, with the receipts to be deposited in a special fund in the
Treasury reserved for EPA programs. [Congressional Record,
12/22/87, p. H12865] These monies would be available to EPA
subject to subsequent appropriation.
As the conference report14 implies, this provision was
apparently added to allow EPA to retain receipts from the four
environmental fees in EPA's FY 87 budget, discussed earlier in
section 2.1 (i.e., quality assurance samples; pesticide
registration; premanufacture notices; ocean disposal permits).
However, the provision is worded broadly enough to cover any fee
for activities authorized by the statutes administered by EPA.
Thus, EPA has authority, at least during FY 88, to retain
receipts from a RCRA delisting fee. Presumably such authority
would need to be renewed in future appropriations bills.
Such language in an appropriations bill may, however, be
considered substantive legislation that is subject to a point of
order since it would not have been referred to the relevant
committee(s). The chairman of the House Energy and Commerce
Committee has indicated his opposition to efforts that
••authorize fees" through an appropriations bill. In a letter to
the Administrator dated February 2, 1987, Representative Dingell
wrote, "I am sure you understand that such an effort to
circumvent this legislative Committee would not be welcome." It
is not clear whether the chairman opposes (1) appropriations
bill language that authorizes the Agency to assess fees, (2)
language that authorizes the Agency to have all receipts
returned to it, or (3) both. The recent grant of authority to
retain fee receipts, coupled with the chairman's letter's
reference to efforts that authorize fees, suggests that his
opposition may be limited to appropriations bill language
authorizing the assessment of fees.
3. Administrative Feasibility
3.1 Introduction
.«••'
Adain&trative considerations are important in assessing the
overall feasibility of a delisting petitions fee system.
Successful implementation of delisting fees depends, in part, on
the level of administrative difficulty in justifying and
designing a fee system, as well as the cost and difficulty of
actually administering the necessary procedures.
14 H. Rept. 100-498, p. 852
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To justify a delisting user fee system, EPA must be able to
identify and quantify the Agency costs (broken down by cost
components^ .of processing delisting petitions (e.g., costs for
technical petition reviews, overhead costs) . To design a
delisting fee, EPA must satisfy legal requirements regarding
design, and then weigh any policy considerations affecting
design. To administer a fee, EPA must develop guidance for the
petitioner identifying how much he has to pay, when he has to
pay it, and how he should pay it. In addition, EPA must provide
guidance for Headquarters staff identifying what will be done
with the fee once it is received. A fee that accounts for
differences in resources spent on petition review and creates an
incentive for well-prepared and complete petitions is
recommended. Sections 3.2 through 3.4 focus in more detail on
the feasibility of justifying, designing, and administering a
fee system.
3.2 Justifying a Fee System
To justify the reasonableness of a delisting petition user
fee system, EPA needs to identify Agency expenses including
direct and indirect costs that are "reasonably1* related to the
private benefits conferred by the delisting petitions. All of
the major Agency cost components of the delisting petition
review process must be identified and quantified.
EPA does not currently have an accounting system that could
be used to itemize or track delisting costs. For example, no
timesheets are currently used to track hours spent on delisting
petition reviews. However, because the fee need only bear a
"reasonable relationship" to Agency expenses, the Agency may
take into account "administrative convenience" in calculating
expenses. 15 In general, costs shall be determined or
estimated from the best available records in the agency. .This
principle, combined with the increased reluctance of courts to
second-guess agencies that make reasonable efforts to comply
with the IOAA, indicate that very precise, complex accounting
systems may not be needed to establish delisting fees that are
"based upon a consideration of the relevant factors'* and that
are not found to be "arbitrary, capricious, an abuse of
discretion* or otherwise contrary to law."16
EPA c identify the relevant delisting petition costs, in
part, baie
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-16-
A-25, as well as on precedents established by other Fe eral user
fee systems. The cost components could include: overhead costs-
review work, including review by workgroup and response to
workgroup .sojMients; data verification activities; preparation of
Federal Register proposed notices; response to public comments;
and preparation of final notices for the Federal Register.
EPA is likely to experience several problems in identifying
costs. For example, as explained below in Section 3.3, the
study group recommends a two-tiered design consisting of a base
fee, plus an additional hourly fee for review of incomplete
petitions. EPA must, therefore, be able to distinguish between
base and hourly costs. Based on past experience, EPA will be
able to distinguish between such costs, albeit with some
difficulty. Likewise, EPA may have difficulty distinguishing
between costs incurred in reviewing required petition data and
costs incurred in reviewing other, not required data requested
of petitioners. EPA sometimes requests such supplementary data
to verify parameters and assumptions in the delisting model.
The costs of reviewing these supplementary data could bo
included in the indirect costs category (e.g., as part of the
overall development of the model). Finally, EPA's experience in
reviewing generic petitions is relatively limited. Thus,
relatively little historical cost data on these petitions are
available for use in identifying costs.
EPA must quantify direct and indirect costs of both
facility-specific petition reviews and generic petition
reviews. EPA can quantify the direct costs of facility-specific
petition reviews using information on past expenditures for
previous reviews. 7 In addition, EPA could supplement data
from past expenditures with data gathered by interviews and/or
time and motion studies of the petition review process and
staff. OMB Circular A-25 provides guidance on quantifying
indirect costs. Quantifying costs for generic delisting
petitions may be difficult because previous experience with such
petitions is limited.
The quantity and quality of data available to analyze the
policy factors related to establishment of a delisting fee
varies. For example, while limited data exist for estimating
the size of the positive environmental impact of a delisting
fee, a faig: amount of relevant data on the number of State and
local governments that will submit petitions is available. The
sufficiency'of the data available on policy concerns is
discussed in each respective section of this paper (e.g.,
environmental impact, State acceptability, economic fairness).
In general, it is adainistratively feasible to consider the
17 Presumably the data on past expenditures would show
that reviews have become more expensive as a result of the
additional requirements imposed by HSWA.
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policy concerns affecting a delisting fee, although significant
data gaps exist. However, the Agency need only meet the legal
requirements discussed in section 2 to establish a fee.
3.3 Designing an Appropriate Fee System
The administrative feasibility and equity of the delisting
user fee system will depend, in large part, on the design of the
fee. The law establishes important limits on the design of the
fee. For example, the law requires that the fee bear a
reasonable relationship to the costs. Based on prior
experience, EPA knows that the costs it incurs can vary widely
if the petitions are not complete (because incomplete petitions
require more interactions between the Agency and the
petitioner). Thus, the law requires that any delisting fee be
roughly proportional to the completeness of the petition.
To satisfy this legal requirement, the fee could have a
two-tier design, with a base amount for complete petitions and
an additional, hourly charge for review of incomplete
petitions. The base fee would be based on the average cost,
calculated from past expenditures, of reviewing complete
petitions. The additional, hourly fee would be based on an
estimate of the additional resources needed to complete the
review. Portions of the fee could be refunded if the estimate
exceeds the actual costs.
Within the parameters set by the legal requirements, the
design can be modified to reflect certain policy
considerations. For example, the fee should be designed to
create an incentive for well-prepared and complete petitions.
The general two-tier design described above would likely provide
such an incentive. In addition, concerns over the accuracy of
petition data would favor including a charge for site visits in
the base fee so that a site visit could become a part of every
review.
Various permutations of the two-tier design (i.e., base
fee/hourly fee) exist. One version would have the base fee
cover the average costs of reviewing a complete petition. When
actual expenditures approach this base level, an additional
hourly feet could be levied if the Agency estimates that extra
resources will be needed. A second version, recently suggested
by the delating staff, involves a base fee covering only the
average edits of initial review and identification of
information n«€d«d to make the petition complete. All
additional work would be done pursuant to an hourly fee. It is
not necessary here to determine which design is more feasible.
The study group's mandate is limited to merely determining
whether a feasible design exists; the group concludes that such
designs do exist.
Finally, the fees should be levied before the Agency
provides its service. Otherwise the Agency may not be able to
recover the costs it incurs in reviewing a petition. For
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-IB-
example, if a fee is not charged until a petition is complete,
then a petitioner could withdraw his petition before supplying
all of the data required for a complete petition. EPA might not
be able to^recover funds from the petitioner for the resources
it had spent in reviewing the petition prior to its withdrawal.
Note that this principle is embodied in Circular A-25, which
mandates collection of the fee in advance of the service.
3.4 Administering a Fee System
To administer a delisting fee, EPA needs to: (1) tell the
petitioner how much he has to pay, when he has to pay it, and
how he should pay it; and (2) identify what will be done with
the fee once it is received. Regarding the first item, EPA will
be providing the petitioner with advance notice of most of this
information when a Federal Register notice is published.
[Alternatively, petitioners could follow the legislative
process, if the fee is established in that manner.] The
delisting staff has suggested that in addition to promulgating a
rulemaking, EPA should also amend the existing guidance manual
for petitioners to reflect any fee that is adopted. It seems
unlikely, however, that major changes to the manual would be
necessary.
OSW will also need to write guidance for Headquarters
staff. This guidance should explain that once a petition is
received, a letter explaining the fee (and how it should be
paid) should be sent to the petitioner. EPA's Office of
Administration and Resources Management (OARM) has already
drafted guidance on how EPA fees should be paid (e.g., mail U.S.
currency to a lockbox at a specified address). This guidance is
currently in Red Border.18 0ARM'S guidance describes how the
bank in charge of the lockbox will send the program office
(i.e., OSW) an acknowledgement of lockbox receipts. OSW staff
can begin its review after receiving this acknowledgement.
OSW's guidance should also explain that Headquarters staff
should not begin its review until it receives documentation that
the fee has been paid. In addition, OSW's guidance should
discuss what action the staff should take once they determine
that the petition is not complete. The guidance should explain
that when the staffer writes to the petitioning firm and informs
it that t&£petition is missing certain information, he should
also incites* a notice about the hourly fee. OSW's guidance
should alsaTdiscuss what the staff should do if the petition is
withdrawn prior to completion of the review process. The
financial officer will need to verify the basis of petitioner's
request for a refund. Most importantly, OSW's guidance will
18 Draft Comptroller Policy Announcement No. 87-xxx,
"Collection of User Fees for Services and Materials Provided by
EPA."
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also need to discuss what procedures the staff must follow in
order to determine the number of hours to be charged via the
hourly fee. These procedures could be modeled on the ones
adopted by_.QSW for charging Superfund for CERCLA-related
activities.1*
4. Financial Feasibility
4.1 Introduction
This section reviews the financial feasibility of a
delisting fee. Section 4.2 estimates the costs that EPA
currently incurs in reviewing petitions. Section 4.3 reviews
the potential amount of revenue that a fee might raise in the
future. Section 4.4 discusses the budgetary implications the
fee would have for the federal government, particularly EPA.
Finally, Section 4.5 examines the administrative costs of
implementing a fee, with a focus on whether such costs are high
in relation to the amount of revenue generated.
Generic delisting petitions, discussed earlier in section
1.3, are few in number and would have a minimal impact on the
financial feasibility of the delisting fee. Thus, they are not
discussed further in this section.
4.2 Current Costs
Assuming full cost recovery, total revenue would equal the
amount of money that EPA spends on petition review. Thus, the
first step in estimating revenue is an examination of EPA's
costs. As discussed in detail in appendix B, EPA spent
approximately $2.4 million in fiscal year 1987 (FY 87) on
delisting related activity — an average of approximately
$17,160 per petition review. In early 1986, the funding
character underlying the delisting program was significantly
altered, with the amount of FTE decreased and the amount of
contractor support increased. Consequently, program costs are
now largely committed to contractor services. This is reflected
in the fact that nearly two-thirds of the FY 87 costs represent
expenditures for contractor support. Specifically, the Agency
spent approximately $1.522 million in FY 87 for contractor
support in delisting. The remaining costs (approximately
$880,000) represent EPA personnel involved in delisting. The
breakdown -of these costs is summarized below.
Regarding contractor funds, roughly half ($792,230) was
spent on direct support for petition review. Another third
($545,379) was spent on site visits, mostly on laboratory
19 Memorandum from Tina Parker to Joe Carra, Bruce Weddle,
Sylvia Lowrance and Mike Gruber, "Superfund Charging Policy for
OSW," dated 4/29/87.
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analysis of samples. The remainder ($184,667) was spent on
development of guidance manuals and a computer database which
tracks petitions. Note that some of these latter expenditures
may not reflect regularly recurring activities and therefore
will not be recoverable through a fee. it appears that the
$59,000 expenditure for guidance manuals was the only one to
fall into this category; a closer review of the data may reveal
additional "one-time" costs. *
Regarding EPA personnel, 22 FTE were expended Agency-wide to
activity related to delisting during FY 87. This covers
directly-involved FTE (e.g., FTE spent actually reviewing the
petition) and indirectly-involved FTE (e.g., FTE spent preparing
the payroll for actual reviewers), the costs of. which EPA has
authority under IOAA to recover in the fee.
The study group's estimate of $2.4 million differs sharply
from the $0.57 million estimate prepared earlier by the Office
of Program Management and Support (OPMS) for the Agency-wide
Task Force. The main reason for the difference is that OPMS
apparently did not include contractor costs. Of course, these
costs account for $1.52 million of the study group's figure.
Aside from contractor costs, the two estimates also differed
on FTE costs. The study group estimated 22 FTE at a cost of
$880,000 while OPMS estimated 14.3 FTE at a cost of $567,000.
There are several possible explanations for this difference.
For example, OPMS apparently did not include indirectly related
FTE in its estimate. Other possibilities include inaccurate
inputs in the RCRA workload model and/or inaccurate assumptions
by the study group. The appendix includes a more detailed
comparison of the two estimates.
4.3 Amount of Revenue
A delisting fee would likely raise approximately $969,200 in
revenue annually. Appendix C provides details on how this
estimate was reached. The amount of revenue raised by a
delisting fee depends on the future workload and associated
costs of the program, and whether all of these costs are
recovered through a fee. As described above, EPA incurred costs
of $2.4 Billion in FY 87. The amount of future costs will
change duetto several factors, the most important likely being a
future decrease in the number of petitions due to the relisting
prograa. 'Other factors include the effect of the fee itself on
the delisting program, and the delegation of delisting authority
to the States. Finally, full cost recovery through a fee faces
several obstacles*
First, as discussed earlier in section 1.2, the relisting
program may significantly affect the delisting program in the
future. Specifically, it appears likely that the relisting
program will substantially reduce the fee's potential revenue
base (i.e., the number of future delisting petitions). By
meeting the exemption level set by the relisting program, a
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generator's waste would be considered nonhazardous and he would
have no need to submit a delisting petition. If OSWER's
proposed self-implementing approach to relisting is not adopted
however, than the possibility of a slightly different type of '
fee (i.e., for review of a generator's test results) would
exist.
Second, the fee itself may change the size of the delisting
program, thereby affecting costs and revenue. For example, due
to resource constraints, EPA currently conducts site visits at
only a small percentage of petitioners' sites (section l.l). in
theory, the delisting fee could include a charge for a site
visit as part of each petition review. In other words,
delisting program activities could be expanded through fee
receipts. [Note that the fee receipts might not be available
for delisting activities; see section 4.4 below.]
A facility visit costs EPA an average of $33,000.20 As
noted above, it currently costs EPA an average of $17,160 to
review a delisting petition. Thus, inclusion of a charge for
site visits for each petition review would significantly
increase the level of the fee. In such a scenario, revenue
would total $2,632,400 (see appendix C).
The incentive effects of a fee could result in a decrease
in the amount of revenue. For example, a higher fee for
incomplete petitions encourages owners and operators to improve
petition quality. The better the petitions, the less resources
EPA spends on review. The lower amount of revenue, however,
would reflect the fact that EPA is incurring lower costs.
Similarly, a fee might deter submission of petitions with little
merit. Although fewer petitions mean less revenue, they also
mean less costs for EPA.
Third, costs (and hence, revenue) would decrease to the
extent that EPA delegates the delisting program to the States.
The Agency would not have legal authority under the IOAA to
charge a fee, since it would not be providing the service upon
which the fee is based (section 6.2). To date, the delisting
program has been delegated to only one State, although 10-15
States art expected to seek such authority (section 6.1).
20 Letter from Carolyn Bosserman, Work Assignment Manager,
SAIC to Wendel Miser, EPA, dated September 23, 1987. The letter
includes a list of site visits conducted to date under EPA
contract no. 68-01-7264. It also summarizes the average costs
associated with each visit. Examination of tho data reveals
that the average cost per facility is actually $24,300, not
$33,000. According to the letter, 10 trips to 30 facilities
were made at a cost of $729,429. [$729,429 divided by 30 -
$24,314.]
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Finally, the^des^gn of the fee may also have an important
impact on the^alrotinTr-or^revenue generated. Circular A-25
directs thatf'generally^a fee should be sufficient to recover the
full cost^of>prQ3tidring the service. Thus, the delisting fee
would presumably be designed to recover ail of the costs
incurred by EPA in reviewing delisting petitions. However, such
a fee may be difficult to design and/or administer. Under the
IOAA, EPA does not have the legal authority to charge all
petitioners a flat fee based on the average of total costs (see
section 2.3). As suggested above in section 3.3, however, EPA
could impose a two-tiered fee, with an initial base charge
covering the costs of reviewing complete petitions and an
additional hourly fee for the additional costs incurred in
reviewing incomplete petitions. An hourly fee might be
difficult to implement, however. This administrative difficulty
might force EPA to modify the two-tiered design, thereby
reducing the amount of revenue.
As a matter of policy, EPA may decide to rebate fee for
successful petitioners (see section 7.2). Given the high
success rate, however, such a design would significantly reduce
the amount of revenue raised.21
4.4 Administrative Costs
Administrative costs are likely to be relatively low,
ranging from $22,700 to $80,000. Appendix C outlines how these
costs were estimated. Note, however, that these costs may
significantly increase depending on how the hourly fee is
designed and implemented, and how an affordability waiver, if
allowed, is designed. The following discussion examines the
costs involved in identifying and quantifying review costs;
designing the fee; and administering the fee.
The costs involved in identifying and quantifying the costs
of petition review should be low. Based on its past reviews,
EPA already has much of the cost information available. The
records of past expenditures on delisting contractor support,
for example, are easily accessible. On* would have to review
these records in son* detail, however/ in order eliminate any
costs for nonrecoverable expenses. For example, an EPA
contractor recently established a computer database to track
delisting petitions. This one-time cost may not be recoverable,
although th« continuing costs of maintaining the database
certainly-are.
21 The delisting staff voiced its objection to the
possibility of rebates. The significance of the staff's
decisions would obviously increase if rebates were possible.
Consequently, the pressure for the staff to improperly consider
nontechnical factors, i.e., those unrelated to the waste's
hazards, would continue to increase.
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-23-
Identifying and quantifying the FTE costs may be more
resource-intensive. As outlined in the appendix, several levels
of interviews might be needed in order to document all
delisting-related efforts. Only a small amount of resources
seems needed, however, to conduct such interviews.
The costs involved in designing a fee are likely to be low
although they have the potential to be significant. This paper'
discusses a particular design for the fee; see section 3.3.
Specifically, a two-tiered design featuring an initial base fee
for all petitions and a second hourly fee for incomplete
petitions, is suggested.
It will be necessary to spend some resources on spelling
out certain details of the fee design. For example, in order to
set the initial base fee, EPA will need to estimate how much it
costs to review a complete petition. In other words, EPA will
have to separate those costs which can be attributed to all
petitions from the costs which are only incurred during review
of incomplete petitions.
In addition, specifying the details of the hourly fee
design may also result in significant costs. EPA may need
procedures for estimating the number of additional review hours
that an incomplete petition (or category of incomplete
petitions) will entail. Establishment of a system tracking
actual time spent on each incomplete petition would also be
needed. Finally, procedures would be needed for refunds for
petitions where the hourly fee exceeds EFA's actual costs (i.e.,
where the estimated number of hours exceeds the actual number of
hours).
If EPA decides to allow waivers of the fee for small firms,
then costs will be incurred in designing a waiver. It is very
difficult to craft a fair ability-to-pay test. Consequently,
administrative costs could significantly increase if
affordability waivers are allowed.
The resources needed to administer a delistina fee will
likely be relatively low. First, any fee rulemaking (e.g.,
pursuant to IOAA) ought to be a relatively straightforward
process.2^.- Development of guidance for OSW staff on how to
implement-^* fe« should be similarly simple. Note that both of
these woufoTbe one-time costs.
Second, enforcement costs will be minimized by having EPA
not perform any review work until the fee payment is received.
22 Compare the Agency's only other IOAA rulemaking to
date, a proposed fee for EPA's water sample quality control
program (51 FR 32886, 9/16/86).
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-24-
However, some resources may be required to defend against any
challenges to EPA's determination that a particular petition is
incomplete (and hence, subject to the additional fee)." such
challenges_should be few since the RCRA regulations and
accompanying guidance manual24 clearly state what information
is necessary.
Some resources will be consumed in administration of the
hourly fee. First, OSW staff will need to prepare and send
letters to firms notifying them of the fee and outlining the
information missing from their petitions. A form letter could
reduce administrative costs here. Second, OSW staff will need
to track the time they actually spend on each petition. Many
OSW staffers already fill out Superfund time sheets on a regular
basis. Their experience has shown that the administrative costs
are small. Thus, although inconvenient for the delisting staff,
it is unlikely that this task will take up very much of their
time. Third, 0ARM staff will need to review the time tracking
sheets with the previously paid fee and determine whether a
refund is warranted. This should be a straightforward exercise.
Finally, administrative costs would ba incurred in
processing affordability waivers, if they are allowed. Few
resources would be needed if an easy-to-apply formula was
adopted. Significant resources may be consumed if the criteria
for the waiver turn out to be vague or complex.
4.5 Budgetary Implications
Unless a specific statute states otherwise, EPA cannot keep
the fee receipts. Without the fee receipts, the fee would
appear, at first glance, to have no positive effect on EPA's
budget.25 However, the Agency's appropriation would likely
increase as a result of the activity underlying the fee. Thus,
the fee would indirectly have a positive effect on EPA's budget.
First, as discussed earlier in sections 2.4 and 2.5,-
federal law requires that all revenues collected by the
government be deposited into the General Fund of the Treasury
23 EPlErecently published a notice clarifying several of
its policies*, including its policy for dismissing incomplete
delisting petitions. 53 Fed. Reg. 6822 (3/3/88).
2* Petitions to Delist Hazardous Wastes. A Guidance
Manual. U.S. EPA, OSW, April 1985.
25 On the contrary, it would have a negative impact
insofar as EPA does not receive an increase in its appropriation
for the costs it incurs in administering the fee. However, as
discussed above in section 4.4, these administrative costs are
likely to be relatively low.
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-25-
unless another statute allows an agency to retain the funds
The FY 88 appropriations bill gave EPA the authority to retain
certain fee receipts. Specifically, the receipts would be
deposited JJL_ a special fund in the Treasury reserved for EPA
programs. EPA would not, however, be able to tap into the fund
unless Congress passed specific legislation authorizing it.
Thus, until such legislation is enacted, the fee would not
have a positive impact on EPA's budget. Even with such
legislation, EPA's budget would increase only if there was no
one-for-one offset in EPA's appropriation. Anything less than a
full offset would result in an increase in Agency resources.
As noted above in section 2.5, EPA has previously submitted
draft legislation to Congress in order to retain fee receipts.
EPA's draft legislation would have much the same effect as the
FY 88 appropriations bill, i.e., receipts would go into a
special EPA fund at the Treasury. Unlike the FY 88 bill though,
the Agency's draft legislation would allow the Agency immediate
access to the funds. However, the budgetary effect would likely
be the same since EPA's appropriation would then become a prime
target for an offset.
Even with a full offset, however, the Agency's budget could
still be increased by the fee, albeit indirectly. Specifically,
with a fee in place, the Agency's appropriation would likely be
increased to allow more facility visits. In other words, if the
Agency requested more resources for facility visits, OMB and
Congress would likely approve it because, with the fee, the net
effect on the federal budget is neutral. An increase in EPA's
appropriation would be balanced by the increase in payments to
the Treasury.
Next, one should keep in mind the issue of net revenue to
the government.26 Presumably a delisting fee would ba
considered a cost of doing business and thus a legitimate
business deduction. Hence, government revenue will decrease as
firms write off this additional expense.
The issue arises as to whether a delisting fee would result
in a sufficient net increase in government revenue. A simple
review of the possible economics of the situation suggests that
it would.-.Assume that the petitioning firms have a gross income
of at l«ajft-$1.0 million. The firms then pay approximately $1.0
million iflfdelisting fees; see appendix C. By claiming this as
26 This issue was apparently first raised within EPA by a
draft paper, dated July 20, 1984, "Overview of Current Work on
Alternative Sources of Funding for Environmental Programs", by
Gainor Eisenlohr of OPPE. Transmittal memo is from John
Thillman, Acting Director, Program Evaluation Division, to Al
Aim.
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-26-
a business expense deduction, the firms can reduce their taxable
income by $1.0 million. Consequently, the firms can save as
much as $340,000 in payments to IRS. [The maximum corporate tax
rate is 34*f-thirty-four percent of $1.0 million equals
$340,000.] Thus, the net increase in revenue to the federal
government is at least $660,000 (i.e., $l.o million minus at
the most, $340,000).
The question then becomes whether this amount exceeds the
net increase in federal government costs, i.e., the amount that
EPA spends to collect the fees (assuming that these monies are
not included in the earlier determination of the level of the
fee). As discussed in section 4.4 above, the administrative
costs of a delisting fee would range from $22,700 to $80,000,
far less than $660,000. Thus, the net revenue to the government
is sufficient to justify the institution of the fee.
Finally, the delisting fee can not be considered a
"one-time recovery". Such recoveries generally refer to the
government's sale of chattels or real estate. Once sold, the
particular asset cannot be sold by the government again, i.e.,
the potential revenue is limited to a single transaction. Here
however, EPA can conduct petition reviews continuously into the
future.
5. Environmental Impacts
5.1 Introduction
Theoretically, the environmental impacts of delisting a
waste should be neutral, since the Agency will delist a waste
only if the generator can demonstrate that no adverse impacts to
human health or the environment would result. Imposing a
delisting fee should not create any new environmental impacts.
In practice, however, the delisting fee may cause positive
environmental impacts. To illustrate these impacts, this
section divides all petitioners into two categories: (1)
petitioners whose wastes will not be granted a delisting or
petitioners who will be granted undeserved delistings due to a
decision based on inaccurate data; and (2) petitioners who will
be granted a delisting because their wastes do not pose a threat
to human health and the environment. This section first
describes-£he current environmental impact of the delisting
process fejg: these two groups, then evaluates the potential
environmental impact of delisting fees, particularly for the
first group. Both types of impacts are presented to distinguish
the potential incremental environmental effects of a delisting
fee from the effects of delisting.
5.2 Environmental Impact of the Delisting Process
Ideally, the delisting process should result in no negative
environmental impacts because generators must maintain
compliance with the hazardous waste regulations, even after
submitting a delisting petition, until the petition is formally
DRAFT: Do Not Quote or Cite
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granted
-27-
27
For petitioners who deserve a delisting because their wastes
do not pos£_a health or environmental hazard (i.e., the second
group), requiring compliance until a delisting decision is made
results in some unnecessary overprotection. Since the validity
of a delisting petition cannot be determined until the petition
is granted or denied, the Agency deliberately chose to ensure
the protection of human health and the environment through
temporary "over-regulation" of these petitioners. Continued
compliance prior to a delisting decision will, therefore, have
no adverse environmental impact by either group of petitioners.
Although pre-delisting compliance is required, the two
groups of petitioners often do not comply with the regulations.
Current experience shows that some facility owners and operators
who have petitioned to have their waste delisted are in minimal
compliance or complete non-compliance with the RCRA regulations,
especially the ground-water monitoring requirements.28 These
owners and operators may believe that because their petitions
might remove them from the regulated system within a year or
two, there is no need to expend resources to comply with RCRA
now.
This attitude of noncompliance results in no environmental
problem with the deserving petitioners (i.e., the second group),
but does with the other petitioners. Non-compliance by
petitioners who will ultimately be denied a delisting or will be
granted a delisting undeservedly (e.g., due to faulty data) may
result in environmental problems. These wastes pose a hazard to
human health and the environment prior to and during the entire
delisting review process if these petitioners do not remain in
regulatory compliance. Wastes that are undeservedly delisted
are likely to cause the most negative environmental impacts
since they will continue to pose a hazard after the delisting
review and decision. Non-compliance by the group of deserving
petitioners has no negative environmental impacts since' these
wastes pose no threat to humanhealth and the environment.
5.3 Environmental Impact of Delisting Fees
A delisting f«« could create environmental impacts
27 A* discussed later in section 6.2, EPA previously
granted "temporary1* del is tings, allowing certain generators to
not comply with the regulations even though their petitions wera
not yet fully processed. HSWA effectively ended this practice.
28 Ground-Wat«r Monitoring Survey, April 24, 1985, House
Energy and- Commerce Committee, Subcommittee on Oversight and
Investigations, Print 99-1. It is not clear whether som« of
these petitioners had been granted "temporary11 dulistings.
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-28-
independent of the ones that already exist with the delistinq
process. Since the wastes of deserving petitioners (the second
group) do not pose a threat to human health and the environment
the issue_af_ environmental impacts of a delisting fee is only '
relevant to the first group of petitioners.
A high delisting fee, especially one that imposes additional
costs for incomplete petitions requiring more Agency review
time, would encourage generators to submit more complete
petitions at the beginning of the process in order to minimize
their costs. In theory, more complete petitions would in turn
reduce the Agency's review time and provide quicker decisions
for petitions submitted by the first group. The sooner a denial
is made, the sooner non-compliance is discouraged and the risk
to human health and the environment is reduced.
In addition, a high fee may result in fewer petitioners who
are granted a delisting undeservedly, since more complete
petitions would mean better delisting decisions. The number of
delisting petitions granted undeservedly could also be reduced
by including a fee component to cover the cost of a data
verification site visit. Petition fees that include the costs
of site visits would allow a substantial increase in the number
of site visits EPA could perform, and would likely result in a
positive environmental impact. Knowledge of a site visit could
act as an incentive to generators to submit accurate petition
data. Greater data accuracy, combined with the possibility of
data verification by EPA for all or an increased number of
petitions, would reduce the number of petitions granted
undeservedly, thereby reducing the risk to human health and the
environment.
A high delisting fee may also discourage undeserving
petitioners from seeking a delisting decision. The additional
cost of a delisting fee, on top of the costs for preparing a
delisting petition29, may be enough of a disincentive for
these petitioners to forego petitioning. Generators who do not
submit delisting petitions may be more likely to remain in
regulatory compliance. Moreover, a reduction in the number of
delisting petitions, especially petitions that will eventually
be denied, would reduce Agency review requirements and,
therefore, free up additional Agency resources for other
activitiesnecessary to protect human health and the environment
(assumingr-ihese resources are still appropriated).
£•»*•
The size of the fee's positive environmental impact,
although difficult to estimate, is likely to be small. The
29 Generators generally spend between $15,347 and $59,460
to prepare, a petition. Memorandum from Jennifer A. Bramlett,
SAIC to Scott Maid, EPA, 8/20/87, "Estimated Rang* of Petition
Preparation Costs".
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-29-
inpact is difficult- to estimate, in part, because of
insufficient data. For example, the only available information
on the number of petitions that were undeservedly granted in the
past are cenfeained in the 12/86 GAO report, which addresses a
small sample of inspections. As part of its effort to verify
certain parameters of the delisting model, the Agency has
recently begun collecting some information about the
petitioners' compliance with RCRA, particularly the ground-water
monitoring requirements. These information requests are
expected to decrease the rate of non-compliance during petition
review. Given the available information, the Agency expects
that few, if any,, petitions will be undeservedly granted due to
inaccurate petition data.
6. Acceptability to States
6.1 Introduction
This section reviews the history of the delisting program in
the States, identifying the level of State participation pre-
and post-HSWA, as well as factors that may affect State
participation levels. Section 6.2 reviews potential impacts of
a Federal delisting fee on States, including the particular
implications of user fees with regard to State authorizations.
Finally, Section 6.3 discusses other State issues relevant to
delisting fees.
Note that this section does not address the relationship of
EPA's state grants to State fees. That issue is beyond the
scope of this paper. As explained in the beginning of the
paper, the Administrator directed OSWER to analyze the
feasibility of establishing a federal fee for review of
petitions for certain RCRA exemptions and waivers. Thus, the
paper discusses State fees only to the extent that they affect
the feasibility of a federal fee. The relationship of RCRA
grants to State fees does not affect the feasibility of a
federal fee. Consequently, the paper does not discuss the
possibility of increasing EPA grants to States with their own
fees in order to encourage other States to adopt them. Nor does
it discuss the opposite possibility, i.e., phasing out grants to
states with their own fees.
6.2 Spclcground
.«••
Prior"Co HSWA, less than 25 percent of the authorized States
were authorized for the delisting program and none of these
States imposed user fee* for review of delisting decisions.
30 GAO estimated that 25 States had received such
authorization with at least 14 of them having active delisting
programs (12/86 GAO report, p. 39). It is not clear where GAO
obtained this figure. The State Programs Branch staff at EPA
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-30-
Few States applied for delisting authorization because of the
complex technical requirements and insufficient staff or
expertise. Public and political ramifications of facility
delisting^decisions may have also made States reluctant to take
on delisting responsibility.
HSWA modified the delisting regulations in several ways:
- Prior to HSWA, EPA's evaluation of delisting petitions
addressed only those factors considered by the Agency in
listing the waste as hazardous; HSWA requires EPA to also
consider additional factors if there is a reasonable
basis to believe that such additional factors could cause
the waste to be hazardous.
- Pre-HSWA regulations also allowed the Agency to grant a
temporary exclusion without prior notice and comment if
there was substantial likelihood that an exclusion would
be finally granted; HSWA requires EPA to provide public
notice and a comment period before granting or denying a
petition.
- HSWA required EPA to reevaluate all temporary exclusions
granted before November 8, 1984 and nullified the effect
of a temporary exclusion if a final decision to grant or
deny a petition was not promulgated by November 8, 1986
(i.e f within 24 months from date of HSWA enactment)
Under Section 228 of HSWA, any requirements, including the
delisting requirements, imposed pursuant to the amendments are
effective in authorized States at the same time they are
effective in other States. Since the HSWA delisting
requirements are more stringent than the pre-HSWA requirements,
EPA is responsible for administering the delisting program until
such time as the States are authorized for this program.
Currently, only one State, Georgia, is authorized under HSWA for
delisting. If States want delisting authority, the deadline for
modifying their programs is July 1, 1989, or, if statutory
changes are necessary, July 1, 1990. The state Programs Branch
at EPA Headquarters estimates that approximately 10-15 States
may seek delisting authority as part of HSWA authorization.
6.3 State Concerns
Ther«-i§ considerable State opposition to a Federal
delisting fat, although the impact of such a fee on the State*
does not appear great. According to the lead Stats
representative on the study group, "the basis of the opposition
is that for the fees collected to bs substantial and worthwhile
Headquarters estimates that the figure was much lover, i.e.,
only 10-15 States.
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-31-
would require fees to be applied in areas that might preempt
State fees (compliance monitoring fees, permit fees,
etc.)«" A 1982 study found that many States have
implemented fees as part of their RCRA programs.-32 Given the
significant-revenue generated by state fees under RCRA, the
States are understandably concerned about any possibility of
preemption.33
This concern is not an objection to a Federal delisting fee
per se. The States are very worried that Federal fees may be
implemented for other RCRA program activities besides
delisting. The feasibility of other Federal RCRA fees is
outside the scope of this paper. If these other candidate fees
are examined in depth, they would be reviewed under the same
criteria used here, including legal feasibility. Under the
IOAA, the Federal government can charge fees only for a service
that it provides. It does not have the legal authority to
charge fees for a service provided by others (e.g., the states).
Thus, it.cannot preempt a fee that a State is charging a firm
for a service that the State provides. Given this legal
restriction, preemption cannot be an issue.
The States' concern about preemption also does not apply to
delegation of the RCRA program to the States. EPA bases its
decisions regarding State authorization only on the conditions
specified in Part 271. Exhibit 6.1 summarizes and presents Part
271 conditions for State authorization. The amount of revenue
that the Agency may raise through a Federal delisting fee in a
particular State is not one of the factors considered by EPA in
determining whether to delegate the program to that State.
The States have also expressed concern that some sort of
user fee system may be required for delegation of delisting
authority. This concern echoes one of the main points raised in
1985 by State representatives on the Agency-wide Task Force on
user fees, i.e., that adoption of fees should not be linked to
program delegation. Again, however, EPA must base its RCRA
delegation decisions only on the conditions specified in Part
271. A user fee system is not one of the conditions specified
in Part 271. The State representatives noted that two of the
31 Letier from Bryan W. Dixon, Director, Hazardous and
Solid Waste Division, Texas Water Commission to Mike Northridge,
EPA Headquarters, dated 5/19/87.
32 "A Study of State Fee Systems for Hazardous Waste
Management Programs," SW-956, July 1982, prepared for EPA by
Fred C. Hart Associates, Inc.
33 Congress recently stated that in developing its fees,
EPA should give "special consideration" to the concerns of the
States. H. Kept. 100-498, p. 852 (12/22/87).
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- 31A -
EXHIBIT 6.1
REQUIREMENTS FOR FINAL AUTHORIZATION
1.
2.
3.
4.
6
RCRA Standard
State program must be
"equivalent" to the Federal
Program - § 3006(b)
EPA Regulations
(40 CFRl
271.9-13
5.
State program must not im-
pose any requirements "less
stringent" than the Federal
requirements - § 3009
State program must be "con-
sistent" with the Federal
program and other State
programs
States may impose require-
ments which are "more
stringent" than those im-
posed by Federal regulations
State program must "provide
adequate enforcement" -
§5 3006(b), 7004(b)(1)
271.9-14
271.4
No analog in
the regula-
tions; the
standard is
outlined in
RCRA § 3009
271.15-16
State program must follow 271.14
specific procedures for pub-
lic "notice and hearing1* in
the permitting process -
§1 7004(b)(l) & (2)
7.
StatijFprogram must provide
for thi public availability
of information "in substan-
tially the same manner, and
to the same .degree1* as the
Federal program
271.17
State
Program Description
Attorney General
Statement, and
Memorandum of
Agreement
Program Description
and Attorney Genera
Statement
Program Description
Program Description
Attorney General
Statement, and Memo
randum of Agreement
Program Description
Attorney General
Statement, and Memo
randum of Agreement
Program Description
Attorney General
Statement, and Memo
randum of Agreement
NOTE: The seventh standard was added by HSWA.
-------
-32-
conditions ("equivalency" and "consistency") could conceivably
be interpreted to require some type of user fee system
However, the Agency does not have and will not adopt such an
intepreta£ion. similarly, the regulations regarding the
Memorandum of Agreement between EPA and a State contain
authority to include additional conditions for authorization (40
CFR 271.8(a)). Again, the Agency does not and will not exercise
this authority to require any sort of user fee system.
In addition, the requirement in section 271.6(b)(3) that a
State describe its source(s) of funding could arguably be
interpreted to require States to establish some sort of user fee
system. Again, the Agency rejects any such interpretation. This
particular requirement does not and will not affect the Agency's
authorization decision. Hence, a user fee system is not
and will not be one of the factors considered in granting
delisting authority.
The States have pointed out, however, that the Agency
conducts capability assessments as part of the authorization
process. (See e.g., "National Criteria for a Quality Hazardous
Waste Management Program under RCRAH, EPA/530 SW-86-021, July
1986, OSWER Policy Directive No. 9545.00-1.) These assessments
are currently not included in Part 271; the Agency plans to add
them to the regulations in the near future. The States fear
that through these assessments, EPA may require the States to
establish user fees. Note that this concern applies to
delegation of all parts of the RCRA program, not just to
delegation of the delisting portion.
The Agency's assessment of State capabilities is limited to
a determination of whether a State's performance in a given
policy area is or will be adequate. (See Memorandum from J.
Winston Porter, Assistant Administrator, OSWER, to Regional
Administrators, "Capability Assessments for RCRA Authorization
Program Revisions'* dated 4/8/87.) If the State's performance is
unsatisfactory (or its capability appears inadequate), then the
Agency will negotiate specific tasks designed to improve
34 Ther. requirement that a State submit a description of
its funding sources is, in a sense, an anachronism. When the
requirement*was promulgated in 1980, the federal government
intended to phase out grants to the States for operating their
own programs. EPA was interested in whether a State would be
able to carry out its program after the grants were phased out.
In other words, EPA imposed the requirement because of its
interest in any restrictions or limitations upon the sources,
not because of any desire to determine the appropriateness of
the types of sources. The federal government subsequently
decided not to phase out the grants in the near future.
Consequently, the requirement currently has no effect on the
Agency's authorization decision.
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-33-
performance. The Agency assessment focuses on how the State's
performance or capability can be improved. The negotiations do
not involve how the improvements in performance or capability
will be financed, except to the extent that federal funds are or
will be used.
6.4 Potential Impacts on States
Despite the States' concerns, a Federal delisting fee system
may, in fact, have a positive impact on States. For example, a
fee system designed and implemented on the Federal level could
later be adopted.or modeled by States after they receive
authorization and serve as a useful means of revenue
generation. If a Federal delisting fee demonstrates that it is
capable of generating substantial revenue, that it does not
require extensive changes to States' accounting systems, and
that it is consistent with State program goals, then states may
consider adopting a similar fee system when authorized.
Another potential impact may be inequities across the States
due to possible variations in user fee systems. For instance,
states that are authorized for delisting may not charge a fee,
or may charge a lower fee than is charged by the Federal user
fee system. Petitioners in those states would have a
comparative economic advantage over generators in other States.
Incomplete data exist regarding the issue of industrial
"havens": the 1982 survey of States is inconclusive, although
the Agency does have some data on the costs facing a generator
who is deciding where to locate (or whether to relocate).
However, inequities among delisting fees in various states are
unlikely to create significant "havens" for industry. The
presence or absence of a delisting fee alone is not likely to
create strong enough incentives/disincentives for firms to
relocate in a different Stats. Therefore, fees ars not
considered a significant factor in industry geographic
distribution.- Possible exceptions may be firms with new
facilities that have yet to be constructed and that plan to
locate near the border of two States, one with a high fes and
the other with a low or no fes.
Based on past experience, as well as data from the Hazardous
Waste Data Management System and the RCRA Firm/Facility
Financial jjatabaia, EPA expects few Stats or local governments
to submit 3i«listing petitions for wastes at facilities that they
own or operate (e.g., fever then 5 percent of RCRA facility
owners and operators ars States or local governments).
Moreover, as noted earlier in Section 2.3, those entities that
do submit petitions may not be subject to a fes becauss of legal
constraints or an Agency policy decision to exempt them. Thus,
ths direct impact of a Federal dslisting fes is expected to bs
very small, if any.
Under a Fsdsral user fes system, EPA can continus its policy
for turning ovsr petitions that ars in ths Federal review
process when ths Stats recsives dslisting authority. If a State
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participates only in a concurrence role, the State will not be
responsible for implementing the delisting program and EPA will
continue to process the petition. In this case, the fee system
would remain-unchanged. If a State is authorized to implement
the delisting program, however, EPA will stop processing the
petition and will turn all relevant data over to the State. The
State can choose to refer to the work EPA has done, or to
reinitiate the review process. In this case, EPA could prorate
the fee depending on how much time was spent with each partial
petition review prior to the State's authorization, and refund
the petitioner accordingly. Some accounting procedures exist
that could be used for tracking Agency expenditures and
prorating fees.
7. Eepnomic Fairness
7.1 Introduction
This section reviews the delisting fee in terms of its
economic fairness. Economic fairness issues include the effect
of a delisting fee on resource allocation and prices: positive
or negative shifts in allocation of private resources that may
result from a fee; the likely effect of a fee on product prices;
and whether or not the fee satisfies the "polluter pays"
principle. This section also examines issues relevant to
burdens and inequities likely to result from a user fee: the
level of hardship to the payer caused by transition to the fee;
whether the fee will lead to unfair burdens on the consuming
public; and the extent to which fees may cause cross-subsidies
or other inequities among delisting petitioners.
7.2 Resource Allocation and Pricing Effects
A delisting fee may cause some generators to forego
submitting a petition. On the one hand, this could result in an
undesirable allocation of resources if the petition would have
been granted. In that case, these firms will unnecessarily use
Subtitle C capacity to manage their wastes. Such capacity is
becoming increasingly scarce. In theory, this may even increase
the price of Subtitle C capacity for other firms wanting to use
it. However, it is not likely that a deserving petitioner will
be deterred. The savings that a firm would realize in having
its petitfi» granted and no longer having to comply with RCRA
Subtitle) OS-requirements are much greater than any fee level
being contemplated. A rough estimate of the savings can be
calculated from past Regulatory Impact Analyses of RCRA Subtitle
C regulations.
On the other hand, if a fee deters firms froa submitting
petitions that will not be granted, an improved allocation of
society's resources would result. A firm would not spend
resources in developing the unsuccessful petition and the Agency
would not spend resources in reviewing and eventually rejecting
the petition.
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One member of the study group suggested that the fee might
be rebated for successful petitioners. This would minimize any
possible misallocation of private resources. However, as
discussedLjjL section 4.3, it would also significantly reduce the
amount of costs that the Agency can recoup, thereby undermining
one of the key objectives of the fee.
The effect of a delisting fee on product prices and
competitive relationships in an industry depends, in part, on
the level of the fee. If the petition is approved, then the
firm faces reduced costs in the future as a result of no longer
having to comply with RCRA. This reduction in future costs will
very likely outweigh the one-time cost of the fee and result in
decreases in product prices. If the petition is denied, then
the firm has spent resources that it cannot recoup. Unless the
fee is exceptionally large, it is unlikely to affect product
prices.
The "polluter pays" principle is not exactly applicable to
the fee proposed for delisting petitioners. Under the polluter
pays principle, parties that are responsible for "polluting1*
incur the costs of one or more of the related activities or
consequences. The delisting petition fee is similar only in the
sense that the party responsible for or desirous of the
dalisting is also responsible for the cost (or a portion of the
cost) of the delisting. Since the dalisting will only be
permitted if the dalisted wasta is not hazardous, however, the
petitioner is not "polluting". The dalisting is in no sansa a
licensa to pollute; the petitioner does not pay to pollute,
rather he pays for a special review from the Agency.
7.3 Burdens/Inequities Caused by Delisting Fees
The level of hardship inflicted on the regulated community
by transition to a fee will differ depending on how far along
the firms are in the petition process. Three types of
petitioners are considered here: (1) petitioners who are still
in the process of petition review at the time of transition to a
fee (there were 129 facility-specific petitions in the review
process as of April 1988); (2) petitioners who are planning to
submit a petition and have begun analytical preparations, but
have not yet formally submitted a petition; and (3) future
petitioner*: who have not yet considered a delisting petition.
if'
The f&irt category of petitioners are those who have already
submitted petitions that are still undergoing Agency review.
These petitioner* were not aware of the possibility of a fee
when they submitted delisting petitions. The Agency may have
legal difficulties levying a fee against petitions submitted
prior to the fee's implementation. If a fee is levied against
petitions "in process", these owners and operators are more
likely than others to experience undue hardship. Because these
petitioners have already committed significant resources to
prepare the petition, they may be reluctant to withdraw on the
basis of the fee,, although, if they had had knowledge of the fee
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initially, they may not have submitted a delisting petition A
proposed solution for these petitioners is to establish a
termination date for grandfathering, before which a reasonably
prepared petition could exit the system. Prior to that date
fees would not be charged. After that date, a petition stili in
the review process would be subject to all relevant fees.
Petitioners who have begun analytical preparations but have
not yet submitted a petition to the Agency by the time a fee is
introduced will be subject to the fee. These petitioners can
still withdraw from the process and cease their preparations,
although they will have already incurred some costs and invested
resources. Since implementation of a fee will require Agency
notice and a public comment process (or passage of legislation
by Congress), these owners and operators will have advance
notice. They may be able to speed up their submittals, or,
alternatively, reconsider petition submission given knowledge of
a future fee.
Immediate transition to a delisting user fee will inflict no
hardship on the last category of petitioners (future delisting
petitioners). A generator is not likely to submit a petition if
the expected costs of doing so are too great. Sine* information
regarding the fee will be available to future petitioners, these
petitioners can assess the cost of delisting- relative tor their
available resources prior to submittal.
The delisting staff has warned that the grandfathering data
must not be set arbitrarily. Heeding this warning, the Agency
could estimate the amount of time it takes most petitoners to
prepare a petition. This would then become the length of the
grace period during which any petitions submitted would not be
subject to the fee. (Conversely, any petition submitted after
this grace period ended would be subject to the fee.) The grace
period would commence whenever notice of the fee is effectively
given, which presumably would be the date that the proposed
regulation is published in the Federal Register.
Imposition of the fee will not unfairly affect consumers.
As noted above in Section 7.2, the fee is unlikely to have any
effect on product prices. Hence, it will likely have no effect
on consumers.
A feerdfor all petitions based on average costs may result in
a cross-So&feidy. Specifically, firms whose petitions require
relatively few resources to review may be subsidizing firms
whoss petitions require relatively substantial resources. As
noted earlier in Section 2.3 however, such a fee may pose legal
problems (e.g./ it may not satisfy IQAA's nexus test). There is
no cross-subsidy issue if the fee is roughly proportional to the
actual costs incurred, e.g., if a higher fee was charged for
review of petitions requiring more resources.
Several members of the study group have raised the issue of
affordability of the fee. They are concerned that a large fee
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might impose an unfair burden on small firms. It is not clear
whether this factor should be considered. First, there is no
provision in IOAA expressly requiring EPA to weigh this factor
The IOAA does, however, have a vague provision stating that the
amount of^ERe fee must be "fair"; see section 2.2. in addition
the legislative history of IOAA implicitly suggests that '
Congress intended to allow agencies to consider
affordability.35 Also, in the the FY 88 appropriations
conference report, Congress stated that EPA should give "special
consideration" to the concerns of small businessmen when
developing its fees.36
Second, the Agency Task Force on user fees did not mention
this as one of the policy factors to be considered by the study
group in reviewing a fee (see appendix A). In addition,
circular A-25 also does not mention this factor in its list of
policy factors that may be considered. A-25 does, however,
provide for a fee waiver in conditions that justify one.
Third, most other federal fees do not have affordability
waivers. However, at least one other federal agency has
based the amount of the fee on the firm's ability to pay.
Specifically, the Interior Department included affordability in
its fee for grazing on public land. Note that this scheme has
been criticized by the Grace Commission38, and was the subject
of litigation brought by the Natural Resources Defense Council.
significant issues would be raised if this factor was
considered. First, as discussed in Section 4.4, it would be
very difficult to design an affordability waiver that is fair
and simple. Significant resources may be needed to cover the
costs of designing an ability-to-pay test. Second, if design
costs are minimized by adopting vague criteria, then the costs
of processing the waivers would increase. Even if specific
criteria are adopted, implementation costs could be relatively
high, e.g., if the criteria are complex. Finally, the Agency
would have to develop a rationale justifying affordability
waivers, i.e., an explanation for why the general taxpayers
35 S. Rep. No. 2120, 81st Congress, 2d Sess., p. 4 (1950).
36 H.4«pt. 100-498, p. 852 (12/22/87).
37 Draft Report to the offie* of the Chairman,
Administrative Conference of the United States, "A Survey of
Federal User Fee Programs'*, by Eastern Research Group, Inc.,
December 1986.
38 President's Private Sector Survey on Cost Control, Task
Fores Report on User Charges (1983) (Grace Commission Report).
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should subsidize small companies. In analyzing this issue, one
should also bear in mind that the savings a firm would realize
from a successful petition (e g., elimination of the need to
comply with RCRA Subtitle C) are quite substantial.
A description of how to consider affordability is outlined
in Appendix E. Due in part to a lack of resources, this
approach has not been fully developed or implemented.
Finally, generators may consider any type of delisting
petition fee to be inequitable. They may feel that it is unfair
to pay a fee to petition to delist wastes that should not have
been deemed hazardous in the first place. As noted in Section
1.2, the Agency is attempting to address this underlying
inequity by reassessing its listing program.
8. Conclusions
The previous discussion indicates that no significant
obstacles exist to implementing a delisting user fee based on
the six Task Force criteria.
Currently, the User charge Statute of the IOAA provides EPA
with the authority to charge fees if certain criteria are met
regarding the amount and structure of the fee. The recommended
option is to develop a regulatory proposal assessing a delisting
fee based on IOAA and then seek specific authorization during
the next reauthorization of RCRA. Regarding retention of fee
receipts, the Agency received some authority in this area in the
FY 88 appropriation. The recommended course is to continue
pursuing the Agency's initiative for new legislation and, if
that fails, to seek specific authority during the next RCRA
reauthorization. In the interim, the Agency's authority to
retain fea receipts should be renewed annually during the
appropriation process.
A delisting fee would be administratively feasible, although
there may be some significant difficulties. First, it may be
difficult to identify and quantify some of the costs of
reviewing petitions. For example, EPA's limited experience with
generic delisting petitions may make it difficult to determine
the resources that it will spend in reviewing them. Second,
some data jgaps on policy concerns will make it difficult to
sufficiently consider these factors in evaluating a fee. For
example, although it is expected that a delisting fee will have
a positive environmental impact, it is difficult to estimate the
size of this impact. Finally, OSW will need to draft guidance
for Headquarters staff on key aspects of administering the fee
(e.g., how to determine the number of hours to charge via an
hourly fee). A base fee for complete petitions, plus an
additional hourly fee to cover resources spent reviewing
petitions with incomplete data, is recommended. This type of
fee structure will likely encourage more complete applications
and reduce Agency resource expenditures.
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A delisting fee would likely raise about $1 million
annually. EPA'a budget would probably increase slightly
depending on the Agency's access to the fee receipts and'anv
corresponding change in EPA's appropriation.. The revenue
estimate is based on an estimate of how the Agency's past
delisting expenditures would change in the future. EPA spent
approximately $2.4 million on delisting in FY 87. These costs
will decrease due to several factors, the most important likely
being the relisting program. Other factors include the
incentive effects of the fee itself and State delegation.
However, revenue could increase significantly, up to $2.6
million, if EPA included a facility visit as part of every
petition review. Finally, net revenue to the federal government
would be, at a minimum, approximately $660,000, far greater than
the administrative costs, which would range from $23,000 to
$80,000. Thus, it is financially feasible to institute the fee.
No significant adverse environmental impacts are expected as
a result of a delisting fee. Relative to no fee, a fee can be
expected to decrease the number of petitions and increase
petition quality. To the extent that a fee discourages
non-serious petitioners, or encourages more complete and
accurate petitions (which require less review resources), Agency
resources will be conserved. An indirect, positive
environmental impact could, therefore, result from conservation
of Agency resources for use in other environmental areas
(assuming the level of resources does not change). In addition,
more complete delisting petitions will decrease the review time,
thereby denying unworthy petitions sooner. Quicker petition
turnaround time, for petitions that are denied, might reduce the
non-compliance time of certain generators and the threat to
human health and the environment. Finally, a fee that provides
funds for data verification activities will ensure that only
non-hazardous wastes are delisted.
State opposition to a Federal delisting fee exists due to
concern that fees will eventually be applied in areas that might
preempt State fees. This concern exists for user fees in all
RCRA programs, not simply fees for delisting. Under the IOAA,
however, the Federal government can charge fees only for a
service that it provides, not for State-implemented activities.
Another Stats concern is that a Stata user fee system may be
required fj?r delegation of delisting authority. However, RCRA
delegatioatdscisions must be based only on conditions specified
in Part 27T? Establishment of a user fee system is not one of
the conditions. A Federal delisting fee system may have a
positive impact on States. For example, a revenue generating
fee system designed and implemented on the Federal level may
later bs adopted or modeled by States.
•
A delisting fee is not likely to have significant negative
economic effects. A fee may, in fact, result in better
allocation, of private resources if it discourages illegitimate
petitioners. A fee is not likely to have any effect on product
prices or competitive relationships in an industry. The level
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-40-
Of
t°o a^e ff^^ by transition
the petition process. ThS Aglncy may fstablS ?? firms are
date for gxandfathering prior to which 2«f?i- termination
not be charged a fee. It ilunclear Sh£?h ^?3 submitted wou
a fee should be considered in dltlrain?^ f t2Q affo^ability
it is to be considered, EPA could Set?! tS feasibility. if
appendix E. uia use the approach outlined in
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Appendix A
Questions for Six Criteria
Established by EPA Task Force on User Fees
Legislatively Feasible
- Is there already specific statutory authority?
- Would Independent Offices Appropriation Act (IOAA) authority
be satisfactory?
- Would the fee be characterized as a tax? (E.g., especially
when mixed public and private benefits are involved or if the
fee is based upon criteria other than cost recovery.) If yes,
it would not be recoverable under the IOAA.
- Would political opposition make adoption of legislation
unlikely? (E.g., if an interest group has "veto power.")
- Is legislative action prerequisite? (E.g., Agency-wide
legislation, statutory amendment, Appropriations language.)
3
- What kind of new legislation would have the most promise for
success? (E.g., statute-specific legislation, Agency-wide
legislation.)
- Would legislation authorizing dedication of revenues in a
way that bypasses the Congressional appropriations process be
politically acceptable?
- What "political capital11 would EPA need to spend for
successful introduction of new legislation?
- Would seeking legislation on fees upset other negotiations?
(E.g., reauthorizations.)
- Would the fee be levied against public entities (e.g.,
States, municipalities) or constitute simply an accounting shift
of Federal funds (e.g., grants)?
Env i ronmenta1
- Would the fee encourage positive environmental behavior?
(E.g., encourage risk reduction, stimulate environmentally
beneficial innovation, assist environmental education, expand
environmental protection.)
- Would the fee imped* information transfer to the States or
to the regulated community? (E.g., by making information too
costly.)
- Would the fee discourage compliance with regulations?
(E.g., late submission of data, illegal waste disposal.)
- Would the fee maka enforcement more difficult? (E.g.,
result in more enforcement actions, make them more complex.)
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A - 2
Financiallv Acceptable
- Would fee revenue be substantial and amount to a sizable
portion of program costs?
- would net revenue to the government be significant? (E.g.,
corporate income tax deductions for fee payment should be taken
into account.)
- What are the fee's budgetary implications for EPA? (E.g.,
availability of revenue for program operation, revenue to offset
"bottom line" EPA expenditures.)
- Would administrative costs be high in relation to revenue
generated? (E.g., guidance, collection, and accounting costs.)
- Would the fee increase enforcement or general counsel costs
substantially? (E.g., more enforcement actions, ruling
internally on waiver requests.)
- Would the fee serve as a stable revenue source? (E.g.,
fees for activities soon to be delegated and fees designed as
policy tools to alter behavior may not provide a stable 'revenue
source.)
- Would the fee be only a one-time recovery?
Acceptable to the States
- Would the Federal fee have an impact on established State
policies? (E.g., affect collection of fees at the State level.)
- Would the fee be levied against public entities (e.g.,
States, municipalities) or constitute simply an accounting shift
of Federal funds (i.e., grants)?
- Would the fee affect State regulatory resource
requirements? (E.g., increase or decrease need for State
enforcement and compliance actions.)
- Would^ths Federal fes provide an incentive for State-level
fee initiatives without entailing undue development costs?
- Would the imposition of a Federal fes differentially affect
delegated and non-dslegatsd programs? (E.g., creats regulatory
burdens for States, serve as a disincentive to delegation.)
- Would the fes lead to regional disparities? (E.g.,
creation of "pollution havens'* or a disincentive for industry to
locats in a certain area.)
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A - 3
Administrate
- Does -sufficient data exist to justify reasonableness of
fees? (E.g., data on administrative costs, data enabling
projection of fee impacts.) If not, what costs and time are
necessary to gather the data?
- Are beneficiaries of the service sufficiently
well-identified to levy the fee accurately against them?
• What costs would the fee recover? (E.g., costs for specific
actions, generic scientific review costs, other overhead costs.)
- Could a clear protocol for calculating direct and indirect
costs be developed easily?
• Are necessary accounting procedures specifiable and easily
implemented? Would the Inspector General be able to approve
then as auditable?
- Would fee implementation involve administrative complexity?
(I.e., factors related to number of parties charged, nature and
number of components comprising the charge, point at which the-
charge is levied, variable charges among parties.)
- Upon what criteria would the fee be based (e.g., volume of
product produced, risk), and are these criteria readily
quantifiable?
Economically Fair
- Would the fee satisfy the "polluter pays" principle and
encourage better allocation of private resources?
- Would the fee substantially affect prices? (E.g., shift
competitive relationships in an industry, influence cost of a
product.) If designed to effect policy changes, fees may alter
prices and change competitive balances.
- Would the fee influence international trade or balance of
payments? ..
- would mbrupt transition to the fee inflict debilitating
hardship on the payer?
- Would imposition of the fea unfairly affect the consuming
public? (E.g., if availability of an essential product or
service is reduced.)
- would a cross-subsidy result froa the fee? (I.e , when one
class or group pays fees although a competitor does not.)
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Appendix B
FY 87 Delisting Program Costs
EPA spent approximately $2.4 million on delisting related
activity during fiscal year 1987 (FY 87). This figure
represents expenditures for both contractor support and Agency
FTE. As Table 1 shows, nearly two-thirds of the annual costs
are spent on contractor support.
Table 1
FY 87 Delisting Program Costs
(in thousands)
$1,522 Contractor support
880 FTE
$2,402 Total
These costs are broken down further balov. The appendix
concludes with a comparison of the study group's cost estimate
with the one made earlier by the Office of Program Management
and Support (OPMS).
A. Contractor Support expenditures
The Agency spent approximately $1.522 million on contractor
support in delisting in FY 87. Specifically, EPA budgeted
$2,840,670 in its contract no. 68-01-7244, which spanned fiscal
years 1986 and 1987.i A review of the contractor's progress
reports shows at least five work assignments (WA's) related to
delisting. [Note: it is not known whether work assignments 2
and 4-7 were related to delisting. The progess reports which
Wendell Miser gave OPPI did not discuss these assigments since
they were closed. They totaled $407,982. Note that HA #11 (for
$11,805), dealing with the air toxicity characteristic, is
apparently not related to delisting.] As shown in Table 2,
these five assignments totaled $2,420,883. This represents over
85% of the contract's total amount.
Thes*. work assignments had different periods of
performance- some covering parts of FY 86 as well as FY 87.
Thus/ in ovftpr to determine the costs for FY 87 alone, one needs
Additional funds were apparently spent for delisting
support under other contracts. This discussion is limited to
contract 168-01-7244, under which most of the contractor support
was provided.
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B - 2
to adjust the figures. Accordingly, costs for work assignments
with performance periods spanning more than the 12 months in FY
87 are adjusted to a one-year basis. For example, WA #1 covered
a period of JO months, including all 12 months of FY 87. The
costs for this WA ($1,320,384) are multiplied by 0.6 (i.e.,
12/20), resulting in a FY 87 figure of $792,230. The costs for
work assignments with performance periods entirely within FY 87
remain the same.
The adjustments of costs to the FY 87 baseline are shown
below in Table 3.
Table 2
Delisting related Work Assignments in
EPA Contract No. 68-01-7264
WA WA
No. Title
1 Support for Petition Review
3 Spot Check Program
8 Support for Oelisting Petition
Data Management System (DPDMS)
9 Guidance Manuals
10 OPDMS Maintenance, Enhancement
and Training Support
Work Plan
Budget
$1,320,384
886,241
131,048
59,907
23.303
Contractor
with Lead
Respqnsibility
SAIC
~ ENSECO
SAIC
Cadmus
SAIC
Total
$2,420,883 (which equals 85%
the total contract amo
Of $2,840,670)
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1
3
8
9
B - 3
Table 3
Adjustment of Delisting Contractor Costs
to FY 87 Baseline
Performance
Period
2/4/86-9/30/87
2/20/86-9/30/87
6/18/86-9/30/87
12/4/86-8/30/87
10 5/26/87-9/30/87
Duration of
Performance
Period
20 months
19 1/2 mos.
15 1/2 mos.
(within FY 87)
(within FY 87)
Work Plan
Budget
$1,320,384
886,241
131,048
59,907
23,303
FY 87 Baseline
(i.e., adjusted
to 12 months!
$ 792,230
545,379
101,457
59,907
23.303
Total $ 1,522,276
B. Agency FTE expenditures
The Agency spent roughly $880,000 in FTE on delisting
related activity in FY 87. This represents approximately 22
FTE, assuming a cost of $40,000 per FTE.
As to be expected, the majority of the 22 FTE came from the
Office of Solid Waste and Emergency Response (OSWER), with most
of that coming from the Office of Solid Waste (OSW).
Specifically, 19 of the 22 delisting related FTE were from
OSWER. Of these 19 FTE, 17 were from OSW; Table 4 shows the
breakdown of FTE Agency-wide.
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B - 4
Table 4
Agency FTE spent on Del1sting in FY 87
Running Balance
FTE of FTE
Variance Section professional staff 6 6
Variance Section clerical staff 1 7
Other Assistance Branch sections
and other PSPD Branches 3 10
PSPO Director's immediate office 1 11
WMD, CAD and OPPI 4 15
OSW Director's immediate office
and OPMS 2 17
OWPE, OERR, OUST 1 18
OSWER AA's immediate office 1 19
Other AA-ships (excluding OARM) 2 21
OARM and Adm'r's immediate office _JL 12.
TOTAL 22
To derive this estimate, staff in the Office of Policy,
Planning and Information (OPPI) reviewed the number of FTE
allocated to the Agency's different offices, and estimated the
amount related to delisting. A detailed description of this
review is given below. Note that each assumption made by OPPI
is clearly stated. This makes it convenient to later check one
or more of the assumptions. For example, in step 1 below, it is
assumed that the Variance Section had 6 total professional FTE
in FY 87.^1it should be relatively easy to check with OPMS and
compare tttl* estimate with the actual figure.
First, a* illustrated above in table 4, it was assumed that
the Variance Section professional staff totals 6.0 FTE, all of
which is spent on delisting-relisted activity. Sfififind, it was
assumed that the Variance Section had 1.0 clerical* FTE, with all
of it also being spent entirely on delisting-related activity.
Third, it was assumed that interviews would reveal that
personnel -in the other Assistance Branch sections and other
branches in ths Permits & States Program Division (PSPD) spent a
total of 3.0 FTE on delisting. ZfisiESH, it was assumed that the
total FTE for PSPD staff (excluding personnel on th« Division
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B - 5
Director's immediate staff) was 50 FTE. Note that 20% of
total was spent on delisting (i.e., 10 FTE out of so =» 20%j"
Fifth, it was assumed that there were 5.0 FTE in the PSPD
Director's immediate office. Sixth, it was assumed that the
Division Director's immediate office spent the same percentage
of resources on a particular activity as the rest of the staff
that it oversees does. Thus, since 20% of the PSPD staff FTE
was related to delisting, then 20% of the immediate Division
Director's office FTE was deemed to be spent on delisting. Note
that 20% of 5.0 FTE equals 1.0 FTE. Seventh, it was assumed
that the total FTE for the Waste Management Division (WMD), the
Characterization and Assessment Division (CAD), and OPPI was 125
FTE. Eighth, it was assumed that interviews would reveal that
these personnel spent a total of 4.0 FTE on delisting-related
activity.
At this point, it may be useful to pause and review the
total FTE overall and the total FTE spent on delisting.
Tallying the assumptions above, one finds that (aside froa the
Office Director's immediate office and OPMS) OSW has a total of
180 FTE. [This breaks down to 55 in PSPD and 125 in WHO, CAD
and OPPI.] Of this 180 FTE, 15 is estimated to be spent on
delisting. [This represents 11.0 from PSPD and 4.0 from WHO,
CAD and OPPI.] Note that 15 delisting-ralated FTE out of 180
total FTE equals 1/12.
Ninth, it was assumed that the total FTE for the OSW
Director's immediate office and OPMS was 24 FTE. Tenth, similar
to the sixth step above, it was assumed that the allocation of
FTE in these two offices reflects the allocation of the staff it
oversees. Thus, 2.0 additional FTE (i.e., one-twelfth of the 24
FTE) is deemed to be spent on delisting activity.
Eleventh, a total of 350 FTE was assumed for the Office of
Waste Programs Enforcement (OWPE), the Office of Emergency
Remedial Response (OERR) and the Office of Underground Storage
Tanks (OUST). Thus, the total FTE for OSWER (excluding the
staff of the Assistant Administrator (AA)) is 554. [This breaks
down to 204 FTE for OSW and 350 for the other offices.]
Twelfth, it was assumed that interviews with OWPE, OERR and OUST
would reveal a total of 1.0 FTE related to delisting.
Thirteenth, it wai assumed that the total FTE for the AA's staff
is 33. Fyprteenth. similar to steps six and ten above, it was
assumed ttjat the allocation of FTE in the AA's office reflects
the allocation of FTE in the offices it oversees. Note that
roughly 3% of the FTE in officee below is allocated to delisting
activity. [This is calculated by dividing the 18 FTE related to
delisting by the 554 total FTE.] Three percent of the 33 FTE in
the AA's office means that approximately 1.0 FTE in the AA's
office is spent on delisting activities. Table 5 shows the
breakdown of delisting related FTE within OSWER.
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a - e
Table 5
Delisting related FTE within OSWER
AA's immediate office (1 total}
OWPE, OERR, OUST fl total1 OSW (17 total)
2 - OD's immediate office, OPMS
4 - WMD, CAD, OPPI
11 - PSPD
Fifteenth, it is assumed that interview would reveal that
delisting-related activity in other offices headed by Assistant
Administrators (excluding the Office of Administration and
Resources Management (OARM) but including, e.g., the Office of
General Counsel and the Office of Policy and Program Evaluation)
total 2.0 FTE. Note that the total FTE related to delisting now
stands at 21.0. Sixteenth, a total of 4,200 FTE is assumed for
all offices headed by an AA (except OARM). Note that 21 divided
by 4,200 equals 0.005%. Seventeenth, similar to steps six, ten
and fourteen, it is assumed that the allocation of FTE in OARM
and the Administrator's office reflects the allocation of FTE in
the rest of the Agency. Eighteenth, it is assumed that the
total FTE for OARM and the Administrator's office is 200. Thus,
1.0 FTE from these offices is deemed to have been spent on
delisting activity. [This is calculated by multiplying 200 by
0.0005%.] Table 6 shows the breakdown of delisting related FTE
among AA's offices.
Table 6
Delisting related FTE according to AA's offices
Administrator's Office
and OARM
1 FTS
1^OSWER Other AA's
(e.g., OGC & OPPE)
19 FTB
(broken down in 2 FTB
table 5 above)
C. Comparison with earlier estimate
The $2.4 million estimate described in this appendix
differs sharply from the $0.57 million estimated earlier by OPMS
-------
B - 7
for the Agency-wide Task Force.2 The main reason for the
difference is that OPMS apparently did not include contractor
costs. Note that OPMS apparently made its calculations prior to
the large.increase in delisting contractor support, which
occurred early in calendar year 1986. Of course, these costs
account for $1.52 million of the OSWER study group's figure.
Aside from contractor costs, the two estimates also
differed on FTE costs. The study group estimated 22 FTE at a
cost of $880,000 while OPMS estimated 14.3 FTE at a cost of
$567,000.J There are several possible explanations for this
difference. First, unlike the study group, OPMS apparently did
not include indirectly related FTE. It is not clear why OPMS
did not include them; the IOAA clearly authorizes EPA to recover
these costs through a fee. Perhaps the RCRA workload model is
not designed to track indirect FTE, i.e., does not account for
FTE not spent on one's area of direct responsibility. EPA may,
however, face administrative difficulties in providing
sufficient documentation for indirect FTE; see section 3.2. If
so, then the study group estimate would have to be revised
downwards, making it closer to OPMS1 estimate.
The two estimates were also based on two different
methodologies. OPMS used the RCRA workload model to estimate.
the costs of one petition review, and then multiplied that by
the number of petitions per year. OPMS included several caveats
to its estimate, noting that the workload parameters were very
tentative and might be too low. The study group estimate, on
the other hand, was based on an analysis prepared by OPPI staff,
which made several key assumptions. Some of these assumptions
may turn out to be inaccurate, thereby leading to an
overestimate. For example, OPPI staff assumed that interviews
with OWPE, OERR and OUST would reveal a total of one delisting
related FTE in those offices. However, EPA may decide not to
conduct these interviews, or such interviews may find no
delisting-related FTE.
Next, the estimate by OPMS was apparently based on FY 86
data, while the study group's estimate reflect FY 87 costs.
However, delisting activity was at roughly the same level during
these two years. Thus, it is unlikely that this could have been
a significant factor.
thsj study group used a slightly higher cost
2 Memorandum from Kennan Garvey/OPMS, OSWER
Representative on Fee Collection Workgroup, to John Adams
(Comptroller's Office), Chairperson, Fee collection Workgroup,
entitled "Initial Report on the Status and Opportunities for
RCRA Fee Collection" and dated February 25, 1986.
3 Ibid.
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B - 8
estimate for 1.0 FTE ($40,000) than OPMS did ($39,600). This
however, represents only a very minor part of the difference '
between the groups.
Tha eatimatea also differed in the current number of
petitiona per year: OPMS assumed 126 petitions/year while the
study group assumed 140 petitions/year.4 Although the annual
number of petitions is a key factor in the estimate by OPMS, it
does not directly affect the study group's estimate. As
discussed above, the study group examined total costs of the
delisting program, regardless of the number of petitions. Thus,
for the study group, this number only became a factor when
determining the average fee. Consequently, these inconsistent
assumptions do not really explain the difference in the
estimates of total costs, although the difference would be
reduced if OPMS had made the same assumption as the study group.
The difference in the estimated number of petitions per
year does partly explain the difference in estimated average
fee: OPMS - $4,500; study group - $17,160. The study group's
figure is calculated by dividing total costs ($2.402 million) by
the number of petitiona (140). Note that this figure is not
very useful since EPA doea not have the legal authority under
the IOAA to charge an average fee based on total costa (sea
section 2.3).
4 Memorandum, dated 10/2/87, from Suzanne Rudzinaki,
Chief, Assistance Branch, PSPD to Debora C. Martin, Chief,
Policy Analysis Staff, OPPI, "Costs Associated with Spot Visit
Check Site Viaita for the Delisting Program".
-------
Appendix c
Estimated Revenue from a Delisting Fee
A delisting fee would likely raise approximately $969,200
in revenue annually (with an average fee of roughly $15.000 for
approximately 63 petitions) . This figure may vary significantly
depending largely on the effect of the relisting program and the
number of facility visits. For example, the total could rise to
as much as $2,632/400 if EPA decided to conduct site visits as
part of every petition review. On the other hand, revenue could
also be zero if, for example, the relisting program results in
the end of the delisting program.
Section A explains the formula used to derive these
estimates. Section B discusses the estimated values for the
variables in the formula. Section C shows the arithmetic
calculations.
A. Revenue Estimate Formula
The total amount of revenue (TR) will equal the total costs
of the program (TC) multiplied by the percentage of costs
recovered by the fee (CR) . This relation can be shown in the)
following expression:
(1) TR - TC*CR
Total costs will equal the sum of facility visit costs
(FVC) and total remaining costs/ hereinafter referred to as
total base program costs (BPC) . This relation can be shown in
the following expression:
(2) TC - FVC + BPC
The total facility visit costs will equal the number of
facility visits multiplied by the average cost per facility
visit (AF) . The number of facility visits will depend on the
number of petition* (N) and the percentage of petition reviews
that include a facility visit (P) . This relation can be shown
in the following expression:
(3) F7C> AF*N*P
As suggested in section 4.3, the number of petitions in the
future nay be significantly lower than the number of petitions
submitted in the past (N'). First, the relisting program (R)
will likely cause the number of petition* to drop substantially
(see section 1.2). Second/ the number of petitions will
decrease to the extent that EPA delegates the delisting program
to more states than it did prior to HSWA (HS) . Finally, the fee
itself may. deter submission of petitions/ e.g., those with
little merit, (0). This relation can b« «hown in the following
expression:
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C - 2
(4) H » N'*R*HS*D
Simple algebraic substitution of (4) into (3) results in
the following expression:
(5) FVC » AF*N'*R*HS*D*P
Next, the total base program costs (BPC) will equal the
past base program costs (BPC') discounted by various factors.
These factors include two of the factors above (R and 0) . Base
program costs will also be reduced to the extent that EPA
delegates the delisting program to the States (S) . in addition,.
they will be reduced to the extent that the fee provides an
incentive for improved petition quality (Q) . This relation can
be shown in the following expression:
(6) BPC - BPC'*R*S*D*Q
simple algebraic manipulation of (2), (5) and (6) results
in the following expression:
(7) TC - AF*N'*R*HS*D*P + BPC'*R*S*D*Q
Additional 'manipulation, of (1) and (7), results in the
following expression:
(8) TR - AF*N»*R*HS*D*P*CR + BPC»*R*S*D*Q*CR
This is the basic formula for estimating delisting fee
revenue .
B. Estimating Values for the Variables
As shown in expression (8) above, the formula for
calculating total revenue includes ten variables. This section
includes estimated values for each of these variables.
- EPA's average cost per facility visit. In FY 87, this cost
was $33,000; see appendix B. OPPZ staff assumed that this
figure is unliXely to Changs significantly in ths near future.
Notsjethat the $33,000 figure represents only the funds
spent by 1791 on contractor support for facility visits. It does
not include the cost of Agency FTE spent on facility visits.
This underestimate of ths true valus of AF should not
significantly affect ths total revenue estimate however. If AF
is adjusted upwards to reflect this Agency FTE, then BPC' would
have to be revised downwards by a similar amount. Ths two
adjustments would largely cancel each other out.
- ths number of petitions submitted in ths past. EPA has
-------
C - 3
received approximately 140 petitions per year in the past; see
appendix B.
3 - the effect of the relisting program on the number of
petitions in the future. This variable ranges from 0 (complete
elimination of the delisting program) to 1.0 (no effect). OPPI
staff estimated 0.5, which represents a 50% reduction in the
number of petitions and base program costs.
H& - the effect on the number of petitions of a higher level of
State delegation than that which existed prior to HSWA. As seen
above with N1, the estimate of the number of future petitions is
based on the average number of petitions throughout the history
of the delisting program. This number already reflects
delegation of delisting authority to 10-15 States. In other
words, the number of petitions received by EPA in the past
(i.e., 140 per year) does not include the petitions processed by
the authorized states. As explained in section 6.2, the number
of States expected to seek delisting authority in the future is
likely to be the same as that prior to HSWA (i.e., 10-15); a
higher level is not expected. Thus, state delegation i» not
expected to have any effect on the number of future petition*,
aside from the delegation to 10-15 States already accounted
for. Consequently, OPPI staff assumed HS equalled 1.0 (-i.e., no
effect).
B - the deterrent effect of the fee. The fee may have no effect
at all (i.e., 0 • 1.0) or a large one (e.g., 0 - 0.7, with 30%
of the potential petitioners deterred by the fee). OPPI staff
estimated that D would equal 0.9.
V
£ - the percentage of petition reviews that include a facility
visit. This variable can range from zero (i.e., EPA conducts no
facility visits) to 1.0 (i.e., EPA includes a facility visit
with each petition review). In the past, EPA has conducted
facility visits during 6% of the petition reviews (see section
1.1). Limited resources have prevented EPA from increasing such
visits. With a fee, EPA would be able to increase the
percentage of visits significantly. OPPZ staff assumed that 20%
of the petition reviews in the future include a facility visit,
i.e., P • 0.2.
Note) that although the percentage of reviews including a
facility vfait is estimated to increase significantly in the
future, tttlT"actual number of facility visits would not. This is
a result of the number of petitions submitted in the future
dropping below current levels. As discussed later, the number
of petitions is estimated to drop from 140 to 63. A change in P
from 6% to 20% would mean 12.6 visits per year (i.e., 0.2*63)
instead of 8.4 (i.e., 0.06*140).
££ - the percentage of costs recovered through a fee. Circular
-------
C - 4
A-25 instructs EPA to recover all costs through a fee.
Administrative difficulties, e.g., satisfying all the IOAA
requirements, may hinder EPA however; see sections 3.2 and 3.3.
OPPI staff assumed that these obstacles could be overcome and
full cost recovery is achieved (i.e., CR » 1.0).
Note that EPA may decide, as a matter of policy, to rebate
the fee for successful petitioners (see section 7.2). If so,
then CR would be close to zero, given the high success rate of
petitions (i.e., CR * l.o - success rate). A rebate would
significantly reduce the amount of costs that EPA could recoup.
Since full cost recovery is one of the key objectives of the
fee, OPPI staff assumed that there would be no rebate.
Note also that EPA may decide to waive the fee based on a
firm's ability to pay; see section 7.3 and appendix E. If the
fee were waived for firms that could not afford it, then CR
would be decreased. OPPI staff assumed that no affordability
waivers would be allowed.
BPC' - the total base program costs in the past. OPPI staff
used data from the most recently completed fiscal year.
Specifically, EPA spent approximately $2.402 million on
delisting during FY 87 (see appendix B). Subtracting the
facility visit costs ($545,000) brings the total down to $1.857
million. Next, as discussed in section 4.2, "one-time costs"
need to be deducted. For example, EPA spent approximately
$59,000 on preparing delisting guidance manuals during FY 87.
Presumably this was a one-time activity and EPA will not spend
similar sums in the future. The guidance manual expenditures
appear to be the only one-time costs during FY 87. Thus, BPC'
equals $1.798 million (i.e., $1.857 million minus $59,000).
As noted above with A?, the figure used fo.r facility visit
costs represents only contractor support costs. Thus, the FY 87
figure for base program costs incorrectly includes Agency FTE
costs for facility visit*. This overestimate should not
significantly affect the estimate of total revenue however. Any
downward adjustment of BPC' would bs. roughly cancelled out by
the corresponding upward adjustment of AP.
2 - the effect of State delegation on the base program costs.
EPA estiasjtss that 10-15 of the 54 States and territories will
receive atreHorization for the delisting program; see section
6.2. Thus, 3 ranges from 0.72 (i.e., 1.0 - 15/54) to 0.81
(i.e., 1.0 • 15/54). OPPZ staff used a mean value of 0.76.
Not* that S, which affects base program costs, differs from
HS, which affects number of petitions. As seen above with BPC',
bass program costs ars estimated using FY 87 costs. Only ons
Stats was authorized for dslisting in FY 87. Thus, the effect
of Stats dslegation is not really reflected in the figure for FY
-------
87 BPC. By contrast, the number of petitions was estimated
based on the history of the delisting program, including the
pre-HSWA period when 10-15 States were authorized for delistina
Thus, this figure already reflects the effect of delegation to
10*15 States*
Finally, note that the estimate for S can be improved by
reviewing the level of base program costs throughout the history
of the delisting program. For example, one could check the base
program costs for FY 84, when pre-HSWA state delegation was at
its peak, and compare them with the costs in FY 87, when the
number of authorized states was low. If the costs do not differ
significantly, then one can conclude that State delegation does
not greatly affect delisting costs (i.e., the value of S should
be closer to 1.0) .
Q - the improvement in petition quality as a result of the fee.
As discussed in section 3.3, it is recommended that the fee be
designed to encourage better petitions. The better the
petition, the less resources EPA spends on review. OPPI staff
assumed that this incentive effect of the fee will result in a
10% reduction of EPA's costs (i.e., Q - 0.9).
C. Calculations
Plugging the values estimated in section B into the formula
outlined in section A results in an estimate of $969,200 total
revenue. The arithmetic is shown below.
(8) TR • AF*N'*R*HS*D*P*CR + BPC' *R*S*D*Q*CR
AF - $33,000; N» - 140; R - 0.5; HS - 1.0; D - 0.9; P -,'0.2;
CR - 1.0; BPC1 • $1.798 million; S - 0.76; Q - 0.9.
TR - ($33,000) (140) (0-5) (1.0) (0.9) (0.2) (1.0) +
($1.798 million)((0.5) (JU36W0.9) (0.9) (1.0)
TR - ($33,000) (70) (0.18) + ($1.798 million) (0.38) (0.81)
TR - ($33,000) (12.6) -I- (1.798 million) (0.3078)
f «
TR - $415 f §00 + $5537*00
TR -
As noted above in section A (specifically, expression (4)),
the number of petitions submitted in the future (N) would equal
N'*R*HS*0. Plugging values into this formula results in N -
(140) (0.5) (1.0) (0.9), which comes out to 63. The average fee
would be the total revenue ($969,200) divided by the number of
petitions (63) — approximately $15,380.
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C - 6
Next, EPA may elect to include a site visit as part of
every petition review. Thus, if P - 1.0 and all the other
values remain the sane, then:
TR » ($33, 000) (144(0. 5) (1.0) (0.9) '(l.'j) (1.0) + $553,400
A V
TR - ($33,000) (70) (0.9) -I- $553,400
TR » ($33,000) (63) + $553,400
TR * $2,079,000 + $553,400-
TR * $2,632,400
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Appendix D
Administrative Costs
Administrative costs for a delisting fee are estimated to
range from $22,700 to $80,000. A large portion of these costs
would be one-time expenditures for the initial establishment of
the fee. Consequently, once the fee is in place, annual
administrative costs are likely to be far lower. Finally, note
that the total costs could increase by as much as $40,000 more
(i.e., for a maximum total of $120,000) if an affordability
waiver is allowed.
The following analysis estimates the costs involved in: (1)
identifying and quantifying review costs; (2) designing the fee;
and (3) administering the fee. The estimates are in terms of
weeks spent by EPA personnel on specific tasks in these three
areas. The final section of this appendix tallies the numbers
of weeks and translates them into costs to EPA.
The costs involved in identifying and quantifying the costs
of petition review should be rather low since such data is
easily available from EPA's past reviews. The entire effort is
estimated to range from 4 to 12 weeks. First, 1-3 weeks- is
estimated for review of contractor reports. These records are
easily accessible, and would be reviewed in order to identify
which of the costs are recoverable. Second, identifying and
quantifying the FTE costs would require 2-6 weeks. As outlined
in Appendix A, several levels of interviews might be needed in
order to document all delisting-related efforts. For example,
1-hour interviews with the following managers may be desirable:
Variance section chief; Assistance Branch chief; Directors of
CAO, WHO and OPPI; Directors of OWPE, OERR and OUST; the
Associate General Counsel for OSWER; and one or two office
directors in OPPE. Third, 1-3 weeks is estimated for the'
confirmation, through OPMS and 0ARM, of the precise allocation
of FTE during FY 87. Finally, note that all of these tasks
would be one-time costs.
Since the rough outlines of the design of the fee already
exist, th« costs involved in designing a fee should be
relativelylow. Hammering out the details of the design is
estimatad&o range from 16 to 20 weeks, although this could
significantly increase if affordability waivers are allowed.
First, approximately 8 weeks will be needed to separata tha
costs which can ba attributed to all patitiona from tha coata
which ara incurred only during review of incomplete patitiona.
Thia is necessary in order to document tha basin for tha
two-tiered fea design.
Second, 2-6 waaka would ba needed to establish procadurea
for estimating tha number of additional review houra that an
incomplata petition will entail. Third, 3 waaka would ba needed
to eatablish a system tracking actual time spent on each
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D - 2
incomplete petition. Finally, 3 weeks would be needed to
establish procedures for refunds for petitions where the hourly
fee exceeds -EPA's actual costs.
Again, all of these tasks represent one-time costs.
Significant costs might be incurred if EPA decides to allow
affordability waivers. Specifying an ability-to-pay test which
is clear and fair might take as much as 44 weeks (i.e., one
FTE). Allowing a vague waiver would save costs in design, but
result in higher costs in administration.
The resources needed to administer a deliatina fee are
estimated to range from 12 to 56 weeks worth of work by EPA.
First, any fee rulemaking (e.g., pursuant to IOAA) ought to be a
relatively straightforward process, and could take as little as
4 weeks. However, unanticipated issues may arise, resulting in
a much larger effort, perhaps as much as 22 weeks. Second,
development of guidance for OSW staff on how to implement the
fee would require 2 to 10 weeks. Both of these would be
one-time costs.
Third, 2 to 10 weeks may be required annually to defend
against any challenges to EPA's determination that a particular
petition is incomplete (and hence, subject to the additional
fee). Next, some resources will be consumed in administration
of the hourly fee. Correspondence with firms, notifying then of
the fee and outlining the information missing from their
petitions, may take 2-6 weeks per year. Finally, an additional
2-8 weeks would be spent annually on administration of the time
tracking system. This includes the time spent by delisting
staff filling out the sheets, and the time spent by OARM staff
reviewing then and calculating the appropriate fee.
The following chart tallies the number of weeks for each of
these tasks.
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D - 3
Administrative Costs
of a Delistincr Fee
(1) identifying and quantifying costs
- Review contractor reports
- Interviews re: FTE
- Review of allocation of FTE
(2) Designing a fee
- Separation of base fee costs
from hourly fee costs
- Procedures for estimating hours
- Time tracking system
- Refund procedures
(3) Actual administration of a fee
- Rulemaking
- Guidance for HQ staff
- Defense against challenges
- Correspondence w/petitioners
- Completion/review of timesheets
TOTAL
* One-time only costs
1-3 weeks *
2-6 weeks *
1-3 weeks *
8 weeks *
2-6 weeks *
3 weeks *
3 weeks *
4-22 weeks *
2-10 weeks *
2-10 weeks
2-6 weeks
2-8 weeks .
25-88 weeks
In order to translate work weeks into EPA costs, it was
assumed »»»» on* FTE equals 44 work weeks and that on« FTE costs
EPA $40,000% Thus, 25 weeks translates into a cost of $22,700
for EPA (!.•., 25/44 times §40,000) and 88 weeks translates into
$80,000 of EPA costs (i.e., 88/44 times $40,000). Affordability
waivers, which might consume as much as 44 weeks, would
therefore add as much as $40,000 to the administrative costs.
Finally, a large portion of the administrative costs are
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D - 4
one-time costs. Once the fee is in place, annual administrative
costs would range from approximately $5,500 to $21,800.*
1 One-time task* rang* froa 19-64 weeks. (19/44) times
$40,000 - $17,272 and (64/44) tines $40,000 - $58,180. Annual
tasks range from 6-24 weeks. (6/44) times $40,000 - $5,456 and
(24/44) times $40,000 - $21,820.
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Appendix E
Possible Method for
Determining Affordability
OSWER may decide to consider the issue of a delisting fee's
affordability. Although not expressly required by law or
recommended as policy, consideration of this issue is suggested
by legislative history. Thus, in considering the Task Force's
economic fairness criterion, OSWER may opt to review whether the
fee would pose an unfair burden on small firms. This appendix
outlines how OSWER might consider this affordability issue. As
noted in section 7.3, this approach has not been fully developed
or implemented due in part to a lack of resources.
In order to determine whether a delisting fee would be
"affordable", the following is needed:
(1) estimates of the costs that a potential petitioner may
face;
(2) a rule predicting the ability of a potential petitioner
to bear these costs; and
(3) any financial information regarding the generator
required by the above rule.
1. Costs that a Potential Petitioner May Face
The first section below outlines a possible modeling
approach for determining what type of costs a potential
petitioner may face. The second section discusses ways of
estimating values for these various costs.
A. A Possible Modeling Approach
A generator (G) must first decide whether to submit a
delisting petition or not. He does this by comparing the sum of
the costs of complying with RCRA Subtitle C requirements until a
final decision on the petition is issued (C), of preparing a
petition (P), and of paying a fea (F) with the present value of
the future costs of complying with RCRA Subtitle C requirements
(PV), multiplied by the probability of the petition's success
(P(S)). In" other words, 6 determines whether C + P * F <
PV*P(S). If so, then 6 will want to submit a petition, assuming
he can afford one. An ability-to-pay (ATP) rule, described in
the following section, can be used to model whether G can afford
to submit a petition, i.e., whether ATP > C + P + P.
Next, if a generator has the incentive to submit a petition
and can afford to do so, then ha will. In other words, G will
pay the fea and submit a petition where C+P+F C + P + F.
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E - 2
A generator may, however, be unable to afford a petition
i.e., ATP < C + P +• F. The issue raised by several members of
the worfc group is that the fee may be the reason why these
generators cannot afford to submit a petition. In other words
some generators may be able to afford a petition only if the fee
were not imposed. This issue can be modeled.
If a generator cannot afford the full costs of petition
submission, one could then check whether G can afford these
costs if the fee were not included. In other words, if ATP < c
+ P + F, then see whether ATP < C + P alone. If not, then there
are some generators who could afford a petition only if the fee
were not imposed. Conversely, if ATP is less than the sum of c
and P, then the fee has no effect, i.e., these generators cannot
afford to either comply with Subtitle C or submit a petition
(even if there is no fee).
The group of petitioners who want to submit a petition but
cannot afford to do so because of the fee needs to be divided
into two groups: those whose petitions will eventually b«
granted and those whose petitions will eventually be denied. An
estimate of the former can be derived by multiplying the total
number of generators in this group by the petition success rate
(i.e., P(S)). This will give the number of deserving
petitioners who would be deterred by the fee from submitting a
worthy petition. The remaining petitioners in this group will
be undeserving petitioners who would be deterred from submitting
an unworthy fee if a fee were imposed.
Finally, to complete the description of what the modeling
approach would look like, one needs to return to the first step,
i.e., whether C + P + F < PV*P(S). The discussion above
outlines what happens if C * P + F is less than PV*P(S). If it
is not, then 6 will elect to continue to comply with RCRA
Subtitle C and avoid the course of submitting a petition,.which
will likely be more expensive. However, the fee may be the
reason why the delisting petition cost is greater than PV.
Thus, one needs to check whether C + P < PV*P(S) for these
generators. If so, then these generators will want to submit a
petition, assuming no fea is charged and they can afford the
remaining costs. The remaining analysis is the same as above.
If ATP > C + P, then these are generators who could afford a
petition only if no fee war* imposed. If ATP < c + P, than tha
fea has nc^effect, i.e., these firms ara financially weak
regardless of tha faa.
Exhibit E-l prasants a diagram of this possible modaling
approach.
B. Estimating Values for tha Model's Variables
As dascribad above, tha proposed modal would have six
variables: c, PV, P, P(S), F and ATP. Tha last one, ability to
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EXHIBIT E -1
SUGGESTED APPROACH FOR MODELING THE AFFORDABILITY OF A RCRA DELISTING FEE
G WILL SUBMIT
A PETITION.
WHICH HE CAN
AFFORD
REGARDLESS OF
THEFEE
UNLESS THERE
IS A FEE G
WILL SUBMIT
AHUNWORTHY
PCTTTION
Q WILL SUBMIT
AWORTHY
PETITION ONLY
IF THERE IS
NO FEE
GCANNOT AFFORD
TO EITHER COMPLY
WITH SUBTITLE C
ORSUBMfTA
PETITION (EVEN
IF THERE IS NO
FEE)
G WILL NOT SUBMIT
APETmON(EVEN
F THERE 8 NO FEE)
BECAUSE FT IS
CHEAPER TO
CONTMJE TO COMPLY
WITH SUBTITLE C AND/
OR THE PETITION HAS A
LOW PROBABILITY OF
(1)
(2)
(3)
(4)
(5)
FEE HAS NO EFFECT: BOXES (1), (4) AND (5)
FEE HAS A POSITIVE EFFECT: BOX (2)
FEE HAS A NEGATIVE EFFECT: BOX (3)
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EXHIBIT E-1 (CONTINUED)
SUGGESTED APPROACH FOR MODELING THE AFFORDABIUTY OF A RCRA DELISTING FEE
C - THE COST OF COMPLYING WITH RCRA SUBTITLE C REQUIREMENTS
UNTIL A FINAL DECISION ON THE PETITION IS ISSUED
P - THE COST OF PREPARING A DELISTING PETITION
F » THE FEE CHARGED BY EPA TO RECOVER COSTS INCURRED
IN REVIEWING THE PETITION
PV - THE PRESENT VALUE OF THE FUTURE COSTS OF COMPLYING
WITH RCRA SUBTITLE C REQUIREMENTS
P(S) - THE PROBABILITY OF THE PETITION'S SUCCESS, I.E.,
THE LIKELIHOOD THAT EPA WILL APPROVE THE PETITION
ATP » THE AMOUNT THAT A POTENTIAL PETITIONER IS ABLE TO PAY
G - THE GENERATOR, I.E., THE POTENTIAL PETITIONER
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E - 3
pay (ATP), is discussed in section 3. The first five are
discussed below.
(1) -C .represents the cost of complying with RCRA Subtitle
C requirements until a final decision on the petition is
issued. PV represents the present value of the future costs of
complying with RCRA Subtitle C requirements. One can obtain a
rough estimate for both of these variables from a review of past
Regulatory Impact Analyses (RIAs).
(2) P represents the cost of preparing a petition. As
noted earlier in. section 5.3, generators generally spend between
$15,000 and $59,000 to prepare a petition.
(3) P(S) represents the probability of a petition's
success, i.e., the likelihood that EPA will approve the
petition. One can obtain an estimate for this variable by
determining the percentage in the past. Presumably this figure
has declined recently, once the additional HSWA requirements
were imposed.
(4) F represents the fee charged by EPA. To obtain an
upperbound estimate of the number of generators who could afford
a fee if a fee were not charged, one would use the maximum value
for the fee. In other words, the maximum level of the delisting
fee would be calculated and used in the model. This can be done
by adopting "conservative" assumptions about the level of the
fee. The following would be conservative assumptions: all
petition reviews include a site visit; petition quality does not
improve; and the fee recovers all of the costs incurred by EPA.
These are discussed further below.
First, the number of facility visits may change in the
future; see, e.g., section 4.3 and appendix C. To derive an
upperbound estimate of the level of the fee, one would assume
that EPA visits all petitioning facilities in the future. As
mentioned in section 4.3, a facility visit costs EPA an average
of $33,000. In FY 87, the average cost of petition review
(excluding facility visit costs) was approximately $13,300.*
Mesttrandum from Jennifer A. Bramlett, SAIC to Scott
Maid, EPAjTi/20/87, "Estimated Range of Petition Preparation
Costs'*.
2 EPA spent approximately $2.402 million in FY 87 on
delisting related activity. Of this, approximately $545,000 was
spent on contractor support for site visits. Thus, EPA's total
deliating costs (excluding facility visit costs) equalled
approximately $1.860 million. Divided by 140 petitions, the
average cost is $13,286.
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E - 4
Thus, with visits at all sites, the average cost would increase
to approximately $46,300 (i.e., $33,000 + $13,300 = $46,300).
Second,_ the quality of petitions may improve in the
future. As discussed in section 4.3, an hourly fee for review
of incomplete petitions would encourage generators to submit
more complete petitions. The better the petitions, the less
costs that EPA incurs in review. The average cost of review
would consequently be reduced. To derive an upperbound
estimate, however, one would assume that petition quality does
not improve. Thus, the maximum average cost would remain
$46,300.
Third, due to administrative difficulties, EPA may not be
able to recover all of its costs through a fee; see section
4.2. An upperbound estimate, however, would assume that these
difficulties can be overcome and EPA would attain full cost
recovery. Thus, the maximum level of the average fee would be
$46,300.
As discussed throughout the paper, EPA's review costs vary
widely, depending on the completeness of the petition. Thus,
the average cost may vary significantly from the maximum fee
that a particular petitioner might face. It is very difficult
to account for this in the analysis. EPA does not have -an
estimate of the most expensive petition review in the past.
Given this lack of information, OPPZ staff suggests that a
maximum fee of $100,000 be assumed. This would reflect a
$33,000 cost for the facility visit and $67,000 in other costs.
The first figure has some basis; EPA's contractor reported that
costs for facility visits in FY 87 averaged $33,000.* The
second figure is somewhat arbitrary. It is, however, more than
five times greater than $13,300, the maximum average review cost
(excluding facility visit costs). OPPI staff feels that this
latter figure represents a very conservative assumption.
Finally, an issue exists regarding the likelihood that a
relatively small company will incur this maximum fee. Note that
this is different from the issue above, where the maximum level
of the fee is estimated. According to one delisting program
staffer, smaller firms arc unlikely to be subject to the maximum
fee. Specifically, the staffer stated that based on his
personal experience, it appears that small firms often submit
relative!^complete petitions. Review of these petitions incurs
^•**J' *
3 Letter from Carolyn Bosserman, SAIC Work Assignment
Manager, to Mr. Wendel Miser, EPA, dated September- 23, 1987.
4 Meeting with Scott Maid, Assistance Branch/PSPD in July
1987.
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E - 5
relatively fewer Agency resources. This observation appears
counterintuitive, i.e., one might expect that large firms are
more likely to submit complete petitions. The analysis does not
incorporate this observation because it would not be a
conservative assumption, in other words, a conservative
assumption here would be to discount this notion, i.e., to
ignore the possibility that small firms are less likely to be
subject to the maximum fee. Thus, one would assume that all
firms, regardless of financial size, faca the maximum fee.
2. Rule Predicting Ability to Pay Certain Costs
The second part of any affordability analysis is the
selection of a rule which predicts the ability of a firm to bear
a certain cost. Some rules are suitable for one-time costs,
others for a flow of future costs. Here, the affordability of
one-time costs is being modeled. Specifically, both the
petition preparation cost (P) and the fee (F) are one-time
costs. C, the cost of complying with RCRA Subtitle C
requirements until a final decision on the petition is issued,
can also be considered a one-time cost, assuming that the time
elapsed is short (e.g., a year or less). Not* that the
affordability of PV, which represents a flow of future costs, is
not modeled. If it was, then a different ATP rule would ba
needed.
•
The Agency has already dona a considerable amount of work
in this area, examining different predictive formulae.5 EPA
has established the Superfund Financial Assessment System
(SFAS), used to determine whether parties involved in Superfund
actions can afford to pay certain costs. SFAS includes an
ATP rule for one-time costs. Given the lack of resources to
further develop tha analysis of ability-to-pay rules, OPPI staff
suggests that this rule ba used for any analysis of tha
affordability of a dalisting fea.
3. Financial Information Required by tha Ability to Pay Rule
Tha ATP rule in SFAS for one-time costs requires various
bits of financial information for potential petitioners,
including nat incoma, depreciation, cash flow, etc. In general,
tha availability of such financial information dapanda on
5 Sea, e.g., "The Financial Assurance for Corrective
Action Modal — Modal Documentation," dated August 1986, by'the
Financial Responsibility Program, OSW, EPA. Sea particularly
section 6.2.3.
6 SFAS Technical Support Document, Industrial Economics,
Inc., 5/25/82.
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. E - 6
whether the petitioner owns or operates a facility subject to
permitting, i.e., a RCRA treatment, storage or disposal facility
(abbreviated TSDF). OSW's delisting program staff estimates
that roughly half of the petitioners in recent years have been
TSDF owners or operators.
Financial information for many TSDF owners/operators is
available through the RCRA Firm-Facility Financial database
(abbreviated F-3), which is maintained by an EPA contractor (ICF
Inc.). The F-3 database includes the 5,165 facilities
defined as active TSDFs on EPA's Hazardous Waste Data Management
System (HWDMS) in February 1985. However/ any analysis of the
affordability of the delisting fee would probably exclude the
321 TSDFs that fall in one of the following categories:
- Facilities where operations were discontinued)
- Facilities where the owner or operator filed bankruptcy;
- Facilities where the owner or operator is a non-profit
organization; and
- Facilities where the owner or operator is a public
institution.
The first two omitted categories are recommended because they
are very unlikely to submit a delisting petition. The last two
omitted categories are recommended because EPA may elect not to
impose the fee on them; see section 2.3. In addition, financial
data are not available for them. Thus, a total of 4,344 TSDFs
(i.e., 5,165 less 821) could potentially be modeled.
According to ICF, these 4,344 TSDFs represent 1,911
immediate owners and operators. Of these, 434 are publicly-held
while 1,477 are privately held. Regarding the 434 publicly-held
companies, the F-3 database has actual financial data for them
either through Standard and Poor's Compustat Services, Inc. or,
for the smaller firms, through Dun & Bradstreat's Business
Information Reports (BIRs). Regarding the 1,477 privately held
companies, actual financial information was obtained from BIRs
where available. If actual data were not available, financial
variables were imputed, using three sources: Dun & Bradstreet
Industry Ndrms; Robert Morris Associates Annual Statement
Studies; fetid Ward's Directory of 49,000 Private U.S. Companies.
. jw*
To summarize, financial information is easily available for
the one-half of the petitioners who are TSDF owners/operators.
7 Much of the following discussion is lifted from Section
9.1 of the FACA modal documentation, supra fn 5.
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E - 7
In many cases, this information represents actual firm data, in
the rest, the information represents imputed financial values
that are as close to the actual values as possible within the
data constraints.
Financial information for the other half of the
petitioners, i.e., the non-TSDF generators, is not easily
available. These petitioners come from a much larger group,
numbering roughly IS,000 to 35,000.8 To simplify things, one
could assume that the financial information for non-TSDF
generators is generally the same as it is for TSDF owners and
operators. One could then simply extrapolate the results of the
analysis for TSDF owners and operators to all delisting
petitioners. Alternatively, one member of the study group
suggested that, in essence, a database similar to F-3 be
compiled for a subset of the non-TSDF generators. The subset
would be the approximately 400 non-TSDF generators who have
previously submitted delisting petitions.10 Of course, this
could entail a significant level of resources.
4. Conclusions
Once the three components have been specified, a model can
be constructed. The model would run through the financial data
for likely petitioners. After running the simulation ma'ny
times, one could determine the percentage of firms which have
the incentive to submit a worthy petition but could afford to do
so only if no fee were imposed. Given this figure, one could
then balance this factor with others in determining the overall
feasibility of a delisting fee. In addition, if the percentage
is significant, then EPA could consider the possibility of
establishing an affordability waiver with its fee.
8 1985 National Biennial Report of Hazardous Waste
Generators and Treatment, Storage and Disposal Facilities
Regulated Under RCRA. Report, dated January 1988, prepared by
Development Planning and Research Associates for OSW.
9 Se« handwritten note on memorandum, dated October 2,
1987, from;Suzanne RudzinsJci, chief, Assistance Branch, PSPO to
Debora C. Hartin, Chief, Policy Analysis Staff, OPPI, entitled
"Costs Associated with Spot Check Sit* Visits for the Delisting
Program1*.
10 In recent years, petitions have been divided evenly
between non-TSDF generators and TSDF owners/operators, according
to the delisting program staff. In the early years of the
program, non-TSDF generators submitted the large majority of
petitions. Thus, one can estimate that roughly 400 of the 700
petitions received to data have been submitted by non-TSDF
generators.
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