United States Office of The Comptroller March 1989
Environmental Protection Washington, D.C. 20460
Agency
»EPA HANDBOOK FOR
SETTING USER FEES
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FOREWORD
User fees are prices the Federal government charges individuals or
organizations for a service or thing of value provided by a Federal agency.
Examples of services EPA provides are registrations, permits, certifications and
other reviews and approvals authorized by the environmental statutes the
Agency administers.
Since 1952, Federal agencies have had general authority to set fees under
the Independent Offices Appropriation Act (IOAA). Some agencies also have
had fee-setting authority under either program authorization statutes or
appropriations legislation.
At the present time, the U.S. Environmental Protection Agency (EPA)
charges fees for only a few of the service programs it administers. Over the past
several years, however, EPA has taken a careful look at the potential for
additional fee programs and has conducted at least three major studies and 20
program-specific analyses. Moreover, as efforts of the Federal government to
reduce its budget deficit intensify, EPA has paid greater attention to, and taken a
more active role in, establishing fee programs.
EPA's national program managers (NPMs) need guidance on how to ensure
that any fee programs they propose and adopt meet three broad objectives:
• Consistency with EPA's overall mission;
• Compatibility with specific program goals and operations; and
• Adherence to all pertinent Federal statutes, regulations, and
policies.
This handbook serves as a road map for EPA offices considering and
developing fees. It provides both procedural and substantive guidance. The
handbook summarizes current Federal and EPA approaches to fees, identifies
EPA participants in the process of fee-setting, and describes their roles and
responsibilities. In addition, the handbook sets forth a methodological
framework program managers can use to systematically and thoroughly identify
and weigh all aspects of fee-setting. This handbook is designed to ensure that
NPMs invest sufficient resources in the background analysis to design an
effective fee program that represents good public policy.
While not prescribing a uniform fee-setting system for all program offices,
this methodological framework defines a standard set of analytic steps to
support senior management's decision-making on specific fee proposals. For
each of these steps, the handbook describes choices and their advantages and
disadvantages. In practice, program managers will find that fee-setting is an
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iterative and flexible process. Thus, they either can use the methodological
framework in its entirety or select specific portions to address particular issues.
Specific questions about the information in this handbook should be
addressed to:
Chair, Agency Task Force on Fees Fiscal Policies and Procedures Branch
Budget Division Financial Management Division
Office of the Comptroller Office of the Comptroller
(202) 382-4170 (202) 382-5113
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TABLE OF CONTENTS
Page
Number
FOREWORD i
TABLE OF CONTENTS iii
LIST OF EXHIBITS v
I. OVERVIEW OF FEE DEVELOPMENT PROCESS 1
1. EPA Policies on Fee-Setting 1
2. Phases of the Decision Process 3
3. Roles and Responsibilities 5
II. CRITERIA FOR EVALUATING FEES 7
1. Legislative Feasibility 7
2. Financial Feasibility 12
3. Environmental Impacts 15
4. Acceptability to States 16
5. Administrative Feasibility 16
6. Economic Impact 17
III. INITIATING FEE DEVELOPMENT 19
1. Identify Candidate Services 20
2. Define Service Beneficiaries and
Special Benefits 20
3. Determine Recoverable Service Costs 20
4. Conduct Preliminary Assessment 20
IV. DETERMINING AND EVALUATING SERVICE COSTS 23
1. Types of Costs Eligible for Recovery 23
2. Calculation of Direct Costs 25
3. Calculation of Indirect Costs 28
4. Feasibility Determination 29
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TABLE OF CONTENTS
(cont.)
V. DEFINING AND EVALUATING ALTERNATIVE
FEE PROGRAMS
1. Basic Options for Pricing Fees
2. Waivers
3. Alternatives Analysis
VI. PROMULGATING A FEE REGULATION
1. EPA Rulemaking Procedures
2. Integration of Fee Program Development
and Rulemaking
Page
Number
31
31
33
35
37
37
39
APPENDICES
APPENDIX A:
APPENDIX B:
APPENDIX C:
APPENDIX D:
APPENDIX E:
Criteria Worksheets
EPA Direct and Indirect
Costs Per Staff Year
Techniques for Updating Fees
Useful Contacts for Program
Offices Developing Fees
Text of IOAA
A-1
B-1
C-1
D-1
E-1
APPENDIX F:
APPENDIX G:
Text of OMB Circular A-25
Office of the Comptroller
Policy Statement on Fees
F-1
G-1
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LIST OF EXHIBITS
Exhibit Following
Number Page
1 Overview of the Fee Development Process 3
2 Legal Criteria for Fee-Setting 8
3 Phase 1: Initiating Fee Development 19
4 Preliminary Assessment Worksheet 21
5 Phase 2: Determining and Evaluating Service
Cost 23
6 Service Cost Calculation Worksheet 23
7 How to Use a Timekeeping Report 25
8 How to Use a BUD-2 Form 25
9 Feasibility Assessment 30
10 Phase 3: Defining and Evaluating Alternative
Fee Programs 31
11 Phase 4: Adopting a Fee Program and
Promulgating a Fee Regulation 37
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I. OVERVIEW OF FEE DEVELOPMENT
PROCESS
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I. OVERVIEW OF FEE DEVELOPMENT PROCESS
EPA's authorizing statutes establish a number of programs to protect the air,
land, ground water, and surface water and to limit human exposure to
hazardous substances, pollutants, and contaminants. Under these programs,
EPA provides individuals and organizations with a wide variety of services such
as permits, registrations, certifications, and other reviews and approvals
authorized by statute.
The reasons for considering the adoption of a fee program may vary from
office to office. Moreover, not all offices that initiate development of a fee
program will complete the effort. For those that do, setting the fee levels (i.e.,
prices) for each service is just one of several decisions facing EPA program
managers. Examples of the other decisions they must make include:
Services for which to set fees;
Users subject to the fees;
Waiver policies; and
The administrative mechanism (e.g., regulation, policy,
guidance) for implementation.
These decisions must be consistent with EPA's overall environmental
objectives, compatible with the operations of specific programs, and in
accordance with current Federal and EPA policies governing the adoption of
fee programs.
This chapter introduces EPA's general policies on fee-setting as well as the
overall process within EPA for designing fee programs. The chapter also
identifies the key participants in fee-setting, their roles and their responsibilities.
Subsequent chapters provide detailed procedural and substantive guidelines
for national program managers (NPMs).
1. EPA POLICIES ON FEE-SETTING
Some general policy principles governing the design and adoption of fee
programs emerged from the 1986 work of an EPA Task Force on Fees as well
as from a number of other Agency studies. These broad policy principles,
designed to balance each office's need for flexibility with the Agency's overall
need for effective and legally defensible fee programs, include:
EPA will focus on setting fees for services provided under
"strictly Federal programs". The Agency will set fees for other
programs if directed by statute or if a fee will benefit EPA's policy goals.
The term "strictly Federal" refers to those services that are provided
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solely by EPA and for which EPA does not have authority to delegate
implementation.
Opportunity for public comment is an integral part of the fee-
setting process. Program offices should identify and fully utilize both
formal and informal opportunities for public participation in order to
ensure that fee programs represent sound public policy.
Rulemaking will generally be the mechanism for
establishing fees, unless otherwise directed by statute.
The four analytic criteria formulated by the Task Force on
Fees should be used to develop the fee proposals presented
to senior management prior to Red Border review.
Each of these four policy principles is discussed in greater detail below.
(1) Fees for Strictly Federal Programs
EPA manages two general types of programs: those for which the
Agency has legal authority to delegate implementation to the States and
those for which it does not. At the present time, EPA's general policy is to
focus its fee-setting efforts on the latter type of programs, referred to
throughout this handbook as strictly Federal programs. This policy position
is consistent with the Agency's heavy reliance on the Independent Offices
Appropriation Act (IOAA) of 1951, as amended (31 U.S.C. §9701), which
authorizes Federal agencies to charge for their own services but does not
authorize Federal agencies to require delegated States to charge for those
identical services. EPA's policy also is to utilize any other authority
Congress provides for fee-setting under program statutes or appropriations
legislation.
(2) Opportunity for Public Comment
Public participation has become an integral element of most EPA
programs. The States, localities, industry, environmental groups, and other
citizens contribute ideas, proposals, knowledge, and experience to the
formulation and implementation of environmental policy. Inclusion of the
public as early as possible can promote the design of a sound, effective, and
defensible fee program that is compatible with a program office's existing
objectives and operations as well as with overall Agency goals.
Program offices have a number of formal and informal avenues for
encouraging and soliciting public involvement. The mix each office selects
will be a function, in part, of the office's proposed method of establishing its
fee program. If an office plans to promulgate a regulation, for example, the
office must provide at a minimum a formal opportunity for a public review
and comment period of a specified duration. With or without rulemaking as
the implementation mechanism, program offices should make the most of
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available avenues for an informal dialogue with the public throughout the
development of the fee program. Examples of informal forums include
conferences, specialized meetings, workshops, or seminars sponsored
either by the Agency or other interested parties. To ensure adequate public
involvement, program offices may consider developing a communication
plan at the outset of their fee-development efforts.
(3) Establish Fees Through Rulemakinq
Under current statutory authority, most EPA programs derive authority
for fee-setting from the IOAA. OMB Circular A-25, which guides Federal
agencies on the implementation of IOAA, stipulates that the head of an
agency (in EPA's case, the Administrator) "may prescribe regulations"
establishing a user fee. For consistency and legal defensibility, offices
proceeding under other statutory authority, in most cases, also should
undertake rulemaking to implement their fee programs, although it is not
necessarily required.
(4) Use of Standard Analytical Criteria
The Agency Task Force on Fees identified six analytical criteria that
would enable NPMs to identify the key advantages and impediments to
incorporating user fees into program operations. These criteria are intended
to help program offices answer questions concerning the feasibility and
benefits of a fee program and to ensure thorough analysis of important
policy issues common to fee-setting across EPA programs. Specific
evaluation questions for each criterion serve as a checklist that any office
contemplating a fee program should complete before going to Red Border
review. Chapter II of this handbook contains detailed descriptions of the six
criteria, and Appendix A contains worksheets for each criterion.
2. PHASES OF THE DECISION PROCESS
The process of analyzing and developing a fee program can be viewed in
terms of four phases:
Initiating fee development;
Determining and evaluating service costs;
Defining and evaluating alternative fee structures; and
Adopting a fee program.
Formal adoption of a fee program generally will be accomplished through
rulemaking (which may begin at a number of points in the fee development
process) although other mechanisms may be used.
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EXHIBIT 1
Overview of the Fee Development Process
PHASE 1
INITIATE
DEVELOPMENT
IS
FEE PROGRAM
FEASIBLE?
PHASE 2
DETERMINE/
EVALUATE
SERVICE
COSTS
PHASES
DEFINE/
EVALUATE
ALTERNATE
FEE PROGRAMS
PHASE 4
ADOPT
FEE
PROGRAM
STOP J
STOP
REGULATORY
DEVELOPMENT
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Each of the four phases, as well as the rulemaking process, encompasses a
distinct combination of procedures, participants, and key decisions about the
substance and design of a fee program. For clarity and efficiency in presenting
complex information to NPMs, Exhibit 1 depicts the four fee development
phases in a structured sequence, with a parallel rulemaking process beginning
at the end of Phase 2. In actuality, program offices may overlap or combine the
four phases to fit their individual circumstances and also may formally initiate
rulemaking either earlier or later in the process of developing a fee program. At
the completion of the process, though, program offices must have a well-
documented record of the rationale for the fee program's design.
(1) Initiating Fee Development
Design of an effective fee program that represents sound public policy
and is legally defensible may require a substantial investment of time and
effort. Before committing these resources, program managers should
conduct a preliminary assessment of the feasibility of integrating a fee
program into service operations. Key characteristics of this first phase
include identification of services that are potential candidates for fees (in
offices that provide multiple services); determination of service users; and an
initial application of the six selection criteria to make a preliminary
determination of feasibility.
(2) Determining and Evaluating Service Costs
If a program office makes a preliminary decision to proceed with fee
development, the next phase is to ascertain more fully the cost to the
government of providing each service for which a fee is contemplated. This
cost estimation will serve as the basis for setting fee levels. Steps in this
phase include selecting one or more techniques for computing service costs,
gathering the information necessary for the computation, and actually
calculating the cost. Once a program office has a cost estimate, it can
conduct a more in-depth examination of the feasibility of a fee program. This
assessment typically will provide NPMj, with sufficient information to decide
whether to continue fee development and initiate regulatory development
activities.
(3) Defining and Evaluating Fee Alternatives
After estimating the service's cost program offices must translate that
cost into a specific fee or set of fees to charge service users. The application
of various pricing techniques, described in Chapter V of this handbook, will
enable program offices to design alternative fee schedules. These fee
schedules can be molded even further *o the specific needs of a program
and its users through the incorporatio.i of provisions for waivers, as also
discussed in Chapter V. Once all alternatives have been identified, the
program office should assess them, drawing heavily on the six analytical
criteria previously described, and maXe a recommendation to senior
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management on whether to proceed. An affirmative recommendation
should include the proposed fee schedule.
This evaluation and recommendation process will vary somewhat
across EPA's programs, depending on whether the program office intends to
establish the fee through formal rule making. When rulemaking is the
method chosen, the program office will conduct the evaluation in partnership
with the Agency workgroup established at the start of rulemaking. This
group will recommend whether the proposed rule should go forward to Red
Border review for further consideration and will help the program office
prepare the appropriate package for this review.
(4) Adopting a Fee Program
The formal adoption of a fee level and associated procedures may be
through a regulation, policy, guidance or other mechanism. This final phase
will vary somewhat depending upon the mechanism selected. In the case of
rulemaking, this phase will encompass all activities required to publish
proposed and then final rules. Preparations for the Notice of Proposed
Rulemaking (NPRM) may include: revising the proposal based on Red
Border review and review by the Office of Management and Budget (OMB),
developing the preamble and regulatory language, obtaining all
concurrences and the Administrator's signature, and arranging for
publication in the Federal Register. Steps related to promulgation of the
final rule may include: analyzing and responding to public comments,
holding public hearings, modifying the fee program, revising the regulatory
language and preamble, conducting another Red Border review, and
repeating all other steps leading to publication in the Federal Register.
3. ROLES AND RESPONSIBILITIES
Throughout the fee development process, program managers and staff
charged with fee development may need to interact with varying frequencies
with a number of offices across the Agency. Some of these participants can
serve as technical resources to the program office, while others are part of the
Agency's formal decision-making process. Key participants are listed below:
Office of Administration and Resources Management
(OARM), Office of the Comptroller, Budget Division: serves as
the coordinating office for the Agency user fee initiative; provides expert
advice on determining service costs and pricing fees; serves as a
resource on use of the indirect cost model.
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OARM, Office of the Comptroller, Financial Management
Division (FMD): provides assistance on financial issues related to
fee program administration and implementation (e.g., determining the
cost of fee program administration, collection of checks and use of the
EPA lockbox); responsible for handling and tracking checks once the
fee program is in place.
Office of Policy, Planning, and Evaluation (OPPE), Office of
Standards and Regulations (OSR): advises on when and how to
undertake rule-making; provides assistance in determining impacts of a
fee (e.g., economic implications) and designing a fee system to support
overall policy goals.
Office of the General Counsel (OGC): assists in ensuring the fee
program complies with statutory authority; provides litigation support if
needed.
EPA Regions: provide input on fees based on service programs with
Regional operations; help EPA Headquarters offices assess the impact
on States and industry.
EPA Steering Committee: coordinates and integrates the Agency's
regulatory development activities; provides feedback during initial
phases of rule-making; establishes workgroups for the proposed rule.
EPA Workgroups: support the program office in regulatory policy
analysis and design.
Throughout the handbook various references are made to these offices and
groups and the ways in which they contribute to fee-setting.
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II. CRITERIA FOR EVALUATING FEES
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II. CRITERIA FOR EVALUATING FEES
EPA's primary mission is the implementation of permitting, certification, and
other service programs to protect human health and the environment. As an
integral part of program operations, user fees must take into account these
objectives as well as the acceptability of fees across the Agency's varied
constituencies.
EPA's Task Force on Fees formulated six criteria that can assist NPMs in
identifying and weighing the complex issues associated with the adoption of a
fee program. These criteria enable NPMs to estimate the feasibility and
acceptability of fee levels and fee program procedures before instituting them.
Specifically, the criteria help NPMs determine whether a fee is:
• Legislatively feasible;
• Environmentally acceptable;
• Financially acceptable to EPA;
• Acceptable to States;
• Administrate; and
• Economically fair to users.
To aid programs in using these analytic criteria, Appendix A contains a separate
worksheet for each criterion. Each worksheet includes key questions NPMs
must consider in order to devise an effective, defensible fee program. At early
stages of the fee developmenT process, program offices are likely to have only
some of the information they will need to apply the criteria and 10 develop a
record of their program design decisions. Therefore, the program office
periodically should revisit the criteria as more information becomes available
during the process.
In using the fee evaluation criteria, a program office should keep in mind that
its fee proposal need not satisfy each criterion equally. The principal purpose of
the criteria is to guide program offices in determining what information to collect,
analyze, and to present to Agency decision-makers on a fee's strengths and
vulnerabilities.
1. LEGISLATIVE FEASIBILITY
At the outset, program offices must consider two fundamental questions:
1) what statutory authority exists for adopting fees and 2) how the applicable
legal authority will shape the design of the fee program. EPA derives its
statutory authority for fee-setting from three basic sources. One source is the
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IOAA. This Act gives Federal agencies broad discretion to collect fees for "a
service or thing of value provided by the agency." Another type of authority is
specific language in a program's enabling legislation. This program-specific
authority often defines the service(s) for which EPA can collect fees and/or the
amount of the fee. A third source of authority may be annual appropriations
legislation which may stipulate the following: programs eligible for fee-setting,
maximum revenues, duration of fee collections, and the Agency's authority to
retain the fees it collects.
Establishing the statutory authority for fee-setting is usually straightforward:
programs either have specific statutory authority in authorizing legislation or
they do not, in which case they have to rely either on IOAA or annual
appropriations language. The source of statutory authority can affect a fee
program's design, and much of a- program office's fee-setting effort will focus on
how to interpret and apply the pertinent statute. Exhibit 2 summarizes the legal
criteria for each type of statutory authority.
The importance of the legislative feasibility criterion cannot be over-
emphasized. In the past, Federal courts have rejected several fee proposals
because implementing agencies failed to interpret correctly the authorities used
for fee-setting. Program offices consequently should consult with the Office of
the General Counsel at the earliest possible date.
(1) Fees Under IOAA
Setting fees under the authority of the IOAA is a complicated and
somewhat uncertain process. The Act itself, reproduced in Appendix E,
provides broad authority but inexact guidance on how to set appropriate fee
levels. According to Title V, charges for services must be fair and based on:
Costs to the government;
Value to the recipient;
Public policy or interest served; and
Other relevant facts.
Circular A-25, published by the Office of Management and Budget
(OMB) and reproduced in Appendix F, provides guidance to Federal
agencies on how to implement the fee-setting authority in the IOAA. Case
law also sets forth the boundaries of fee-setting under the IOAA, although
NPMs should keep in mind that the courts have not been uniform in their
interpretation of the law.
Based on IOAA itself, OMB guidance, and case law, three broad
principles have emerged that govern the establishment of user fees at EPA
as well as other Federal agencies:
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EXHIBIT 2
Legal Criteria for Fee-Setting
STATUTORY BASIS FOR FEE-SETTING*
IOAA
PROGRAM-SPECIFIC
MANDATORY
LEGAL
CRITERIA
OPTIONAL BUT
RECOMMENDED
CRITERIA
SPECIAL BENEFITS: Fees must
be based on special benefits
provided above and beyond those
provided to the public at large.
NEXUS TEST: Fees must be
clearly linked to special benefits
provided to discrete beneficiaries.
COST BASIS: Fees must bear a
reasonable relationship to the cost
of providing the service.
N/A
CASE-BY-CASE: Fees must be
constructed to reflect the dominant
statute's or rule's requirements
(e.g., applicability to certain
activities, dollar ceiling on
charges).
USE IOAA PRINCIPLES: Where
direction is lacking in a specific
statute, fees should, where
possible, take into account the
IOAA leeal criteria.
*Program-specific authority may derive from either authorization or appropriations legislation.
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Fees must be based on the concept of "special
benefits".
EPA must be able to identify and charge specific
beneficiaries.
The soundest approach to setting fee levels is to base
them on the government's cost of providing the
service.
1. Special Benefits
A primary purpose for assessing a fee is to recover the
government's cost of providing services that deliver independent,
private benefits to service users. Circular A-25 cites the following
examples of such "special benefits" services:
Those that enable the beneficiary to obtain more gains
or values than those that accrue to the general public
(e.g., patents, insurance or guarantee provisions, and permits or
licenses for particular business activities).
Those that provide business stability or contribute to
public confidence in the beneficiaries' business
activities (e.g., product inspection and grading, insuring bank
deposits).
Those that are performed at the request of or for the
convenience of the recipient, and are beyond the
services regularly received by other members of the
same industry or group, or of the general public (e.g.,
passports, visas, or inspections after regular duty hours).
A key issue for EPA is how to document as conclusively as possible
that the regulatory services it provides confer special benefits on users.
The courts in general have confirmed the authority of Federal
agencies to charge for regulatory services. In one of the earliest cases
interpreting IOAA, the court clearly stated that the Federal
Communications Commission (FCC) could charge for "services which
assist a person in complying with his statutory duties" (554F.2d 1109
(1976) at 1115). In a related case, the court determined that the
Nuclear Regulatory Commission (NRC) could charge for licensing
nuclear facilities, since "a license from the [NRC] is an absolute
prerequisite to operating a nuclear facility" (601 F.2d 223 (1979) at
223).
A wide range of EPA services meet the special benefits test,
including permitting, licensing and registration, inspections that support
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specific licensing and registration decisions, and processing
certificates. Examples of special benefits accruing through these
activities are market access and increased ease of communicating
product information to the consumer.
Under the IOAA, EPA cannot charge for activities that support the
Agency's overall regulatory efforts and are not linked to specific,
identifiable beneficiaries (see next section). Under the IOAA, EPA
cannot incorporate into its fee structure costs for generic regulatory
processes that are not linked to specific, identifiable beneficiaries (see
next section). For example, a program fee could take into account the
cost of a public hearing on a specific permit or license. In general,
however, the cost basis for the fee could not encompass the Agency's
costs for industry-wide rulemaking (e.g., standard-setting).
2. Identifiable Benefits Provided to Identifiable
Beneficiaries
Once a program office has made certain that a service provides
special benefits, the next step is to link those benefits to discrete
beneficiaries. That connection is frequently referred to as the "nexus
test." A critical point to consider when making the connection is the
need to distinguish private from public benefits. Under the IOAA,
agencies may charge only for services that confer some private benefits
to identifiable individuals or entities. Many of the services provided by
EPA include private as well as public benefits. The key distinction here
is that the benefits provided through the service should accrue primarily
to a private beneficiary. The courts have held that where a service
provides both public and private benefits, agencies may charge to
recover the costs associated with the special, private benefit.
An example from the lOAA's legal history will help clarify this point.
In 1976, the court stated that "a certain nexus, a threshold level of
private benefit," was required before the FCC could charge fees for
common carriers and equipment manufacturers (554 F.2d 1109 (1976)
at 1114). The court, however, later qualified this claim, stating that the
FCC was "not prohibited from charging an applicant or grantee the full
cost of services rendered to an applicant which also result in some
incidental public benefits" (Op. cit. at 1115).
To illustrate its meaning, the court cited a hypothetical example. If
the FCC incurs expenses for testing or inspection, these expenses can
be charged in full to the applicant. But if the agency engages in
further testing in order to meet consumer safety standards, it cannot
charge for this testing, which is performed to satisfy some independent
public interest.
The need to identify individual beneficiaries means that a program
office cannot simply take its total operating budget, divide by the
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number of companies regulated, and assess an annual fee. A number
of Federal agencies have tried to set fees using this simple approach,
only to have their fee schedules overturned in court. In prohibiting this
type of fee, the court in one case stated that "whole industries are not in
the category of those who may be assessed, the thrust of the [IOAA]
reaching only specific charges for specific services to specific
individuals or companies" (415 U.S. 345 (1974) at 349). In other
decisions, courts have noted that basing fees on the formula described
above amounts to a tax rather than a fee, and that only Congress is
authorized to levy taxes.
3. Relationship of Fee to the Cost of Providing the Service
Under the IOAA, Agencies generally have based fees on the
government's cost of providing goods or services. The requirement that
the fee bear a relationship to cost does not mean program offices must
track the cost of each individual service transaction. Program offices
instead should use all reasonably available data to estimate future
costs of service delivery. Specific methodologies for estimating costs
are described in Chapter IV. In general, cost estimates (and thus fees)
based on detailed timekeeping and accounting systems are preferable,
but if such systems are not available, program offices can estimate
costs and set fee levels from case studies or interviews.
-The courts have recognized that fees cannot always be based on
individual calculations, and have interpreted the IOAA as requiring only
a "reasonable particularization of the basis for the fees, accomplished
by an allocation of costs to the smallest unit that is practical" (554 F.2d
1109 at 1116). To incorporate this concept into their fees, program
offices that discover a wide range of costs for a particular service may
need to break service actions down into categories that reflect this
diversity.
Program staff responsible for calculating service costs should be
aware that the IOAA allows agencies to include both indirect and direct
costs in a fee's cost basis. Direct costs commonly comprise the major
portion of service cost. These costs cover expenses incurred directly as
a result of providing the service, such as the wages of the worker
processing a permit or license, and any other expenses with a clear link
to the service. Indirect costs include overhead costs such as
management of workers or incidental xeroxing and data processing.
Chapter IV contains a fuller discussion of direct and indirect costs.
Regardless of what fee an office proposes or how that fee is
determined, program staff should document the process by which
special benefits and beneficiaries are identified, how a relationship
between charges and specific beneficiaries is established, and the
method for calculating fee levels. Meticulous documentation will
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facilitate EPA's internal review and concurrence, substantiate
rulemaking, and support the Agency in the event of a legal challenge.
(2) Fees Under Program-Specific Authority
Some of the statutes EPA administers already authorize the Agency to
set fees. Additionally, statutes can be amended to include such authority.
Historically, fee-setting authority or requirements differ slightly from one
statute to the next. Some legislation, for example, offers program offices
great flexibility in setting fees, and only requires that the fees be
"appropriate". Other statutes explicitly authorize full cost recovery, while yet
others set a fee cap without regard for full cost recovery.
A statute with few restrictions on fee-setting provides the NPM with
considerable flexibility in designing the fee program: how much to charge,
for which services to charge, and what portions of true cost to include in the
fee eventually assessed. To provide some structure for fee-setting efforts in
these circumstances, a program could apply the basic principles of fee-
setting under the IOAA. Considerations such as identifying clear
beneficiaries and discrete services are an important part of fee-setting,
regardless of the statutory basis for the fee.
2. FINANCIAL FEASIBILITY
A primary intent of user fees, particularly under the IOAA, is to promote
the financial self-sufficiency of Federal agencies. Even if EPA does not have
legislative authority to retain all fee revenues it collects, program offices should
attempt to estimate the total annual revenue from a fee program, the ratio of
administrative costs to revenue, and the long-term dependability of user fees as
a source of revenue. These financial performance measures are meant to
serve as a reference for decision-making, to enable NPMs and Agency senior
management to weigh financial performance against other considerations in
determining a fee system's design. As with all six of the selection criteria, the
financial performance measures should be viewed as interactive with the other
considerations for fee-setting. For example, the Agency may want to implement
a fee program that raises only a small amount of revenue, if the fee program can
stimulate desirable environmental impacts or produce other benefits such as
more effective administration of a statute, a reduced number of spurious or
faulty service applications, or any of a number of positive public policy
implications.
(1) Annual Revenue Generated
The projected magnitude of annual gross revenues from a fee program
in and of itself is an important financial performance measure. The rationale
for projecting a fee's annual gross revenue is based on the assumption that
each fee proposal, no matter how complex, requires a certain level of
Agency effort before any fees can actually be assessed. A fee that raises
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only minimal revenue each year may not justify investing resources into
setting the fee level, shepharding the fee through the rulemaking process,
responding to public comments, and administering a fee program. Program
offices can seek advice from the Office of the Comptrollers' Budget Division
on whether fee revenues are likely to justify development of a user fee
proposal.
To project annual revenue, program offices can look both at the
magnitude of the fee and the number of service transactions for which the
fee will be assessed. In some cases, discussed below under "Revenue
Dependability," service volume may vary from year to year. In addition, any
waivers the program office decides to offer will reduce fee revenues
correspondingly.
(2) Administrative Cost/Revenue Ratio
One way for a program office to project the financial performance of a
fee program is to compare its administrative cost to its anticipated gross
revenue. A low ratio makes a fee program more attractive. Administrative
cost refers exclusively to the cost of the incremental resources committed to
fee administration and does not encompass the costs of administering the
service for which a fee is being levied. The purpose of this performance
measure is to demonstrate the extent to which the Federal government in
general and/or EPA in particular will benefit financially from the adoption of
fees.
Concerns over the administrative cost/revenue ratio also is linked to the
issue of fee retention. Some of the Agency's administrative costs are fixed.
with or without fee retention. Under IOAA, the revenue the Agency collects
from its fee program will go into the U.S. Treasury's General Fund, unless
Congress authorizes retention. Furthermore, program authorization statutes
and appropriations bills rarely provide for retention. In the absence of
retention, therefore, fees with low administrative costs are more acceptable
than those with high administrative costs.
Calculating the administrative cost to revenue ratio is relatively
straightforward: program offices should divide the annual cost of full-time
equivalents (FTEs), or staff years, responsible for administering the fee
program by the fee's projected gross annual revenue. Estimating
administrative costs involves projecting the number of FTEs required to
collect, review, and process fees. Not all of these administrative costs are
borne by the program office. Fee processing, for example, is handled by the
OARM. This office estimates that its portion of a service transaction
averages 18 minutes. Such costs need to be factored into the total estimate,
since they are an important part of the fee program's overall administrative
costs. For more information on the cost of fee program administration,
program offices should consult directly with staff in OARM's Financial
Management Division (FMD).
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Program offices should be especially careful not to confuse the cost of
fee program administration with service delivery costs. For example, the
cost of FTEs required for a technical, substantive review of a permit
application is not part of the cost of fee program administration. Legitimate
fee administration costs are associated with fee-related activities such as
verifying that a beneficiary has paid in advance for a service, that the fee
was included in the application and that the check was made out for the
correct amount, and processing of the payment through FMD.
(3) Revenue Dependability
Revenue durability refers to the length of time for which a program
office projects it can collect fees. This projection depends on such
considerations as the expiration date of statutory authority for a service or for
a user fee itself. Revenue stability is a measure of the fluctuation in
projected annual revenues over the life of the fee program.
1. Revenue Durability
In general, fee programs with long estimated lifetimes are more
attractive than those of short duration. A fee program that generates
revenues for several years may justify devoting Agency resources to
the program's development more than a fee program of short duration.
In addition, implementation of a long-standing fee program is likely to
result in fewer disruptions of ongoing program operations than those
fee programs that are short-lived.
Estimating the longevity of a fee program, however, is a difficult
task, largely because of legislative uncertainties. Some possible
indicators of duration are the estimated reauthorization date of program
legislation or the expiration of fee collection authority in an annual
appropriation. Program staff and managers will need to exercise
considerable caution, however, in basing decisions on these types of
indicators because of the unpredictability of legislative activity.
2. Revenue Stability
Fluctuations in service transactions from year to year can
complicate the administration of a fee program, particularly if the
fluctuations are relatively unpredictable and have significant impacts on
fee revenues. Programs that are authorized to retain fee revenues and
depend on them for program operations are particularly vulnerable
from such fluctuations. Even if programs do not retain the fee revenues,
they still will find fee systems with a stable number of transactions and a
predictable administrative cost to revenue ratio more attractive than
those for which the number of transactions varies significantly from one
year to the next.
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In order to estimate revenue stability, program managers need to
examine the characteristics of the underlying service program. A
principal consideration is whether the program is delivering a one-time
service to each beneficiary (e.g., a unique, one-time scientific review) or
periodic services (e.g., permit renewals). Demand for services
delivered periodically may be easier to predict. Another consideration
is whether renewals are staggered over the years or provided to all
beneficiaries at the same time. A third factor is whether EPA is
providing the service to a fixed or fluctuating universe of beneficiaries.
Program offices can estimate fee revenue fluctuations by
examining service volumes for recent years, identifying relevant
upcoming rulemakings, and by identifying trends reflected in budget
planning. Program offices also should investigate any other issues that
could affect revenue stability.
3. ENVIRONMENTAL IMPACTS
Every EPA program is designed to achieve a set of environmental goals.
Services such as permitting and certification are ways to meet these goals by
fostering environmentally sound behavior by the regulated community. At a
minimum, the fee program should not impede the environmental goals of the
permitting, certification, registration, or other relevant program activities. If a fee
system as first conceived has adverse environmental consequences, the
program office should attempt to mitigate these impacts by altering the fee
system's design. In addition, program offices should investigate fee system
alternatives that may increase environmental benefits, such as significant new
risk reductions, stimulation of desired technological innovation, or reduction of
cross-media impacts.
Design of a fee program does not require an in-depth Environmental
Impact Assessment. Rather, program staff should articulate for their senior
managers the key environmental issues that may emerge during the fee
program's development and affect support for the program within, as well as
outside, EPA. Examples of key questions program offices can examine are:
• How will the fee program affect the timing of service
delivery?
• What effect will the fee program have on compliance with
EPA regulations?
• How will the fee program affect EPA's enforcement of
regulations?
• Will the fee program have an effect on information transfer
to the States and the regulated community?
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Because of the cross-media linkages among the Agency's programs, the
examination of environmental effects should not be limited to the program for
which a fee is under consideration.
4. ACCEPTABILITY TO STATES
As a partner with the States in protecting the environment, EPA needs to
be sensitive to how fees for strictly Federal programs affect the States
environmentally, economically, and politically. In addition, EPA needs to
consider the impact of fee-setting for a particular program (or set of programs)
on its long-term working relationships with individual States. In order to assess
a fee program's acceptability to the States, program offices can look at whether
the fee results in one or more of the following circumstances:
• Duplicates or overlaps with an existing State fee program;
• Requires States or their localities to pay fees;
• Affects major industries, and thus the economy, of
particular States; or
• Fosters regional inequities.
Even when they are not affected by a specific fee program, States may
have fee-setting experience that may be useful to Headquarters program
offices. As a general rule, program staff should work closely with their Regional
counterparts in initiating contacts with the States; and program offices should
keep Regional staff apprised of subsequent interactions with States. In
addition, program offices may wish to tap the resources of the State/EPA
Committee.
5. ADMINISTRATIVE FEASIBILITY
Program managers need to incorporate administrative procedures into
the design of their fee programs and estimate the resources the Agency will
need for effective fee administration. Two distinct, but related, concerns are the
operational feasibility of the fee program and the effect of the fee program on
the administration of the service program itself.
The degree of complexity in a fee program will be an important factor in
determining ease of administration. As a general rule, a fee program that
encompasses multiple services, an elaborate schedule of fees for each service,
or an extensive user clientele will be more complicated to operate. In these
complex, multi-service, multi-fee programs, the likelihood that users will remit an
incorrect fee is greater than in simpler, single-fee programs. Verification that
service users have paid their fees and selected the appropriate category may
require either the program office and/or the Office of the Comptroller to dedicate
substantial incremental resources. Conversely, a fee program might improve
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overall operation of the service program. For example, it might encourage new
timekeeping and recordkeeping systems and discourage applications
submitted without any real chance for approval.
6. ECONOMIC IMPACT
Fee programs have the potential for adverse economic consequences
such as disrupting the delivery of products and services to consumers or
impairing the financial stability of individual users, industry segments or
regional economies. Careful examination of these potential consequences is
essential and should not be separated from analysis of the other fee selection
criteria. Severe economic impacts, for example, may reduce the number of
users and in turn the potential magnitude of fee revenues. Economic impacts
also may reduce the fee program's acceptability to one or more States,
especially if the fees appear inequitable or unfair to users in those States.
Environmental and economic impacts also are closely linked.
Not all program offices designing fee programs will have to conduct an
in-depth Economic Impact Analysis. Rather, staff responsible for development
of a fee program need to present to senior management the key issues
associated with the general concept of a fee program as well as with specific
program designs. Program offices experienced in the development of major
rules already may have substantial economic information with which to evaluate
fee alternatives. Many offices, however, will be able to rely only on their own
limited knowledge coupled with information gleaned from the .public
participation process.
A substantial body of guidance already exists within EPA for conducting
economic assessments. Below are a few examples of some economic impact
indicators that may be useful to program offices contemplating the adoption of
fee programs.
One rough indicator of the economic impact on a firm is the proportion of
that firm's annual revenues the fee(s) represent. Program offices can estimate
this ratio by comparing proposed fee levels to firms' net revenues. The fee
program also may affect industry segments and consumers of their products.
The types of economic impacts to watch for include market access, market
stability, and increased prices. Program offices might anticipate effects on
market access if a fee is so high that it discourages startups of new firms.
Market stability, on the other hand, might be affected if a fee schedule assesses
variable fees for related services. Here, the economic standing of firms paying
the lower fees might improve relative to other firms relying on more expensive
services. Market stability could also suffer if a fee schedule is structured so that
one class of service users subsidizes service consumption by competitors. This
scenario might take place if the first firm to register a new technology or product
paves the way for approvals of related applications.
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Consumers of a service user's products, on the other hand, might be
affected by a fee program if firms pass on the cost of fees in the form of higher
prices for their products. In and of itself, this is not necessarily a problem,
unless the impact is severe. Additionally, if the existence of fees causes firms to
drop out of the market, product availability might decline.
Program offices attempting to predict a fee's effect on industry and
consumers should be aware that previous studies have indicated that a fee
generally would have to be quite high to produce major market disruptions.
These considerations do not alter the fact firms may perceive fees to be an
excessive economic burden. Moreover, whether potential economic impact is
real or imagined, discontented firms and their industry representatives can
severely delay or even prevent implementation of a fee program by requesting
judicial review of the Agency's implementing regulations. The potential for
industry opposition should not prevent development of a fee proposal, however.
Furthermore, as with the environmental impact criterion, the initial identification
of potential negative economic consequences need not derail adoption of the
fee program. Through the use of waivers, discussed in Chapter V, a program
office may redesign the fee program to avoid or substantially mitigate the
projected adverse impacts.
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III. INITIATING FEE DEVELOPMENT
-------
I. INITIATING FEE DEVELOPMENT
Program offices initiate their examination of fees for a variety of reasons.
Some programs have an explicit statutory authority to implement user fees. For
other programs, the impetus for embarking on fee-setting may be either an
initiative from within the Agency or an external request from OMB or even the
regulated community.
Regardless of how or why a program office begins its exploration of fee-
setting, initial design of the fee program coupled with a preliminary assessment
of its feasibility should be a prerequisite to any major commitment of Agency
resources. The design steps should focus on the identification of 1) candidate
services, 2) the service users (beneficiaries) and the special benefits to those
beneficiaries, and 3) the service costs potentially eligible for recovery. Once
these preliminary design steps are completed, the program office should use
the six analytic criteria described in Chapter II to make an initial decision on the
merits of continuing fee development, issues requiring further study, and issues
to be addressed in the final design of a fee program. This first phase of fee
development, shown in Exhibit 3, also should identify the information needed to
support fee-setting and establish a plan for obtaining it.
1. IDENTIFY CANDIDATE SERVICES
Each environmental statute EPA administers typically either requires or
enables EPA to undertake classes of service activities such as permitting,
registration, scientific review, or certification. The first step, therefore, is to take
inventory of all services that are potential candidates for fees, so that none is
excluded from the initial screening. This inventory should list the service
candidates, describe each service, identify the number of service transactions in
recent years, and provide as much information as possible about the users of
the service.
Types of services at EPA that are good candidates for fee-setting include
permits, registrations, facility and site inspections, processing of regulatory
exemptions, and certifications. Each of these broad types of service categories
can be subdivided into smaller, more discrete service units. A program office
might be able to disaggregate a permitting program, for instance, by class of
permit.
Often, these service programs have been established by a program's
enabling legislation. In some cases, the statute distinguishes among different
service classifications (e.g., different types of permits). The program office,
however, often has discretion to make these delineations on its own through
operating regulations or guidance documents. A fee program may serve as a
basis for further refinement of services for which different fees may be charged.
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EXHIBIT 3
Phase 1: Initiating Fee Development
IDENTIFY
CANDIDATE
SERVICES
Li
DEFINE BENEFICIARIES
AND SPECIAL BENEFITS
LI
DETERMINE
RECOVERABLE SERVICE
COSTS
CONDUCT PRELIMINARY
ASSESSMENT
J
-------
2 DEFINE SERVICE BENEFICIARIES AND SPECIAL
' BENEFITS
As noted in Chapter II, fees set under the IOAA must meet specific tests.
First, the service provided by the Federal government must confer a special,
private benefit to an identifiable beneficiary. In this early phase of fee
development, a program office using the IOAA should begin to assemble the
information necessary to demonstrate that these tests are met. Program offices
operating under other legislative authority may also find this step useful.
Program files or other records on historical service transactions or background
documents for prior rule-making may be good sources of information for
preparing a reliable profile of beneficiaries. Delineation of special benefits may
be more difficult and may involve some original research, including the
solicitation of public participation.
3. DETERMINE RECOVERABLE SERVICE COSTS
Under the IOAA, fee schedules also must meet the "nexus" test, i.e., that a
reasonable relationship exists between the government's cost of providing a
service and the fee charged. This first phase is an appropriate point at which to
start documenting that relationship. Thus, for each candidate service, a
program office should list the participants in its own and other offices and
should try to estimate roughly the total staff and management time spent on the
service program as a whole and/or individual service transactions. Coupled
with the projected number of transactions, this information forms the basis for a
rough estimate of future fee revenues.
4. CONDUCT PRELIMINARY ASSESSMENT
In this early phase of fee development, program offices should evaluate the
initial fee program design against all six of the criteria presented in Chapter II.
By necessity, the assessment for some criteria will be more detailed than for
others because the program office will not have all the information it needs for a
complete evaluation until later phases of the process. Nevertheless, at this
stage, preliminary application of the criteria should allow program staff to
identify the major policy and management issues that will need resolution prior
to final adoption of a fee program. Below are some examples of how to use the
criteria for a preliminary assessment:
Legislative Feasibility: At the outset of Phase 1, a program office
should identify the appropriate fee-setting authority for each candidate
service on its list. It is possible that some offices will have explicit
statutory authority to set fees for of its services. In other instances, an
office may need to rely on the IOAA for legal authority. The efforts in
this first phase to identity candidate services, the number of annual
transactions for each service, and the beneficiaries and their benefits
should provide a preliminary assessment of the soundness of the
potential fee program.
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Financial Feasibility: This criterion will be of significance to senior
management in deciding whether to pursue fees further. Using budget
planning documents and workload models, program staff can develop
a rough assessment of the potential revenue stream from a fee
program. Additionally, legislative and regulatory tracking and analysis
can provide some indication of the revenue stability from a potential
fee.
Environmental Impact: As early as possible, program staff
responsible for fee development need to brief program managers on
any major environmental implications, either adverse or beneficial,
associated with the establishment of a fee program. Other offices, such
as the Office of Enforcement and Compliance Monitoring (OECM) and
the Office of Policy, Planning and Evaluation (OPPE) may be
particularly helpful in this exercise.
Economic Impact: In this phase, a program office will be able to
discern potential economic impacts only in a very preliminary way,
because the fee schedule alternatives have not been defined yet.
Through ongoing interaction with States, industry, and other
representatives of the public, however, program staff should be able to
foresee any economic issues that may create opposition at a later stage
of the process.
Administrative Feasibility: Based on initial design considerations,
a program office should be able to project the relative administrative
complexity of its fee program and identify for senior managers any
undesirable implications that adopting a fee program may have on the
program's existing organization, staffing, and other operational
characteristics.
Impact on States: Evaluation of legislative feasibility and economic
and environmental impacts, coupled with direct discussions with
States, will provide a preliminary profile of the acceptability to States of
the general concept of a fee program. Analysis of the acceptability of
specific design alternatives is more appropriate at a later stage.
The analysis of fee-setting is by no means complete after this initial
application of the selection criteria, because specific fee levels have not been
proposed yet. Nonetheless, program offices will have made an initial
determination of the merits of continuing to examine fees.
Program offices should attempt to begin establishing a written record of their
analysis at the conclusion of this phase. Exhibit 4 is an example of how to
summarize the preliminary assessment results and document the conclusions
of the screening phase. This worksheet is also a convenient way to present
information to appropriate decision-makers. The manner in which each
service's performance on the criteria is expressed is at the discretion of
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EXHIBIT 4
Preliminary Assessment Worksheet
(To be filled in by program office at the end of Phase 1)
Service Legislative Financial Environmental Impact on Admin Economic 3
Candidate Feasibility Feasibility Impact States Feasibility Impact '••
1.
2.
3.
4.
s
3
f
\
!.
f
/
y
H
;j
•^
>J
*:
Service 1
Service 2
Service 3
Service 4
Principal
Positive
Principal
Negative
-------
individual program offices. Pluses and minuses or high/low classifications both
serve the same function -- to highlight tradeoffs and effectively communicate
which services merit further investigation for fee-setting.
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IV. DETERMINING AND EVALUATING
SERVICE COSTS
-------
IV. DETERMINING AND EVALUATING SERVICE
COSTS
Once a program has identified the services for which it wants to investigate
fees, the next phase of fee development is to calculate the cost to the
government of providing these services. The costing phase is an intermediate
phase on the way to actually setting fees, and is necessary because EPA policy
is to set fees as close to full cost recovery as possible in the absence of any
restrictive legislative language to the contrary. Determining the cost of
providing the service becomes particularly critical in the case of IOAA fees,
since the statute requires that fees bear a reasonable relationship to the
government's true cost of providing the service to identifiable beneficiaries.
Procedures for using cost estimates to determine fees may be more flexible
under program-specific statutes. In many cases, such statutes do not contain
detailed restrictions on costing or pricing fees. Thus, program offices setting
such fees could theoretically omit the thorough calculations in this costing
phase. Nonetheless, program offices basing their fee programs on specific
statutory authority other than IOAA are encouraged, whenever possible, to
structure their fees with the three IOAA tests described in Chapter II in mind.
This chapter describes the steps program offices should follow to determine
service costs. A section covering the types of recoverable costs precedes the
discussion of the individual costing steps. The steps themselves include
selecting a methodology for estimating service costs, using this methodology to
gather cost information and compute service costs, and deciding whether to
continue with fee development. Exhibit 5 shows an overview of Phase 2, and
Exhibit 6 is a worksheet which guides a user through the steps associated with
costing services.
1. TYPES OF COSTS ELIGIBLE FOR RECOVERY
For fees set under IOAA, OMB Circular A-25 provides guidance to Federal
agencies on what constitutes the full cost of services rendered. No comparable
guidance exists for fees set under other statutory authorities. EPA's general
policy is to seek full cost recovery in those cases, unless the statute authorizing
the fee contains alternate provisions, or full cost recovery produces an
unwanted result that could be alleviated with lesser fees.
Under Circular A-25, user charges based on the IOAA should be "sufficient
to recover the full cost... of providing the service, resource, or property." Full
cost consists of all direct and indirect costs including, but not limited to, the
following items:
Direct and indirect personnel costs, including salaries and fringe
benefits such as retirement and medical insurance;
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EXHIBIT 5
Phase 2: Determining and Evaluating Service Costs
IDENTIFY L
COSTING OPTIONS
ASSEMBLE L—
COSTING INFORMATION
CALCULATE
SERVICE COSTS
APPLY ANALYTIC
CRITERIA
\L
STOP
PREPARE START
ACTION REQUEST
c
GO TO PHASE 3
BRIEF STEERING
COMMITTEE AND
CHARTER WORKGROUP!
-------
EXHIBIT 6
Service Cost Calculation Worksheet
STEP
Al
A2
A3
A4
A5
A6
A7
Bl
B2
B3
B4
B5
B6
Cl
C2
C3
Dl
D2
D3
El
E2
E3
Fl
F2
F3
F4
F5
F6
Gl
G2
G3
G4
G5
G6
DESCRIPTION
If using time allocation method, complete this section.
Total hours charged to service annually in timekeeping system
% of staff time spent on non-service related activities
Hours of staff time on non-service related activities (AlxA2)
Staff hours spent on service (A1-A3)
Number of service actions completed annually
Hours per service action (A4/A5)
FTEs per service action (A6/2080)
If using time expenditure build-up method, complete this section.
Average hours expended for step 1 of service
Average hours expended for step 2 of service
Average hours expended for step 3 of service
Average hours expended for step 4 of service
Average hours, total (B1+B2+B3+B4)
FTEs per service action (B5/2080)
All users complete this section.
Enter either A7 or B6 here (HQ FTEs per service action)
Dollar cost of an FTE for the appropriate AA office (Appendix C)
Dollars per service action, HQ activities (ClxC2)
If service is provided in the regions, comolete this section.
Compute steps A1-A7 or Bl-B6for regional activities on a separate
worksheet; enter either A7 or B6from the worksheet here
Dollar cost of an FTE at the regions (Appendix C)
Dollars per service action, regional activities (DlxD2)
If contractors assist service deliver), complete this secnon.
Total contractor costs attributable to service
Enter A3 here (Number of service actions completed annually)
Contractor costs per service action (E1/E2)
If indirect costs are to be included, complete this section.
Enter A7 or B6 here (HQ FTEs per service action)
Indirect costs per FTE for the appropriate AA office (Appendix C)
Indirect dollars per service action, HQ activities (FlxF2)
Enter Cl here (regional FTEs per service action)
Indirect costs per FTE for regions (Appendix C)
Indirect dollars per service action, regional activities (F4xF5)
All users complete this section.
Enter C3 here (dollars per service action for HQ activities)
Enter D3 here (dollars per service action for regional activities)
Enter E3 here (dollars per service action for contractor costs)
Enter F3 here (indirect dollars per service action for HQ activities)
Enter F6 here (indirect dollars per service action for regional activities)
Total cost per service action (G1+G2+G3+G4+G5)
AMOUNT
•
-------
Physical overhead, consulting, and other indirect costs,
including material and supply costs, utilities, insurance, travel, and
rents or imputed rents on land, buildings, and equipment;
The agency's management and supervisory costs; and
The costs of enforcement, research, establishment of
standards, and regulation, including any required environmental
impact statements.
In order to provide a simpler definition of the kinds of Agency costs incurred in
providing a service, the Office of the Comptroller has grouped all EPA expenses
into two categories described in detail below: direct costs and indirect costs.
(1) Direct Costs
Direct costs are all costs incurred by the divisions, branches or other
organizational units which actually provide the service. In EPA's accounting
system, such costs include salaries and benefits, travel, certain kinds of
equipment charges, and contractor expenses. Some costs which may
directly benefit service providers, such as internal EPA research and
development, are not charged to service providers in EPA's accounting
system, and hence are not considered direct costs.
In general, program offices will not have to worry about adding up all
the various types of direct costs. The Office of the Comptroller has prepared
Appendix B to simplify the calculation of both direct and indirect costs. Once
a program office has determined how many staff ( including appropriate
support and management staff within the program office) work on the
service, it can refer to this Appendix to obtain the average annual cost of
salary, fringe benefits, travel, and equipment per staff member. Contractor
costs are not included in Appendix B, however. Program offices will have to
work with their budget staff to identify any contractor costs that directly
support the service (see Section 2 of this chapter for details).
(2) indirect Costs
Indirect costs are the expenses of managing the four Assistant
Administrator (AA) program offices (Air and Radiation, Water, Pesticides and
Toxic Substances, and Solid Waste and Emergency Response) and the
Regions, as well as the expenses associated with the Administrator's Office
and the non-program AA offices: OARM, OECM, OPPE, Research and
Development (ORD), External Affairs (OEA), General Counsel (OCG),
Inspector General (OIG), Regional Operations, and International Activities
(OIA). Program offices will not have to calculate indirect costs, since they are
itemized in Appendix B. Section 3 of this chapter explains the use of the
Appendix.
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2. CALCULATION OF DIRECT COSTS
Circular A-25 stipulates that Federal agencies normally will collect fees "in
advance of or simultaneously with the rendering of services." This requirement
shapes the methodologies open to program offices for ascertaining costs. It
rules out, for example, methodologies that track direct costs on a case-by-case
basis and bill the user at the completion of the service. Rather, it requires
program offices to utilize a methodology that calculates the "representative" or
average staff time to perform each unit of service and translates that staff time
into an average direct cost.
Several methodologies exist for determining "representative" staff time
required to perform a service. Two basic estimating methodologies, described
more fully below, are time allocation and time expenditure build-up. Time
allocation involves the use of existing timekeeping and service delivery tracking
systems to estimate both the total annual staff time required to carry out the
service program and the total annual service transactions. Time expenditure
build-up is a case study method, whereby program offices interview program
staff and review records for each stage of the service to "build up" an estimate of
the total time necessary to perform the service.
Program offices can view these two estimating methods as the two ends of a
continuum. Program offices can combine them into alternative methodologies
that address the offices' needs and capabilities more effectively. No single
method is inherently better than another. Each has its own merits and
shortcomings, which are highlighted in the following discussion. Where
resources permit, offices are encouraged to use several methods and compare
the results.
(1) Time Allocation
The time allocation methodology relies on existing program office
timekeeping and service delivery tracking systems. Program offices can
extract information from the timekeeping system on the total hours expended
on the service over the course of a year, as illustrated in Exhibit 7. If the
timekeeping system records only professional staff time, program offices can
estimate support and management time based on those figures. For
example, if the timekeeping system shows that 25 percent of the
professional staff in a division work full-time on a service, the office can
assume that 25 percent of that division's support and management staff also
contribute to the service.
Another approach is to use budget information to estimate total staff
time expended annually on the service. The BUD-2 budget form, shown in
Exhibit 8, contains information on assigned staff for each EPA program
element activity in the most recent fiscal year. Program staff should be
aware, however, that the BUD-2 form may not assign manpower by the
service designation under study for fee-setting and identifies assigned rather
than actual staff levels. Thus the BUD-2 form is likely to be less reliable than
-25-
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EXHIBIT 7
How to Use a Timekeeping Report
A timekeeping report with the necessary information might look like this:
TIME ACCOUNTING SYSTEM
BI-WEEKLY EXPENDITURE REPORT
FOR PAY PERIOD ENDING: 09/30/87
SORTED BY ORGANIZATIONAL UNIT
(l) DATE: 01/23/88
PAGE: 7 OF 10
ORGANIZATIONAL UNIT: DIVISION A
ACT.
CODE |
DESCRIPTION
05 | ACTIVITY A
06 | ACTIVITY B
) 10 | OTHER - SPECIAL STUDIES C8
ORGANIZATIONAL UNIT SUBTOTAL
ORGANIZATIONAL UNIT: DIVISION B
ACT.
CODE
01
03
5)13
DESCRIPTION
MRS THIS
PER
ACTIVITY X
ACTIVITY Y
ACTIVITY A
OTHER - STATE PLANNING COMMITTEE
ORGANIZATIONAL UNIT SUBTOTAL
25
215
27
103
370
2,918
YTDHRS
311
2.470
320 QjJ
1,350
4.451
(T) (2) (s) ^ne ^ ^e reP°rt 's generated 0) is not important What is important is that the report be as of the close
of whatever lime period a program office has chosen to measure. In this case, the time period is as of the
close of fiscal 1987 (2). Note that the column marked "YTD HRS" (5) will give the full-year summary of
hours needed.
(j\ /4\ In some cases, it is possible to get a report "sorted" in a number of different ways. This report is sorted by
organizational unit (3), which in this case means different divisions in a program office (4).
Although it might be convenient to have a report sorted by activity code (6), this report allows staff
developing fees to see all activities of the two divisions. Such an overview is useful in the early stages of
defining a service, when inappropriate activities (8) can be excluded from the service definition. Note that
different types of activities often have different account code structures; here, other activities have account
codes (7) of 10 or greater.
In this example, if the service consisted of two activites (ACTIVITY A and ACTIVITY B) the total hours
expended for the year would be 1340 + 970 + 320, or 2630. This number would be entered in Box A4 of
the Service Cost Calculation Worksheet (Exhibit 6).
-------
EXHIBIT 8
How to Use a "BUD-211 Form
"BUD2" forms, submitted to OMB each September, look like this:
BUD~2 U.S. ENVIRONMENTAL PROTECTION AGENCY - PROGRAM ELEMENT PRICING ANALYSIS
(Dollars In Thousands)
PECODE: 0(XXX»""HQ: X RT: PE TITLE: PROGRAM x PERMITTING OFFICE: WATER fe.a.l
0 ACTIVITIES & ACCOMPLISHMENTS
PERMIT TYPE A SUPPORT
POLICY & STRATEGY DEVELOPMENT
7) - PERMIT CATEGORIZATION STRATEGIES
PERMIT TYPE B SUPPORT
REGIONAL REVIEWS
-REGIONAL REVIEWS
REGIONAL TECHNICAL SUPPORT (fij)
TOTAL
0 FY87
OPERATING PLAN
©
-------
a timekeeping system which records actual hours worked. Nevertheless, the
BUD-2 information provides program offices with a mechanism for checking
on calculations made using a timekeeping system or, if necessary, splitting
figures for total hours worked into Headquarters and Regional components
as described below.
Ideally, a timekeeping system will distinguish Headquarters from
Regional hours, if appropriate. If it does not, the ratio of Headquarters FTEs
to Regional FTEs for the program element and activity that best correspond
to the service can be obtained from the BUD-2 budget forms for
Headquarters and Regional activities. For example, if that ratio is 1
Headquarters to 9 Regional FTEs, then total hours or FTEs reported by a
timekeeping system can be split 10 percent to Headquarters and 90 percent
to the Regions. This split is necessary because of the differences in salary,
fringe benefits and other costs between Headquarters and the Regions.
Once an estimate of total hours expended on the service is complete,
program staff will need to calculate the total number of service transactions
performed over the selected time period in both Headquarters and the
Regions. Each program office will have its own sources for this kind of
information. The BUD-2 form is one such source. A second is the
information compiled by each AA's office for EPA's Strategic Planning and
Management System (SPMS), which contains numerical measures of
progress against certain goals, (e.g., permit issuance). If the service for
which a fee is to be charged matches one of the performance measures in
SPMS, the SPMS accomplishment figure for the selected time period can be
used directly in cost calculations. If SPMS information is not usable directly,
the AA's Office or the program office itself may maintain a more detailed
database of program office accomplishments. Budget staff from the AA's
Office can assist program staff in obtaining SPMS information and other
office-wide accomplishment information.
After completing the calculation of total staff time spent on service
delivery and the total number of service actions performed, programs have a
simple, mathematical task to complete hours per service action. Lines A4,
A5 and A6 of the cost calculation worksheet (Exhibit 6) guide users through
this calculation. If there is a Regional component to the service, the
calculation should be performed separately on a blank worksheet and the
result from line A7 of that worksheet copied to line D1 of the main worksheet.
Two separate sets of calculations are necessary because Regional and
Headquarters staff time cost different amounts. These must be combined
into a single cumulative cost, for all service actions, whether performed at
Headquarters or in the Regions.
For program offices with extensive timekeeping and service delivery
tracking systems, the time allocation methodology is an attractive option.
Provided the systems are accurate and up-to-date, calculations are
comparatively simple to perform. The estimation methodology can generate
-26-
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the most faithful picture of the time expended on the service, since
calculations are based on actual time recorded in the past by service staff.
The time allocation methodology has two potential drawbacks of
importance to all program offices. The first is that the timekeeping system
may not accurately segregate those staff activities not directly related to
service delivery and thus ineligible for inclusion under the IOAA costing
principles. For example, staff may charge 100 percent of their time to a
service account in the system although they actually spend some time on
special projects, public information activities, or other tangential activities.
Program offices could use a time expenditure build-up methodology to
adjust reported hours for the service downward to compensate for such non
service-related activities.
A second problem with the methodology is that it may not be an
accurate barometer of wide variations in the time required to complete a
service action. If the variations are significant, it may be necessary to break
the service action into categories. This will be a subjective decision based
on the lOAA's requirement, explained in Chapter II, that fees bear a
reasonable relationship to the cost of providing a service. Program offices
are encouraged to use some of the interview and sampling techniques
described below to identify variability in the time requirements for service
transactions and to consider such variability in designing a fee program.
(2) Time Expenditure Build-Up
The time expenditure build-up methodology attempts to ascertain
historical trends on actual time spent completing service transactions. It
differs from time allocation in that it identifies each step of the service
transaction, and through staff interviews, estimates the average time spent
on each step. The averages for each step of the service transaction are then
added together to get a total or "built-up" estimate.
Alternatively, specially designed timesheets can be used to record staff
time spent on a sample of service actions. The timesheets should be
attached to the paperwork for all service actions initiated during a time
period, e.g. one or two months. Every staff member handling the paperwork
would be expected to initial the timesheet and indicate how much time he or
she spent on it. When all the applications have been processed, the hours
for each application can be totalled and an average service time calculated.
The major advantage of this methodology is its usefulness for program
offices that do not have elaborate timekeeping or other tracking systems. A
secondary advantage of the methodology is that it is more likely than the
time allocation methodology to discern any significant variability in staff time
spent on service actions. Interviews are more likely to reveal the range of
service costs, and program offices can question service delivery staff directly
on how the effort required to complete a service differs from case to case.
-27-
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The time expenditure build-up methodology has some drawbacks,
however. Because it depends on interviews and sampling, it is more difficult
to perform. Additionally, personnel perspectives on service cost are
subjective, and their estimates of time expended may be less accurate than
those based on timekeeping systems. A related disadvantage is that once
program offices have completed their surveys, no independent means of
verifying the figures exist. As a result, fees calculated using only this
methodology may be more susceptible to criticism from service constituents.
(3) Hybrids
Program offices may devise other cost estimating methodologies that
are hybrids of the two described above. These hybrids can use the stronger
points of one methodology to buttress the weaker points of another. An
example will make the advantages of such combinations more clear. A
program office may have used the time allocation methodology to arrive at
an initial estimate of service cost. To corroborate or refine the initial
estimate, the program office could then use the time expenditure build-up
technique and gather more information through interviews or specially
designed service tracking timesheets.
Once a program office has completed its estimate of representative staff
time, calculation of the dollar cost of the staff time for a service action is simple.
Program offices can convert their service time estimate to FTEs (at 2,080 staff-
hours per FTE) and refer to Appendix B for the direct dollar cost of an FTE.
Lines C1-C3 and D1-D3 of the worksheet in Exhibit 6 describe this calculation
for the Headquarters and Regional components of a service.
If program office staff believe that contractor activities directly support the
service, they should contact budget staff in their AA's office for assistance in
estimating the costs of these activities. The BUD-2 budget form lists contractor
expenditures in the most recent fiscal year for each program element activity
(see Exhibit 6). Even if a program element activity exactly matches a service
definition, however, program staff must still determine whether the contractor's
activities directly support the service. It may be that only a portion or none of the
contractor's activities assist program staff in service delivery. Once program
and budget staff have estimated the dollar amount of contractor costs
attributable to the service, that amount should be entered on line E1 of the
worksheet in Exhibit 4.
3. CALCULATION OF INDIRECT COSTS
Appendix B lists the FY 87-88 both direct and indirect costs for the Regions
and for the four major program offices, OAR, OW, OPTS and OSWER. Program
offices will have used the direct cost portion of the appendix to calculate the
dollar cost of the staff time expended on a service action. The indirect cost
portion of the Appendix will enable program offices to calculate the indirect
costs associated with that staff time. Use of the Appendix figures to calculate
-28-
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indirect costs associated with the Headquarters and Regional components of a
service is described in lines F1-F6 of the worksheet.
The indirect cost areas listed in the left-hand column of the appendix are
divided into three groups. Group 1 costs are those that should be included in
fees unless there is statutory language to the contrary; these are typical indirect
costs such as program management at the AA and RA level; finance,
accounting and personnel (OARM); legal (OGC); and internal audit (OIG).
Group 2 consists of the cost centers associated with EPA's Office of Research
and Development (ORD). R&D costs, in at least some cases may legitimately
be included in the input of the service cost. Each program office relying on the
IOAA should seek input from OGC on the feasibility of including R&D costs.
Group 3 cost centers appear to have a somewhat tenuous relationship to most
of the services EPA provides. Program offices promulgating a fee under
statutory authority other than the IOAA or wishing to calculate fees on an all-
inclusive basis may consider using group 3 costs in their fees. Again, program
offices should work closely with OGC in determining which costs to include.
In order to use the Appendix, program office staff should use the column for
their AA's office (and the column marked "Regions" if the service is partially
provided in the Regions), and sum the dollar figures listed for those indirect
costs in groups 1, 2 and 3 which they desire to include in their fees. The dohar
cost per FTE for the AA's Office should be entered on line F2 of the worksheet;
the Regional dollar cost per FTE should be entered on line F5.
Appendix B also describes how the indirect costs were calculated by tie
Office of the Comptroller. Program offices may want to include portions of this
description in the proposed rule for the fee and other documents explaining
how the fee was developed.
4. FEASIBILITY DETERMINATION
After completing its calculation of service costs, a program office shot Id
reevaluate the feasibility and desirability of setting user fees. This evaluation
can then form the basis for a decision on whether to proceed with adoption of
the fee program through a regulation, policy, guidance, or other mechanism.
Program offices can perform this assessment with the help of the six
selection criteria introduced in Chapter II. During the costing phase, program
offices will have gathered considerable additional information that will support
more in-depth evaluation of all criteria. Examples of how to apply the criteria in
this phase of the process are as follow:
Legal Feasibility: At the conclusion of this phase, the program office
will have important information it needs to develop a fee program thaf
recovers the full cost of service and apportions those costs consisteiv
with the law.
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-------
Financial Feasibility: A program office now will have some
concrete, reliable data on the potential total revenue from a fee as well
as the durability of that revenue stream. Without further information
about the fee structure, however, the program office will only be able to
make broad assumptions about administrative costs.
Economic Impact: The program office can use the service cost
information to project the probable level of fees and the likely impacts of
such a fee schedule on the direct service beneficiaries and other facets
of the economy as a whole.
Administrable: This criterion is one for which the program office will
not be able to undertake in-depth analysis until it completes the design
of the user fee program. Certain assumptions can be made, however,
based on such factors as the number of service beneficiaries and the
complexity of services provided.
Environmental Impact: From this phase, the program office will
have gleaned little, if any, additional information on the potential for
environmental impacts. The exception may be estimated economic
impacts which in turn may have discernible environmental effects.
Acceptability to the States: The closer the program office gets to
setting specific fees, the more accurate its evaluation of acceptability to
the States will be. Determining service costs and projecting the
probable fee schedule in this phase will enable the program office to
refine its earlier analysis of the fee program's potential effects on the
States.
Exhibit 9 consists of a table that program offices can use to summarize the
results of their costing evaluation. The difference between this table and the
summary assessment table first used in the screening phase is that program
offices are now targeting fee-setting for a specific set of services. To document
the results of the evaluation in the new table, program offices should attempt to
use short, descriptive paragraphs rather than the simple pluses and minuses or
high/low classifications used at the end of Phase 1.
-30-
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EXHIBIT 9
Feasibility Assessment
(To be filled in by program office after the costing phase.)
Service Candidate:
Legislative
Feasibility
Financial Environmental Impact on Admin Economic
Feasibility Impact States Feasibility Impact
Principal
Positive
Principal
Negative
-------
V. DEFINING AND EVALUATING
ALTERNATIVE FEE
PROGRAMS
-------
V. DEFINING AND EVALUATING ALTERNATIVE
FEE PROGRAMS
Following the determination of service costs, a program office will be ready
to price fees; i.e., translate the estimated service costs into one or more fee
schedules that can be evaluated and presented to senior management for
decision-making. This chapter provides program offices with information on
basic options for pricing fees, the use of waivers to fine-tune the fee program,
and the preparation of a complete alternatives analysis that will be presented to
senior managers who are assessing the merits of a fee program. Exhibit 10
summarizes the key steps in this third phase of fee program development.
1. BASIC OPTIONS FOR PRICING FEES
Two primary pricing options are available for pricing fees:
Average cost, in which all service users are assessed an identical fee
that corresponds to the estimated service cost.
Stratified average cost, in which the charge for a particular service
is stratified into different fee levels, depending on variations in cost to
different groups for performing the service or subservice.
The discussion below is designed to aid a program office in selecting the
option that best fits its needs.
(1) Average Cost
Average cost pricing is the most elementary pricing methodology
available for setting user fees. In average cost pricing, the fee charged as a
general rule is identical to the service cost that program offices estimate in
the costing phase, Phase 2. Using this method, the fee schedule for an
office's fee program will consist of a separate, specific amount for each type
of service (e.g., each type of permit or registration) included in the fee
program.
Variations on the average cost method may occur under the following
circumstances:
The program office includes fee administration costs in
the proposed fee schedule;
The program office has calculated service costs using
data from earlier years, and decides to adjust the fee
to account for inflation; and
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EXHIBIT 10
Phase 3: Defining and Evaluating
Alternative Fee Programs
NO
PREPARE FEE
ALTERNATIVES
ASSESS
ALTERNATIVES
YES
CONSIDER WAIVER
OPTIONS
REGULATORY DEVELOPMENT
REGULATORY
WORKGROUP
MEETINGS
AND REPORTS
STOP
RECOMMEND FEE
PROGRAM
c
DRAFT RULE
PACKAGE
GO TO PHASE 4
OBTAIN CLOSURE FROM
WORK GROUP AND/OR
STEERING COMMITTEE
-------
Program offices may find this relatively simple approach especially
attractive when resources for fee development and administration are
scarce. Because no further calculations beyond those in Phase 2 are
necessary to set a fee schedule, personnel costs for the fee development
are kept to a minimum. Similarly, with a single fee level, fee payments will
be eaiser and less labor-intensive to process, preserving scarce resources
for other program operations. Even when resources are scarce, however,
program offices with a diverse pool of service users should proceed
cautiously in using the straight average cost as the fee level. Different
classes of users may translate into different costs to the Agency as well as
different capabilities to bear the burden of the fee.
(2) Stratified Average Cost
Conceptually, program offices can stratify fees for a service In several
ways. The first and most common method is to vary fees according to the
level of effort the Agency expends in providing the service. This could be
done when identifiable categories that exist within a type of service action
require significantly different levels of Agency resources. Additionally, cases
might occur when different classes of service users require significantly
different Agency resources. Program offices could also set stratified fee
levels for a service based on the characteristics of the service request itself
(e.g., was the request submitted punctually, was it complete?).
In practice, however, program offices should stratify fees based on
service cost, since the driving principle behind fee collections is full cost
recovery. For IOAA fees, particularly, the program office is legally obligated
to demonstrate that fees do not deviate significantly from estimated service
costs.
General examples of program offices where staff should consider
setting stratified average cost fees include:
Offices with complex service programs. Because stratified
average cost fees inherently involve differentiated fees, they can more
readily capture the range of service costs associated with a complex set
of services.
Offices that anticipate legal challenges to the fee program.
By using the differentiated fees set under stratified average cost to most
closely capture the actual cost of services, program offices may be able
to reduce the chances of legal challenges to the fee programs.
In contrast, program offices whose services are not easily grouped into
discrete categories may need to be more cautious about setting stratified
average cost fees. If service users have difficulty determining which fee
level to pay, the program office may end up committing significant resources
to determining whether each service applicant has submitted the correct fee.
Regardless of which pricing option a program office pursues to set fees,
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consultation with supporting offices such as OGC is essential to ensure that
the fee complies with statutory requirements.
2. WAIVERS
A waiver is a mechanism program offices can use either to reduce or entirely
eliminate the fee a user otherwise would pay. In the rule making process, the
program office can specify that waivers will be considered on a case-by-case
basis, or can exempt certain classes or categories of users on the basis of
criteria such as size, revenues, or economic hardship. Adoption of a waiver
policy provides a program office with an opportunity to fine-tune the basic
design of its fee program. Waivers can be used either to enhance a fee
program (e.g., increase its political acceptability or promote environmental
objectives) or ameliorate identified negative impacts (e.g., economic hardship).
In developing waiver policies, all offices should examine a standard set of
characteristics: categories of eligibility, eligibility guidelines, waiver fees, and
administrative procedures. As with the basic fee program, a program office has
a number of choices for designing each of these aspects of its approach to
waivers.
There is little policy or guidance on waivers that is uniformly applicable to all
Federal user fee programs. The IOAA does not address waivers directly, but
OMB Circular A-25, currently being revised, provides some guidelines on their
use. The draft revision provides Agency heads with the discretion to
recommend to OMB that exceptions to the fee schedule be granted. Most
exceptions are subject to review by OMB after a period of four years. This
handbook provides a further discussion of how to incorporate the use of waivers
into fee programs.
(1) Eligibility Categories
Recent waiver proposals by a number of Federal agencies offer some
useful information on the way waivers can be structured. In general, the
waiver categories have been defined in terms of subsets of users (e.g., small
businesses) and to a lesser extent in terms of subcategories of service (e.g.,
products with public benefits). The most common examples of waiver
categories are:
Public Interest: A program office may wish to consider public interest
waivers when a user fee may impede the introduction or continuation of
a product (e.g., innovative technology) that may significantly reduce risk
or have other significant positive environmental or public health
benefits. Existing Federal fee programs already incorporate public
interest waivers. EPA itself, for instance, grants waivers from the fees
for pesticide tolerance petitions if the pesticide is part of an integrated
pest management program. Similarly, the Food and Drug
Administration (FDA) plans to exempt orphan drug applicants from
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licensing user fees because the advantages to the public outweigh the
direct benefits to the licensee.
Financial Hardship: The rationale for allowing financial hardship
waivers is that full cost recovery should not be pursued so vigorously
that a fee program's adverse economic impacts on a user eliminate the
service's presumed benefits to the user. Few, if any, guidelines have
been established for ascertaining whether a user fee poses financial
hardship. Types of information found in a firm's financial statement
(e.g., gross revenues, net profits) may help a program office determine
a user's ability to pay all of its projected fees.
Small Business: This waiver is a subset of financial hardship
waivers. In general, the Federal government's policy is to stimulate, not
impede, small business; and small business waivers may allow a fee
program to be consistent with that objective. In defining "small
business," a program office may want to consider annual sales
volume, product volume, number of employees, or other factors.
Other categories of waivers considered by one or more Federal agencies
include government agencies (e.g., States and localities), quasi-government
entities (e.g., regional planning authorities), and non-profit institutions (e.g.,
academic entities). The rationale in these cases usually is a variation on the
"public" interest waiver. Program offices are not limited to these categories.
Moreover, they can incorporate multiple waiver categories into fee
programs, provided the fee program's design continues to meet all
applicable statutory requirements.
(2) Eligibility Guidelines
Identification of waiver categories for possible adoption is just the first
step in fashioning a program office's approach to waivers. A related step is
the development of quantitative or qualitative criteria for determining a
specific applicant's eligibility for a waiver, regardless of whether the
applicant or the Agency initiates consideration of a waiver. Some categories
of waivers, such as the "small business" one may lend themselves to being
defined in quantitative terms. Even in such cases, the program office should
define the type of information the applicant must submit as evidence of
eligibility. This is discussed in more detail in the section on administrative
procedures.
(3) Waiver Fees
Administrative expenses are incurred in reviewing waiver applications.
It may be appropriate, therefore, for a program office to attempt to recover the
cost of these reviews. Each EPA office should set its own policy for the
amount to be charged for each waiver application. One option is to address
each application for a waiver on a case-by-case basis. This gives an office
maximum flexibility but may raise issues of equity and fairness within the
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user community. The second approach, therefore, is to designate in
advance the fee for each waiver category. A program office could choose to
refund waiver application fees in those instances where waivers are
granted.
(4) Administrative Procedures
Finally, the program office must develop administrative guidelines for
both its own staff and the user community to address such issues as:
Payment Method: one option is for the waiver applicant to remit the
reduced waiver fee initially, with the balance of the full fee due if the
waiver is denied; an alternative is to require the applicant to pay the full
fee, with a rebate if the waiver is approved.
Eligibility: an office can elect to grant waivers only upon petition by a
user; or an office can consider and grant a waiver on its own initiative.
Waiver Petition: petitioners need to know what information the
program office requires in order to act upon a waiver request. An office
may design a special form, require a letter on formal letterhead, and/or
delineate the types of data to be submitted.
As with other aspects of the fee program, a program office can tailor its
approach to waivers to meet its specific objectives and program operations.
3. ALTERNATIVES ANALYSIS
A substantial portion of the third phase of fee development is the analysis of
alternative fee schedules. In some cases, program offices may already have
considered waivers in defining these alternatives. Some offices, by contrast,
will incorporate waivers after conducting the alternatives analysis and as part of
the adoption of a final fee program in phase 4. Each program office should
select the approach best suited to its particular circumstances.
The alternatives analysis once again evaluates the fee program's design
against the six analytical criteria discussed in the previous phases. This third
application of the selection criteria occurs at a critical point in the fee-setting
process, since program offices now should have virtually all the information they
need to complete the criteria worksheets in Appendix A.
As in the other analytical phases, legal considerations play a particularly
important role in the pricing phase. Program offices should be certain to
document how all proposed fee schedules meet any legal restrictions set forth
in the authorizing statute. Offices proposing lOAA-based fees in particular
should verify an approximate relationship between the fee and estimated
service costs and private benefit. It should be noted that if a fee program
includes many waiver categories, fees paid by nonexempt service constituents
-35-
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cannot increase to compensate for fee revenues lost through waivers, because
each user's fee would not accurately represent its service costs.
After pricing fees, program offices have an opportunity to better estimate the
revenue potential of each proposed fee alternative. Information gained in the
pricing phase now can be used to project more accurately the annual revenue
from each fee as well as the fee's anticipated revenue stability, and the ratio of
revenues to administrative costs. As with the other selection criteria, these
topics are covered more extensively in Chapter II.
With the definition of a fee schedule, program offices now also will be able to
assess the economic and programmatic impacts of fees both on service
constituents and on other government activities. Program offices, for example,
should determine whether any comparable State programs might be influenced
by new EPA fees.
The fee alternatives devised by the program office may have differing
administrative impacts. A program office might expect, for example, that a fee
schedule with a large number of waiver categories would pose more
administrative complexities than a simpler schedule. Similarly, a program office
may find that the design of a fee schedule will influence both the environmental
and economic impacts of a fee program.
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VI. ADOPTING A FEE PROGRAM AND
PROMULGATING A
FEE REGULATION
-------
EXHIBIT 11
Phase 4: Adopting a Fee Program and Promulgating
a Fee Regulation
SELECT
ADMINISTRATIVE
MECHANISM*
4a
CONTINUE
RULEMAKING?
YES
PREPARE
PROPOSED
RULE
4b
I
|4c
CONDUCT RED1—
BORDER REVIEW..
CONDUCT OMB
REVIEW
I
ADDRESS 111
COMMENTS AND
REVISE NPRM
REPEAT STEPS
4c THROUGH 4f
FOR FINAL RULE
4e
OBTAIN
CONCURRENCES
PUBLISH IN
FEDERAL
REGISTER
RESPOND TO
4g
PUBLIC COMMENTS
AND PREPARE
FINAL RULE
NO
ISSUE POLICY
OR GUIDANCE
* Initial selection may occur
in Phase 2 or 3 but be
reconsidered in Phase 4.
-------
VI. ADOPTING A FEE PROGRAM
AND PROMULGATING
A FEE REGULATION
OMB's policy for lOAA-based fees is "that unless there are statutory
prohibitions or limitations, user charges will be instituted through administrative
action." Examples of administrative action include policy memoranda, program
guidance, or rules and regulations.
In most cases, EPA will adopt fee programs through the rulemaking process.
The final rule, published in the Federal Register, should contain the following
information:
Services for which fees will be charged;
Discussion of private benefits from the service(s);
Description of beneficiaries;
Fee schedule and waiver policy; and
Description of fee collection procedures (see Appendix G).
Exhibit 11 provides an overview of the key steps in the rulemaking process.
Because rulemaking is a very flexible process, however, program offices will
have considerable latitude in when they select rulemaking as the adoption
mechanism and initiate rulemaking. Program offices should contact the Office
of Standards and Regulation (OSR) for more specific guidance.
1.EPA RULEMAKING PROCEDURES
A standard set of procedures is applicable to virtually any rule EPA
promulgates, including user fee rules. Items of particular importance to program
offices planning to promulgate user fee regulations include*:
The Start Action Request (SAP) is the official form that program
offices use to initiate formal Agency action on the proposed fee rule. In
the SAR, the program office describes the basic elements of the
proposed fee program. The EPA Steering Committee uses information
in the SAR to anticipate the fee's effect on EPA program activities and
to map out further review of the fee rule.
The discussion is based on the EPA Regulation Management Series
fact sheets.
-37-
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The SAP also assists other program offices in determining whether they
need to nominate program staff to the rule's official workgroup.
The Steering Committee is a standing committee with responsibility
for coordinating and integrating the Agency's regulatory development
activities. The Steering Committee reviews the SAR submitted by the
program office and sets up the rule's workgroup. The Committee plays
an important role throughout regulatory development, since it monitors
the workgroup's progress and has the final say on whether the merits of
the proposed fee program are sufficient to justify promulgating a rule.
The Workgroup, chartered by the Steering Committee, is composed
of staff from the program office and other staff assigned by Steering
Committee representatives from each office. The workgroup provides
the Steering Committee with in-depth analyses of regulatory options
based on a variety of perspectives from within the Agency.
Development Plans are required for all major rules, i.e., those with a
very large impact on society, either in terms of cost ($100 million or
more) or other impacts. In the Plan, the program office explains the
need for the proposed fee program, examines regulatory options and
their anticipated regulatory impact, and presents a plan for developing
the fee regulation. Fee rules themselves are unlikely to be classified as
major rules, but they may be part of a major rulemaking.
The Workgroup Reports are prepared periodically to keep the
Steering Committee abreast of regulatory developments. These
reports describe the regulatory issues confronting the workgroup,
including any problems requiring the attention of Agency management.
The workgroup chair, i.e., the program office lead, writes the reports
with support from other workgroup members.
The Draft Rule Package is prepared by the program office and
distributed in advance of the closure meeting. This package, which
contains the core of the Red Border/OMB review package, should
include the action memorandum, the preamble and regulatory text,
supporting analyses, and other relevant materials. For some rules,
program offices may need to include an Information Clearance
Request, which is the form for requesting OMB permission to collect
substantial amounts of information from regulated parties. In the
preamble and text, program offices should discuss the following items:
the statutory authority for fee collection; the service(s) for which the
program office will collect fees; any special benefits accruing to service
users; and the fee levels, including any differentiated fees or fee waiver
provisions. The package also should include the methodology used to
determine service cost (program offices whose fee levels are set
directly in the authorizing statute can omit this step), including the basic
items included in the estimate of service cost and a justification for their
inclusion.
-38-
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Workgroup or Steering Committee Closure occurs before the
program office can send the draft rule package forward for
management review. The purpose of a closure meeting is to
summarize the status of issues raised on the proposed fee rule. Based
on the closure meeting, staff from the OSR prepare a closure
memorandum which defines the terms of Red Border review and
summarizes the conclusions of the workgroup and the Steering
Committee.
Red Border Review/OMB Review is required prior to publication of
the Notice of Proposed Rulemaking (NPRM) in the Federal Register.
EPA's internal review, referred to as "Red Border Review," should
include the Assistant Administrators for OPPE and OARM and the
General Counsel. From time to time, other AAs or RAs may also
participate if the AA/RA workgroup representatives feel that the rule
may affect their program activities. The standard components of the
Red Border/OMB review package include -- in addition to the action
memorandum, the preamble, and the rule -- the communications
strategy, a completed OMB SF83 form, and assorted other materials.
More information on these items and how to put the review package
together is available from the Regulation Management Branch of OSR.
Under Executive Order 12291, OMB must review each proposed and
final rule before the Administrator signs it. The purpose of OMB review
is to ensure that the Agency has selected the regulatory option with the
least adverse impact on the regulated community. The Steering
Committee member representing the program office's Assistant
Administrator takes responsibility for coordinating the review and
response to OMB's comments.
Federal Register Publication is the legal, formal mechanism for
informing the public of a new regulation. The NPRM will notify the
public of EPA's intent to establish a fee program and announce the
opportunity for public comment. Following receipt of public comments,
the program office summarizes and analyzes them and addresses their
disposition in the preamble to the final rule. Publication of a final rule in
the Federal Register formally and legally implements the user fee. The
program office preparing the Federal Register notice should follow the
formal requirements for submitting a notice carefully, since even minor
irregularities can cause delays.
2. INTEGRATION OF FEE DEVELOPMENT AND
RULEMAKING
Although the rule making process follows a standard series of steps, program
offices may find it difficult to determine when to initiate the process in
developing a fee. Timing will vary from office to office, depending on such
factors as the difficulty of developing the fees or the time frame established for
investigating fees.
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(1) Timing the Initiation of Rulemaking
Ideally, initiating rule-making procedures early in the fee development
process will ensure that perspectives from throughout the Agency are
considered before options for the fee program have been foreclosed. Yet if
a program office starts the rulemaking process before it has sufficient
preliminary information on the feasibility and impacts of the fee, the
rulemaking process could utilize EPA resources inefficiently.
One approach is for a program office to initiate rulemaking (i.e., submit
the Start Action Request) after the second phase of fee investigation. At this
point, program offices will have a good idea of possible fee levels, projected
revenue, and potential impacts on users and the States.
For some offices, however, a later start, perhaps after the pricing phase,
may be more appropriate. Premature efforts at rulemaking may reduce the
fee's chances of receiving a favorable review from Agency and OMB
management. On the other hand, if the need to implement a fee program is
urgent, a program office may choose to initiate rulemaking even before
concluding the costing phase.
(2) Using the Regulatory Process to Examine Fee Alternatives
The advantage of starting rulemaking after the costing phase is that the
third stage of fee-setting -- defining the fee level ~ can then become an
integral part of regulatory development. As the fee development flowchart
shows, the program office can use the workgroup meetings as a way to
secure outside feedback on fee alternatives. The program office may find
the workgroup's reaction to the fees especially helpful in assessing the
impact of the fee program on the Agency at large, since the group should
include representatives from all appropriate AAs' and Regional offices.
Through the workgroup's examination of fees, it and/or the Steering
Committee will reach a decision on whether the program office should
proceed with promulgating a fee regulation. This decision is the signal to
the program office either to abandon its fee-setting efforts or to prepare the
draft rule package for Red Border review.
(4) Addressing the Management and Public Review Comments
Regardless of how a program office combines fee-setting and
regulatory development in earlier phases, the final phase of fee
development incorporates formal comments received from reviewers into the
fee structure. When the program office first receives the draft rule package
back from Red Border/OMB review, it needs to incorporate any comments
into the fee proposal. These comments may cover a variety of issues, such
as the financial burden on the affected industry, impacts on other programs,
the administrative cost to EPA, or the methodology used to calculate service
cost.
-40-
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After addressing management and OMB comments on the proposed
fees, the program office can forward the preamble and regulatory text,
accompanied by the Action Memorandum, to the Administrator's office for
signature. If the Administrator approves the package, the signed original of
the preamble and rule, together with the forms necessary for publishing the
proposed rule, can be forwarded to EPA's Federal Register Officer in the
Regulation Management Branch of OPPE.
The notice of proposed rulemaking (NPRM) will precipitate a second
round of review comments, this time from the public and the regulated
industry- Program offices can expect these comments to be broad in scope.
Subjects that reviewers might address include statutory authority (or
perceived lack thereof), waiver categories, economic impact on the industry
at large as well as on individual entities, the fee levels, and the fees' effect
on prices. The program office, in conjunction with the workgroup members,
must address formal comments received in response to the NPRM. This is
usually done in a separate section of the preamble entitled "Response to
Comments." The public comments may raise significant issues that could
result in considerable refinement of the proposed fee program. If such
changes are made, the package must undergo Red Border and OMB review
again, and comments from those reviews must be resolved before the
package is forwarded to the Administrator for signature and then to OPPE for
Federal Register publication. After publication in the Federal Register, the
fee program will become effective on the date specified in the Federal
Register.
-41.
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APPENDICES
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APPENDIX A
CRITERIA WORKSHEETS
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Worksheet 1: Legislative Feasibility
QUESTION
DISCUSSION
PROGRAM-SPECIFIC AUTHORITY
1. Is there specific statutory authority for
collecting fees?
2. What are the fee-setting requirements?
3. How will the fee meet these requirements?
4. To what extent is the fee authority
consistent with IOAA principles?
5. Does upcoming legislation exist that
would grant specific statutory authority?
IOAA
6. If program-specific authority is not
available, would IOAA authority be
satisfactory?
SPECIAL BENEFITS
7. What service(s) will be subject to fees?
8. What special benefits does each service
confer?
9. If the service is exclusively regulatory, are
there special benefits other than
regulatory?
BENEFICIARIES
10. Who are the beneficiaries?
11. Are they individual firms or citizens?
(As distinct from groups or classes of
applicants.)
Proper Cost Basis
12. How closely does the estimated cost
reflect the true cost of providing the
service?
13. Is the assessed fee different from the
calculated cost of providing the service?
If yes, why?
14. Is there adequate documentation to justify
the fee level?
A-1
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Worksheet 2: Financial Feasibility
QUESTION
DISCUSSION
GENERAL
1. How close does the fee come to full
cost recovery? (i.e., are both direct and
indirect costs included?)
2. What are the basic cost elements in the
fee's cost basis? (Attach separate list
if necessary.)
3. How will the fee be monitored/updated?
4. What will be the annual fee revenue?
Does this amount justify the resources
needed for program development?
5. Will income tax deductions reduce net
revenue to the government?
ADMINISTRATIVE COST/REVENUE
RATIO
6. What will be the relationship of adminis-
trative costs to revenue generation?
7.
How will this ratio change over the life
of the program (i.e., if administrative
costs are high in start-up years, how
quickly will they decline)?
REVENUE DEPENDABILITY:
Revenue Durability
8. What is the projected lifetime of the fee
program?
9. Are programmatic or legislative changes
in the offering that could affect continua-
tion of the service program?
10. Could the fee program in any way
benefit/hinder efforts to secure program
reauthorization?
REVENUE DEPENDABILITY:
Revenue Stability
11. How constant will fee revenue be from
year to year?
12. Does the service have a history of
fluctuating demand?
A-2
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Worksheet 3: Environmental Impact
QUESTION
DISCUSSION
1. What is the (expected) overall effect
on environmental behavior?
- Would the fee encourage risk
reduction?
- Would it have an impact on
innovation?
- Would it assist in environmental
education?
- Would it enhance environmental
protection?
2. Would the fee impede information
transfer to the States or the regulated
community (e.g., by making
information transfer too costly)?
3. Would the fee discourage compliance
with regulations (e.g., Late
submission of data, illegal waste
disposal)?
4. Would the fee make enforcement
more difficult? (Result in more
enforcement actions? Make them
more complex?)
5. Would any cross-media effects occur
(e.g., fees for one type of chemical
disposal resulting in an increase in
another form of chemical disposal)?
A-3
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Worksheet 4: Acceptability to States
QUESTION
DISCUSSION
1. How would the Federal fee program
affect established State programs (e.g.,
affect collection of fees at the State
level)?
2. What impact would the fee have on State
regulatory requirements (e.g.,
enforcement or compliance actions)?
3. Would the fee contribute to regional
disparities (e.g., by creating "pollution
havens")?
4. Would the fees serve as a disincentive to
program delegation?
Would the fee be levied against public
entities (e.g., States, municipalities) or
constitute a mere shift of accounting
funds (e.g., Federal grants being used to
pay fees)?
6. How would EPA fee programs affect
State efforts to adopt their own fee
programs?
7. Are there sufficient opportunities for
States to provide EPA with comments
on the fee proposal?
A-4
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Worksheet 5: Administrative Feasibility
QUESTION
DISCUSSION
1. Are adequate recordkeeping systems in
place for tracking service delivery and
service costs?
Would the fee affect program efficiency
(e.g., reduce unnecessary service
requests, increase efficiency of service
delivery, standardize program
operations)?
3. Would the fee have administrative or
programmatic repercussions in other
program offices (e.g., more
enforcement actions, greater demand
for comparable services offered by
other program offices)?
Would the program office be able to
absorb costs of fee program
administration in the event that a
compensating budgetary allocation is
not forth comming?
5. At which point during service
application and delivery will the fee be
assessed?
6. Will all service users pay the same fee?
7. If not, what is the basis for variable
charges (e.g., type of applicant, level
of effort necessary to provide the
service, etc.)?
8. Can the program office supply the
personnel resources to calculate the fee?
A-5
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Worksheet 6: Economic Impact
QUESTION
DISCUSSION
1. Would the abrupt transition to a fee
program inflict debilitating hardship on
the payor (i.e., fee as a percentage of
revenue or sales)?
2. Does the fee schedule reflect any
differences in economic standing among
service users (e.g., through use of
waivers)?
3. Would the fee have significant market
impacts (e.g., market stability, market
access)?
4. How would the fee affect the
competitive position of American
producers in international markets?
5. Would a cross-subsidy result from the
fee (e.g., one class of service users
subsidizing service consumption by a
competitor.)?
6. Would the fee substantially affect
product prices?
7. What impacts would the fee have on
product availability?
8. Will affected parties have sufficient
opportunity to comment?
A-6
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APPENDIX B
EPA DIRECT AND INDIRECT
COSTS PER STAFF YEAR
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APPENDIX B:
EPA DIRECT AND INDIRECT COSTS PER STAfF-YEAR
COST CATEGORY
DIRECT COSTS:
Salaries, fringe benefits, travel and equipment •
AIR
COST PER FTE FOR
OPTS OSUER WATER REGIONS
INDIRECT COSTS:
(a) Group 1:
Program management. Air, OPTS. OSUER. Water and Regions •« 2,951 1,665 4,771 4,069 8,488
EPA Administrator, Deputy Administrator and staff offices
Associate Administrator for Regional Operations
AA for Administration and Resources Management
Office of the General Counsel
Office of the Inspector General
Total, Group 1
1.128 1,129 1,231 1,161 574
0 00 0 83
15.537 11,471 21.544 24,415 17,691
1,553 1,621 2,428 1,732 222
1.342 1,342 1,342 1,342 1,342
22.511 17,228 31,316 32,719 28,400
(b) Group 2:
AA for Research and Development
Total, Group 2
Total, Group 1 and Group 2
72,906 21.601 28,710 63,507 0
72,906 21,601 28,710 63,507
95,417 38,829 60.026 96,226 28,400
(c) Group 3:
Associate Adninistator for International Activities
AA for Enforcement and Compliance Monitoring
AA for Policy, Planning and Evaluation
AA for External Affairs
Total. Group 3
Total, Group 1, Group 2 and Group 3
508 SOB 508 508 0
1.899 1.899 1.899 1,899 1,899
6,535 6,535 6.535 6.535 280
2,79* 2,794 2,794 2,794 0
11.736 11,736 11.736 11,736 2.179
107,153 SO.S65 71,762 107,962 30,579
Note*:
• Data not yet complete
•• Final figures Hill vary slightly Mhan updated data are used
B-l
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TECHNICAL INFORMATION ON DIRECT AND
INDIRECT COSTS
The following explanation of how the figures in Appendix B were calculated
is intended for program office staff who wish to understand the numbers in more
detail. In addition, the Office of the Comptroller is aware that program offices
need to provide an explanation of their service costing approach in a proposed
rule and in memoranda prepared for internal EPA use. Sections of this
appendix can be quoted verbatim for that purpose; key sections appropriate for
inclusion in a proposed rule are underlined.
A. Direct Costs
EPA's Office of the Comptroller has calculated the direct cost per full-time
equivalent staff year (FTE) for FY 87/88 for the Agency's four main program
offices and its regional operations. Direct costs per FTE include salary and
benefits, travel, and other incidental charges. Costs were calculated by dividing
the total expenditure for each of the program offices and for the regional
operations (excluding contractor costs incurred by these areas) by total staff
hours recorded for each area. The resulting cost figures were divided by 2,080
in order to express them in terms of standard EPA staff years (FTEs). Program
offices can obtain assistance from the Office of the Comptroller in updating the
costs. Appendix C provides some techniques for updating to reflect changes in
EPA's overall cost structure.
B. Indirect Costs
EPA's Office of the Comptroller also has calculated indirect costs for the
Agency's four main program offices and its regional operations. The technique
used to make the calculations is fully consistent with generally accepted
accounting principles, and has been used in Federal court to document the
indirect costs associated with Superfund toxic waste clean-ups. Indirect costs
associated with each of EPA's major administrative units are itemized
separately so that a program office may charge for only those administrative
costs which are appropriate to the particular fee. The Office of the Comptroller
also can aid the program offices in updating these costs to reflect annual
changes in EPA's overall cost structure.
Program management costs for the Regions (combined) and for the Air and
Radiation, and Water programs were calculated by dividing total expenditures
in those program element areas designated by EPA as program management-
related by total hours charged to those program elements. Cost figures were
then expressed in terms of standard EPA staff years (FTEs) by dividing hours
charged by 2,080. The program elements considered to include program
management are as follows:
Air: A2TR5A, Program Management, Air
OPTS: A2VR5A, Program Management, OPTS
Water: A2UR5A, Program Management, Water
OSWER: AGLR5A, Program Management, OSWER
B-2
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Regions: A3XT5A, Regional management
A3ZT5A, Financial management
A4AT5A, Personnel management
A4EX5A, Regional support services
A2XT5A, Regional counsel
Other indirect costs were "allocated" to the four AA offices and the Regions
using a model developed by the Office of the Comptroller. The model, which is
based on a model used to document indirect costs for Superfund cost recovery
legal actions, takes the expenditure for any individual indirect cost area (e.g.,
the Office of the Comptroller) and calculates how much of that expenditure
should be charged or "allocated" to other administrative areas within the
Agency.
Each indirect cost area is allocated on a basis which reflects the actual
use of that area's output by the Agency. For example, the Administrator is
involved in all phases of the Agency's activity, so the cost of the Administrator's
office is spread to all Agency administrative areas in proportion to their
assigned staffing levels. Upkeep charges for EPA's National Computer Center,
however, are allocated to administrative areas in proportion to their use of the
Center's computer capacity.
B-3
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APPENDIX C
TECHNIQUES FOR UPDATING FEES
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APPENDIX C:
TECHNIQUES FOR UPDATING FEES
Appendix B was compiled using financial figures from fiscal 1987, and can
be used in service costing throughout fiscal 1988. In subsequent years,
program offices who calculated and promulgated fees in fiscal 1988 may decide
to adjust fee levels to take into account both changes in EPA's organizational
structure and changes in the government's labor costs, the primary cost
component of EPA fees. The fee level adjustment methodologies described in
this appendix are designed to minimize the burden on program offices while
ensuring that fee levels continue to accurately reflect EPA's cost of providing
services. Two possible fee adjustment methodologies are described below.
A. Fee Recalculation
In any given fiscal year, a program office may seek assistance from the
Office of the Comptroller's Budget Division in updating the figures in Appendix
C. Without re-estimating the staff hours necessary for each service action,
program office staff can use original estimates of staff hours and the revised
figures to produce a new service cost estimate as the basis for a revised fee
schedule. The total time necessary for this exercise is not likely to exceed more
than one or two hours.
While this approach is significantly more accurate than the labor-cost inflator
methodology described below, it does have one disadvantage. Because each
service provided by a program office has a different mix of Headquarters,
Regional and contractor labor, no two services are likely to increase in cost by
exactly the same percentage. If a program office is charging for several fees, for
example, one may go up by 3% while another increases by 4 1/2%. Users may
notice this "discrepancy" (actually the result of a more accurate recalculation of
costs) and complain about it.
B. Using the Labor-Cost Inflator
A second methodology is to increase all fees directly, without revisiting
service costs at all. Fees could be adjusted upwards by the percentage change
in the Federal government's General Schedule (GS) pay scale or any other
appropriate inflation index. This information is published annually by OMB and
available through the Office of the Comptroller's Budget Division.
C-1
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APPENDIX D
USEFUL CONTACTS FOR PROGRAM
OFFICES DEVELOPING FEES
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APPENDIX D
USEFUL CONTACTS FOR PROGRAM OFFICES
DEVELLOPING FEES
Contacts that can assist program offices in their efforts to set fees include:
For help on determining service costs and pricing fees:
Budget Division
Office of the Comptroller
Office of Administration and Resources Management
Room W717, Tel. 382-4170
For assistance on issues relating to fee program implementation
(e.g., determining the cost of fee program administration,
establishing collection of checks and use of the EPA lockbox):
Fiscal Policies and Procedures Branch
Financial Management Division
Office of the Comptroller
Office of Administration and Resource Management
Room M3423, Tel. 382-5155
For information on the mechanics of rulemaking:
Regulation Management Branch
Information and Regulation Systems Division
Office of Standards and Regulations
Office of Policy, Planning and Evaluation
Room W415, Tel. 382-5479
For assistance in examining a fee's statutory authority:
General Law and Claims Branch
Office of General Counsel
Room W1054, Tel. 382-4550
The EPA Task Force on Fees is the coordinating group for the Agency's user
fee initiative. The Task Force is chaired within the Office of the Comptroller's
Budget Division. This should be the initial contact point for a program office
considering user fees.
D-1
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APPENDIX E
TEXT OF IOAA
-------
CHAPTER 97. MISCELLANEOUS
Section
9701. Fees and charges Tor Government services and things of value.
9702 Investment of trust funds
Auto-Cite?-: Any case citation herein can be checked for form, parallel
references, later history, and annotation references through the Auto-
Cite computer research system
§ 9701. Fees and charges for Government services and things of
value
(a) It is (he sense of Congress that each service or thing of value provided
by an agency (except a mixed-ownership Government corporation) to a
person (except a person on official business of the United States Govern-
meit) is to be self-sustaining to the extent possible.
(b) The head of each agency (except a mixed-ownership Government
corporation) may prescribe regulations establishing the charge for a service
or thing of value provided by the agency Regulations prescribed by the
heads of executive agencies are subject to policies prescribed by the
President and shall be as uniform as practicable Each charge shall be—
(I) fair; and
(2) based on—
(A) the costs to the Government;
(B) the value of the service or thing to the recipient;
(C) public policy or interest served, and
(D) other relevant facts.
(c) This section does not affect a law of the United States—
(1) prohibiting the determination and collection of charges and the
disposition of those charges; and
(2) prescribing bases for determining charges, but a charge may be
redetermined under this section consistent with the prescribed bases.
(Sept. 13, 1982, P. L. 97-258, § 1, 96 Stat. 1051.)
HISTORY; ANCILLARY LAWS AND DIRECTIVES
Prior law and revision:
ReviMd Section Source (USCS) Source (Sutuiei ai Urgt'
9701 31-483* Au» 31. I9J1. ch 376. { 501. 63
Sut. 290
743
E-l
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31 USCS § 9701 MONEY AND FINANCE
In the section, the words "agency (except a mixed-ownership Govern-
ment corporation)" are substituted for "Federal agency (including
wholly owned Government corporations as defined in the Government
Corporation Control Act of 1945 [31 U.S.C. 841 et seq ]" because of
section 101 of the revised title and for consistency.
In subsection (a), the words "each service or thing of value provided"
are substituted for "any work, service, publication, report, document.
benefit, privilege, authority, use. franchise, license, permit, certificate,
registration or similar thing of value or utility performed, furnished.
provided, granted, prepared, or issued" for consistency and to eliminate
unnecessary words The words "(including groups, associations, orga-
nizations, partnerships, corporations, or businesses)" are omitted as
being included in "person" under 1 1
In subsection (b), before clause (1). the words "ma> prescribe regula-
tions establishing the charge for a service or thing of value provided by
the agency" are substituted for "is authorized by regulation . to
prescribe therefor such fee, charge, or price, if any, as he shall
determine, in case none exists, or redetermme, in case of any existing
one" for consistency, to eliminate unnecessary words, and because of
the restatement In clause (1). the words "and equitable" are omitted as
being included in "fair" In clause (2)(A), the^-words "direct and
indirect" are omitted as surplus In clause (2)(B), the words "of the
service or thing" are added for clarity In clause (2)(D), the words
"and any amount so determined or redetermmed shall be collected and
paid into the Treasury as miscellaneous receipts" are omitted as
unnecessary because of section 3302(a) of this title.
Subsection (c) is substituted for 31.483a(provtsos) for clarity and to
eliminate unnecessary words
E-2
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APPENDIX F
TEXT OF OMB CIRCULAR A-25
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OFFICE OF MANAGEMENT AND BUDGET
AGENCY: Office of Management and Budget, Executive Office of
the President.
July 1, 1987
Circular A-25, * User Charges"
ACTION: Draft Revision OMB Circular No. A-25; Request for Public Comment.
SUMMARY: Circular A-25 establishes Federal policy regarding fees assessed for
Government services and for sale or use of Government property or resources. The
revision updates the existing Circular, which was last issued in 1959.
DATE: Comments from the public should be submitted no later than August 1, 1987.
ADDRESS: Comments should be addressed to: Ellen Balis, Budget Review Division,
Room 6001 New Executive Office Building, Office of Management and Budget,
Washington, DC 20503, Telephone: (202) 395-4574.
SUPPLEMENTARY INFORMATION: Title V of the Independent Offices Appropriation Act
of 1952 provided authority for Federal agencies to charge for services or
benefits provided to specific beneficiaries. Circular A-25 provides guidance
to the agencies to implement this authority.
Analysis of Key Sections
6. General Policy. This section provides the basic policy for when and what
type of user charge should be assessed.
— Section 6a discusses special benefits. Paragraph one retains the same
definition of special benefits as the existing Circular but provides updated
examples. Paragraph two defines the appropriate pricing mechanism for setting
charges. It continues to allow net revenues to be earned in specified cases.
Paragraph three provides new guidance for cases when there are incidental public
benefits. Paragraph four retains existing guidance for cases when the
identification of beneficiaries is obscure.
— Section 6b provides new guidance that charges can be made to the direct
beneficiary even if part of the benefit is passed on to others.
— Section 6e continues to provide exceptions that can be granted directly
-------
by agencies. Some exceptions can also be granted by the Office of Management and
Budget upon the recommendation of agencies.
— Section 6d defines full cost recovery and market pricing. An annual rate
of return on capital resources has been added to the definition of full cost
recovery. The revision also adds examples of how to use commercial practices to
determine market pricing.
7. Implementation. This new section provides guidance on agency
implementation of user charges.
— Section 7a provides the general policy that, unless there are statutory
limitations, charges should be instituted through administrative action.
— Section 7b provides guidance for developing legislation in cases where
there are statutory impediments.
— Section 7c states when proposal of excise taxes rather than user
charges would be appropriate.
— Section 7d encourages agency coordination of collection efforts and
legislative proposals.
— Section 7e promotes designing collection efforts that keep costs to a
minimum.
— Section 7f notes that agencies should follow normal legislative clearance
procedures for user charge legislation.
8. Agency responsibility. This section outlines the role of the agency in
proposing and implementing user charges. In addition to responsibilities as
laid out in the existing Circular, agencies are to undergo annual reviews of
their user charges and update them to reflect changing conditions, and to
maintain readily accessible records related to the base for setting fees and the
fees collected.
9. Disposition of receipts. This section allows more flexibility for agency
retention of receipts than the existing Circular. When agencies do retain
receipts, the new guidance does require, in most circumstances, that the
receipts remain under appropriations control. Receipts above the level of full
cost recovery are always returned to the general fund under this guidance.
TO THE HEADS OP EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
Subject: User Charges
1. Purpose. The Circular establishes Pederal policy regarding fees assessed
for Government services and for sale or use of Government property or resources.
It provides information on the scope and types of activities subject to user
charges and on the bases upon which user charges are to be set. Finally, it
provides guidance for agency implementation of charges and the disposition of
receipts.
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2. Rescission. This rescinds Office of Management and Budget Circular No.
A-25, dated September 23, 1959, and Transmittal Memoranda 1 and 2.
3. Authority. Title V of the Independent Offices Appropriations Act of 1952
(31 U.S.C. 9701).
4. Coverage. The provisions of this Circular cover all Federal activities
that convey special benefits to recipients beyond those accruing to the general
public, except where the imposition of user charges is prohibited by lav or
regulated by executive order, or where specific statutes provide authority for
the assessment and imposition of user charges. In such cases, the statute or
executive order shall take precedence over this Circular (e.g., sale or disposal
under Federal surplus property statutes). In any case where an Office of
Management and Budget circular provides guidance concerning a specific user
charge area (e.g., OMB Circular No. A-45 concerning charges for rental
quarters and OMB Circular No. A-130 concerning costs of disseminating
information products and services), or specific beneficiaries (e.g., OMB
Circular No. A-97 concerning providing services to State and local governments),
the guidance of that circular shall be deemed to meet the requirements of this
Circular. This Circular applies to all agencies, as that term is used in 31
U.S.C. 9701, but does not apply to activities of the legislative and judicial
branches or to mixed-ownership Government corporations, as defined in 31 U.S.C.
9701.
5. Objectives. It is the objective of the United States Government:
a. To ensure that each service, sale, or use of Government property or
resources provided by an agency to specific recipients be self-sustaining;
b. To promote efficient allocation of the Nation's resources by establishing
charges for special benefits provided to the recipient that are at least as
great as costs to the Government of providing the special benefits; and
c. To allow the private sector to compete without disadvantage in supplying
comparable services, resources, or property where appropriate.
6. General policy, A user charge, as described below, will be assessed
against each identifiable recipient for benefits derived from Federal activities
beyond those received by the general public. When the imposition of user
charges is prohibited or restricted by existing law, agencies will review
activities periodically and recommend legislative changes when appropriate.
Section 7 gives guidance on drafting legislation to implement user charges.
a. Special benefits
(1) Determining when special benefits exist. When a service (or privilege)
provides special benefits to an identifiable recipient beyond those that accrue
to the general public, a charge will be imposed to recover the full cost to the
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Federal Govenunent for providing the special benefit*. For exanple, a special
benefit will be considered to accrue and a user charge will be imposed when a
Government service:
(a) Enables the beneficiary to obtain more immediate or substantial gains or
values (which Bay or may not be measurable in monetary terms) than those that
accrue to the general public (e.g., receiving a patent, insurance, or guarantee
provision, or a license to carry on a specific activity or business or various
kinds of public land use); or
(b) Provides business stability or contributes to public confidence in the
business activity of the beneficiary (e.g., inspection and grading of farm
products, or insuring deposits in commercial banks); or
(c) Is performed at the request of or for the convenience of the recipient,
and is beyond the services regularly received by other members of the same
industry or group, or of the general public (e.g., receiving a passport, visa,
airman's certificate, or an inspection after regular duty hours).
(2) Determining the amount of user charges to assess:
(a) Except as provided in section 6c, user charges will be sufficient to
recover the full cost (as defined in section 6d) of providing the service,
resource, or property.
(b) User charges will be based on market prices (as defined in section 6d)
when the Government is supplying services, property, or resources in its
capacity as property owner rather than as sovereign (e.g., leasing space in
Federally-owned buildings). Under these conditions, user charges will recover
full costs and may yield net revenues.
(c) Dser charges will normally be collected in advance of, or
simultaneously with the rendering of services.
(3) In cases where incidental benefits to the general public are provided
along with benefits to specific beneficiaries (e.g., processing a new drug
application or inspecting farm products), charges should generally be set in
accordance with paragraph (2) of section 6a.
(4) No charge should be made for services when the identification of the
specific beneficiary is obscure and the service can be considered primarily as
benefiting broadly the general public.
b. Charges to the direct recipient. Charges will be made to the direct
recipient of the special benefit even though all or part of the special benefits
may then be passed to others.
c. Exceptions. (1) Agency heads or their designee may make exceptions to the
general policy in the following cases:
(a) The provision of a free service is an appropriate courtesy to a foreign
government or international organization; or comparable fees are set on a
reciprocal basis with a foreign country; or
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(b) The recipient of a special benefit is entitled by lav to receive such
benefits free or at a subsidized rate. However, if the Administration does not
agree with the exception, legislation to change the lav can be proposed.
(2) Agency heads or their designee may recommend to the Office of Management
and Budget that exceptions to the general policy be Bade when:
(a) The cost of collecting the fees would be an unduly large part of the
receipts from the activity; or
(b) Any other condition exists that, in the opinion of the agency head or his
designee, justifies an exception.
(3) All exceptions shall be for a period of no more than four years unless
renewed by the agency heads or their designee for exceptions granted under 6c(l)
or the Office of Management and Budget for exceptions granted under 6c(2) after
a review to determine whether conditions warrant their continuation.
(4) Requests for exceptions and extensions under paragraphs (2) and (3) of
section 6c, shall be submitted to the Director of the Office of Management and
Budget.
d. Determining full cost and market price. (1) "Pull cost" includes all
direct and indirect costs of providing a property, resource, or service. These
costs include, but are not limited to, an appropriate share of:
(a) Direct and indirect personnel costs, including salaries and fringe
benefits such as retirement and medical insurance.
(b) Physical overhead, consulting, and other indirect costs including
material and supply costs, utilities, insurance, travel, and rents or imputed
rents on land, buildings, and equipment. If imputed rental costs are applied,
they should include:
(i) Depreciation of structures and equipment, based on official Internal
Revenue Service depreciation guidelines unless better estimates are available;
and
(ii) An annual rate of return (equal to the average long-term Treasury bond
rate) multiplied by the value of land and other capital resources used.
(c) The agency's management and supervisory costs.
(d) The costs of enforcement, research) establishment of standards, and
regulation, including any required environmental impact statements.
(2) "Market price" means the price for a unit of property, resource, or
service that is based on competition in open markets, and creates neither a
shortage nor a surplus of the property, resource, or service.
(a) When a substantial competitive demand exists for a property, resource, or
service, its market price vill be determined using commerical practices, for
example:
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(i) By competitive bidding; or
(ii) By reference to prevailing prices in competitive markets for property,
resources, or services that are the same or similar to those provided by the
Government (e.g., campsites or grazing lands in the general vicinity of private
ones) with adjustments as appropriate that reflect demand, level of service, and
quality of the good or service.
(b) In the absence of substantial competitive demand, market price will be
determined by taking into account the prevailing prices for property, resources,
or services that are the same or substantially similar to those provided by the
Government, and then adjusting the supply made available and/or price of the
property, resource, or service so that there will be neither a shortage nor a
surplus, e.g., campsites in remote areas.
7. Implementation, a. The general policy is that, unless there are statutory
prohibitions or limitations, user charges will be instituted through
administrative action.
b. When there are statutory prohibitions or limitations on charges,
legislation to permit charges to be established should be proposed. In general,
legislation should seek to remove restraints on user charges and permit
their establishment under the guidelines provided in this Circular. When passage
of this general authority seems unlikely, more restrictive authority should be
sought. The level of charges proposed should be based on the guidelines in
Section 6. When necessary, legislation should:
(1) Define in general terms the services for which charges will be assessed
and the pricing mechanism that will be used;
(2) Specify that receipts will be collected in advance of or simultaneously
with the provision of service; and
(3) Specify where receipts will be credited (see section 9).
Legislation should not specify precise charges. The user charge schedule
should be set by regulation. This will allow administrative updating of fees to
reflect changing costs and market values.
Where it is not considered feasible to collect charges at a level specified
in Section 6, charges should be set as close to that level as is practical.
c. Excise -taxes are another means of charging specific beneficiaries for the
Government services they receive. New user charges should not be proposed in
cases where an excise tax currently finances the Government services that
benefits specific individuals. Where appropriate, agencies may consider
proposing new excise taxes rather than user fees. This should be considered
where a tax would be significantly cheaper to administer and its burden would
rest almost entirely on the user population (e.g., gasoline tax to finance
highway construction). Excise taxes cannot be imposed through administrative
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action but rather require legislation. Legislation should meet the sane criteria
as in 7(b), except that the level of the tax mist be explicitly stated. Agency
review of these taxes Bust be perforated periodically and new legislation should
be proposed, as appropriate, to update the tax based on changes in cost.
d. In proposing new charges or nodifications to existing ones, managers of
other prograns that provide special benefits to the sane or sinilar user
populations should be consulted. Joint legislative proposals should be Bade and
joint collection efforts designed to ease the burden on the users should be used
whenever possible.
e. Every effort should be made to keep the costs of collection to a minimum.
The principles embodied in Circular No. A-76 (Performance of Commercial
Activities) should be considered in designing the collection effort.
f. Legislative proposals will be submitted to the Office of Management and
Budget in accordance with the requirements of Circular No. A-19. To ensure the
proper placement of user fee initiatives in the budget account structure,
agencies are encouraged to inform 0KB of proposals at an early stage of
development.
8. Agency responsibility. Agencies are responsible for the initiation and
adoption of user charges schedules consistent with the policies in this
Circular. Each agency will:
a. Identify the services and activities covered by this Circular;
b. Determine the extent of the special benefits provided;
c. Apply the principles specified in paragraph 6 in determining full cost or
market price, as appropriate;
d. Apply the guidance in section 7 either to implement charges
administratively or submit legislation as appropriate;
e. Review charges annually and adjust then to reflect changing costs or
market values;
f. Ensure that the requirements of OMB Circular No. A-123 (Internal Control
Systems) and appropriate audit standards are applied to collection.
g. Maintain readily accessible records of:
(1) The services or activities covered by.this Circular;
(2) The extent of special benefits provided;
(3) The exceptions to the general policy of this Circular;
(4) The information used to establish charges and the specific method(s) used
to determine them; and
(5) The receipts from each user charge imposed.
h. Maintain adequate records of the information used to establish charges and
provide them upon request to OMB for the evaluation of the schedules.
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9. Disposition of receipts, a. If user fees are implemented solely under the
authority of this Circular, collections will be credited to the general fund of
the Treasury as miscellaneous receipts, as required by 31 U.S.C. 9701.
b. Legislative proposals to permit the collections to be retained by the
agency nay be appropriate in certain circumstances. Proposals should meet the
guidelines in Section 7b.
(1) Proposals that allow agency retention of receipts may be appropriate
when:
(a) The fee charged recovers the outlays of the agency in providing the
special benefit in the period in which the service is provided. (For example, a
fee calculated as the overtime pay of inspectors charged for after regular duty
hour inspections). In these cases, use of the receipts need not be controlled
directly through the appropriations process. Generally, the use of receipts
credited to an agency's appropriation should, however, be subject to limits set
in the annual appropriations language.
(b) The fee charged is tied to the full cost of providing the special
benefits. In these cases, the agency's outlays in a given fiscal year to provide
the benefit may be less than the full-cost recovery fee charged. Under these
circumstances, agency use of the receipts should be subject to control through
the appropriations process.
(2) Legislative proposals should always credit collections above the level of
full-cost recovery to the general fund.
10. New activities. Whenever agencies prepare legislative proposals for new
or expanded Federal activities that would provide special benefits, the policies
and criteria set forth in this Circular will apply.
11. Inquiries. For information concerning this Circular, consult the Office
of Management and Budget examiner responsible for the agency's budget estimates.
By direction of the President:
James C. Miller III,
Director.
[FR Doc. 87-14265; Filed 6-30-87; 8:45 am]
BILLING CODE 3110-01-M Certified to be a true copy of the original.
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APPENDIX G
OFFICE OF THE COMPTROLLER
POLICY STATEMENT ON FEES
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\
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
COMPTROLLER POLICY ANNOUNCEMENT OFFICE OF
NO. 88-03 ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT: Collection of User Fees for Services and
iteria],s Provided iy EPA
FROM: /, yDa^id P. Ryan
motroller
(X
TO: Assistant Regional Administrators
Management Division Directors
Senior Budget Officers
Regional Comptrollers
Allowance Holders
This Policy Announcement establishes general financial and
accounting requirements applicable to user fees collected by EPA.
Program requirements specific to each Agency user fee will be set
out in separate regulations developed by the Programs implementing
those fees.
BACKGROUND
As a result of Congressional direction and Administration
initiatives, EPA has undertaken a review of various services and
materials provided to the public that may be candidates for assess-
ment of fees. Fee collection is based on a philosophy that Federal
activities conveying special benefits to recipients, beyond those
accruing to the general public, should be as self-sustaining as
possible.
User fees are now being considered for a number of EPA programs,
and several have entered the rulemaking stage. As user fees are
implemented for various EPA programs, it will be essential to know
the amount and type of fees collected for budgeting and internal
control purposes. This Policy Announcement is intended to provide
the basic mechanisms for receiving, depositing and reporting fee
collections so that adequate data are available for management
decisionmaking.
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POLICY
Fees must be received by EPA, payable in U.S. currency, before
services will be administered or goods provided. As these fees are
received, they will be identified uniquely in the Agency's Financial
Management System (FMS), and will then be deposited into the General
Fund of the U.S. Treasury. Should EPA receive Congressional approval
to establish a Special Fund (i.e., a Treasury account where receipts
can be reserved for specific purposes), we will issue amended
guidance.
PROCEDURES
Use of EPA Lockbox. In order to improve physical security over
checks, and for cash management purposes, user fees must be remitted
through the EPA Lockbox system. Program offices establishing user
fees must include the appropriate Lockbox address in its regulations
and in other guidance that advises parties on requesting services
or materials from EPA. Program offices must obtain the respective
Lockbox addresses from the Office of the Comptroller's (OC) Fiscal
Policies and Procedures Branch (FPPB) . FPPB will add a line in the
Lockbox address that will identify the type of user fee or Program
Office to be notified. This modification of the standard Lockbox
address will facilitate processing by the Financial Management
Offices (FMO).
(As Programs work with the OC in establishing user fees, OC will
designate an FMO(s) responsible for processing these materials.)
Forwarding Lockbox Receipts to EPA. The Lockbox bank will forward
a copy of any remittance check, the envelope in which the check was
sent, and any materials that accompany the check to the appropriate
EPA Financial Management Office within one working day. To help
match checks with the applications for services and materials sent
directly to the Program, the Program administering the user fee
will request the remitter to annotate the check, or to include
information with the check to link it with the application.
EPA FMO Processing. For each type of user fee that it must account
for, the EPA FMO receiving materials from the Lockbox bank will
maintain a running log of such receipts. The FMO will number the
receipts sequentially. The numbers will be structured as follows:
The first digit will be the fiscal year in which the remittance was
deposited. The second, third and fourth digits will be the first
three positions of the Program Element under which the activity
primarily occurred. The last six positions will be used for
sequential numbers, e.g., "000001," "000002," etc., with an entire
log number looking like 7AGT000001.
For large volume user fees (e.g., quality assurance samples), the
Financial Management Officer and the responsible program may agree
to post receipts in batches rather than by individual order.
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The FMO staff will annotate this number on the copy of the check
and on any order form that it forwards to the Program office.
These items, and any other related finance or administrative
documents received from the Lockbox, will be forwarded to the
responsible Program Office within one working day.
The FMO will complete a Schedule of Collections (EPA Form 2505-3)
daily for each type of user fee collection and will E-mail a copy
of that schedule to the Program Office. To ensure all materials
sent are received and that amounts are correct, the Program
Office must reconcile the Schedule of Collections both with the
Lockbox materials they receive separately and with their own
system for tracking applications for goods or services they
provide.
Entering Information in the FMS. FMO staff will record user fees
in FMS as a deposit to Treasury Receipt Account 68 2410, "Fees and
other charges for administrative and professional services." Trans-
action code 399 will be used to establish a debit to EPA account
362.0, "Miscellaneous Receipts - Return to Treasury," and a credit
to account 590.0, "Miscellaneous General/Trust Fund Receipts."
The FMO will enter the sequential number assigned above in
positions 21-30 of the General Ledger Code Sheet, EPA Form 2500-3.
The transaction data will be entered in positions 63-70, and the
name of the remitter, abbreviated if necessary, will be entered in
positions 71-80 of the Code Sheet.
Program Office Tracking of User Fees. Each Program Office
responsible for user fee assessments must track — preferably
through an automated system — all applications for services or
materials. The Program Office system must include fields for both
the FMO assigned number and the amount of the collection reported
on the EPA Form 2505-3. These required data elements are simply
to link the Financial Management System and the program system
for internal control and reconciliation purposes. In developing
the tracking system, the Program Office should also attempt to
anticipate data requests that may be made as part of the budget
development process and should include such data elements in
their system.
Summary Reports. Within one month following the end of each
Quarter, the responsible FMO will send to the appropriate Programs
and to the Budget Division a printout of all FMS data for that
Quarter on each user fee.
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EFFECTIVE DATE
These policies and procedures are effective immediately for
all user fees that the Agency collects for services or materials
(except for the existing fee collected for tolerances and tolerance
petitions issued under Section 408 of the Federal Food, Drug, and
Cosmetic Act).
FOR ADDITIONAL INFORMATION
If you have any questions on the policies and procedures set
forth above, please contact Bob Cluck, Fiscal Policies and Procedures
Branch, at 382-5160.
cc: J. Richard Bashar
John J. Sandy
Alvin Pesachowitz
Vincette L. Goerl
Tony Musick
John Elliott
Carole Ansheles
Financial Management Officers
FMD Branch Chiefs
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