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Earth Night

Excerpts from:
Department of Environmental Protection Report to the
Fees and Program Improvements Committee
December 19, 2002

Executive Summary
During the fiscal crisis of the late 1980's, business leaders, environmentalists and government officials arrived at a consensus solution for future funding of environmental protection programs. Legislation created a Fees and Program Improvements Advisory Committee for the Department of Environmental Protection (DEP) and authorized the Department to institute a fee system, contingent upon the implementation of numerous streamlining and program efficiencies. The new permit and compliance fees were established to supplement state and federal environmental dollars and were dedicated to environmental protection programs. Through the 1990's this system provided the resources and the flexibility for the Department to invest in innovative approaches to environmental protection.

Since the beginning of FY02 DEP's budget has been cut by 17 percent. These budget cuts have taken away these resources and the flexibility required to continue developing innovative environmental regulation. DEP's mandated responsibilities have expanded greatly, but the Department now has 65 fewer staff than it did in 1989. New responsibilities have been accommodated by increased efficiency and innovation, for example through introduction of electronic filing capabilities for DEP customers, the privatization of the Hazardous Waste Site Cleanup process and the development of outcome based initiatives such as the Environmental Results Program.

FY03 budget cuts have already caused reductions in Department operations. In deciding where to cut programs and services, the Department has followed six guiding principles designed to focus our efforts on critical environmental and public health problems:

  • Maintain compliance and enforcement presence;
  • Limit short-term exposures to contamination;
  • Shift risk to the regulated community;
  • Focus DEP's technical resources on supporting municipal and public agencies;
  • Invest in areas that provide long-term efficiencies;
  • Divest in programs that fall below critical mass.

The percentage of the Department's budget funded from general tax revenues has decreased from 100% in 1989 to 21 % in 2003. Non-tax revenues are now the major source of funding for environmental protection programs. Expansion of non-tax revenues, such as greater access to dedicated funds with surpluses, expansion of audits of out of state bottle distributors return of unclaimed bottle deposits, increases in existing permit and compliance fees to reflect the cost of doing business, adoption of new fees, and cost of living increase in penalties, present the best opportunity to maintain funding levels for core environmental programs without placing further demands on the general tax base (see Section VI for a complete list of options). In order to benefit environmental protection, these non-tax revenue options must supplement, not replace existing, state funding commitments. …

IV. Responding to Recent Budget Cuts

Magnitude of Recent Budget Cuts
Since the beginning of FY02, DEP's state operating account funding has been reduced from $68,295,799 to $56,550,609 a loss of $11,745,110, or 17 percent. During the same period FTEs have decreased from 1132 in FY02 to 1085 as of December 2002. Staff reductions have come from a combination of an early retirement incentive plan offered in FY2002, layoff of 40 people in FY03, and a voluntary furlough program in which over 80% of DEP staff participated. In addition to the staff reductions, DEP has renegotiated its leases and temporarily shifted costs on to Federal, Trust and Capital accounts where possible.

Guiding Principles
A budget and staff reduction of this magnitude has forced DEP to make significant program cuts in FY03. The choices made by the Department have been guided by the following six principles. These principles are intended to focus remaining resources on those areas most critical to public health and the environment.

    1. Maintain compliance and enforcement presence. Maintaining the enforcement safety net is the Department's highest core program priority and is essential to protecting public health and the environment.

    2. Limit short-term exposures to contamination. Resources will be devoted to protecting the public from imminent hazards and reducing short-term risks.

    3. Shift risk to regulated community. DEP will issue "presumptive approvals" for many permits that currently require extensive technical review, and look for opportunities to expand the use of the LSP and ERP regulatory models.

    4. Focus DEP's technical resources on supporting municipal and public agencies. Municipalities oversee critical environmental programs and are in dire need of technical support. DEP will maintain support of municipal regulators while reducing technical and pre-permitting assistance to permitted entities.

    5. Invest in areas that provide long-term efficiencies. DEP will maintain a commitment to improve information management and increase our ability to accept on-line transactions as a means of freeing resources for more important technical work.

    6. Divest in programs that fall below critical mass. Ensure remaining programs are implemented reasonably well and avoid creating the appearance of a program where no credible program actually exists.

Fundamental Impacts
While the Department has focused its dwindling resources on critical environmental and public health problems, this focus comes at the cost of both long-term solutions to many persistent environmental problems and at the cost of innovative programs that respond to the needs of the regulated community in Massachusetts. These changes will effect the Department, the public and the regulated community in important ways:

  • Greater reliance on the regulated community to determine the appropriate means of achieving environmental standards.
  • Higher costs, for both the private and public sectors, over the long term in order to achieve short-term savings.
  • Shift of resources to enforcement and compliance activities will inevitably mean more after the fact clean-ups and clean up is always more expensive than prevention.
  • Greater reliance on by- the- book regulatory standards decreases the opportunity to identify more cost effective designs and flexible approaches to permitting, increasing environmental compliance costs for businesses and municipalities.
  • The costs the public bears for hazardous waste clean up will also rise as the public pays for necessary hazardous waste site clean up where no private responsible party can be identified due to resource limitations.
  • Extended permit review timelines in order to ensure adequate review and analysis of those projects with the greatest potential to impact public health and the environment. While enabling the Department to meet its statutory obligations, extended timelines will impact the costs of permitting for business and municipalities and may delay projects initiated as a part of the economic recovery of FY '04 and FY '05.

Specific FY03 Program Cuts
In FY 03, cuts and consolidations are occurring in all major areas of DEP activity. The following specific reductions have been or will shortly be implemented:

A. Technical Assistance and Outreach

  • The wetlands circuit rider program for local conservation commissions has been cut in half due to loss in circuit rider staff.
  • Technical assistance, permitting and compliance assistance programs for all non-municipal clients have been significantly reduced.
  • The hazardous waste site source discovery program has been eliminated, and support for public involvement in hazardous waste site clean up activities has been significantly reduced.
  • State-funded infrastructure vulnerability assessments aimed at defending against terrorism have been discontinued.
  • Technical and compliance assistance efforts intended to help businesses prevent pollution and comply with the Toxics Use Reduction Act (TURA) has been discontinued.
  • Providing project proponents with a "Single Point of Contact" for DEP permitting and project management has been limited exclusively to situations where project proponents are willing to pay extra for the service.

B. Accessibility and Responsiveness

  • Attendance at night meetings where the public often expects the agency's presence and expertise has been significantly reduced. DEP will participate only in those meetings that are required by statute or regulation, supported by dedicated accounts, or considered essential to support the few technical assistance and outreach activities that will remain intact.
  • Response to most nuisance (e.g. dust, noise and odor) complaints will be discontinued, leaving them to be handled by municipal officials or not handled at all.

C. Compliance and Enforcement

  • Solid waste compliance assurance activities will be limited to only the most significant sources of contamination.
  • Auditing of continuous emissions monitoring data and stack tests at major sources of air pollution has been drastically scaled back.
  • Periodic sanitary survey inspections of some small public water supplies have been discontinued.
  • Comprehensive DEP oversight of assessment and cleanup activities at Tier 1A hazardous waste sites has been eliminated.
  • 15 of 40 ambient air monitors across Massachusetts will be dismantled.

D. Permitting

  • Only those permits most essential to the protection of public health and the environment will be reviewed on a priority basis.
  • Sewer connection and extension, industrial wastewater discharge to sewers and new solid waste facility permits; herbicide applicator licenses, and harbormaster appeals of Chapter 91 licenses will be evaluated for transition to presumptive approvals.
  • Federal air permits for minor and reduced-emission projects and hazardous waste site cleanup will be evaluated for transition to presumptive approvals or permit by rule.
  • Drafting of National Pollution Discharge Elimination System (NPDES) surface water permits will be deferred to the EPA in all but a handful of high-priority cases.
  • Local decisions on Title 5 septic systems, tight tanks, alternate percolation rates and variances will be evaluated for presumptive approvals;
  • Technical review of Chapter 91 small docks and piers will be halted and shifted to a general license.
  • Self-certification by design engineers of plans and specifications for non-State Revolving Fund (SRF) wastewater and water treatment facilities will be evaluated.

E. New Policy, Regulation and Program Development

  • Regulation and policy development in most program areas, except those required to implement disinvestments, will be halted.
  • Comprehensive sewer redesign will be halted.
  • Work on new total maximum daily load (TMDL) standards, but we will complete the projects already commenced, such as the Assabet Watershed and Estuaries projects, will be suspended.
  • Review of all but the highest priority Massachusetts Environmental Policy Act (MEPA) activities will be eliminated.
  • Program development and planning activities in transportation areas (e.g. airports, diesel and rideshare) and solid/ hazardous waste management will be drastically cut back.

V. FY04

FY04 Budget Shortfall
Even after deep cuts in spending and staffing this fiscal year, DEP is facing a fiscal year 2004 budget shortfall that could result in the loss of up to 200 additional positions. DEP implemented many one-time actions in FY 03 to lessen the impact of budget cuts. Rent in the headquarters building was deferred until next fiscal year, some salaries and program cost were moved onto federal accounts and capital accounts to take advantage of flexibility and available funding. Utilization of these options allowed DEP the time to undertake a more orderly consideration of program priorities than would have otherwise been possible if all the reductions came at one time. The inability to replicate these one-time options, combined with the contracted increases in staff costs mean that a level funded budget in FY 04 has the effect of at least a $5 million dollar budget reduction. The deficit could easily approach $10 million if additional cuts come before the close of FY03.

The potential net result of budget decline in the fiscal years '02-'04 is a 33% reduction of the agency's work force in less than two years. Any private sector business experiencing similar catastrophic reductions would be looking at drastic changes in all phases of its operations: facilities, organization, products, supplies and customer service. DEP is no different.

Additional Program Cuts
While it is too early to tell how and where the next wave of cuts may be apportioned, DEP has already begun to consider a range of options for additional disinvestments in order to maintain its focus on the principles previously outlined.

  • Hazardous Waste Sites. State audits and compliance activities will be reduced even further, and not provide adequate oversight of third party cleanups. DEP will urge EPA to oversee assessment and cleanup at the most serious sites. Comprehensive actions at federally funded sites will continue since the federal government earmarks funds for these sites, but all other remaining elements of the program will face significant reductions.
  • Pollution Prevention and Toxics. As the pendulum swings back toward end-of-the-pipe control after a decade of success in preventing pollution and reducing industrial use of chemicals, DEP will be less effective at keeping toxics, such as those linked to cancer and asthma, out of the air and water. The agency may also need to eliminate all or of parts of its solid waste management program. DEP may not pursue authorization of the Federal RCRA hazardous waste management program.
  • Water Resources. DEP may stop all licensing of shoreline development under the Public Waterfront Act (Chapter 91); allow public water suppliers to develop new wells at their own risk without state oversight; relinquish its role in the drafting of federally mandated surface water discharge permits, leaving these decisions solely to EPA; and refuse to hear appeals of all but a handful of local wetlands permitting decisions, leaving the courts to decide.
  • Customer Service. The closure or consolidation of one or more DEP regional offices is quite likely in FY 2004. Fewer regional offices will mean less convenience, local service and responsiveness to citizens, municipal officials and regulated businesses.

VI. Funding Alternatives

DEP has identified a number of options for increasing revenues, which are outlined below. While all of these are viable options, it is important to ensure that additional revenues are dedicated to their intended purposes and not simply used to offset further reductions in general funding for DEP. The challenge is to develop consensus and support in the legislature to allow DEP access to these dedicated funds without offsetting reductions in general funds.

There is a real need to maintain some level of general taxpayer stake in DEP's work, since the agency is charged with protecting the environment for everyone - not just those who pay permit or compliance fees. Otherwise, DEP initiative and effort will effectively be geared toward activities that generate the most revenue rather the most significant threats to our public health and the environment.

    1) Access To Dedicated Funds With Surpluses

  • Give DEP access to $22 million of dedicated revenue in the Clean Environment Fund.

    • - Expand the Bottle Bill. Unclaimed bottle and deposits currently generate $30 million in revenues per year for the Clean Environment Fund, which is dedicated to environmental protection, recycling, and other solid waste programs. Expanding the bottle deposit law to encompass spring water, fruit juices and other drinks would yield up to an additional $7.5 million annually.

    - Expand the Department of Revenue (DOR) Audit Program. Over the last several years, funding from the CEF appropriation has been provided to DOR to establish an audit program for the bottle distributors to insure that unclaimed bottle deposits are turned over to DOR as required by law. Last year this program was expanded to include out of state distributors and the program has exceeded all expectations with the collection of several million dollars in delinquent revenue. Expansion of this program to all out-of-state distributors in FY04 could expect similar one-time collections.

    2) Increase Existing Fees And Assessments

      Adjust Fines and Penalties to reflect inflation and cost of living increases. DEP could review and update its enforcement penalty schedule to reflect inflation since current fines and penalties were set. Alternatively, legislation similar to that approved this session in the Senate (SB2163) could be enacted to broaden the agency's ability to seek and recover larger penalties from environmental violators. It is reasonable to estimate that such initiatives could yield additional revenues of $500,000 to $1 million per year.

      Increase permit and compliance fees. The fiscal year 2003 state budget included a provision that increased DEP permit and compliance fees indexed to cost of living increases since the fees were last set. Adjusting them again to reflect DEP's costs of doing business, which have increased at twice the rate of inflation, would yield additional revenues of $1.5 million to $2 million per year.

      Increase the Drinking Water Assessment. A DEP advisory committee has already recommended an increase in assessments paid by public water suppliers that would bring in about $200,000 annually beginning next fiscal year - with the provision that the increased funds would specifically support the agency's Drinking Water Program and not be used to offset unrelated budget cuts.

      Increase the Hazardous Waste Transporter Fee. The hazardous waste transporter fee was originally established to pay the debt service for the Chapter 21E bonds and has not been increased since the mid 1980s. Adjusting it to reflect increases in the cost of living since then would generate estimated new revenues of $2 million for the Environmental Challenge Fund and the DEP's Waste Site Cleanup program.

      Increase Chapter 21E Compliance Fees. These fees, collected from parties responsible for the assessment and cleanup of hazardous waste sites, have not been increased since they were originally set in 1993. Raising them to reflect cost of living increases would yield an additional $1 million per year. Indexing them to DEP's costs of doing business would bring in about $1.6 million in additional revenues annually. Additional categories of fees could be assessed as well.

      Increase other specific compliance fees. In certain high-volume business sectors - asbestos removal, dry cleaning, photo processing, printing and vehicle fueling - DEP spends far more on compliance assurance than it collects in fees to offset those costs. Additional revenues of $1 million to $2 million per year could be realized by raising fees in these sectors.

    3) Adopt New Fees

      Low Emission Vehicle (LEV) Fees. Originally proposed as part of the State Implementation Plan (SIP) for complying with the federal Clean Air Act, these would be paid by vehicle manufacturers based on new vehicle sales volume in Massachusetts. Additional revenues from these fees would be an estimated $500,000 to $600,000 per year.

      Technical Assistance Fees. The Legislature authorized DEP in Section 18(g) of Chapter 21A of the General Laws to establish and assess fees for technical assistance, training and materials. While this option has not been extensively pursued in the past due to concerns about equity of service, it could make DEP technical assistance available to those businesses and municipalities willing to pay extra for it. For example, Alternative Schedule Permit (ASP) program could be greatly expanded and the funds provided under this negotiated fee program made directly available to the Department without further appropriation.

      Infrastructure Impact Fees. DEP is considering a new program under which property owners would pay development fees based on square footage of impervious surfaces. State and local governments would share the resulting revenue, which would finance stormwater and wastewater improvements.