Fiscal Note & Local Impact Statement
127 th General Assembly of Ohio
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BILL: |
DATE: |
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STATUS: |
SPONSOR: |
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LOCAL IMPACT
STATEMENT REQUIRED: |
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CONTENTS: |
Establishes
requirements governing the discharge of ballast water by oceangoing vessels
in Ohio waters of Lake Erie in order to control aquatic nuisance species |
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STATE FUND |
FY 2008 |
FY 2009 |
FUTURE YEARS |
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General Revenue Fund – Attorney
General |
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Revenues |
- 0 - |
- 0 - |
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Expenditures |
- 0 - |
Potential minimal to
moderate increase for civil actions |
Potential minimal to
moderate increase for civil actions |
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Aquatic Nuisance Species
Prevention Fund (New Fund) – Department of Natural Resources |
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Revenues |
- 0 - |
Gain from fees and civil
penalties |
Gain from fees and civil
penalties |
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Expenditures |
- 0 - |
Increase for administering
permit and inspection programs and controlling/preventing aquatic nuisance
species |
Increase for administering
permit and inspection programs and controlling/preventing aquatic nuisance
species |
Note: The state
fiscal year is July 1 through June 30.
For example, FY 2007 is July 1, 2006 – June 30, 2007.
·
The
bill creates the Aquatic Nuisance Species Prevention Fund in the state
treasury, with revenues provided through permit and inspection fees and civil
penalties assessed for violations of the ballast water dumping provisions
contained in the bill.
·
The
costs of administering the permit and inspection programs for oceangoing vessel
ballast water will be paid from the Aquatic Nuisance Species Prevention Fund,
as well as control, prevention, and reclamation costs relating to aquatic
nuisance species.
·
The
Attorney General may incur additional minimal to moderate administrative costs
from the GRF, depending on the number of civil action cases taken.
·
No
direct fiscal effect on political subdivisions.
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The bill places requirements
on oceangoing vessels entering the Ohio waters of Lake Erie in order to prevent
them from discharging ballast water containing invasive species that could
potentially be harmful to the lake and shoreline environment. Ships pump ballast water into their tanks
and holds for stability and maneuverability when they are carrying light loads
or no cargo at all, though it can also be used for other purposes such as
stability in rough seas and to lower a ship in the water to pass under
bridges. The ballast water is often
picked up at one port and then discharged at the next port where the ship
receives cargo.
Coastal waters used as
ballast water can contain sediments and organisms which are then transported to
other ports and discharged along with the ballast water. These organisms may include nonnative
invasive species, or "aquatic nuisance species," which are
potentially harmful to ecosystems outside their native habitat, including the
Great Lakes. The bill defines an
aquatic nuisance species as "a nonindigenous species that threatens the
diversity or abundance of native species in or the ecological stability of
infested waters or commercial, agricultural, aquacultural, or recreational
activities that are dependent on such waters."
Ballast water discharge permit program
The
bill requires the Chief of the Division of Wildlife in the Department of
Natural Resources (DNR), no later than 12 months after the bill's effective
date, to establish a program for the issuance of permits for oceangoing vessels
to enter Ohio's portion of Lake Erie.
In order to receive a permit, the operator of the vessel must
demonstrate either that the vessel will not discharge ballast water or other
waste or effluent, or that the operator will use environmentally sound
technology and methods (to be identified in rules) to prevent the discharge of
aquatic nuisance species in the ballast water or waste.
The
bill establishes the Aquatic Nuisance Species Prevention Fund to support this
program and all other activities related to the control and prevention of
aquatic nuisance species and the reclamation of territory that has been
affected by such species. The ballast
water discharge permit program will provide revenue to the fund through a
permit fee to be established in rules.
A permit is valid for one year and is renewable.
Michigan
ballast water reporting program
The
state of Michigan operates a similar program of issuing permits to vessels
entering its state waters of the Great Lakes, enacted in 2005 by Senate Bill
332 of the 93rd Michigan Legislature.
The Michigan program allows the discharge of "waste or
effluent" by permit holders so long as they meet certain requirements set
by the Michigan Department of Environmental Quality (MDEQ) and federal law and
regulations. While the permit program
proposed in H.B. 298 is not identical to the Michigan program, it is
similar enough to allow the Michigan program to provide some guidance as to the
fiscal effect H.B. 298 could have on the state of Ohio.
Michigan
charges its permit fees based on National Pollution Discharge Elimination
System (NPDES) guidelines for United States Environmental Protection
Agency-designated major and minor facilities.
"Individual permits" are used for major facilities and are customized
for a particular facility based on its specific characteristics, while
"general permits" are used for minor facilities and are suitable for
use by any facility meeting certain eligibility criteria. For oceangoing vessels, the "general
permit" fee for minor facilities is used.
MDEQ uses the NPDES general
permit application fee of $75 for a certificate of coverage under the general
ballast water discharge permit. The
certificate of coverage is valid for five years, and there is a $150 annual
renewal fee for the permit, also under NPDES guidelines. MDEQ lists 224 vessels in compliance with
the ballast water law for 2007.
Assuming the operator of each vessel paid the annual permit renewal fee
of $150, that represents revenue of $33,600.
In addition, any ship applying for the first time would need to pay the
$75 application fee, which also covers the five-year certificate of
coverage. Depending on how many new
ships enter service in Michigan's Great Lakes waters, this could provide
additional income in the low thousands of dollars. Because 2007 was the first year for Michigan's program, all ships
would have had to pay the application fee, resulting in $16,800 in revenue for
the 224 vessels listed as being in compliance.
It
should be noted that DNR believes that ship traffic into Ohio ports is greater
than that of Michigan ports since Michigan is served primarily by Detroit and a
few smaller ports, while Ohio has the large ports of Toledo and Cleveland along
with several others on the Lake Erie shoreline. This may create more oceangoing ship traffic and thus a source of
greater revenue for Ohio. At this
point, DNR is unable to say how much it would charge for permits. However, based on the estimates from the
Michigan program, it seems unlikely that the amount brought in from fees alone
would cover the costs of administering the program in the Division of
Wildlife.
Oceangoing vessel inspections
The
bill requires the Chief of the Division of Wildlife to promulgate rules to
establish performance standards for ballast water discharge and other means
that may be used to spread aquatic nuisance species, including ballast sediment
and infestations on other parts of ships.
The bill requires the Chief to establish a system of inspections for
oceangoing vessels to ensure compliance with the rules, including taking
samples of water or sediment in ballast tanks and other parts of the ship. The bill requires the rules to include the
provision of inspection fees to be paid by the operators of the vessels being
inspected, with fees being paid into the Aquatic Nuisance Species Prevention
Fund.
The
Michigan law does not require a system of inspections or inspection fees, so
there is no point of comparison from which to estimate any potential revenues
or costs to DNR from this program. The
bill also does not specify that inspections would be required for all
oceangoing vessels or how often the inspections would be required. Therefore, it is unclear how often
inspection fees would be collected from ships subject to inspection. Presumably, some of these issues would be
handled in the rule-making process.
If
the inspection program is operated in a similar manner to the permit system in
Michigan, with similar fees being charged for every vessel to undergo an annual
inspection, a similar amount of revenue in the tens of thousands of dollars
could be expected. Due to the
likelihood of an increased need for staff to perform the inspections, however,
it again seems unlikely that fees alone could support this program.
Civil penalties
The
bill provides for civil actions against any person who violates Chapter 1535.
of the Revised Code, which is enacted in the bill and pertains to the control
and prevention of aquatic nuisance species, including the permit program. Either the Chief must request the Attorney
General to bring a civil action against violators or other persons may bring
civil actions against those they believe have violated or are violating the
provisions contained in the bill. The
bill requires the Chief of the Division of Wildlife to adopt rules establishing
the amount of a civil penalty to be assessed against violators, but requires
that the amount be at least $25,000 for each violation. The amounts of civil penalties are to be
collected by the Division of Wildlife and deposited into the newly established
Aquatic Nuisance Species Prevention Fund.
There
is no data as of yet on violations of the Michigan ballast water program
because it has only been in operation since January 1, 2007. However, depending on the number of vessels
using Ohio waters, the number of violations incurred (a ship may have multiple
violations), and how many of those violations result in civil actions
undertaken by the Attorney General and imposition of a civil penalty, as well
as the final penalty amount to be determined in rules, the revenue into the
Aquatic Nuisance Species Prevention Fund could be as high as the low millions
of dollars.
The
Attorney General's office may incur some additional costs for the pursuit of
civil actions under the bill. These
could either be paid for out of the Attorney General's General Revenue Fund
operating expenses or the newly established Aquatic Nuisance Species Prevention
Fund. The bill states that the new fund
is to be used for the administration of Chapter 1535. of the Revised Code, under
which the civil remedy provisions fall.
The amount required will depend on the number of civil action cases
taken by the Attorney General.
Great Lakes Aquatic Nuisance Species
Coalition
The
bill requires the Chief of the Division of Wildlife, within 12 months of the
effective date of the bill, to facilitate the formation of a Great Lakes
Aquatic Nuisance Species Coalition through agreements with other states in the
Great Lakes basin and with Canadian provinces in the region. The purpose of the Coalition would be to
recommend and implement water pollution control laws that prohibit the
discharge of aquatic nuisance species from oceangoing vessels. The fiscal impact of the formation and
functioning of such a Coalition would likely be reflected in increased
administrative costs associated with drafting the relevant agreements in
coordination with the other participating states and provinces and the expenses
associated with ongoing efforts by the participants, including participant
meetings and policymaking endeavors.
Michigan Senate Bill 332,
which enacted that state's ballast water permit program, also required the
MDEQ, the regulating authority, to facilitate a Coalition using similar
language to that contained in H.B. 298 requiring DNR to do the same. As of yet, DNR does not have a cost estimate
for its role in facilitating such a Coalition, however, the relevant costs
under the bill would likely be paid from the Aquatic Nuisance Species
Prevention Fund.
Aquatic Nuisance Species Prevention Fund
The
bill establishes the Aquatic Nuisance Species Prevention Fund in the state
treasury with the stated purpose of preventing and controlling aquatic nuisance
species in the state waters of Lake Erie, the reclamation of aquatic resources
in Ohio that have been injured as a result of aquatic nuisance species, and the
administration of Chapter 1535. of the Revised Code, encompassing all programs
contained in the bill.
The
fund is to receive revenue from all money collected by the Chief of the
Division of Wildlife under Chapter 1535., including permit and inspection fees
and civil penalties paid by violators, as well as investment earnings. Money in the fund will be used to pay the
expenses of administering the permit and inspection programs and Ohio's part in
facilitating and participating in the Great Lakes Aquatic Nuisance Species
Coalition.
LSC fiscal staff: Brian Hoffmeister, Budget Analyst