HB 0638

This bill increases the oil import license fee, changes the rate of interest assessed on overdue oil import fees, and repeals underground storage facility permit fees.

This bill also allocates the first $100,000 of each fiscal year to the general fund.

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

Be it Enacted by the Senate and House of Representatives in General Court convened:

II. Any person who imports or causes to be imported oil into the state, except those using oil pipelines, railroads, and highways to transport oil products between states other than New Hampshire or for international transport of oil products, shall be licensed by the department of safety under this chapter. The annual fee for the license shall be [~~$.001~~] $.00125 per gallon of oil imported into this state. The fee shall be paid monthly by such person to the department of safety. [~~and then deposited by~~] The department of safety shall deposit the first $100,000 of fees paid in each fiscal year into the general fund. The remainder shall be deposited into the oil pollution control fund administered by the department of environmental services. Imposition of the fee shall be based on the records of the person and certified as accurate to the department of safety.

2 Interest Assessed on Overdue Oil Import Fees. Amend RSA 146-A:11-b, IV to read as follows:

IV. Every person who imports or causes to be imported oil shall file a monthly report for the preceding month and shall include all fees due for that reporting period with the department of safety on or before the twentieth day of the following calendar month. Failure to file by the required date or to enclose fees due shall result in the assessment of a 10 percent penalty to be added to the amount of fees due for that month. If no fees are due, a penalty of $1 per day shall be assessed. Said penalty shall immediately accrue and thereafter the overdue fees and the penalty shall bear interest at the rate established by the [Internal Revenue Service effective on the first business day of the calendar year. To this rate shall be added 2 percent. In determining the monthly rate, that figure shall be rounded off to the nearest quarter percent] commissioner of safety under RSA 260:40-a. The department may waive all or any portion of penalties or interest for good cause.

3 Underground Storage Facility Permit. Amend RSA 146-C:4, II to read as follows:

II. The department shall issue or deny a permit to all facilities registered under RSA 146-C:3 within 90 days of the receipt of the complete registration information. A permit issued under this section shall be displayed on the premises of the underground storage facility at all times. Permits shall be valid for a period of 5 years[~~, except as provided in paragraph III~~].

4 Repeal. RSA 146-C:4, III, relative to underground storage facility permit fees, is repealed.

PROVISION REGARDING CHANGE IN INTEREST RATE:

The Oil Pollution Control (OPC) Fund, established under RSA 146-A, and five other funds established under RSA 146-D, E, F, G and RSA 147-B:12 are state dedicated environmental funds. Under these six funds, per-gallon fees are assessed on various imported petroleum products. Persons liable for payment of these import fees are licensed by the Department of Safety (DOS) and are required to (1) file monthly reports with DOS on the number of gallons imported and (2) to pay the calculated import fees due for the reporting period. Pursuant to RSA 146-A:11-b. IV penalties and interest are assessed when a licensee fails to file a timely report or pay the required import fees. All six of the environmental funds refer to RSA 146-A:11-b, IV for the methodology of determining penalties and interest. If enacted into law, this bill would change the interest rate methodology under RSA 146-A:11-b, IV, to the methodology of RSA 260:40-a. The amount of state dedicated revenues derived from RSA 146-A:11-b, IV interest assessments is a function of licensee reporting and import fee payment activity. The amount of interest revenues may vary from year-to-year. Based on average interest collections for the past five years for the six environmental funds, the change in state revenues for future years is calculated as follows:

FY 1998 - FY 2002 average annual interest collections: $30,000 per year

FY 1998 - FY 2002 average annual interest rate, based on IRS rate +2%; 10%

FY 1998 - FY 2002 average annual interest rate, If set by Commissioner of Safety: 12%

Effect of retroactive rate change: ($30,000X 0.12)/0.10 = $36,000 in interest collected per year

FY 1998 - FY 2002 average change in revenues: $36,000 - $30,000 = $6,000 per year increase

FY 2004 and each year thereafter, revenue change = $6,000

A change in the interest rate methodology would not affect state dedicated expenditures. County or local revenues would not be affected by a change in the interest rate methodology, as these political subdivisions are not DOS licensees. It is not known if penalties and interest assessed against licensees are passed through to consumers of petroleum products, including political subdivisions of the state. Therefore, the impact on county or local expenditures cannot be determined.

PROVISION REGARDING RSA 146-A IMPORT FEE INCREASE:

The Department of Environmental Services (DES) performs state-wide underground petroleum storage tank (UST) facility compliance inspection activities supported by federal grant funds (fixed at $187,500 annually), vapor recovery system inspection fees provided through administrative rule (approximately $30,000 annually), and RSA 146-A, D & F Fund revenues. In addition, revenues from the RSA 146-A OPC Fund are used to cover a federal grant funding shortfall (approximately $32,373 annually), as the grant is not sufficient to support core program functions. The federal grant funding shortfall, direct program support provided by the OPC Fund, and other expenditures has resulted in a deficit spending condition in the OPC Fund four out of the last five fiscal years. An increase in annual revenues is needed to correct the deficit spending condition. DES has calculated an 18% increase in the OPC Fund import fee, from $.001 per gallon to $.00125 per gallon, will correct the problem, in consideration of a repeal of the vapor recovery system inspection fee rule.

Total UST compliance program annual costs: $614,211

State & federal support: (390,356)

DES proposed repeal of vapor recovery inspection fee rule 30,000*

Net program funding shortfall $253,855

*This reduction of restricted revenue not contained in this bill is a result of the proposed repeal of the vapor recovery system inspection fee rule.

OPC Fund annual revenue increase resulting from 25% fee

increase to address program funding shortfall: $357,008

(Based on extrapolation of FY 1998 - FY 2002 average revenues)

FY 2004 and each year thereafter revenue change = $357,008

Of the total revenue collected under RSA 146-A, the first $100,000 will be deposited into the general fund.

An increase in the OPC import fee and resultant administrative action to repeal the vapor recovery inspection fee rule will not change DES program expenditures, but will correct a deficit spending condition. County or local revenues would not be effected by an OPC import fee increase. It is not known if the fee increase would be passed through to political subdivisions.

PROVISION REGARDING REPEAL OF RSA 146-C PERMIT FEES:

The RSA 146-C UST facility permit fees (approximately $95,340 annually, based on $70 assessed per facility) are deposited in state general funds. The state and political subdivisions are exempt from paying the fee.

FY 2004 and each year thereafter revenue change = $95,340