Lake County board directs phased fee increases for air-quality permits after workshop

Lake County supervisors sitting as the Lake County Air Quality Management District board of directors on June 2025 directed staff to draft a phased replacement of the district's fee rule intended to recover the actual costs of permitting, inspections and compliance work.

Doug Gard, Air Pollution Control Officer for the Lake County Air Quality Management District, told the board the district proposes to "repeal the existing fee rule, replace them with new fee rule and structure" and that the change aims to provide "clarity and better transparency for district fees." He said the proposal is based on cost recovery studies and staff time estimates and noted that "air pollution has [a] significant cost to the community" and that long-term health benefits of regulation can exceed costs.

Why it matters: Staff says current fees have not kept pace with workload or regulatory changes dating back to the 1996 schedule, leaving the district underfunded and unable to meet state or federal mandates. District materials estimate new revenues would pay for five full-time equivalent positions the district says are necessary to perform permitting, inspections and respond to enforcement and monitoring obligations. Staff also warned of near-term pressures, including an upcoming EPA technical systems audit and an immediate roughly $50,000 equipment replacement after a weather station tower collapse.

What the board directed: After extended discussion about economic impact and legal limits on fee changes, the board indicated support for a phased implementation staff proposed at the workshop: a first-year 25% increase, a second-year 25% increase, and then 10% increases for the next five years (a seven-year implementation to reach the staff's target revenue). Supervisors emphasized that the adopted schedule would set a maximum; the district could implement smaller increases in any given year and would report on revenue and expenditures during the annual budget process. Staff said the board's direction from the workshop will be used to prepare a formal draft rule for state and EPA review and later formal adoption.

Key details from staff presentations and board discussion:

- Fee structure and rationale: Staff presented spreadsheets comparing revenue under the current fee schedule (with a hypothetical 3% CPI) to revenues under the proposed fee rule, then subtracting estimated salary and operating costs (staff based the salary estimate on five FTEs). The district assumed a 10% year-over-year increase for non-staff operating costs and noted equipment replacement costs have roughly doubled over the last decade.

- Permit activity and categories: In 2025 the district reported 17 new permit applications received so far: 15 for generators, one for a carbonizer and one for an aggregate crusher. Staff said existing sources renewing permits are not subject to the same permit-application fee requirement cited in the presentation.

- Legal limits and rule structure: Staff cited the California Health and Safety Code in explaining limits on simple fee increases (15% per year when only amending fee amounts). To allow larger phased increases, staff said the district must repeal the existing fee rule and adopt a new fee rule and structure; that process requires state and federal review (state air board/ARB and EPA) and inclusion in the State Implementation Plan (SIP) for federally enforceable changes.

- Financial and community concerns: Supervisors repeatedly said the aggregate increases shown for some permit categories were large and could be disruptive to local businesses. Supervisor Sabatier called the size of some single-year increases "monstrous" and urged a stepwise approach with a one-year review to measure impacts. Board members asked staff to identify which individual permit increases were driving the biggest jumps and whether targeted adjustments could reduce severe percentage changes for small operators.

- Alternative proposals and compromise: Several board members proposed alternatives, including adopting part of the staff proposal now and pausing to reassess in one to two years, or dividing the implementation over a longer schedule (seven years was discussed). One compromise the board returned to at the end of the workshop was a two-year front-loaded increase (25% then 25%) followed by smaller annual increases (for example, 10% thereafter) with annual reporting and the option to implement less than the maximum in any given year.

- Timeline and next steps: Staff said the district must submit the draft rule to ARB and EPA for review before returning to the board for formal adoption; staff estimated a fuller proposal would be ready for board action in winter 2026 if the board provides direction now. Staff also warned that if the district adopted a fee schedule below the target now, later unilateral increases would be limited by the Health and Safety Code to 15% per year unless the board repealed and rebuilt the rule again.

Quotes: "We are currently not meeting our mandates and we may be subject to repercussions of the state or EPA," Gard said during the presentation. Supervisor Sabatier said of the proposed single-year increases: "that is monstrous." Gard also explained the district lacks motor vehicle fee revenue other districts use to subsidize programs, noting the county was precluded from that revenue historically because it was an attainment area.

Outcome and implementation notes: The workshop did not include a formal vote. The board provided staff with direction to prepare a draft rule implementing a phased increase (the 25%/25% then smaller annual increases approach), to return with financial updates during the annual budget process, and to proceed with the required state and federal reviews. Staff advised the board it may implement smaller increases than the maximum in any given year and that formal adoption of the new rule will set the maximum schedule the district can rely on federally.

What remains unresolved: The board asked staff to (1) re-check the revenue math and clarify large percentage jumps in specific permit categories; (2) provide one-year impact modeling before final adoption; (3) identify whether certain categories (for example, small businesses or specific permit types) could be phased or capped to reduce sharp increases; and (4) pursue potential legislative or funding remedies that could provide revenue similar to motor vehicle fees other air districts receive.

Next public step: Staff will prepare a formal draft fee rule and supporting materials reflecting the board's direction, submit the draft for state and EPA review, and return to the board with a noticed adoption hearing later in the process.