Objective

To assess the extent of implementation of the five recommendations included in our initial audit report Title V Operating Permit Program Revenues, Expenditures, and Changes in Fund Balance for the Eight Fiscal Years Ended March 31, 2017 (2017-S-81).

About the Program

The U.S. Environmental Protection Agency established an operating permit program (Program) under Title V of the federal Clean Air Act Amendments of 1990 (Act). The purpose of the Program is to help control excessive industrial pollution by requiring states to monitor pollutant output and to take action to remedy violators that produce pollutant quantities in excess of established limits. Pursuant to New York’s Clean Air Compliance Act of 1993 (CACA), the Department is responsible for developing and administering this Program.

Air pollution sources subject to the Program must obtain an operating permit and pay annual fees established by the Act. The Department assesses the fees on Title V facilities based on their self-reported emissions from the previous calendar year and bills them annually. The Act mandates that the Program’s permit fee revenues be sufficient to cover all reasonable direct and indirect costs necessary for the Department to develop, administer, and enforce the Program.

The Department is required to report annually to the Executive, the Legislature, and the State Comptroller’s Office on Program progress, costs, and revenues. The State Comptroller’s Office is required to perform a biennial audit of the Program.

Our initial audit, covering the period April 1, 2009 through March 31, 2017, examined whether the Department has adequate procedures in place to accurately capture Program revenues, expenditures, and changes in fund balance; whether Department officials have made reasonable estimates of anticipated Program expenses for the current year and the immediately upcoming year; and whether Program fee revenues collected pursuant to administration of Article 72, Title 3 of the Environmental Conservation Law were adequate to cover Program expenses. We found that the Department generally had adequate procedures in place to capture the Program’s revenues, expenditures, and changes in fund balance transaction data. However, we identified errors in the permit fee billing process and in the allocation of expenses to the Program. Additionally, during the audit period, Program revenues were insufficient to cover Program expenses, as required by the Act and CACA.

The five recommendations in our initial audit report addressed the need for the Department to take steps to improve monitoring systems to ensure expenses are appropriately charged and to work with relevant stakeholders to develop a strategy to bring the Program into self-sufficiency, in compliance with the Act.

Key Finding

The  Department has made significant progress in correcting the problems we identified in the initial report. Of the five recommendations, four have been implemented and one has not been implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.