Nov. 28, 2007 — The Public Services Commission (PSC) voted Wednesday to reject the controversial environmental user fee (EUF) as a way to cover solid-waste disposal costs in the territory, but gave conditional approval to a fee system for wastewater disposal.
The funding plans were contained in an application submitted by the V.I. Waste Management Authority (WMA), which is subject to PSC regulation. The WMA has been devising a method to wean itself from the territory's General Fund and become self-sufficient — a goal whose logic came under fire at Wednesday's public hearing at PSC headquarters.
In rejecting the EUF, the commissioners put the Legislature on notice that the statute lawmakers approved in 2004 — creating the WMA and calling for the imposition of an EUF on all products imported into the territory — needs review.
"We're all heaping this venom on the WMA, when I believe they're doing the job as mandated by the Legislature for them to do," said Commissioner Donald "Ducks" Cole. "I believe the Legislature is where some of this venom should be placed."
"Vote them out!" Alana Mawson responded from the audience.
The problem lies in the complexities of taxing imports to fund waste disposal, said Commissioner Verne C. David.
"Based on sentiment and reaction from the community, there's not an opposition to a fee," David said. "It's more to the proposed methodology being used that's been created by the Legislature. I'm of the conclusion that the Legislature did not research the effectiveness of the proposed method that is being recommended."
An Untested System
All five commissioners present voted to reject the EUF import fee, a system that has never been used before in the United States, and possibly in the world, according to experts who testified Wednesday.
"This type of implementation — using a fee placed on imports — I have not seen anywhere," said Raul A. Torres, vice president of the environmental consulting firm Malcolm Pirnie, which advised the PSC on the WMA's application.
"I've been researching this," David said. "I have not been able to identify anything close or similar to this proposal. There's no experience. There's no history!"
The plan calls for fees ranging up to 12 cents per pound on everything brought into the territory, including mail. Fee are also levied on products manufactured here.
May Adams Cornwall, the WMA executive director, said she intends to have a revised plan for funding solid-waste disposal ready for the PSC by March — although it will still have to be based on the EUF import fee, unless the legislative or executive branches intervene.
A report issued late Monday by the hearing examiner charged with reviewing the WMA's application criticized the authority for failing to provide documentation or cost analysis on a host of issues relative to the proposed EUF, such as the system of imposing the fees, collecting the fees, reimbursing importers on products that don’t wind up in the waste stream and failing to propose recycling programs in the application, among other shortcomings.
Asked by Boschulte whether the authority was prepared to begin implementing its EUF system in January, as proposed, Cornwall acknowledged she was not.
Daniel Yannone, who runs a custom brokerage business, echoed concerns voiced by others at Wednesday's meeting that the imposition of yet another fee on products coming into the territory would not only slow down an already cumbersome process, but would also be a logistical and financial nightmare.
Holding up a stack of papers two inches thick pertaining to a shipment for Food Center grocery store, he told commissioners, "This is the paperwork for one shipment … it cost $3,435 in taxes and clearance. This is going up to $15,300 for the same three containers because of the way they want to institute their fees. Right now it cost me $235 to clear this. If they impose their fees, it will cost $1,100 to clear this — the same three containers — because of the amount of manpower I'll need to get this done."
Wastewater-User Fee Approved
Before rejecting the EUF, all five commissioners made quick work of approving the so-called WUF, or wastewater user fee, according to the provisions recommended by the hearing examiner.
The examiner called for granting the application for 18 months, beginning in January — thus hiking residential fees to $110.97, or more than double the current charge. In addition, fees would increase 15 percent annually for 15 years. However, in order to renew the WUF beyond June 30, 2009, WMA will have to revamp its method of charging non-commercial customers, develop a fee structure for miscellaneous expenses and improve accountability and transparency of wastewater costs, among other obligations.
The public, and at least one commissioner questioned — if not railed against — the notion that the authority needs to be self-sufficient. Previously, all waste disposal was the concern of the Public Works Department, funded through the territory's General Fund. Many pointed out that if the WMA achieves its goal of becoming self-sufficient and no longer relies on money from the General Fund, there is no system in place to proportionally reduce the taxes paid into the General Fund that once went to waste disposal.
"Why can't the General Fund continue to fund the WMA?" Cole asked. "We're saying we're getting new revenues to fund this entity, but right now the entity is being funded."
"It's double taxation," one audience member called out.
The president of the St. Thomas-St. John Chamber of Commerce, Tom Brunt — a co-owner of MSI Building Supplies in Crown Bay — had commissioners paying close attention to his testimony proposing a tipping fee to fund solid-waste disposal, where charges are placed on things at the point they enter the waste stream.
After Wednesday's vote, Brunt said, "We need to continue to work to find a solution. We're going to go back to the Legislature to get them to realize that they need to go back and make changes to the law."
Challenges to the Examiner's Report
The meeting began with Cornwall reading a statement requesting a continuance of Wednesday's meeting for two weeks for the authority to prepare a response to the hearing examiner's report. Cornwall said she received the report at 8 p.m. Monday night, leaving her and her counsel little time to review and rebut some of the inaccuracies she claims it contains.
For example, Cornwall said, the hearing examiner claims 40 percent of the WMA budget is allocated to administrative costs. In fact, she claims that figure is more like 15.6 percent, based on "more traditionally considered administrative functions." She also disputed claims that capital funding needs were not clearly articulated in the application.
Cole and Commissioner Alecia M. Wells made a motion to grant the extension and allow Cornwall a chance to rebut the hearing examiner's report, prompting a dressing down by Boschulte.
The timeline for the hearing examiner's report — being submitted very soon before the PSC hearing — was approved months ago, based on a Nov. 30 drop-dead date to review the application, he said.
"I took the time to be ready tonight — I took the time to read (the report) and to come tonight," said Boschulte, who went on to ask why the WMA didn't show up with a list of rebuttals. "We could have had that information tonight, but I bet that wasn't done because you bet you'd get the 15 days (continuance). The time was taken by many of the commissioners to do their due diligence to make a vote tonight, and that should have been the same with the authority."
Despite the lambasting, some commissioners and members of the public made a point of expressing their respect for Cornwall's
efforts. In her opening remarks to the commission requesting the continuance, the pressure from the recent unveiling of the EUF and WUF fees at public hearings and in the media seemed to come to bear on her as she thanked her staff for their support. She choked up while reading her statement, pausing twice before she was able to continue.
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