Original Notice.

     Preproposal statement of inquiry was filed as WSR 08-20-023.

     Title of Rule and Other Identifying Information: Chapter 16-91 WAC, Requested animal services and holding facilities -- Fees.

     Hearing Location(s): Kittitas County Event Center, Heritage Center, 512 North Poplar Street, Ellensburg, WA 98926, on December 29, 2008, at 2:00 p.m.; and at the Natural Resources Building, 1111 Washington Street S.E., First Floor Conference Room #175A&B, Olympia, WA 98504, on December 30, 2008, at 2:00 p.m.

     Date of Intended Adoption: January 9, 2009.

     Submit Written Comments to: Dannie McQueen, P.O. Box 42560, Olympia, WA 98504, e-mail WSDARulesComments@agr.wa.gov, fax (360) 902-2092, by 5:00 p.m., January 2, 2009.

     Assistance for Persons with Disabilities: Contact WSDA receptionist by December 22, 2008, TTY (800) 833-6388 or 711.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: During the 2008 legislative session, the Washington state department of agriculture (WSDA) was given authority to establish fees by rule for certain requested services; (1) establishment and inspection of animal holding facilities; (2) inspection and monitoring of animals in animal holding facilities; and (3) special inspections of animals or facilities at the request of the owner. The department is proposing to develop a new chapter within TITLE 16 WAC that would describe the department's process in assessing fees for such requested services.

     Reasons Supporting Proposal: In chapter 16.36 RCW, WSDA is given the authority to supervise the prevention of the spread and the suppression of infectious, contagious, communicable, and dangerous diseases affecting animals within, in transit through, and imported into the state of Washington. To provide additional tools to accomplish this mission, individuals representing the Washington state livestock and poultry industry went before the 2008 legislature and requested that the WSDA receive statutory authority to establish in rule an equitable fee-for-service schedule for requested monitoring and oversight services by the WSDA animal services program. The ability to provide these requested services will continue to protect Washington state's livestock industry and the health, safety, and welfare of the state's citizens.

     Statutory Authority for Adoption: Chapters 16.36 and 34.05 RCW.

     Statute Being Implemented: Chapter 16.36 RCW.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Washington state department of agriculture, governmental.

     Name of Agency Personnel Responsible for Drafting and Implementation: Paul Kohrs, DVM, Olympia, (360) 902-1835; and Enforcement: Leonard Eldridge, DVM, Olympia, (360) 902-1878.

     A small business economic impact statement has been prepared under chapter 19.85 RCW.

     To provide additional tools to accomplish this vital mission, individuals representing the Washington state livestock and poultry industry went before the 2008 legislature and requested that the WSDA receive statutory authority to establish in rule an equitable fee-for-service schedule for requested monitoring and oversight services by the WSDA animal services program. RCW 16.36.023 passed by the 2008 legislature in EHB 3381 states:

     RCW 16.36.023 Fees -- Rules.

     (1) The director may adopt rules establishing fees for:

     (a) The establishment and inspection of animal holding facilities authorized under this chapter;

     (b) The inspection and monitoring of animals in authorized animal holding facilities; and

     (c) Special inspections of animals or animal facilities that the director may provide at the request of the animal owner or interested persons.

     (2) The fees shall, as closely as practicable, cover the cost of the service provided.

     (3) All fees collected under this section shall be deposited in an account in the agricultural local fund and used to carry out the purposes of this chapter.

     I. Poultry Industry: Washington state had become out of compliance with the national poultry improvement plan (NPIP), a voluntary program under the USDA. Lack of compliance became a concern as the threat of avian influenza to poultry increased and it became clear that NPIP regulations had been modified. Also, in the past, the department did not have available staff and funding resources to document NPIP compliance.

     Washington state is currently in compliance with NPIP. However, without the fee-for-service schedule, WSDA will not have the resources available to stay NPIP compliant.

     NPIP compliance is beneficial to the Washington state poultry industry for the following reasons:

     (a) The flocks of producers are tested and monitored on a regular basis. This testing and monitoring allows producers to send poultry products out of state and streamlines the shipping process. There are different levels of NPIP certification, which provides purchasers with assurance that Washington poultry products meet the NPIP standards.

     (b) If Washington is NPIP compliant, USDA will indemnify 100% of the cost of euthanasia, cleanup, disinfection and disposal in the event of a major poultry disease outbreak in the state.

     However, if Washington state is not NPIP compliant, USDA will indemnify producers at the rate of 25% of the cost of the birds only. The poultry industry can suffer severe economic impacts due to disease outbreak. An exotic Newcastle disease (END) outbreak in California in 2002 cost producers an estimated $145 million.

     In 2002, the poultry/egg industry was valued at $145 million (that number appears to be a low estimate and 2007 NASS statistical information is not yet available for confirmation). Costs of depopulation are extrapolated from the 2002 END response report. Based on the total cost of the response and number of birds depopulated, it turned out to be ~ $40.00 per bird. Taking into account a 2% annual inflation factor, in 2008 it would come to ~ $45.00 per bird. It is estimated that the number of birds in the commercial industry to be close to eight million. The cost of a response including depopulation plus cleanup and disposal for the commercial industry would therefore be estimated at $350 million (USDA).

     Washington's poultry industry is a $169 million dollar industry commercially and a $1.3 million dollar noncommercial industry annually. The poultry producers in Washington see NPIP compliance as necessary to survive a disease outbreak, such as avian influenza. Should a disease outbreak occur requiring flocks to be euthanized, USDA would provide 100% indemnification funding. This funding would allow a devastated poultry industry to quickly recover. The lack of NPIP compliance would mean that the USDA indemnity amount would only be 25% of the cost of birds only and there would be no funding for cleanup, disinfection and disposal funds provided.

     WSDA is receiving requests from the poultry industry to perform NPIP required tests and monitoring, but, as stated above, the department currently lacks the funding to perform these services. Prior to the passage of this legislation, the funds to perform testing have been limited and have been placing a financial strain on the WSDA animal health program, both in terms of staff and budget resources. Implementation of the proposed rule will allow WSDA to perform vital services for the poultry industry.

     Estimated costs of proposed rule to small poultry producers: Comparison of costs of NPIP inspections with other states is difficult. The NPIP inspection fees in other states vary widely, from $25.00 to $200 per hour plus the cost of the testing. WSDA used the following information to determine projected costs of NPIP in Washington:

•	Forty-eight NPIP flocks have registered with the WSDA animal health program, and the industry is growing.
•	Thirty-eight of that total are small poultry producers.
•	The remaining producers are eight large poultry producers and two hatcheries. These producers maintain compliance using their own trained personnel; the thirty-eight small poultry producers will be the most likely requestors of WSDA services.
•	The average NPIP inspection will take approximately 30-60 minutes. The number of birds that need to be tested for an official statistical sample depends upon the size of the flock. It takes about two minutes to test each bird (thirty birds/hour).

     Compliance Requirements: The proposed fee-for-service schedule does not contain any compliance requirements and will only apply to requested services for NPIP inspections. NPIP compliance is voluntary and not mandated by state or federal law.

     Professional Services Required to Comply: WSDA does not anticipate that the proposed rule will create any need for additional professional services.

     Cost of Compliance: The only cost for poultry producers will be the cost of requested NPIP inspections.

     Other actions taken by the department that will contain costs:

•	WSDA staff combining trips with other inspections and offering the requesting party the option to take advantage of doing several inspections in the same day, if scheduling permits.
•	Use of electronic communication, recordkeeping and filing wherever possible will streamline the inspection and notification process, thus decreasing the cost of inspection. WSDA will pass these cost reductions on to the requesting producer.

     II. Livestock Industry and Livestock Owners: Washington state has a vital and growing livestock industry, the value of which in Washington state is $1.6 billion. This industry growth has placed additional financial burdens on WSDA because the industry wants WSDA to monitor livestock import activities so that diseases such as tuberculosis (TB), brucellosis, bovine spongiform encephalopathy (BSE), and foot and mouth disease are not introduced into the state.

     a. BSE is a disease of adult cattle, but they are exposed at a young age. The border between U.S. and Canada had been closed to adult breeding cattle due to the BSE positive cow found in Washington in December 2003. WSDA monitoring became especially critical after the U.S./Canadian border reopened on November 17, 2007, to breeding cattle born after March 1, 1999, as several recent BSE cases in Canada were born after March 1, 1999. When the U.S./Canadian border opened, monitoring became critical to determine the origin [of] the livestock for trace-back purposes.

     To understand the economic impact of BSE, the one illegally imported cow into Washington in December 2003 cost (at a minimum) $11 billion to the national beef industry and the costs are still being tallied. The economic loss is mainly due to markets that are still closed to U.S. beef imports.

     b. Washington state has been free of TB and brucellosis for over twenty years. When a case of these diseases are found in a state, it loses its USDA TB-free or brucellosis-free status and USDA places mandatory testing requirements upon the affected state. This creates a financial burden on the industry because producers have to pay for additional testing and handling fees and the value of the animal drops at point of sale by an estimated $0.06 - $0.10 cents per pound.

     Once a state loses its TB or brucellosis "free" status, it is difficult to get back because the disease is very difficult to eradicate. The timeframe to regain free status depends upon the necessary investigations and the ability to trace the movement of livestock.

     The table below describes the potential economic impact of some states that have lost either their TB or brucellosis status. The economic impact of the fee for service would be economically insignificant as compared to the loss of the "free" status for the industry as a whole.

State	Disease	Industry Value (Estimate)	Testing Impact $ (Lost Status)	Lost Value @ Point of Sale (Lost Status)	Depopulation
Washington (Disease Free)	Tuberculosis	$1.6 billion
New Mexico (Lost Status) USDA FY 2007	Tuberculosis	$3 billion	$6 - $8 per head Testing only	$.05 - $.10 per pound Example: 600 pound animal would decrease to $30 - $60 per head	$22 million (USDA)
Minnesota (Lost Status) USDA FY 2008	Tuberculosis	$2 billion	$6 - $8 per head Testing only	$.05 - $.10 per pound Example: 600 pound animal would decrease to $30 - $60 per head	$6 million (State legislature buy-out program: $75.00 per head)
California (Lost Status) USDA FY '08-'09	Tuberculosis	$6.0 billion	$6 - $8 per head Testing only	$.05 - $.10 per pound Example: 600 pound animal would decrease to $30 - $60 per head	$55 million (USDA)
Montana (Lost Status) USDA FY 2008	Brucellosis	$1 billion	$6 - $8 per head $80 million	$.05 - $.10 per pound Example: 600 pound animal would decrease to $30 - $60 per head

     c. Another major concern is the potential for an accidental or intentional introduction of a foreign animal disease, such as foot and mouth disease, into the state. It has been estimated that for each hour this disease goes undetected it will cost the U.S. economy $10 million. The proposed rule will allow WSDA to better monitor livestock imports and reduce the risk to industry.

     Estimated costs of proposed rule to small livestock businesses: Under WSDA rules, industry may establish restricted holding facilities. The holding facilities provide industry with additional flexibility in meeting Washington state animal import requirements. Use of such a facility is not mandatory and producers always have the option of meeting import requirements prior to entry. The proposed rule will allow WSDA to recover the costs associated with monitoring restricted holding facilities.

     1. It is estimated that four to six restricted holding facilities will be established for tuberculosis and brucellosis testing and vaccination. The holding facilities will provide a place for requested services and will not be used to address import violations. The need for these holding facilities has increased with the reopening of the U.S./Canada border to breeding cattle. WSDA oversight is necessary to ensure that imports meet Washington state's animal health import requirements.

     WSDA currently oversees one restricted holding facility. This holding facility requires an average of three inspections per month (twelve hours and three hundred miles) plus the time to process and ship samples. WSDA anticipates the demand for holding facilities will grow and, therefore, the resources necessary to service them will need to expand.

     2. In a very limited number of cases the department may need to extend the life of a quarantine beyond the typical testing requirements that release a quarantine. Quarantines do not disproportionately impact small businesses. The department may find it necessary to make regular visits to ensure that conditions of the quarantine are being followed and the health of the animal(s) is being maintained. These costs may include time and mileage necessary for regular surveillance on the quarantine to ensure biosecurity and isolation protocols are being adhered to, observation of testing or treatment of animals to satisfy chain of custody requirements are met and general evaluation of the health of the animal(s).

     Compliance Requirements: The proposed fee-for-service schedule does not affect importation compliance requirements. In actuality, when requested by the producer, the fee-for-service option makes interstate health requirement compliance easier. The fee-for-service implementation will apply to requested services only.

     Professional Services Required to Comply: WSDA does not anticipate that the proposed rule will create any need for additional professional services.

     Cost of Compliance: The cost of establishing a restricted holding facility will include the initial application fee, annual renewal fee, and the cost of inspections to monitor compliance.

     Other actions taken by the department that will contain costs:

•	WSDA combining trips with other inspections and offering the requesting party the option to take advantage of doing several inspections in the same day, if scheduling permits.
•	In case an extended quarantine is needed, the department will always strive to offer other options to the owner/producer that would allow the release of the quarantine without long-term supervision and the costs associated with it.

     III. Equine (Horse) Industry and Horse Owners (the value of equine sales in Washington state, according to the 2002 census of agriculture, is totaled at $18.6 million):

     When horses are imported from out-of-country, the USDA requires that those horses be channeled through a contagious equine merits (CEM) facility to ensure the health of the horses imported and to prevent the introduction of CEM. CEM is a contagious equine disease spread by infected mares and stallions through breeding practices.

     Currently, two holding facilities are convenient to Washington state horse owners, one in California and one in Oregon. Each facility has a waiting list for their use.

     The equine industry has requested the establishment of this type of facility in Washington state. This would require inspection, approval, testing and monitoring by WSDA animal services program to meet USDA requirements.

     A CEM quarantine facility in Washington state would require a significant amount of oversight by WSDA to maintain the level of biosecurity necessary to protect the state's equine industry. And while these facilities benefit and protect the equine industry as a whole, the department would provide the inspection, approval, testing and monitoring needed to establish and maintain a CEM quarantine facility only at the request of an individual or group.

     Estimated costs of proposed rule to small equine businesses:

•	It is likely that only one or two CEM facilities would be established in Washington in the foreseeable future.
•	California and Kentucky currently oversee USDA-approved facilities and these states expend considerable time and resources overseeing the facilities.
•	Depending on the number and location of the facilities, requested services would involve WSDA staff mileage traveling to the facilities and staff time spent inspecting and monitoring these facilities' records. Staff time is estimated to be an average of twelve to eighteen hours per week, the estimates, of which, are based upon other states' experience. Mileage costs would depend on the location of the facility. Staff costs would increase if evenings or weekend visits are required.

     Mitigation and other options available to industry to reduce costs:

•	A CEM facility would be a benefit to the Washington equine industry as residents who import horses would be able to use a local CEM facility rather than sending their animals to another states' holding facility.
•	It is likely that the majority of users of a CEM facility would be individual horse owners rather than small businesses. The proposed rule would not disproportionately impact small businesses.

     Other actions taken by the department that will contain costs:

•	In order to reduce costs, WSDA would strive to combine trips with other inspections and offering the requesting party the option to take advantage of doing several inspections in the same day, if scheduling permits.

     CONCLUSION: This analysis has been performed to determine whether the proposed rules WILL have an economic impact on small livestock and poultry producers and whether a small business economic impact statement is required in accordance with chapter 19.85 RCW, the Regulatory Fairness Act.

     While it has been concluded that it is questionable whether a small business economic impact statement is required for the proposed rule (based upon some of the reasons outlined below), the department is filing this document as a small business economic impact statement as it has identified measures to mitigate costs when industry requests department services.

     Reasons:

•	Affected small businesses are not required to use the services provided by WSDA. There are other options available to the public to comply with Washington state animal health laws.
•	The fees are only charged when a party requests certain services from the WSDA animal services program.
•	Washington is not required to establish an equine quarantine facility for contagious equine merits. Testing and quarantine facilities are available in other states.
•	WSDA does not anticipate that the proposed rule will create a need for additional professional services.
•	It is likely that the majority of users of a CEM facility would be individual horse owners rather than small businesses.
•	Private veterinary practitioners are available to provide services to ensure poultry and/or livestock are in compliance with Washington state animal health laws.
•	Parties bringing poultry and/or livestock into the state of Washington can seek services to ensure compliance with animal health laws prior to bringing respective animals into Washington.

     There are economic and logistical benefits to Washington livestock, equine, and poultry owners:

•	If Washington is NPIP compliant, USDA will indemnify 100% of the cost of euthanasia, cleanup, disinfection and disposal in the event of a major poultry disease outbreak in the state.
•	A CEM facility would be a benefit to the Washington equine industry as residents who import horses would be able to use a local CEM facility rather than sending their animals to another states' holding facility.
•	Washington state has been free of TB and brucellosis for over twenty years. Should a case of these diseases be found in a state, that state loses its USDA TB-free or brucellosis-free status and USDA places mandatory testing requirements upon the affected state. This creates a financial burden on the industry because producers have to pay for additional testing and handling fees; and the value of the animal drops at point of sale by an estimated $0.06 - $.10 cents per pound.
•	It is difficult to determine the cost per hour for a private veterinarian as each circumstance is unique. One estimate received for a simple appointment is averaged at $40 to $45 per appointment. It is estimated that the time spent by the private veterinarian for the appointment is ten to fifteen minutes. Therefore, using this estimate, one hour of a private veterinarian's time would be conservatively estimated at $160.00. The department's veterinarian service time is $85/hour.

     Mitigation and other actions identified to contain costs:

•	WSDA may combine trips with other inspections and offering the requesting party the option to take advantage of doing several inspections in the same day, if scheduling permits.
•	In the case of the need for an extended quarantine, the department will always strive to offer other options to the owner/producer that would allow the release of the quarantine without long-term supervision and the costs associated with it.

     A copy of the statement may be obtained by contacting Lynn Briscoe, P.O. Box 42560, 1111 Washington Street S.E., Olympia, WA, phone (360) 902-1987, fax (360) 902-2087, e-mail lbriscoe@agr.wa.gov.

     A cost-benefit analysis is not required under RCW 34.05.328. The WSDA is not a listed agency under RCW 34.05.328 (5)(a)(i).

November 18, 2008

Leonard E. Eldridge, DVM

State Veterinarian

OTS-2044.1

     (1) The establishment and inspection of restricted holding facilities (also known as animal holding facilities) authorized under this chapter and chapter 16-30 WAC;

     (2) The inspection and monitoring of animals in authorized restricted holding facilities; and

     (3) Special inspections of animals or animal facilities that the director may provide.

     As provided by RCW 16.36.023, the fees in this chapter, as closely as practicable, cover the cost of the service provided.

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     (1) Inspections related to establishment and monitoring of restricted holding facilities under chapter 16-30 WAC.

     An inspection of the premises is required upon application for license to establish a restricted holding facility and with annual renewal of that license. The inspection may include, but is not limited to, the evaluation of compliance capabilities with isolation requirements, biosecurity protocols, sanitation practices, recordkeeping, and overall health of animals in quarantine.

     (2) Inspections related to the monitoring of animals held in a licensed restricted holding facility. Inspections may include, but are not limited to, follow-up activities or investigations related to confirmatory disease testing, mortality review, recordkeeping compliance (hold order, test chart submission, etc.), and overall health of the animals.

     (3) Special inspections of animals or animal facilities at the request of the animal owner or interested persons. Special inspections may include, but are not limited to, visual inspections of biosecurity and sanitation conditions, rodent control, and overall animal health. Time may also be spent safely handling and sampling animals for disease testing.

     (4) Other special inspections may be provided upon request and at the discretion of the director.

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     (2) Information about the application process and the standards for issuing a license to a restricted holding facility are found in chapter 16-30 WAC.

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     (1) Service requests must be received by the state veterinarian's office two business days prior to the date of the requested service.

     (a) The notification requirement allows the department to secure adequate staffing to supply the requested service and to accommodate leave or adjust staffing for anticipated workloads.

     (b) The notification requirement applies even if there is permanent staffing at the location.

     (c) Failure to meet the notification requirement may result in denial of service.

     (2) Service requests beyond the office's usual scope or volume will be provided only if adequate numbers of qualified employees are available.

     (3) The department reserves the right to determine the number of personnel necessary to provide the requested service.

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     (2) The hourly charge is assessed in one-half hour increments. The charges are incurred starting when staff leave their official work station and ending on return to their official work station.

     (3) The hourly rate will be one hundred dollars for services provided during nonbusiness hours. Nonbusiness hourly rates apply for services provided before 8:00 a.m. or after 5:00 p.m. during the weekday and for services provided on Saturday, Sunday, or recognized state government holidays listed in RCW 1.16.050.

     (4) Persons requesting service with less than two business days notice may be subject to a charge of two additional hours at the applicable hourly rate.

     (5) If staff must provide service at multiple locations, the final billings will be prorated accordingly.

     (6) The department will recoup at cost, from the person requesting the service, expenses for unforeseen items necessary to complete the inspection service.

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     (2) The fees are due and payable upon billing.

     (3) A late fee of one percent per month on the unpaid balance will be assessed against persons more than thirty days in arrears.

     (4) In addition to other penalties, the director may refuse to perform any inspection or services provided under this chapter for any person in arrears unless the person makes payment in full prior to such inspection or certification service.

     (5) Accounts that become ninety or more days in arrears twice within a five-year period may be subject to a permanent requirement for payment in full at the time service is provided.

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