Original Notice.

     Preproposal statement of inquiry was filed as WSR 09-14-123.

     Title of Rule and Other Identifying Information: Chapter 16-401 WAC, Nursery inspection fees, the department is proposing to increase nursery dealer license fees and requested inspection fees. In addition, the department is amending the language in order to meet the needs of the nursery industry and in response to recent changes implemented by the federal government.

     Hearing Location(s): Washington State Department of Agriculture, 1111 Washington Street S.E., Natural Resources Building, 2nd Floor, Conference Room 259, Olympia, WA 98504-2560, on October 29, 2009, at 1:00 p.m.

     Date of Intended Adoption: November 5, 2009.

     Submit Written Comments to: Henri Gonzales, P.O. Box 42560, Olympia, WA 98504-2560, e-mail hgonzales@agr.wa.gov, fax (360) 902-2094, by October 29, 2009.

     Assistance for Persons with Disabilities: Contact Henri Gonzales by October 22, 2009, TTY (800) 833-6388.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Chapter 16-401 WAC, Nursery inspection fees, the department is proposing to increase nursery dealer license fees and fees for additional services requested by the industry. In addition, the department is amending the language in order to meet the needs of the nursery industry and in response to recent changes in procedure implemented by the United States Department of Agriculture's Animal and Plant Health Inspection Service.

     Reasons Supporting Proposal: During the 2009 legislative session, the Washington state legislature authorized (as required by Initiative 960) the Washington state department of agriculture to increase the nursery dealer licensing and plant pest inspection and testing fees as necessary to meet the actual costs of conducting business (see chapter 564, Laws of 2009).

     This rule establishes the fees charged by the plant services program for activities authorized in chapters 15.13 and 15.14 RCW. The program's revenue is almost solely derived from inspection, testing, and license fees. An increase in fees would enable the program to cover the costs associated with performing these activities.

     Statutory Authority for Adoption: RCW 15.13.260, 15.13.280, 15.13.370, and 15.14.015; chapter 34.05 RCW; and chapter 564, Laws of 2009.

     Statute Being Implemented: RCW 15.13.260, 15.13.280, 15.13.370, and 15.14.015.

     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: Tom Wessels, 1111 Washington Street, Olympia, WA 98504-2560, (360) 902-1984; Implementation and Enforcement: Mary Toohey, 1111 Washington Street, Olympia, WA 98504-2560, (360) 902-1907.

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

     Rule Summary: RCW 15.13.280 requires the department of agriculture (WSDA) to establish a schedule of fees for retail and wholesale nursery dealer licenses based on the gross annual sales of horticulture plants at each place of business. RCW 15.13.370 authorizes the department to provide special inspections or certifications upon request and to prescribe a fee for those services. Chapter 16-401 WAC establishes fees for both nursery dealer licenses and requested services. The fees collected from the fee schedule specified in chapter 16-401 WAC are deposited into the nursery inspection account within the agriculture local fund. The nursery activities of the plant services program are entirely fee-supported. The mission of the plant services program is to enforce the state's nursery standards and facilitate the trade of agriculture products through phytosanitary certification.

     In fiscal year 2009, the nursery inspection activity expenses exceeded revenue by $65,000 because of increasing operating expenses. Prior to 2007, the department had increased fees for requested services as needed annually at a rate within the mandated office of financial management fiscal growth factor. However, enactment of Initiative 960 in 2007 prohibited state agencies from increasing fees without legislative authority. During the 2009 legislative session, the department was given authority to increase the fees for nursery dealer licenses and for plant pest inspections.

     With the intention of stabilizing the nursery inspection account until approximately 2016, the department considered increasing nursery dealer license fees by 20% and fees for requested services by 32%. However, in view of the current economic turndown and after consulting with the WSDA nursery advisory committee, the department decided to mitigate possible economic impacts by reducing the proposed increases substantially and reevaluating the program's financial status in 2010.

Fee Increase	Projected Account Balance 6/30/2011
No fee increase	($11,723)
32% for requested services/20% for nursery dealer license in January 2010	$473,737
16% for requested services/10% for nursery dealer license in January 2010	$263,193

     Average monthly operating expenses for the nursery and requested inspection activities (performed under authority of both chapters 15.13 and 17.24 RCW) of the plant services program are approximately $115,000. The projected account balance above of $263,193 is less than three months' operating expenses.

     The proposed rule revision will result in no additional reporting, record-keeping, or other compliance requirements for nurseries. Other than the increase in the fee itself, there are no additional equipment, supplies, labor, professional services, or increased administrative costs to small businesses associated with the proposal, and this proposal will not cause small businesses to lose sales or revenue.

     Affected Groups and Costs: The proposal to increase the nursery dealer license fees in chapter 16-401 WAC would affect all of the approximately 6,500 licensed businesses that sell horticultural plants. This includes retail garden centers and production nurseries, hardware stores, groceries, and large chain stores. However, the cost for each business would be relatively minor (no more than a $16 increase per year) and would vary with the size of the business. Nursery dealer licenses for businesses are based on the gross annual sale of horticulture plants. A business with gross annual sales of less than $2,500 currently pays $38.73. Under this proposal that would increase $3.27 to $42.00. At the top end of the schedule, a business with gross annual sales exceeding $15,000 currently pays $166.00. This proposal would increase this license fee by $16 to $182.00. Since the nursery dealer license fee schedule is proportional to gross sales, the proposed increase would not have a disproportionate cost impact on small businesses. The proposed nursery dealer license fee schedule and the current fee schedule are listed below.

	Number of Nurseries	Current Fee	Proposed Fee	Proposed Increase
Gross business sales of horticulture plants less than $2,500	3,000	$38.73	$42.00	$3.27
Gross business sales of horticulture plants between $2,500 and $15,000	1,404	$82.99	$91.00	$8.01
Gross business sales of horticulture plants $15,000 or more	1,885	$166.00	$182.00	$16.00

     The proposal to increase fees for requested services by approximately 16% would affect those nurseries requesting phytosanitary certification for the movement of horticultural plants. Phytosanitary certification is generally required in order for production/wholesale nurseries to be able to comply with requirements of receiving international or interstate markets. Some of these services can also be obtained from the United States Department of Agriculture (USDA); however, the cost of the federal services exceeds the proposed WSDA fees. (See the alternatives section later in this document.) The proposed fee schedule, along with the current fee schedule, is listed below.

Service	Current Fee	Proposed Fee
Hourly rate-business hours	$34.80	$40.00
Hourly rate-nonbusiness hours	$44.45	$51.00
Certificate issued at time of inspection	No charge	No charge
Certificate issued more than twenty-four hours after the inspection	$16.55	$19.50
Additional certificates	$5.20	$6.50
Fumigation lot or container fee	$13.80	$16.00
Certificate of plant health for noncommercial movement	$6.80	$6.80
Compliance agreement	$34.80	$40.00
Inspection tags or sticker (lots of 250)	$6.80	$7.80

     A business with a nursery dealer license is allowed without additional fee four hours of phytosanitary inspection services per year, which adequately covers routine growing season inspections for most production/wholesale nurseries. In FY09, approximately one hundred forty nurseries requested services in excess of four hours. Requested services in excess of four hours are charged at the hourly rate established in chapter 16-401 WAC. The fees paid for requested services on an annual basis ranged from $6.80 (for a single certificate) to $4,000 for nurseries with large interstate and international markets. In general the largest cost impact of this fee increase would be for these few relatively large nurseries.

     Industry Outreach: The proposal to increase nursery dealer license fees and fees for requested services was discussed with the nursery advisory committee on June 12, 2009. The committee recommended a 10% increase for nursery dealer licenses and a 16% increase in fees for requested services. The proposal was also presented to the fruit tree advisory committee and the grapevine advisory committee.

     In addition to notifying advisory committees, the plant services program will send a notice of the proposal to all program accounts.

     Alternatives: The alternative to increasing nursery dealer license fees and fees for requested services is to leave the current fees unchanged and reduce program staff and services. Currently, there are eleven field personnel stationed throughout the state for the plant services program. Reductions in staff would likely result in longer waiting times for export services, impeding the ability of Washington nurseries to move nursery stock in some markets. It would also decrease the ability of the plant services program to inspect for and take compliance action to prevent shipments carrying harmful pests and nonnative species from moving into commerce, endangering Washington's plant resources.

     An alternative source of requested phytosanitary inspection services for international and some domestic shipments is federal, performed by USDA Animal and Plant Health Inspection Service (APHIS). Federal fees for these services are not directly comparable to the WSDA hourly fee, as APHIS charges by the certificate, rather than by the hour. However, the current federal fee of $98 per certificate appears to be approximately 1.5x to double the proposed state fee for the same service. In addition, some services performed by WSDA are not offered by APHIS.

     Conclusion: The fees generated by nursery dealer licenses and requested services fund the plant services program of WSDA. The plant services program is mandated by chapter 15.13 RCW to regulate sales and movement of horticulture plants and to facilitate trade. The proposal to increase nursery dealer licenses by 10% will result in a $16 increase or less. The proposed approximately 16% increase in fees for requested services will impact a relatively small number of nurseries with extensive multistate and international markets.

     A copy of the statement may be obtained by contacting Henri Gonzales, P.O. Box 42560, Olympia, WA 98504-2560, phone (360) 902-2061, fax (360) 902-2094, e-mail hgonzales@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).

September 23, 2009

Mary A. Martin Toohey

Assistant Director

OTS-2691.2

AMENDATORY SECTION(Amending WSR 07-11-011, filed 5/3/07, effective 7/1/07)

WAC 16-401-027   Schedule of fees and charges -- Applicable rates and charges.   The following rates apply for requested inspection services:

(1) Fee or Charge:
Hourly rate -- business hours	$((34.80)) 40.00
Hourly rate -- nonbusiness hours	$((44.45)) 51.00
Certificate issued at time of inspection	No charge
Certificate issued more than twenty-four hours after the inspection	$((16.55)) 19.50
Additional certificates	$((5.20)) 6.50
Fumigation lot or container fee	$((13.80)) 16.00
Certificate of plant health for noncommercial movement	$6.80
Compliance agreement	$((34.80)) 40.00
Inspection tags or stickers (lots of 250)	$((6.80)) 7.80 per lot
((Inspection tags or stickers (minimum 10)	$0.29 each))

     (2) Mileage at the established office of financial management rate (schedule A), per diem and other authorized travel expenses at actual cost, and travel time at the applicable hourly rate may be assessed for requested inspections that are not a part of a regular work schedule. Such charge may be prorated among applicants if more than one applicant is provided service during a workday or trip when mileage and/or per diem are applicable.

     (3) Inspections for phytosanitary certification, including growing season field inspections, are provided at the applicable hourly rate provided in subsection (1) of this section except where an alternate certification inspection fee is provided in statute, in rule, or by a written agreement between the department and an industry entity, university, or public agency. When growing season field inspections for phytosanitary certification and regulatory inspections are performed simultaneously, the first two hours of inspection each calendar year for nurseries licensed under WAC 16-401-041 (1)(b) or (2)(a); and the first four hours of inspection per calendar year for nurseries licensed under WAC 16-401-041 (1)(c) or (2)(b), are without charge.

     There is no additional charge for the first phytosanitary certificate issued at the time of the inspection.

     (4) Inspection and certification of nonplant material or equipment for sanitation (freedom from soil or pests) by visual examination or through witnessing a prescribed treatment (steam cleaning, hydro-washing, etc.) is charged at the applicable hourly rate.

     (5) Witnessing and certification of fumigation is charged at the applicable hourly rate, plus a per lot or container fee.

     (6) The department may also charge fees and/or surcharges for transmittal to federal agencies.

     (7) The department may issue a certificate of plant health for noncommercial movement of plant materials between states by unlicensed persons, up to a maximum of five plants, and provided that the plants are brought to a plant services office for inspection.

Note:

When two or more types of inspection, provided in this section, are performed simultaneously, only one hourly rate applies. One certificate for one service is issued at no charge.

[Statutory Authority: Chapters 15.13, 15.14, and 34.05 RCW. 07-11-011, § 16-401-027, filed 5/3/07, effective 7/1/07; 06-15-043, § 16-401-027, filed 7/11/06, effective 8/11/06; 05-12-110, § 16-401-027, filed 5/31/05, effective 7/1/05; 04-17-037, § 16-401-027, filed 8/10/04, effective 9/10/04. Statutory Authority: Chapters 15.13, 15.14, 17.24, and 34.05 RCW. 03-21-166, § 16-401-027, filed 10/22/03, effective 11/22/03. Statutory Authority: Chapters 15.13, 15.14, and 34.05 RCW. 03-10-083, § 16-401-027, filed 5/6/03, effective 6/30/03. Statutory Authority: Chapters 15.13 and 15.14 RCW. 01-11-031, § 16-401-027, filed 5/8/01, effective 6/8/01.]

     (1) Retail nursery dealer license fee:

     (a) Gross business sales of horticultural plants and turf less than two thousand five hundred dollars . . . . . . . . . . . . $((38.73)) 42.00

     (b) Gross business sales of horticultural plants and turf between two thousand five hundred dollars and fifteen thousand dollars, the license fee is . . . . . . . . . . . . $((82.99)) 91.00

     (c) Gross business sales of horticultural plants and turf of fifteen thousand dollars or more . . . . . . . . . . . . $((166.00)) 182.00

     (2) Wholesale nursery dealer license fee:

     (a) Gross business sales of horticultural plants and turf less than fifteen thousand dollars . . . . . . . . . . . . $((82.99)) 91.00

     (b) Gross business sales of horticultural plants and turf of fifteen thousand dollars or more . . . . . . . . . . . . $((166.00)) 182.00

     (3) As provided in RCW 15.13.285, a surcharge of twenty percent of the base rate, in addition to the fees established on all classes of licenses in subsections (1) and (2) of this section, is established.

     (4) Permit fee for those types of sales and organizations exempted from licensing requirements by RCW 15.13.270

. . . . . . . . . . . . $6.70

[Statutory Authority: Chapters 15.13, 15.14, and 34.05 RCW. 07-11-011, § 16-401-041, filed 5/3/07, effective 7/1/07; 06-15-043, § 16-401-041, filed 7/11/06, effective 8/11/06; 05-12-110, § 16-401-041, filed 5/31/05, effective 7/1/05. Statutory Authority: Chapters 15.13, 15.14, 17.24 and 34.05 RCW. 03-21-166, § 16-401-041, filed 10/22/03, effective 11/22/03. Statutory Authority: Chapters 15.13, 15.14, and 34.05 RCW. 03-10-083, § 16-401-041, filed 5/6/03, effective 6/30/03. Statutory Authority: Chapters 15.13 and 15.14 RCW. 01-11-031, § 16-401-041, filed 5/8/01, effective 6/8/01; 99-12-034, § 16-401-041, filed 5/26/99, effective 6/26/99.]

© Washington State Code Reviser's Office