WSR 12-19-096

PROPOSED RULES

DEPARTMENT OF AGRICULTURE


[ Filed September 19, 2012, 10:17 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 12-16-102.

Title of Rule and Other Identifying Information: Chapter 16-470 WAC, Quarantine -- Agricultural pests, the department is proposing to increase the fees for requested services performed under the authority of chapter 17.24 RCW.

Hearing Location(s): Washington State Department of Agriculture (WSDA), 1111 Washington Street S.E., 2nd Floor, Room 259, Olympia, WA 98504-2560, on October 24, 2012, at 10:00 a.m.

Date of Intended Adoption: October 31, 2012.

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 24, 2012.

Assistance for Persons with Disabilities: Contact Henri Gonzales by October 17, 2012, TTY (800) 833-6388 or 711.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: This proposal will increase fees for requested services authorized under chapter 17.24 RCW. Similar services performed for nursery facilities licensed under chapter 15.13 RCW will continue under the existing fee schedule outlined in chapter 16-401 WAC. Requested services affected by this increase include: Phytosanitary certification of exports, witnessing fumigations, postentry quarantine inspections, other field inspections, plant disease diagnostic testing, and associated document fees. The fee increases will offset increasing expenses and allow the program to balance the costs of providing requested services relative to its other activities. During the 2012 legislative session, the Washington state legislature authorized (as required by Initiative 960) WSDA to increase these licensing fees as necessary to meet the actual costs of conducting business (see 3ESHB 2127, chapter 7, Laws of 2012).

Reasons Supporting Proposal: The increase in revenue is necessary for the financial stability of the program, which is supported entirely by fees.

Statutory Authority for Adoption: RCW 17.24.131; chapter 34.05 RCW; and chapter 7, Laws of 2012 (3ESHB 2127).

Statute Being Implemented: RCW 17.24.131.

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

Name of Proponent: WSDA, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Tom Wessels, 1111 Washington Street S.E., Olympia, WA 98504-2560, (360) 902-1984.

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

Small Business Economic Impact Statement

SUMMARY OF PROPOSED RULES: WSDA plant services program is proposing to amend the schedule of fees and charges in chapter 16-470 WAC, for requested services.

Chapter 17.24 RCW authorizes WSDA to provide special certification services upon request to facilitate the movement and sales of plant products and to charge a fee for those services adequate to cover the cost of the services rendered. The schedule of fees for these services is established in rule in chapter 16-470 WAC. In the 2012 legislative session, the legislature authorized the department to increase fees for requested inspections as necessary to meet the actual costs of conducting business (ESHB [3ESHB] 2127, chapter 7, Laws of 2012).

The proposed amendments to this chapter include:


Increasing the hourly rate for requested services conducted during business hours from $40 to $50.
Increasing the hourly rate for requested services conducted during nonbusiness hours from $51 to $65.
Increasing the fees for compliance agreements from $40 to $50.
Increasing fees for certificates issued more than twenty-four hours after the inspection from $19.50 to $24.
Increasing the fees for additional certificates from $6.50 to $8.00.
Increasing the fumigation lot fee from $16 to $20.
Increasing the site inspection fee for the United States Department of Agriculture (USDA) postentry quarantine from $81 to $101.

SMALL BUSINESS ECONOMIC IMPACT STATEMENT (SBEIS): Chapter 19.85 RCW, the Regulatory Fairness Act, requires an analysis of the economic impact proposed rules will have on regulated small businesses. Preparation of an SBEIS is required when proposed rules will impose more than minor costs for compliance or have the potential of placing an economic impact on small businesses that is disproportionate to the impact on large businesses. "Minor cost" means a cost that is less than three-tenths of one percent of annual revenue or income, or one hundred dollars, whichever is greater, or one percent of annual payroll. "Small business" means any business entity that is owned and operated independently from all other businesses and has fifty or fewer employees.

INDUSTRY ANALYSIS: The plant services program provides special certifications upon request to facilitate the domestic and international export of plant products. Businesses requesting these services are not regulated by the plant services program, but they voluntarily request certification services in order to fulfill the phytosanitary standards of the importing countries and states. Businesses may request inspections from USDA animal and plant health inspection services (APHIS) or from the WSDA plant services program to verify compliance with those standards. WSDA plant services program provided requested services to three hundred eighty-six customers in FY 2012, with annual fees for all businesses of any size ranging from $7.00 to $70,000. The fee charged is based on the time it takes to verify compliance with the standards of the importing states and countries. There are several types of businesses requesting these services, with NAICS codes including 1112, 1113, 1131, 1132, 3211, 3212, 3219, 3399, 4233, 4238, 4244, and 4245. Many customers are located in other states or Canada but ship through Washington ports. The department has analyzed the proposed rule amendments and has determined that some costs are considered more than minor and could have an economic impact on small businesses that use these services.

INVOLVEMENT OF SMALL BUSINESSES: Because of the diversity of the businesses using these services, there is no formal organization representing affected industries. The proposal was developed solely to enable the plant services program to recover the costs of providing these services. RCW 17.24.131 states that to facilitate the movement of plant products, WSDA may provide these services upon request and prescribe a fee to recover its costs. As a program without access to state general funds, the plant services program must maintain an adequate fund balance if it is to continue providing these services.

To assess the impact of this proposal on small businesses, the plant services program mailed a fact sheet on the proposed fee increase and a survey with a self-addressed stamped envelope to approximately two hundred fifty businesses. Of the sixty-four respondents, fifty-four identified themselves as small businesses.

COST OF COMPLIANCE: RCW 19.85.040 directs agencies to analyze the costs of compliance for businesses required to comply with the proposed rule, including costs of equipment, supplies, labor, professional services, and increased administrative costs. Agencies must also consider whether compliance with the rule will result in loss of sales or revenue. RCW 19.85.040 directs agencies to determine whether the proposed rule will have a disproportionate cost impact on small businesses by comparing the cost of compliance for small business with the cost of compliance for the ten percent of the largest businesses required to comply with the proposed rules. Agencies are to use one or more of the following as a basis for comparing costs:


Cost per employee;
Cost per hour of labor; or
Cost per one hundred dollars of sales.

This proposal does not impose regulations on Washington businesses but increases user fees for requested services. The most significant factor in determining these costs is the import requirements of receiving countries and states.

The cost of this proposal on affected businesses is determined by many factors including the following:


The number of certification services requested - the program charges for services on an hourly basis.
The certification requirements - some countries may require multiple inspections or laboratory testing.
The receiving country or states - some countries or states have overall more stringent import requirements than others.
The product exported - some products have an inherently higher phytosanitary risk.
The location of the business - businesses in remote areas will pay more for WSDA inspectors' travel time.

Analysis of Cost of Compliance: The program analyzed the cost of this proposal to small businesses and found that it will have a significant cost on some of the small businesses using these services. Based on the results of the customer survey, eighty-four percent of businesses using these services are small businesses and the cost of the proposal would be more than minor for seven percent of those. An analysis of businesses requesting services in FY 2012 showed three hundred eighty-six customer paid user fees ranging from $7.00 to over $70,000. If 2012 requests are consistent with future requests, the proposal would cost one hundred fifty-eight businesses, one hundred thirty-three of which would be small businesses, more than $100.

Analysis of Disproportionate Economic Impact: When costs associated with proposed rules are more than minor, the Regulatory Fairness Act requires a comparison of the costs to small businesses with those of ten percent of the largest businesses in the regulated industry. An analysis has shown that the costs small businesses will incur to comply with the proposed rules are more than minor, but they are not disproportionate between small and large business entities, as they are directly proportional to the services requested. Because costs are not disproportionate, mitigation of the fees for services is not required.

JOBS CREATED OR LOST: Under RCW 19.85.040, agencies must provide an estimate of the number of jobs that will be created or lost as the result of compliance with the proposed rules. In collecting information from representative small businesses through survey, the program estimates that thirteen jobs could be lost as a result of small businesses paying increased user fees.

CONCLUSION: In the 2012 legislative session, 3ESHB 2127, chapter 7, Laws of 2012, directed the department to increase fees for requested inspections to cover the costs of doing business in order to maintain the sustainability of the program. The alternative to this proposal is to reduce the number of the program's inspectors and eliminate requested services when the cost of providing those services cannot be fully recovered. Unfortunately, this would have a much larger economic impact on businesses using these inspections services. Exporters would have to rely on USDA APHIS for certification at a significantly higher cost, and with a much smaller USDA APHIS staff, exporters would face significant delays. Some businesses also have the option of exporting out of Oregon ports, but the Oregon department of agriculture fees for these services are also higher. Even with a twenty-five percent increase in fees for requested services, WSDA will still provide phytosanitary certification services at a lower cost than is available to exporters in neighboring states.

Please contact Tom Wessels if you have any questions at (360) 902-1984 or twessels@agr.wa.gov.

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. WSDA is not a listed agency under RCW 34.05.328 (5)(a)(i).

September 19, 2012

Mary A. Martin Toohey

Assistant Director

OTS-4976.1


AMENDATORY SECTION(Amending WSR 09-23-006, filed 11/5/09, effective 1/1/10)

WAC 16-470-912   Schedule of fees and charges -- Applicable fees and charges.   (1) Hourly rate.


Hourly rate - Business hours $((40.00)) 50.00
Hourly rate - Nonbusiness hours $((51.00)) 65.00

(2) Laboratory diagnostic services, except as provided in subsection (3) or (4) of this section, are charged at the applicable hourly rate plus materials.

(3) Plant pathology laboratory diagnostic fees:

(a) Nematode assay (plant material) . . . . . . . . . . . . $38.00

(b) Nematode assay (soil) . . . . . . . . . . . . $60.00

(c) Assay for dwarf bunt (TCK), Karnal bunt, flag smut

. . . . . . . . . . . . $60.00


Note: Fee is for one sample for one specific organism, unless more than one organism can be detected in a single test without additional inputs.

(4) The department reserves the right to provide service by written agreement at a single, negotiated cost or at a negotiated rate for projects with at least one of the following characteristics:

(a) Projects greater than one hundred samples;

(b) Projects requiring materials not readily available; or

(c) Projects requiring special handling, multiple phase test procedures, or prolonged incubation periods.

The rate charged shall not be less than the cost to the department of performing the tests.

[Statutory Authority: RCW 17.24.021, 17.24.131, chapter 34.05 RCW, and 2009 c 564. 09-23-006, 16-470-912, filed 11/5/09, effective 1/1/10. Statutory Authority: Chapters 17.24 and 34.05 RCW. 07-11-012, 16-470-912, filed 5/3/07, effective 7/1/07; 06-15-044, 16-470-912, filed 7/11/06, effective 8/11/06; 05-12-111, 16-470-912, filed 5/31/05, effective 7/1/05. Statutory Authority: Chapters 17.24, 15.14, and 34.05 RCW. 05-01-180, 16-470-912, filed 12/21/04, effective 1/21/05. Statutory Authority: Chapters 17.24 and 34.05 RCW. 04-17-036, 16-470-912, filed 8/10/04, effective 9/10/04. Statutory Authority: Chapters 15.13, 15.14, 17.24, and 34.05 RCW. 03-21-166, 16-470-912, filed 10/22/03, effective 11/22/03. Statutory Authority: Chapters 17.24 and 34.05 RCW. 03-10-082, 16-470-912, filed 5/6/03, effective 6/30/03. Statutory Authority: Chapters 17.24 and 15.14 RCW. 01-11-033, 16-470-912, filed 5/8/01, effective 6/8/01.]


AMENDATORY SECTION(Amending WSR 09-23-006, filed 11/5/09, effective 1/1/10)

WAC 16-470-917   Schedule of fees and charges -- Fees for post entry inspection services.   (1) Post entry site inspection and/or permit review and approval . . . . . . . . . . . . $((81.00)) 101.00

(2) Subsequent inspections of post entry plant materials are provided at the applicable hourly rate.

(3) Post entry inspection fees may be waived for state universities, United States Department of Agriculture researchers, and other public entities.

[Statutory Authority: RCW 17.24.021, 17.24.131, chapter 34.05 RCW, and 2009 c 564. 09-23-006, 16-470-917, filed 11/5/09, effective 1/1/10. Statutory Authority: Chapters 17.24 and 34.05 RCW. 07-11-012, 16-470-917, filed 5/3/07, effective 7/1/07; 06-15-044, 16-470-917, filed 7/11/06, effective 8/11/06; 05-12-111, 16-470-917, filed 5/31/05, effective 7/1/05; 04-17-036, 16-470-917, filed 8/10/04, effective 9/10/04. Statutory Authority: Chapters 15.13, 15.14, 17.24, and 34.05 RCW. 03-21-166, 16-470-917, filed 10/22/03, effective 11/22/03. Statutory Authority: Chapters 17.24 and 34.05 RCW. 03-10-082, 16-470-917, filed 5/6/03, effective 6/30/03. Statutory Authority: Chapters 17.24 and 15.14 RCW. 01-11-033, 16-470-917, filed 5/8/01, effective 6/8/01.]


AMENDATORY SECTION(Amending WSR 09-23-006, filed 11/5/09, effective 1/1/10)

WAC 16-470-921   Schedule of fees and charges -- Miscellaneous fees.   (1) 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 or post entry inspections that are not a part of a regular work schedule. Such charges may be prorated among applicants if more than one applicant is provided service during a workday or trip when per diem is applicable.

(2) Postage, special handling services and other miscellaneous costs exceeding five dollars will be charged back to the applicant at the actual cost.

(3) Certificates of inspection, phytosanitary certificates, and other official documents will be provided to the applicant subject to the charges and conditions established ((in chapter 16-401 WAC.)) below:


Fee or Charge:
Certificate issued at time of inspection No charge
Certificate issued more than twenty-four hours after the inspection $24.00
Additional certificates $8.00
Fumigation lot or container fee $20.00
Compliance agreement $50.00

[Statutory Authority: RCW 17.24.021, 17.24.131, chapter 34.05 RCW, and 2009 c 564. 09-23-006, 16-470-921, filed 11/5/09, effective 1/1/10. Statutory Authority: Chapters 17.24 and 34.05 RCW. 03-10-082, 16-470-921, filed 5/6/03, effective 6/30/03. Statutory Authority: Chapters 17.24 and 15.14 RCW. 01-11-033, 16-470-921, filed 5/8/01, effective 6/8/01. Statutory Authority: Chapter 17.24 RCW. 99-12-035, 16-470-921, filed 5/26/99, effective 6/26/99.]