Original Notice.

     Preproposal statement of inquiry was filed as WSR 11-16-018.

     Title of Rule and Other Identifying Information: Chapter 16-29 WAC, Animal disease traceability.

     Hearing Location(s): Natural Resources Building, 1111 Washington Street S.E., First Floor, Conference Room 175, Olympia, WA 98504, on September 6, 2012, at 1:00 p.m.; and at Central Washington University, 1007 North Chestnut, Block Hall, Meeting Room 150, Ellensburg, WA 98926, on September 7, 2012, at 1:00 p.m.

     Date of Intended Adoption: October 5, 2012.

     Submit Written Comments to: Teresa Norman, P.O. Box 42560, Olympia, WA 98504-2560, e-mail WSDARulesComments@agr.wa.gov, fax (360) 902-2092, by 5:00 p.m., September 7, 2012.

     Assistance for Persons with Disabilities: Contact WSDA receptionist by August 31, 2012, TTY (800) 833-6388 or 711.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department proposes to add new chapter 16-29 WAC, Animal disease traceability. The 2011 legislative session passed SHB 1538 which directed the department to adopt by rule a fee per head on cattle sold or slaughtered in the state or transported out of the state to administer animal disease traceability activities for cattle. The proposed new WAC will establish a forty cent per head fee on cattle sold or slaughtered in the state or transported out-of-state, establish a process to assess and collect the fee, establish exemptions and establish a penalty matrix for failing to pay the fee.

     Reasons Supporting Proposal: If Washington state is unable to trace cattle, the United States Department of Agriculture has the authority to put movement restrictions on the entire state. This new WAC is necessary for the department to trace cattle that may be infected or have been exposed to infectious and communicable diseases. In order for the department to trace cattle, the department must obtain health and movement information to determine where cattle originated from, where the cattle moved to, and what cattle were exposed.

     Statutory Authority for Adoption: RCW 16.36.150 and chapter 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 (WSDA), governmental.

     Name of Agency Personnel Responsible for Drafting and Implementation: David Hecimovich, Olympia, (360) 725-5493; and Enforcement: Leonard E. Eldridge, DVM, Olympia, (360) 902-1881.

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

     WSDA is proposing to establish chapter 16-29 WAC, Animal disease traceability within TITLE 16 WAC, Department of agriculture. The purpose of this chapter is to establish animal disease traceability activities for cattle.

     SMALL BUSINESS ECONOMIC IMPACT STATEMENT: 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 a small business economic impact statement 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 animal disease traceability program will be responsible for administering animal disease tracebacks for livestock within the state of Washington. The program has determined it regulates 6,420 existing businesses that fall under the North American Industry Classification System codes corresponding to the regulated industry: 31161, Animal Slaughtering (except poultry); 112120, Dairy Cattle and Milk Production; 112111, Beef Cattle Ranching & Farming; and 112112, Cattle Feedlots.

     INVOLVEMENT OF SMALL BUSINESSES: A small business economic impact assessment survey was mailed to 6,420 producers and businesses (6,063 registered brand holders and 357 businesses associated with cattle who were not registered brand holders) to analyze the economic impact of proposed rules on small businesses.

     WSDA analyzed how the fee per head to administer animal disease traceability activities for cattle would be collected on cattle at change of ownership, transported out of the state, or slaughtered in the state.

     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.

     The program has opted to look at cost per one hundred dollars of sales as a basis for comparing costs.

     Analysis of Cost of Compliance: The program has analyzed the cost of compliance anticipated by regulated small businesses. Four hundred eight small businesses and five large businesses returned the small business economic impact survey. Thirty-seven percent of small businesses and sixty percent of the large businesses surveyed indicated fees would have an impact.

     The following questions were asked and then charted to business that may have an impact from SHB 1538:

•	Will the business incur costs to comply? If yes, cost per $100 of sales?
•	What kinds of resources will the business likely need i.e., equipment, supplies, labor increased administrative costs or professional services?
•	Will the business lose sales or revenue? If yes, how much revenue will be lost?
•	Will jobs be created or eliminated? If yes, how many jobs?

     Question: Will the business incur costs to comply? If yes, cost per $100 of sales?

     Question: What kinds of resources will the business likely need i.e., equipment, supplies, labor increased administrative costs or professional services?

     Question: Will the business lose sales or revenue? If yes, how much revenue will be lost?

     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 not more than minor and are not disproportionate to costs incurred by large business entities.

     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.

     Question: Will jobs be created or eliminated? If yes, how many jobs?

     CONCLUSION: To comply with chapter 19.85 RCW, the Regulatory Fairness Act, the WSDA has analyzed the economic impact of the proposed rules on small businesses and has concluded that the costs are not more than minor and there is no disproportionate impact between small and large businesses.

     Please contact David Hecimovich if you have any questions at (360) 725-5493 or by e-mail dhecimovich@agr.wa.gov.

     A copy of the statement may be obtained by contacting David Hecimovich, WSDA, P.O. Box 42560, Olympia, WA 98504-2560, phone (360) 725-5493, fax (360) 902-2087, e-mail dhecimovich@agr.wa.gov.

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

August 1, 2012

Leonard E. Eldridge

State Veterinarian

OTS-4366.3

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     "Entry permit" means prior written permission issued by the director to admit or import animals or animal reproductive products into Washington state.

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     (a) Cattle moving interstate for grazing purposes per WAC 16-86-017 may be eligible for an assessment refund. To qualify for a refund, owners shall provide proof within forty-five days of return that the cattle returned to the physical address listed on the grazing permit.

     (b) Female dairy cattle moving interstate for feeding purposes may be eligible for an assessment refund. To qualify for a refund, owners shall provide proof within forty-five days of return that the cattle returned to the location of origin listed on the export certificate of veterinary inspection.

     (2) Assessments are collected by the department when a livestock inspection is conducted and collected in the same manner as the livestock inspection fees.

     (3) All other assessments shall be paid to the department by the fifteenth day of the month following the month in which the sale, slaughter, or transportation out-of-state occurred by:

     (a) The seller, in the case of cattle not receiving a livestock inspection per chapter 16.57 RCW; or

     (b) The meat processor, when cattle are slaughtered for purposes other than custom slaughtering where no change of ownership occurred. Assessments that are remitted to the department by the meat processor for cattle that are imported from out-of-state shall reference the entry permit number and enclose a copy of a livestock inspection certificate if applicable. Assessments that are remitted to the department by the meat processor for in state cattle shall enclose a copy of the certificate of permit (haul slip) and reference the livestock inspection certificate number if applicable.

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     (2) The following is the base penalty, not including statutory assessments.

Violation	Base Penalty
RCW 16.36.150	Failing to pay the traceability fee
First offense	$50.00
Second offense within ten years	$125.00
Third and subsequent offenses within ten years	$250.00

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