Original Notice.

     Preproposal statement of inquiry was filed as WSR 12-11-121.

     Title of Rule and Other Identifying Information: The department of agriculture (DOA) is proposing an amendment to WAC 16-237-195 Fees for warehouse audit and related services, increasing the fee for year-end inventories.

     Hearing Location(s): Spokane County Cooperative Extension, 222 North Havana Room F, Spokane, WA 99202, on October 8, 2012, at 11:00 a.m.

     Date of Intended Adoption: October 17, 2012.

     Submit Written Comments to: Teresa Norman, P.O. Box 42560, Olympia, WA 98504, e-mail WSDARulesComments@agr.wa.gov, fax (360) 902-2085, by 5:00 p.m., October 8, 2012.

     Assistance for Persons with Disabilities: Contact WSDA agency receptionist by calling TTY 1-800-833-6388 or 711.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed amendment to WAC 16-237-195 will enable the warehouse audit program to recover the final portion of the cost incurred in performing the requested year-end inventory program. The department is proposing to increase the year-end inventory fee from ten percent to twenty percent with a minimum fee of four hundred dollars. The warehouse audit program is also proposing to increase the hourly rate charged from $33 per hour to $56 per hour consistent with the proposed hourly fee increase for the grain inspection program. This fee proposal is supported by the advisory board for the grain warehouse audit program to cover the cost of the program and the addition of one auditor.

     Reasons Supporting Proposal: This proposed fee increase should generate sufficient revenue to fully cover increased costs for the warehouse audit program. This is the second step of an overall program fee increase of $145,000 recommended by the warehouse audit program advisory board. The statutory fee increase passed by the legislature in 2012 is estimated to generate $126,700 of the amount and this proposed rule change is estimated to generate the remaining $18,300 needed to hire an additional auditor and cover increasing costs.

     Statutory Authority for Adoption: RCW 22.09.020(13), 22.09.790, chapter 34.05 RCW, 3ESHB 2127, chapter 7, Laws of 2012.

     Statute Being Implemented: Chapter 22.09 RCW, Agricultural commodities.

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

     Name of Proponent: [DOA], governmental.

     Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Don Potts, 617 North Fancher Road, Building 103D, Spokane, WA 99212, (509) 533-2487.

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

     The purpose of this chapter is to establish regulations and fees for services provided by the grain warehouse audit program. The fees established in this chapter are to be set at a level that will ensure full cost recovery for services rendered.

     The proposed amendments to this chapter include:

•	Increasing the grain warehouse audit program fee for the year-end inventories from ten percent before July 30 and fifteen percent after July 30 to a flat rate of twenty percent, with a minimum fee of $400.
•	Increasing the hourly rate from $33 per hour to $56 per hour consistent with the proposed hourly fee increase for the grain inspection program.

     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 on businesses in an industry.

     "Minor cost" means a cost per business 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 a business that employs fifty or fewer employees.

     INDUSTRY ANALYSIS: The proposed rule impacts large and small businesses that pay year-end audit fees. These businesses fall primarily under the North American Industry Classification System (NAICS) code 493130 Farm Product Warehousing and Storage.

     The grain warehouse audit program has analyzed the proposed rule amendments and the costs of compliance and has determined that the proposed rule amendments will not impose more than minor costs on WSDA-regulated businesses.

     INVOLVEMENT OF SMALL BUSINESSES: Small businesses have been involved in writing the proposed rules and in providing the department with the expected costs associated with the rule revisions. The grain warehouse audit program has attended commission and trade meetings and has met individually with business owners throughout the state. The program will continue to provide information and obtain input from industry on the proposed rule. A public hearing is scheduled for early October.

     COST OF COMPLIANCE: RCW 19.85.040, the Regulatory Fairness Act, 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.

     Analysis of Cost of Compliance: A small business economic impact assessment survey was mailed to forty-nine grain warehouse audit program customers. Twelve survey responses were received, all from small businesses. Of the twelve small business responses, all but one business indicated the proposed fee increase would not create or eliminate jobs, would not cause a loss in sales or revenue, or cause the business to incur compliance costs. One small business responded that the proposed increase in fees would cause the loss of one job and incur an annual revenue loss of $300. Additionally, one customer commented on the survey that any proposed fee increase would be passed on to customers, and suggested more support for the program's audit staff and reducing staff in Olympia instead of raising fees.

     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. The costs small businesses will incur to comply with the proposed rules are not more than minor and are not disproportionate between small and large businesses.

     Additionally, while year-end inventory fees will rise from five to ten percent, with a minimum fee of $400, this fee remains much less than the grain trade would pay private auditors to review year-end inventories.

     JOBS CREATED OR LOST: Responses from small businesses to WSDA's small business economic impact survey indicate that there will not be any jobs added because of the fee increases. One small business indicated that one job may be lost due to the fee increase.

     CONCLUSION: The grain warehouse audit program has analyzed the economic impact of the proposed rules on small businesses and has concluded that the costs small businesses will incur to comply with the proposed rules are not more than minor and are not disproportionate between small and large businesses.

     Please contact Don Potts, grain warehouse audit program manager, if you have any questions at dpotts@agr.wa.gov or at (509) 533-2487.

     A copy of the statement may be obtained by contacting Don Potts, 617 North Fancher Road, Building 103D, Spokane, WA 99212, phone (509) 533-2487, fax (509) 533-2486, e-mail dpots@agr.wa.gov.

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

August 22, 2012

Brad J. Avy

Assistant Director

OTS-4909.2

AMENDATORY SECTION(Amending WSR 05-07-080, filed 3/15/05, effective 4/15/05)

WAC 16-237-195   Fees for warehouse audit and related services.   The following fees apply to the following services:

     (1) For year-end inventories requested by a warehouse operator, the department charges ((the following:

A fee of:		If requested:
(a)	10% of the warehouse license fee	By July 30th of each year
(b)	15% of the warehouse license fee	After July 30 of each year))

twenty percent of the warehouse license fee with a minimum fee of four hundred dollars.

     (2)(a) The hourly rate for all other services performed by the warehouse audit program at the request of warehouse operators, grain dealers and/or other government agencies is $((33.00)) 56.00 per hour.

     (b) These services include, but are not limited to, technical assisted audits of records and inventory, observation of sampling of commodities, collection of samples for the Karnal Bunt Survey, and remeasurement of commodities and storage bins.

     (3) In addition to the hourly rate established in subsection (2)(a) of this section, the department assesses appropriate charges for overtime, mileage, meals, and lodging expenses incurred by department personnel when providing the types of services identified in subsection (2)(b) of this section.

[Statutory Authority: 2003 1st sp.s. c 25 and chapters 22.09 and 34.05 RCW. 05-07-080, § 16-237-195, filed 3/15/05, effective 4/15/05. Statutory Authority: RCW 22.09.020(13). 00-21-043, § 16-237-195, filed 10/13/00, effective 11/13/00.]

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