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Montana Administrative Register Notice 4-14-202 No. 2   01/26/2012    
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BEFORE THE DEPARTMENT OF AGRICULTURE

OF THE STATE OF MONTANA

 

In the matter of the amendment of ARM 4.12.1405, 4.12.1427, 4.12.1428, 4.17.105, 4.17.106, and 4.17.107 relating to the Late Fees for Services

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NOTICE OF PUBLIC HEARING ON PROPOSED AMENDMENT

 

 

TO:  All Concerned Persons

 

            1.  On February 16, 2012, at 3:00 p.m. the Montana Department of Agriculture will hold a public hearing in Room 225 of the Scott Hart Building, 302 N. Roberts at Helena, Montana, to consider the proposed amendment of the above-stated rules.

 

            2.  The Department of Agriculture will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process and need an alternative accessible format of this notice.  If you require an accommodation, contact the Department of Agriculture no later than 5:00 p.m. on February 9, 2012, to advise us of the nature of the accommodation that you need.  Please contact Cort Jensen at the Montana Department of Agriculture, 302 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; phone: (406) 444-5402; fax: (406) 444-5409; or e-mail: agr@mt.gov.

 

3.  The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

 

REASON:  For all the rules that are amended here the reasoning for the amendments is the same.  Establishing and clarifying that payment for services is due upon receipt is important for timely processing of accounts payables.  Establishing and clarifying when accounts are past due is necessary for imposing collection fees.  Establishing this timeframe allows the department to determine which accounts have been paid in full before generating the next month's bills.  The minimum fee is not being increased to generate revenue, but to cover associated costs when bills are not paid on time and department staff is required to spend additional hours processing additional bills.

 

         4.12.1405  PLANT INSPECTION CERTIFICATE/SURVEY COSTS – FEES  (1)  All fees are due within 30 days after billing.  The department may assess a collection fee of 10% of any amount past due, after providing written notice of the past due status, with a minimum charge of $10. All fees for services are payable upon receipt of a billing statement.  The department may assess a collection fee of 18% annual percentage rate, or assess a minimum fee of $25, whichever is greater, for any payment amount not received on or before the last regular business day of each month.  The department may require past due payment of fees prior to providing inspection services.  The fees shall be as follows:

(a)  through (d) remain the same.

 

      AUTH:  80-1-102, 80-7-108, 80-7-122 80-7-131, MCA

      IMP:  80-7-108, 80-7-110, 80-7-119 80-7-122, MCA

 

      FINANCIAL IMPACT:  The impact cannot be accurately estimated since collection fees will be based on each client's fee balance.  By way of example, though, if a client owed fees in the amount of $500 that were more than 30 days old, under the current collection fee rule (10% or $10, whichever is greater), the collection fee for that month would be $50 (10% = .10; $500 x .10 = $50).  Under the proposed fee collection change, that same client would owe $25 (18% APR is 0.18; 0.18/12 months = .015 x $500 = $7.50 but since $7.50 is less than $25, $25 would be used).  Under the current collection fee rule, collection fees older than 30 days are assessed on a monthly basis.  Under the proposed rule, for this client, the economic impact would be a reduction in that month's collection fee of $25.00.  Collection fees can be avoided by paying fees when due.

 

            4.12.1427  INSPECTION FEES  (1) through (4) remain the same.

(5)  All fees are due within 30 days after billing for services are payable upon receipt of a billing statement.  The department may assess a collection fee of 18% annual percentage rate of any amount past due, or assess a minimum charge fee of $10 $25, whichever is greater, for any payment amount not received on or before the last regular business day of each month.  The department may require past due payment of fees prior to providing inspection services.

 

      AUTH:  80-3-303, 80-3-315, MCA

      IMP:  80-3-315, MCA

 

      FINANCIAL IMPACT:  Historically, the department has provided inspection services to less than sixty businesses in the state of Montana.  Under the current fee structure, the department has issued the minimum $10 fee to two businesses for late payment of inspection fees.  In the past two years, the minimum late fee was assessed eighteen times to these businesses for a total of $180.  Using the proposed minimum fee for late payments, the two businesses would have been assessed a total of $450 for an increased financial impact of $270.  Collection fees can be avoided by paying inspection fees when due.

 

            4.12.1428  ASSESSMENT FEES ON ALL PRODUCE  (1) The assessment fee on all produce except produce grown in Montana and inspected at shipping point shall be 6 cents per each produce unit.

            (a)  The department may assess a 10% penalty (based on the previous quarterly assessment report fee amount), or a minimum fee of $25, whichever is greater, for any assessment reports received after the deadline.

 

      AUTH:  80-3-303, 80-3-314, MCA

      IMP:  80-3-314, MCA

 

      FINANCIAL IMPACT:  The department has 35 companies submitting quarterly produce assessment reports.  On average, five companies fail to meet the deadline for submitting their reports each quarter.  The 35 companies paid an average quarterly assessment of $3,200 for the previous three years.  Using the three-year average, the financial impact would be $320 per company per quarter.  The total annual impact would be $6,400 (5 companies x $320 per quarter x 4 quarterly periods = $6,400).  Collection fees can be avoided by submitting reports and paying assessment fees when due.

 

      4.17.105  APPLICATION PROCEDURES  (1) through (8) remain the same.

      (9)  Applications are due by the following deadlines.  Applications submitted after the deadline must include an additional late fee of $200.

      (a)  Applications for initial certification of producers are due at least 120 days prior to the harvest of organic crops or the sale of organic livestock or livestock products.

      (b)(a)  Applications to continue producer certification are due no later than March 15 annually.

      (c)(b)  Applications for initial certification of handlers can be made at any time.

      (d)(c)  Applications to continue handler certification are due no later than September 15 annually.

      (10) through (11) remain the same.

 

      AUTH:  80-11-601, MCA

      IMP:  80-11-601, MCA

 

      REASON AND FINANCIAL IMPACT:  See ARM 4.17.106 below.

 

            4.17.106  APPLICATION FEES AND FEES FOR SERVICES  (1) through (6) remain the same.

      (7)  Inspection fees are due no later than 30 days past billing.  The department shall assess a collection fee of 18% annual percentage rate for any amount past due.  The department may require past due payment of fees prior to providing certification services.  Applications submitted after the deadline must include an additional late fee of $200.

      (a)  Application fees and the related $200 late fee are subject to a collection fee of 18% annual percentage rate or a minimum fee of $25, whichever is greater, for any payment amount not received within 45 days of the deadline and for each monthly billing cycle thereafter.

      (8)  Inspection fees are payable upon receipt of a billing statement.  The department may assess a collection fee of 18% annual percentage rate or assess a minimum fee of $25, whichever is greater, for any payment amount not received on or before the last regular business day of each month.  The department may require past due payment of fees prior to providing certification services.

 

      AUTH:  80-11-601, MCA

      IMP:  80-11-601, MCA

 

      REASON AND FINANCIAL IMPACT:  The line that indicated a $200 late fee was moved from ARM 4.17.105(9), which discussed procedures, and added to ARM 4.17.106(7), which discusses fees, for consistent topic matter.  Section (7)(a) is required to clarify that the $200 late fee is subject to the collection fee, but not until after a one-month billing cycle.

      Over the past five years, approximately 15 percent of certified operations have paid (annual) application fees after the due date.  Fifteen percent of currently certified operations is 21.  Assuming an average application fee of $300, and the $200 late fee, collection fees on late applications have historically generated an estimated $157.50 (21 late applications x $500 x 18% APR x 30 days) or $7.50 per late application.  Using the proposed $25 minimum fee, the estimated collection fees received would be $525 (21 late applications x $25) for a fiscal impact of $367.50.  Collection fees can be avoided by paying application and inspection fees when due.

 

      4.17.107  ANNUAL REPORT AND ASSESSMENT FEES  (1)  Producers and handlers certified by the department, and new applicants for certification, must submit an annual report of their total gross sales and handling charges for all certified organic production and handling.  Certified producers and new applicants for producer certification shall pay an annual assessment fee to the department as a percentage of gross sales of organically produced products.  Certified handlers and new applicants for handler certification shall pay a flat annual assessment fee based on their reported level of gross sales and handling charges for all products and services included in their Organic Handling System Plans (OHSP):

      (a)  the annual report of all gross sales and handling charges shall be for the previous calendar year;

      (b)  the report and fees for both producers and handlers are due on March 15 annually.  The department may assess a 10% penalty (based on the previous annual assessment report fee amount), or a minimum fee of $25, whichever is greater, for any assessment reports received after the deadline.  The department may require past due payment of fees prior to providing certification services.

      (2)  remains the same.

      (3)  All assessment fees are nonrefundable upon receipt.  The department shall assess a collection fee of 18 % annual percentage rate for any amount past due.  The department may require past due payment of fees prior to providing certification services.

 

      AUTH:  80-11-601, MCA

      IMP:  80-11-601, MCA

 

            REASON AND FINANCIAL IMPACT:  Over the past five years, approximately 10% of certified operations have submitted annual sales reports and/or assessment fees after the due date.  Ten percent of currently certified operations is 14.  Assuming an average assessment fee of $500, penalties for late sales reports are estimated to generate $700 (14 late assessments x $500 x 10%).  The total annual fiscal impact is estimated at $700.

 

            Collection fees can be avoided by submitting reports and paying assessment fees when due.

 

            4.  Concerned persons may submit their data, views, or arguments concerning the proposed action either orally or in writing at the hearing.  Written data, views, or arguments may also be submitted to: Cort Jensen at the Montana Department of Agriculture, 302 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; telephone (406) 444-5402; fax: (406) 444-5409; or e-mail: agr@mt.gov and must be received no later than February 23, 2012.

 

            5.  The Department of Agriculture maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency.  Persons who wish to have their name added to the list shall make a written request which includes the name, e-mail, and mailing address of the person and specifies for which program the person wishes to receive notices.  Notices will be sent by e-mail unless a mailing preference is noted in the request.  Such written requests may be mailed or delivered to Montana Department of Agriculture, 302 North Roberts, P.O. Box 200201, Helena, MT 59620-0201; fax: (406) 444-5409; or e-mail: agr@mt.gov or may be made by completing a request form at any rules hearing held by the Department of Agriculture.

 

6.  An electronic copy of this Notice of Proposed Amendment is available through the department's web site at www.agr.mt.gov, under the Administrative Rules section.  The department strives to make the electronic copy of the notice conform to the official version of the notice, as printed in the Montana Administrative Register, but advises all concerned persons that in the event of a discrepancy between the official printed text of the notice and the electronic version of the notice, only the official printed text will be considered.  In addition, although the department strives to keep its web site accessible at all times, concerned persons should be aware that the web site may be unavailable during some periods, due to system maintenance or technical problems.

 

            7.  The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

DEPARTMENT OF AGRICULTURE

 

/s/ Ron de Yong                                                  /s/ Cort Jensen                                       

Ron de Yong, Director                                      Cort Jensen, Rule Reviewer

 

Certified to the Secretary of State, January 17, 2012.

 

 

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