-IR- Database Guide
-IR- Database: Indiana Register

TITLE 312 NATURAL RESOURCES COMMISSION

Economic Impact Statement
LSA Document #22-183


IC 4-22-2.1-5 Statement Concerning Rules Affecting Small Businesses
Estimated Number of Small Businesses Subject to this Rule:
Several small businesses in Indiana will be impacted by the proposed rule. Types of small businesses subject to this rule include: Nurseries, Sawmills (Primary), Campgrounds, Firewood Producers and Dealers, Moving Companies, Recreational Vehicle (RV) Manufacturers and Retailers, Boat Retailers, Mobile Home Manufacturers and Retailers, Mobile Home Transporters, and Certified Pesticide Applicators. For each county included in the fiscal analysis, 122 businesses in Lake County and 63 businesses in Whitley County may be impacted by this rule. Table B-1 lists the number of businesses by county and business type impacted by the rule.

Table B-1: Impacted Small Businesses by County and Type of Business
County  Nursery  Sawmill  Campground  Moving Companies  RV Industry  Boat Sales  Mobile Home Industry  Mobile Home Transporters  Certified Pesticide Applicator  Firewood Dealer  Total 
Lake  32  54  16  122 
Whitley  16  13  63 

Estimated Average Annual Reporting, Record Keeping, and Other Administrative Costs Small Businesses Will Incur for Compliance:
In order to move regulated material from these or other quarantined counties, the small business will need to apply for and have in place compliance agreements with the Department of Natural Resources Division of Entomology and Plant Pathology (DNR) or USDA Animal and Plant Health Inspection Service, Plant Protection and Quarantine (USDA APHIS PPQ), and may have to obtain certificates and limited permits of inspection. Though the compliance agreement will be created and processed by the DNR or USDA APHIS PPQ, the small business owner will need to initiate the process by applying for and meeting guidelines set by the compliance agreement. It is estimated that each business will incur a cost of 0.5 man days (or four hours) to complete the paperwork to initiate a compliance agreement. Assuming that the average employee earns $15 per hour, the estimated annual cost to initiate a compliance agreement is $60 per year.
Nurseries will require a compliance agreement. They will need to send a copy of their compliance agreement with each shipment they send out of the quarantine counties. There is no anticipated cost for the nurseries to attach a copy of the compliance agreement as each nursery is inspected annually by the DNR for their nursery license per IC 14-24-5 (Table B-2).
Sawmills will need to obtain a compliance agreement with USDA APHIS PPQ. This will require a two (2) hour training session on Accurate Statements. This training will need to be completed every year. Each shipment leaving the quarantined area will need to have an Accurate Statement attached to the waybill or other shipping documents. A copy of the Accurate Statement must also be sent to the USDA APHIS PPQ for each shipment. To maintain and manage records, it is estimated that 0.5 man hours per shipment is required. The estimated number of man days for each Sawmill to maintain all of the proper records within the business is 0.5 man days (or four hours) per month. Assuming that the average employee earns $15 per hour, the annual reporting, record keeping, and training costs to each sawmill would be $750 per year (Table B-2).
Certified pesticide applicators may obtain a compliance agreement with the USDA APHIS PPQ to perform inspections and prepare inspection documents for businesses and private citizens. The administrative costs associated with the compliance agreement are estimated to be the same as for sawmills. In addition, the expense for the certified pesticide applicator to obtain a compliance agreement will be offset by a means to provide services and generate business revenue (Table B-2).
Campgrounds (private and public) will not need compliance agreements. Regulated material brought in to the campgrounds will be the property of the campers and not the campground. It will be the responsibility of the campers to make sure they are not violating this quarantine. Thus, there is no anticipated record keeping or administrative cost for campgrounds (Table B-2).
Firewood Producers and Dealers, and Boat Retailers that deliver material outside the quarantined county will need a compliance agreement. The administrative costs associated with the compliance agreement are estimated to be the same as for Sawmills (Table B-2).
Mobile Home and RV Manufacturers, Retailers, and Transport companies also need to obtain a compliance agreement with USDA APHIS PPQ for Accurate Statements. However, they receive a rubber stamp with their compliance number for all of their paperwork. The estimated administrative costs are the same as for Sawmills (Table B-2).
Moving Companies will not need a compliance agreement. It is the responsibility of the customer to make sure their possessions are not harboring gypsy moth life stages. Thus, there is no anticipated record keeping or administrative cost for moving companies (Table B-2).

Table B-2: Estimated Average Annual Administrative Cost for Gypsy Moth Quarantine Compliance by Small Business Type
Small Business Type: Assumptions for administrative Costs.  Annual Average Administrative Costs: 
Nursery Industry: Compliance Agreement set up / year.  $60 
Sawmills: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month.  $810 
Campgrounds: No administrative costs.  $0 
Firewood Producers/ Dealers: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month.  $810 
Moving Companies: No administrative costs.  $0 
RV Industry: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month  $810 
Mobile Home Industry: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month  $810 
Boat Retailers: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month  $810 
Certified Pesticide Applicators: Compliance agreement set up / year + Maintenance/ management of records = 0.5 man days/month  $810 

Estimated Total Annual Economic Impact on Small Businesses to Comply:
Nurseries in quarantined counties will only be impacted if they ship outside of the quarantined areas. If they plan to ship outside the area, they need to contact the DNR nursery inspector for their business. The inspector will conduct a gypsy moth egg mass survey of the nursery and surrounding area. If no egg masses are found, they can ship with just the compliance agreement. The inspection does not incur additional cost to the small business, and attaching a copy of the compliance agreement or phytosanitary certificate will not incur additional cost to the business. State phytosanitary certificates are provided to licensed nurseries at no charge. If egg masses are found in the nursery or the surrounding area, the entire nursery needs to be treated with an appropriate insecticide prior to shipment.
The average nursery in Indiana is ten (10) acres. The average cost of treatment per nursery is $600 for chemicals and one (1) man day for applying the chemical. Assuming the average worker earns $15 per hour, the total labor cost would be $120. The total average treatment cost for the year would be $720.
The economic impact on Sawmills will be minimal. In order to follow the compliance agreement, they need to inspect each load before it is shipped. If any life stage of gypsy moth is found, it needs to be removed from the shipment. This additional inspection should average 0.25 man days per shipment. Based on compliance agreements in current gypsy moth quarantine areas, the average sawmill will send ten (10) shipments per month. Assuming the average worker earns $15 per hour, the average annual cost for sawmills would be $3,600.
Certified Pesticide Applicators will need a compliance agreement from the USDA APHIS PPQ if they chose to provide gypsy moth inspection services. They would be required to incur the cost of the annual training of two hours per employee trained and the cost of maintaining records required by the compliance agreement. This cost would be similar to the estimated cost for sawmills, at $3,600 per year. This cost would also be offset by the revenue generated by providing inspections for citizens and other businesses and is estimated to be a positive impact to the business.
Boat Retailers, the Mobile Home Industry, and the RV Industry will also see a small economic impact from this rule. They will need a USDA APHIS PPQ compliance agreement and their annual fees will be similar to sawmills, at $3,600 per year. They will need to inspect each shipment leaving the quarantined counties for any gypsy moth life stage. After the inspection, they will need to stamp all of the paperwork with their compliance agreement number. The stamp will be provided by the USDA.
Firewood Producers and Dealers will only need a compliance agreement if they are moving firewood outside the quarantined area. A compliance agreement would require inspection of the material before it is moved out of quarantined counties. The economic impact is estimated to be minimal.
Campgrounds and Moving Companies are not anticipated to have an economic impact from a loss of business due to the quarantine. There is no administrative economic impact from this rule. It is the responsibility of the campers and customers to ensure they are not moving any life stage of gypsy moth.
Addition of these two counties to the rule will also impact businesses or regulated entities traveling through the quarantined areas. The fiscal impact of adding those two counties is unable to be determined. However, both counties are adjacent to quarantined counties. The addition of these two counties will not cause a large fiscal impact to small business. If the entire state was quarantined as a consequence of refusing to incorporate these two counties into the quarantine, the fiscal impact to small business would be substantial.
The proposed change to the rule to adjust the program manual edition from the 1994 version to the 2019 version will have no economic impact on any entity subject to the rule. This document is updated occasionally by the USDA APHIS PPQ National Gypsy Moth Management Team to incorporate updates in technology and advancements in existing processes such as the use of the Internet and geographical information systems to conduct survey work. The gypsy moth program is over 100 years old and has been successful in maintaining the same regulatory restrictions, remaining consistent, over that time period. There is no fiscal impact or requirements on regulated entities from these modifications.
The total potential economic impact to small businesses in the proposed quarantined area is $317,610 (Table B-3).

Table B-3: Estimated Economic Impact to All Small Businesses in the Proposed Quarantined Area
Types of Business  Total # Small Business with Potential Impact in Counties/Townships Proposed for Quarantine  Annual Cost per Small Business  Total 
Nurseries  48  $780  $37,440 
Sawmills  $4,410  $22,050 
Campgrounds (1)  $0  $0 
Moving Companies (1)  67  $0  $0 
RV Industry  12  $4,410  $52,920 
Boat Retailer  $4,410  $26,460 
Mobile Home Industry  20  $4,410  $88,200 
Certified Pesticide Applicator (2)  20  $4,410  $88,200 
Firewood Dealer / Producers  $780  $2,340 
Total  185    $317,610 
(1) Responsibility of the citizen and/or camper to comply with the quarantine.
(2) This expense would be offset by revenue generated for inspection services provided to customers (businesses and citizens).

Justification Statement of Requirement or Cost:
There are currently nine (9) counties quarantined for gypsy moth in Indiana. The value of shipments from the timber industry in Indiana is approximately eight billion dollars. Gypsy moths will feed on 80% of trees in Indiana's forest. By imposing this rule, the artificial spread of this pest can be slowed. Counties that do not currently have a heavy infestation of gypsy moths can be saved from the potential damage to their forest resources. By managing the artificial spread to nonquarantined counties, the existing stands of trees will continue to be utilized and the timber industry will be allowed to continue to support this faction of the economy in Indiana.
Federal regulations restrict interstate movement of specific articles (such as outdoor household articles, firewood, etc.) from a "generally infested area" without a permit. 7 CFR 301.45. However, states may avoid a general quarantine of the entire state if the state regulates the intrastate movement of the listed articles in specific areas of the state that are generally infested in a manner that mirrors the federal regulations. Indiana currently has nine counties listed in 312 IAC 18-3-14(e) as generally infested areas. Through testing, it has been determined that it is necessary to add Lake County and Whitley County as generally infested areas to stay in compliance with federal regulations and to avoid a statewide quarantine of the interstate movement of regulated items. In other words, if the two additional counties are not added to the rule, the state risks federally-imposed quarantine on the entire state. This would severely restrict the ability of those engaged in business that are impacted by the rule even if they are not in a generally infested area.

Regulatory Flexibility Analysis of Alternative Methods:
(1) Less stringent compliance or reporting requirements: The compliance agreements are developed for each business with the intent to fit the requirements to each business operation to have minimal operational and economic impact but at the same time meet the biological needs of the rule. Thus, compliance agreements are made as flexible as biologically possible.
(2) Less stringent schedules or deadlines for compliance or reporting requirements: The schedules and deadlines for compliance and reporting are set at the least stringent schedule for small businesses and regulatory needs.
(3) The consolidation or simplification of compliance or reporting requirements: The state quarantine area is also the boundary of the federal quarantine. Without implementing this rule, the federal quarantine boundary would encompass the entire state. The adoption of the federal quarantine within the few counties that are generally infested by DNR prevents the impact of the federal quarantine to businesses in counties without gypsy moths. The USDA APHIS PPQ and DNR work together to administer the quarantine. USDA APHIS PPQ will take the lead for all compliance and reporting requirements. The DNR recognizes compliance agreements issued by USDA APHIS PPQ and does not duplicate this effort.
(4) Establishment of performance standards: The quarantine establishes performance standards to meet biological needs to manage gypsy moths. The standards are adapted to each small business' operational aspects to minimize impact to business but at the same time meet biological needs.
(5) Exemption of small businesses from part or all of the requirements or costs: Each business operation is analyzed for the need to comply. Through analysis, it may be determined that a particular small business does not move regulated material outside the quarantine area. In this situation, the business does not need to meet the requirements of the quarantine and thus has no impact. Analysis of the business is conducted upon request by DNR or USDA APHIS PPQ at no cost to the business.

Posted: 08/31/2022 by Legislative Services Agency

DIN: 20220831-IR-312220183EIA
Composed: Feb 01,2023 7:58:17PM EST
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