Fiscal Note & Local Impact Statement

125 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 ˛ Phone: (614) 466-3615

˛ Internet Web Site: http://www.lsc.state.oh.us/

BILL:

Sub. H.B. 143

DATE:

May 20, 2003

STATUS:

As Reported by House Agriculture & Natl. Resources

SPONSOR:

Rep. Aslanides

LOCAL IMPACT STATEMENT REQUIRED:

No —

Minimal Cost

 


CONTENTS:

To revise the law governing the labeling and sale of seed

 

State Fiscal Highlights

 

STATE FUND

FY 2004

FY 2005

FUTURE YEARS

General Revenue Fund

     Revenues

Loss which will be reflected in the Seed Fund revenue gain

Loss which will be reflected in the Seed Fund revenue gain

Loss which will be reflected in the Seed Fund revenue gain

     Expenditures

Decrease which will be reflected in the Seed Fund expenditure increase

Decrease which will be reflected in the Seed Fund expenditure increase

Decrease which will be reflected in the Seed Fund expenditure increase

Seed Fund (New)

     Revenues

Gain of GRF revenues reflected above + Additional Revenues from flower seed regulation

Gain of GRF revenues reflected above + Additional Revenues from flower seed regulation

Gain of GRF revenues reflected above + Additional Revenues from flower seed regulation

     Expenditures

Increase of GRF expenditures reflected above + Additional Expenditures from flower seed regulation

Increase of GRF expenditures reflected above + Additional Expenditures from flower seed regulation

Increase of GRF expenditures reflected above + Additional Expenditures from flower seed regulation

Note:  The state fiscal year is July 1 through June 30.  For example, FY 2004 is July 1, 2003 – June 30, 2004.

 

·        Currently, the money received from permit fees, seed inspection fees, packet seed inspection stamps, purity analysis and germination test fees, sales of seized or condemned seed, and fines recovered under the Agricultural Seed Law are deposited to the credit of the General Revenue Fund (GRF).  This bill creates the Seed Fund, which would receive any fees relating to the Agricultural Seed Law.  As a result, there would be a loss of revenues to the GRF; however, the money currently collected for seed law fees would be deposited into the Seed Fund.  Revenues resulting from the flower seed requirements created under this bill would also be deposited into this fund.

 

·        Currently, the expenditures resulting from the administration and regulation of the Agricultural Seed Law is paid for out of the Division of Plant Industry’s GRF appropriation.  This bill creates the Seed Fund, which would receive any fees relating to the Agricultural Seed Law.  Any costs associated with the seed law would be paid for out of this fund.  As a result, expenditures would decrease for the GRF, but would increase for the Seed Fund.

·        The Seed Fund would receive additional revenues and realize increased expenditures for the new requirements relating to flower seed testing and permitting.  It is expected that the revenues and expenditures relating to the flower seed requirements would be balanced.

·        There could be a potential for a minimal increase in expenditures due to the new duties (such as establishing new tolerances and the additional requirements associated with the addition of flower seed regulation) established for the Department of Agriculture within this bill.  Also, the Department has stated that it will, in all likelihood, start auditing more seed sellers (under this bill the Department will conduct audits rather than the Auditor of State).  If this takes place, there could also be a potential for an increase in revenues due to the auditing process.

 

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2003

FY 2004

FUTURE YEARS

Counties

     Revenues

- 0 -

- 0 -

- 0 -

     Expenditures

Potential minimal increase

Potential minimal increase

Potential minimal increase

Note:  For most local governments, the fiscal year is the calendar year.  The school district fiscal year is July 1 through June 30.

 

·        The bill adds additional prohibitions concerning violations of the Agricultural Seed Law.  As a result, there could be increased violations, which could be classified as fourth or third degree misdemeanors.  However, the Department generally pursues administrative remedies rather than civil.  As a result, any increase would be minimal.

 



 

 

Detailed Fiscal Analysis

 

This bill makes changes to the law governing the labeling and sale of seed.  The cost of implementation of this bill will be discussed below.

 

Ohio Seed Improvement Association

 

Under current law, the Ohio Seed Improvement Association (a non-profit, quasi-regulatory organization) is named as the entity responsible for certifying Ohio seed.  The bill retains the Ohio Seed Improvement Association (OSIA) as the seed certifying entity, but adds a few requirements dealing with standards and procedures.  The bill requires that the OSIA shall establish standards and procedures for seed certification that are no less stringent than those prescribed by the association of official seed certifying agencies and that do not conflict with sections 907.01 to 907.17 of the Revised Code, as well as designating intervals at which it shall conduct a review of the certification standards and procedures.  No proposed change to the standards and procedures may take effect unless the change first is approved by an affirmative vote of at least two-thirds of the members of the association’s governing body. 

 

Records and Audits of Seed Sellers by the Department of Agriculture

 

The bill extends the record-keeping requirements for the advertising of agricultural and vegetable seed to flower seed. 

 

Under current law, the Director of Agriculture may request the Auditor of State to audit a seed seller.  Upon receiving this request, the Auditor shall conduct an audit.  If an audit occurs at a location outside this state, the person being audited shall pay the Director for all costs incurred by the Auditor.  The costs of any audit under this division shall be charged to the Department of Agriculture.  This section of law is removed with this bill.  The Department stated that audits have never been conducted on permit holders since seed sellers’ records were accepted as submitted.  As a result of this language change, the Seed Section Examiners will perform the audits.  The Department stated that the Seed Section will actually be conducting some audits on records.  Consequently, their costs may increase as a result of this, however, the Department stated that any increase is unlikely to be substantial since the examiners are already at these facilities conducting seed samples. 

 

Seed Law Changes

 

Many changes are made concerning the seed law.  The bill modifies the label requirements for agricultural and vegetable seed and adds label requirements for flower seed for seed sellers.  The bill modifies the requirements governing the sale of agricultural and vegetable seed, and applies those requirements to the sale of flower seed.  This will increase costs in administering the seed law due to the addition of flower seeds. 

 

Currently, the test to determine the percentage of germination for labeling purposes must be completed within:  (1) nine months immediately prior to sale, exclusive of the calendar month in which the test was completed, if the seed is not in hermetically sealed packages or containers; or (2) 36 months immediately prior to sale, exclusive of the calendar month in which the test was completed, if the seed is in hermetically sealed packages or containers, provided that any seed may be sold more than 36 months after the month in which it has been tested if it is retested within nine months immediately prior to sale.

 

The bill instead requires that the test used to determine the information concerning the seed’s percentage of germination that is required to appear on the label of the seed to be completed within:  (1) 12 months prior to sale, exclusive of the calendar month in which the test was completed, if the seed is not in hermetically sealed containers or if the seed is agricultural seed other than cool season grass seed; (2) 15 months prior to sale, exclusive of the calendar month in which the test was completed, if the seed is a cool season grass seed or a mixture of only cool season grass seeds and if the seed is not in hermetically sealed containers; or (3) 36 months prior to sale, exclusive of the calendar month in which the test was completed, if the seed is in hermetically sealed containers.  Any such seed may be sold at any time after the 36 months have expired if it is retested prior to sale.  Seed that has been retested may be sold for an additional time period if it is accompanied by a new label that complies with the applicable labeling requirements.  The time period must consist of 12 consecutive months, not including the month in which the retest was performed. 

 

A requirement that seed cannot be out of compliance with the tolerance established for it by the Director is also added.  The Department will have to establish this tolerance.

 

Seed Labeler Permits and Fees

 

Current law generally prohibits a person from selling agricultural or vegetable seed within or into Ohio unless he has paid for and attached to the seed container Ohio seed inspection fee tags or labels obtained from the Director or a permit to use his or her own tags or labels.  A person must pay a $10 annual fee to obtain a permit.  The bill eliminates the issuance of Ohio seed inspection fee tags or labels.  As a result, a permit must be obtained.  The bill requires any person who labels flower seed to obtain a seed labeler permit.  The Department stated that the fee tags and labels are not currently issued.  Seed labeler permits for agricultural and vegetable seeds are currently required by the Department.  There are approximately 400 seed labeler permits issued which generates approximately $4,000.  This will not be affected by the bill.  The Department estimates that there will be 20 flower seed labeler permits issued which would result in an increase of revenues of about $200.  The bill also modifies and establishes additional permit requirements and procedures for obtaining a seed labeler permit.  These modifications should result in negligible increases in expenditures for the Department initially.

 

Currently a permit holder must report all sales of seeds semiannually and pay the seed inspection fees for seed sales when the sales are reported.  The report must be made semiannually on a form that the Director prescribes and provides.  A person who holds a valid seed labeler permit must include with each semiannual report a seed fee based on the amount of the seed that the person sold during the reporting period.  This is retained in the bill.  However there are some revisions to the seed fee.  The seed fee under this bill is as follows:

 

·        For soybeans and small grains, including barley, oats, rye, wheat, triticale, and spelt, four cents per 100 pounds;

·        For corn and grain sorghum, five cents per 100 pounds;

·        For vegetable and flower seed sold at wholesale or retail or on consignment or commission in containers of eight ounces or less, 2% of the wholesale value of the containers of seed or, if the seed is not sold wholesale, 2% of the retail value of the containers of seed;

·        For alfalfa, clover, grass, native grass, mixtures containing any of these, and all agricultural, vegetable, and flower seeds not specified, ten cents per 100 pounds.

 

The major change with the revised fee schedule is the addition of the flower seed fee.  Also, seed fee for retail vegetable and flower seed is added.  Currently, the Department collects $291,030 in seed fees.  The Department does not know, at this time, how much the additional flower seed fee will generate. 

 

Currently, if the total amount of the seed fee that is due is less than $5, the person must pay the minimum seed fee, which is $5.  This is not changed by the bill.

 

For each failure to report in full the amount of seed sold or to submit the required seed fees in full by the due date, a seed labeler permittee must pay a penalty of 10% of the amount due or $50, whichever is greater.  Currently, a seed labeler permittee must pay a penalty of 10% of the amount due or $10, whichever is greater.  The Department has not conducted audits in the past.  As a result, it is not clear how much revenue, if any, will be generated with the penalty increase.  However, the Department has stated that it will be conducting audits in the future and this will probably result in some additional revenues.

 

Duties of the Director of Agriculture

 

The bill requires the Director to perform specified functions in regards to the analysis of flower seed.  The Director is also required to adopt rules regarding native grass, tolerance for agricultural, vegetable, and flower seed, application information for seed labeler permits, and any other provisions that are necessary to clarify or administer the seed labeling requirements.  These additional requirements, especially the flower seed regulation, will increase the expenditures of the Department.  However, the increased costs of sampling and testing flower seeds will be offset by the revenues generated from flower labeler permits and flower seed fees.

 

Legume Inoculant Registration

 

Under current law, any person who submits an application for the registration of a brand of legume inoculant shall annually pay, prior to the first day of August, a registration and inspection fees based on dollar sales volume of that brand in Ohio within the 12-month period ending the last day of June immediately preceding the registration renewal date, in accordance with the following schedule:

 

·        $1 up to $10,000 volume, the registration fee shall be $25;

·        $10,001 up to $20,000 volume, the registration fee shall be $50;

·        $20,001 and over volume, the registration fee shall be $100;

·        Brands not previously registered for sale in Ohio will pay the minimum registration fee of $25.

 

The bill changes the registration date from August 1 to January 1.  It also eliminates the fee table specified above and instead establishes one fee of $50 per brand regardless of the sales volume of the brand.  The Department currently receives $900 from legume inoculant registration.  The Department estimates that an additional $750 will be generated from the flat rate fee.  However, the flat rate will make the process simpler and less time consuming.

 

Seed Fund Created

 

The bill creates the Seed Fund.  The money collected by the Director under the Agricultural Seed Law will be deposited into the Treasury of the State to the credit of the Seed Fund.  The money will be used to administer and enforce the seed law.  Currently, the money received from permit fees, seed inspection fees, packet seed inspection stamps, purity analysis and germination test fees, sales of seized or condemned seed, and fines recovered under the Agricultural Seed Law are deposited to the credit of the General Revenue Fund.

 

Enforcement Prohibitions

 

The bill establishes additional prohibitions regarding seed law.  Under current law, anyone who violates any of the prohibitions in the Agricultural Seed Law is guilty of a misdemeanor of the fourth degree on a first offense and a misdemeanor of the third degree on each subsequent offense.  The new prohibitions prohibit a person from doing the following:

 

·        Sell seed for use as bird feed if it contains viable prohibited noxious-weed seed or viable restricted noxious-weed seed;

·        Sell prohibited noxious-weed or restricted noxious-weed seed for the purpose of sowing, except sowing for research purposes;

·        Sell seed that contains prohibited noxious-weed seed or restricted noxious-weed seed that is designated as having no tolerance or that is out of compliance with its tolerance.

 

The bill also adds flower seeds to some of the prohibitions as well as providing that any lot of flower seed that is not in compliance with the law is subject to seizure on complaint of the Director.  The seizure of flower seed is specified under the provisions that provide for the seizure of agricultural or vegetable seed. 

 

These additional prohibitions may result in more violations.  Adding the flower seed is expected to increase the violations.  Also, since these violations are misdemeanors, municipal and county court costs and fine revenues could increase. 

 

 

LSC fiscal staff:  Wendy Risner, Budget Analyst

 

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