Commission Agenda Item No. 3
Presenter: Brandi Reeder

Action
Finfish Import License Rules
August 22, 2013

  1. Executive Summary: This item seeks adoption of proposed amendments to rules governing reporting requirements for the holders of a finfish import license. The proposed amendment would require license holders to submit invoices electronically within 24 hours of each instance of importing, exporting, or transporting commercially protected finfish.
  2. Discussion: Under Parks and Wildlife Code, §66.020, it is unlawful for any person to buy or offer to buy, sell or offer to sell, possess for the purpose of sale, transport or ship for the purpose of sale, barter, or exchange commercially protected finfish (bass of the genus Micropterus, blue marlin, crappie, flathead catfish, jewfish, longbill spearfish, muskellunge, northern pike, red drum, sailfish, sauger, snook, spotted sea trout, striped bass, tarpon, walleye, white bass, white marlin, yellow bass, or hybrids of any of those fish). With certain exceptions (such as transport through Texas by common carrier, aquaculture, etc.), the statute applies to the possession, transportation, sale, or purchase of commercially protected finfish without regard to where the fish was taken, caught, or raised.

     Under department rules (31 TAC Chapter 57, Subchapter D), the holder of a finfish import license is required to generate a shipping invoice for each shipment of commercially protected finfish that is imported, exported, or transported in Texas, and to forward that invoice to the department by the 10th day of the month following the month in which the regulated activity occurred. Staff has determined that given the prevalence of automation in the workplace, the widespread availability of affordable digital devices, and the benefits to the department of increased efficiency, there is justification for requiring licensees to submit all information electronically within 24 hours.

    At the Work Session meeting on May 22, 2013, staff was authorized to publish the proposed rules in the Texas Register for public comment. The proposed rules appeared in the July 19, 2013 issue of the Texas Register (38 TexReg 4562-4564). A summary of public comment on the proposed rules will be presented at the time of the hearing.

  3. Recommendation: Staff recommends that the Commission adopt the proposed motion:
    “The Texas Parks and Wildlife Commission adopts amendments to §57.372, concerning Packaging Requirements, with changes as necessary to the proposed text as published in the July 19, 2013, issue of the Texas Register (38 TexReg 4562-4564).”

Attachments – 1

  1. Exhibit A—Proposed Rule

Commission Agenda Item No. 3
Exhibit A

FINFISH IMPORT LICENSE RULES

PROPOSAL PREAMBLE

1. Introduction.

         The Texas Parks and Wildlife Department proposes an amendment to §57.372, concerning Packaging Requirements. The proposed amendment would require the holder of a finfish import license to submit shipping invoices to the department electronically within 24 hours of shipment. Under the current rule, permittees are required to submit invoices by overland mail or fax by the 10th day of the month following the month in which a shipment occurred. The rule is a tool to assist the department in detecting the unlawful introduction of wild-caught protected species of fish into the commerce stream, which, if undetected and unaddressed, could result in negative impacts to wild populations of fish.

         Compilation, correlation, retrieval, handling, and storage of hard-copy reports is time consuming, costly, and hampers the department’s ability to accurately assess compliance and detect violations. Considering the prevalence, wide availability, and low cost of the technologies involved, the department has concluded that requiring invoices to be submitted via an Internet-based application would make program administration significantly more efficient for both the department and the regulated community. The online system is designed to reduce reporting errors, provide for a more efficient means of confirming and retrieving historical data, and make data more immediately available to department regulatory and enforcement personnel. The department also has concluded that the speed, ease, and low cost of electronic reporting make it possible to achieve a reporting timeframe that is very close to real time, which enhances the department’s ability to resolve issues quickly.

         The proposed amendment also would alter subsections (h) and (i) to conform the internal references in those subsections.

2. Fiscal Note.

         Brandi Reeder, Fisheries Law Administrator, has determined that for the first five-year period that the proposed rules are in effect, there will be fiscal implications to the department in the form of increased program efficiency as a result of enforcement or administration of the rule; however, those savings cannot be quantified but are expected to be positive.

         There will be no fiscal implications to other units of state or local government.

3. Public Benefit/Cost Note.

         Ms. Reeder also has determined that for each of the first five years the rule as proposed is in effect:
         (A) The public benefit anticipated as a result of enforcing or administering the rule as proposed will be increased convenience and economy for the regulated community and the ability of the department to use resultant efficiencies to address increasing workloads with current staff.

         (B) There could be adverse economic effects on persons required to comply with the rule as proposed. The proposed rule would require all permittees to ensure that invoices are submitted to the department via the Internet. For persons who already own or have access to a computer or personal digital device and have Internet access, there is no adverse economic cost to comply with the proposed rule. For persons who do not possess a computer or other digital device that can access the Internet (such as a tablet or smart phone), compliance with proposed amendments would require the permittee to either use a public computer with Internet access, purchase or lease hardware and Internet access, or absorb the cost of hiring someone with the equipment and expertise to perform the required actions. Department research indicates that adequate hardware is widely available and can be purchased for approximately $200. Internet access is an additional charge that varies from approximately $15 to $100 per month, depending on the technology and carrier plan. The department has determined that the technical skill required to submit invoices electronically is very similar to other types of skills that are commonly found in office/business environments and therefore concludes that it is unlikely persons required to comply would need to engage an employee dedicated solely or even significantly to the submission of invoices to the department; however, the department estimates that cost at approximately $18.00 per hour.

         The department sent a survey to each of the 156 persons who hold a current finfish import license in order to determine potential economic costs to persons required to comply. The department received 33 responses. Twenty-one respondents indicated that compliance with the proposed amendment would not result in additional direct economic costs. Twelve respondents indicated that compliance would result in annual direct economic costs. Two of the respondents indicated annual compliance costs of less than $600, four respondents estimated annual compliance costs of between $1,000 and $3,000, four respondents estimated annual compliance costs of between $10,000 and $12,000, one respondent estimated annual compliance costs of $26,000, and one respondent estimated annual compliance costs of $100,000 (the respondent did not provide a description or explanation of those costs).

         The department notes that the proposed amendment does not create new recordkeeping requirements; the current rule, in effect since 1982, already requires permittees to create, submit, and maintain invoice records. However, for persons who have not been reporting monthly sales and purchases as required under current rule, compliance with the proposed amendment could result in additional costs; however, those costs would be the cost of coming into compliance with the existing rules.  By implementing a web-based reporting system, the proposed amendment would allow permittees to automate their recordkeeping and reporting processes, which should save time and expense by eliminating the need for the creation and handling of physical documentation.

         (C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses and micro-businesses. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact on small businesses. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to small businesses and micro-businesses to determine if any further analysis is required. For that purpose, the department considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services.

         The department has determined that the proposed amendment could have an adverse economic impact on small businesses and micro-businesses. To ensure that the analysis captures every entity that might be affected, the department considers that most if not all finfish import license holders qualify as a small or micro-business. There are 156 persons who currently hold a finfish import license. The proposed rule would require all permittees to submit required information to the department via the Internet. For persons who already own or have access to a computer or personal digital device (such as a tablet or smart phone) and have Internet access, there is little or no adverse economic cost to comply with the proposed rule. For persons who do not possess a computer or other digital device that can access the Internet, compliance with proposed amendments would require the permittee to either access a public computer with Internet access, purchase or lease hardware and Internet access, or absorb the cost of hiring someone with the equipment and expertise to perform the required actions. Department research indicates that adequate hardware is widely available and can be purchased for approximately $200. Internet access is an additional charge that varies from approximately $15 to $100 per month, depending on the technology and carrier plan resulting in an estimated additional cost of between $380 and $1400 for the first year ($200, plus the monthly Internet provide costs of $15-$100/month), but a cost of $180 to $1200 a year for subsequent years consisting solely of the Internet provider costs. The department has determined that the technical skill required to submit invoices electronically is very similar to other types of skills that are commonly found in office/business environments.

         As noted previously in this preamble, the department sent a survey to each of the 156 persons who hold a current finfish import license in order to determine potential economic costs to persons required to comply. The department received 33 responses, 21 of which qualified as small or microbusinesses. Thirteen respondents indicated that compliance with the proposed amendment would not result in additional direct economic costs. Eight respondents indicated that compliance would result in annual direct economic costs. Of those eight, two indicated annual compliance costs of less than $600, three estimated annual compliance costs of between $1,000 and $3,000, three estimated annual compliance costs of between $10,000 and $12,000, and one estimated annual compliance of $26,000.

                 The department notes that the proposed amendment does not create new recordkeeping requirements; the current rule, in effect since 1982, already requires permittees to create, submit, and maintain invoice records. However, for persons who have not been reporting monthly sales and purchases as required under current rule, compliance with the proposed amendment could result in additional costs; however, those costs would be the cost of coming into compliance with the existing rules.  By implementing a web-based reporting system, the proposed amendment would allow permittees to automate their recordkeeping and reporting processes, which should save time and expense by eliminating the need for the creation and handling of physical documentation.

         The department considered several alternatives to achieve the goals of the proposed amendments while reducing potential adverse impacts on small and micro-businesses and persons required to comply. The component of the proposed rules that constitutes an adverse economic impact to small and micro-businesses is the requirement to submit invoices via the Internet. One alternative the department considered was status quo. This alternative was rejected because one goal of the proposed amendment is to increase the efficiency with which the department administers the finfish import license program, given that additional manpower is not a viable option. The department concluded that requiring invoices to be submitted electronically would be the most effective means to accomplish that goal while reducing the adverse economic impacts to small and micro-businesses.

         The department also considered leaving reporting media optional. This alternative was rejected because the department has determined that the investment in staff time to continue processing and reconciling hard-copy documents by manual methods in even limited amounts is not justifiable.

         The department also considered imposing a fee for persons who desire to continue to file reports and notifications manually. This alternative was rejected because it represents a continuing expense to the department that is unjustifiable in light of the small number of permittees that would be affected, and because department staff would still be required to process and reconcile the reporting information manually.

         (D) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rule as proposed will not impact local economies.

         (E) The department has determined that there will not be a taking of private real property, as defined by Government Code, Chapter 2007, as a result of the proposed rule.

4. Request for Public Comment.

Comments on the proposal may be submitted to Brandi Reeder, Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, Texas 78744; (512) 389-4853; email: brandi.reeder@tpwd.state.tx.us.

5. Statutory Authority.

         The amendment is proposed under the authority of Parks and Wildlife Code, §66.020, which authorizes the commission by proclamation to require fish imported under the provisions of that section to be tagged, packaged, and labeled, and accompanied by an invoice.

         The proposed amendment affects Parks and Wildlife Code Chapter 66.

         §57.372. Packaging Requirements.

                 (a) – (f) (No change.)

                 (g) Each commercially protected finfish shipping invoice shall be duplicated by the licensee.

                         (1) A licensee shall report each imported, exported, or intrastate shipment to the department within 24 hours via a department-approved Internet application[One copy shall be submitted to the Texas Parks and Wildlife Department regional law enforcement office by the shipper by the 10th day of the month following the month of shipping of each intrastate or export shipment].

                         (2) One copy shall be retained by the licensee for a period of one year from the date of receipt of each imported shipment or from the date of shipping of each intrastate or exported shipment.

                         (3) One copy shall be retained by the receiver for a period of one year from the date of receipt of each import, intrastate, or export shipment.

                         [(4) Except as provided in subsections (h) and (i) of this section, one copy shall be submitted to the Texas Parks and Wildlife Department regional law enforcement office by the] receiver of each import, intrastate, or export shipment by the 10th day of the month following the month of receipt.]

                         (h) A restaurant owner, operator, or employee receiving commercially protected finfish from the holder of a Texas finfish import license is exempt from subsection (g)(1)[(g)(4)] of this section, but is required to comply with subsection (g)(3) of this section, provided that the commercially protected finfish is for consumption on the premises by the restaurant patrons.

                         (i) The holder of a retail fish dealer license receiving commercially protected finfish from the holder of a Texas finfish import license is exempt from subsection (g)(1)[(g)(4)] of this section, but is required to comply with subsection (g)(3) of this section.

         This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.

         Issued in Austin, Texas, on