Policy Analysis
DATCP must regulate the use of pesticides to assure compliance with groundwater standards under ch.
160, Stats. Groundwater standards are established by the Department of Natural Resources under ch.
NR 140, Wis. Adm. Code. DNR has established a groundwater enforcement standard of 3
mg/liter for atrazine and its chlorinated metabolites.
DATCP must prohibit atrazine uses that result in groundwater contamination levels that exceed the DNR enforcement standard under s.
160.25, Stats. DATCP must prohibit atrazine use in the area where groundwater contamination has occurred unless DATCP determines to a reasonable certainty, based on the greater weight of credible evidence, that alternative measures will achieve compliance with the DNR enforcement standard.
Currently, under ch.
ATCP 30, Wis. Adm. Code, the use of atrazine is prohibited in 102 PAs (approximately 1,200,000 acres), including large portions of the Lower Wisconsin River Valley, Dane County and Columbia County. The current rules also restrict atrazine use rates and handling practices, including the timing of applications on a statewide basis. The statewide restrictions are designed to minimize the potential for groundwater contamination, as required under s.
160.25, Stats.
Over the next year, DATCP may identify additional wells containing atrazine and its chlorinated metabolites at and above the current DNR enforcement standard. In order to comply with ch.
160, Stats., DATCP must take further action to prohibit or regulate atrazine use in the areas where these wells are located. DATCP proposes to amend ch.
ATCP 30, Wis. Adm. Code to add PAs or take other appropriate regulatory action in response to any new groundwater findings.
Comparison with federal regulations
Pesticides and pesticide labels must be registered with the federal Environmental Protection Agency (“EPA"). Persons may not use pesticides in a manner inconsistent with the federal label.
The current federal label for atrazine advises that atrazine should not be used on permeable soils with groundwater near the soil surface. Wisconsin has clearer, more definite restrictions on atrazine use, based on actual findings of groundwater contamination in this state.
EPA is proposing federal rules that would require states to create pesticide management plans for pesticides that have the potential to contaminate groundwater. Wisconsin's current regulatory scheme for atrazine pesticides would likely comply with the proposed federal rules.
Entities affected by the rule
Residents whose private wells are located in the proposed or expanded PA would be affected by the proposed rule. Atrazine users in a new or expanded PA would be affected by the proposed rule. Dealers, distributors and manufacturers of atrazine who service areas of proposed expanded PAs would be affected by a reduction in the sales of atrazine. Commercial application services would be required to know where all the atrazine PAs are located to avoid illegal applications. The proposed action is not expected to have a measurable effect on consumer food costs, specifically on corn-derived products.
Policy Alternatives
No Change. If DATCP takes no action, current rules will remain in effect. However, DATCP would take no new regulatory action in response to new groundwater findings obtained this year. This would not adequately protect groundwater in the newly discovered contaminated areas, nor would it meet DATCP's statutory obligations.
Statutory Alternatives
None at this time.
Statutory authority
Staff time required
DATCP estimates that it will use approximately 0.5 FTE staff to develop this rule. This includes investigation, drafting, preparing related documents, coordinating advisory committee meetings, holding public hearings and communicating with affected persons and groups. DATCP will use existing staff to develop this rule.
DATCP Board Authorization
DATCP may not begin drafting this rule until the Board of Agriculture, Trade and Consumer Protection (Board) approves this scope statement. The Board may not approve this scope statement sooner than 10 days after this scope statement is published in the Wisconsin Administrative Register. If the Board takes no action on the scope statement within 30 days after the scope statement is presented to the Board, the scope statement is considered approved. Before DATCP holds public hearings on this rule, the Board must approve the hearing draft. The Board must also approve the final draft rule before DATCP adopts the rule.
Agriculture, Trade and Consumer Protection
Subject
Agricultural Producer Security (License Fees and Technical Changes).
Administrative Code Reference: Chapters
ATCP 99,
100 and
101, Wis. Adm. Code.
Statutory authority
Objective of the rule. DATCP currently administers the Agricultural Producer Security program under Chapter
126, Stats. This program helps protect agricultural producers against catastrophic financial defaults by milk contractors, grain dealers, grain warehouse keepers and vegetable contractors (collectively referred to as “contractors"). Contractors must be licensed by DATCP, and most contractors pay assessments to an agricultural producer security fund administered by DATCP. Licensed contractors also pay license fees to cover DATCP's cost to administer the program.
Current license fees are set by the Agricultural Producer Security Law, ch.
126, Stats., enacted in 2001. However, that law incorporated the same license fees established under prior law. Grain dealer and grain warehouse keeper license fees have not actually changed since 1997. Milk contractor license fees have not changed since 1994. Vegetable contractor license fees have not changed since 1998, except that
2005 Wisconsin Act 80 modified license fees for certain potato buyers who opt out of the security program.
DATCP may adjust license fees by rule, but has not done so to date. Current fees are no longer adequate to fund the Agricultural Producer Security Program. DATCP proposes to increase license fees by rule, as appropriate, to provide an adequate level of program funding. DATCP may also make minor technical changes to current rules, including possible definition changes and changes to incorporate the provisions of
2005 Wisconsin Act 80. This rule will
not affect contractor assessment payments to the agricultural producer security fund.
Policy Analysis
The Agricultural Producer Security Program helps secure approximately $10 billion in annual payment obligations to Wisconsin agricultural producers. Contractors who procure milk, grain or processing vegetables from producers must be licensed by DATCP.
Most contractors contribute to an agricultural producer security fund administered by DATCP (the fund currently has a balance of over $7 million). In the event of a financial default, DATCP may reimburse affected producers from the fund. Fund contributions are based on the contractor's size, financial condition and risk practices. Contractors must file annual financial statements with DATCP.
Effective administration of the agricultural producer security program is critical for managing potentially large financial risks. DATCP performs the following functions, among others:
Reviews and processes annual contractor license applications, and monitors compliance with license requirements.
Reviews confidential annual financial statements, to determine contractor compliance with financial standards.
Audits accounts, records and grain inventories, to verify contractor claims and ensure compliance with financial standards.
Administers the Agricultural Producer Security Fund (current balance over $7 million).
In the event of a financial default, conducts default proceedings to determine the amounts owed to producers and to reimburse producer claims as appropriate. DATCP may litigate competing financial claims.
Attempts to recover, from defaulting contractors, reimbursement of fund payments to affected producers.
Adopts and amends rules to regulate contractor practices, and establish fund contribution amounts.
Investigates law violations, and takes compliance action as necessary.
Substantially all costs to administer the program, including costs for staff, supplies and support, are currently funded by contractor license fees. These fees are separate from contractor assessments paid to the Agricultural Producer Security Fund (fund assessments may not be used for program administration).
License fees are based on the amount of milk, grain or vegetables that the contractor procures from producers. License fee levels have not increased for many years. However, license fee revenues have increased slightly, because contractor procurement amounts and grain storage capacity have generally increased over time.
Until recently, this modest growth in fee revenue (not fee levels) was adequate to maintain a positive balance in the administration portion of the program. However, the 2003-2004 Biennial Budget Act eliminated virtually all general tax dollar (GPR) funding for the program. That made it necessary to transfer 2.9 full-time-equivalent staff positions (FTE's), and their supply and support costs, from GPR to license fee funding. The 2.9 FTE's include 2.0 FTE grain auditors and 0.9 FTE from 2 administrative support positions. This has had a substantial impact on administrative account balances in the grain security program.
DATCP maintains separate accounts of the revenues, expenditures and cash balances for each of the 4 license types (grain dealer, grain warehouse keeper, milk contractor and vegetable contractor). Expenses have exceeded revenues for the program as a whole over the last 4 years. Until fiscal year 2006, the program's cash balance has been adequate to absorb the loss. The shortfalls have been especially severe in the grain dealer and grain warehouse keeper accounts, which now have significant negative cash balances. The vegetable contractor account also has a negative balance, though to a smaller degree.
The milk contractor account has a positive, but declining, balance at this time. DATCP is currently using milk contractor license fee revenues to cover shortfalls in the grain and vegetable administrative accounts. Milk contractors are, in that sense, “subsidizing" the grain and vegetable security programs.
DATCP proposes to raise license fees to provide critical program funding and to correct current inequities between industry groups. The amount of fee increases may vary between industry groups, depending on current account balances and program costs. DATCP may also review fee equity between contractors within industry groups (for example, the relative burden on large vs. small contractors).
Comparison with federal regulations
There is no federal program to secure milk contractor payments to producers. However, there are federal programs relating to grain warehouses and vegetable contractors. Federal program coverage differs from Wisconsin program coverage, so there is little if any duplication.
Grain Warehouses
The United States Department of Agriculture (USDA) administers a producer security program for federally licensed grain warehouses. Federally licensed warehouses are exempt from state grain warehouse licensing and security requirements. State-licensed warehouses are likewise exempt from federal licensing and security requirements.
The federal program focuses on grain storage. Unlike the Wisconsin program, the federal program provides little or no protection related to grain dealing (buying grain from producers, with or without storage). However, USDA is proposing to regulate grain dealing (“merchandising") by federally licensed grain warehouse keepers. If that proposal becomes law, federally licensed warehouse keepers who engage in grain dealing would likely be exempt from state grain dealer licensing. DATCP rules might need to recognize that exemption, if it occurs.
Vegetable Contractors
The Perishable Agricultural Commodities Act (PACA) regulates contractors who buy unprocessed, fresh market vegetables from producers. Wisconsin's vegetable security program applies mainly to
processing vegetables, so there is little overlap with PACA (which applies to
fresh market vegetables).
2005 Wisconsin Act 80, which allowed potato buyers covered by PACA to opt out of participation in the Wisconsin Producer Security Fund, further limited potential overlap between state and federal programs.
Entities affected by the rule
This rule may affect grain, milk and vegetable contractors who are licensed under Wisconsin's agricultural producer security program. This rule may increase license fees for affected contractors. The fee increase may vary by contractor type.
Policy Alternatives
DATCP cannot continue operating this regulatory program on the current license fee revenue. One policy alternative would be for the Legislature and the Governor to resume partially funding the program with GPR (tax dollars). However, that appears unlikely.
Another alternative would be to reduce critical administrative functions, such as financial statement reviews and grain warehouse audits. However, that would put agricultural producers at great financial risk and threaten the solvency of the agricultural producer security fund. It could also have an adverse impact on competing grain, milk and vegetable contractors.
Statutory Alternatives
This proposed rule would modify license fees currently contained within the statutes. DATCP has specific authority to modify these fees by administrative rule. However, they could also be modified by the Legislature.
Staff time required
DATCP estimates that it will use approximately 1.0 FTE staff to develop this rule. This includes time required for investigation and analysis, rule drafting, preparing related documents, coordinating advisory committee meetings, holding public hearings and communicating with affected persons and groups. DATCP will use existing staff to develop this rule
DATCP Board Authorization
DATCP may not begin drafting this rule until the Board of Agriculture, Trade and Consumer Protection (Board) approves this scope statement. The Board may not approve this scope statement sooner than 10 days after this scope statement is published in the Wisconsin Administrative Register. If the Board takes no action on the scope statement within 30 days after the scope statement is presented to the Board, the scope statement is considered approved. Before DATCP holds public hearings on this rule, the Board must approve the hearing draft. The Board must also approve the final draft rule before the department adopts the rule.
