Title of Regulation: 18VAC15-30. Virginia Lead-Based Paint Activities Regulations (amending 18VAC15-30-162, 18VAC15-30-163).

Statutory Authority: §§ 54.1-201 and 54.1-501 of the Code of Virginia.

Public Hearing Information:

December 18, 2013 - 9:30 a.m. - Department of Professional and Occupational Regulation, 9960 Mayland Drive, Suite 200, Board Room 2, Richmond, VA 23233

Public Comment Deadline: February 14, 2014.

Agency Contact: Trisha Henshaw, Executive Director, Virginia Board for Asbestos, Lead, and Home Inspectors, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8595, FAX (866) 350-5354, or email alhi@dpor.virginia.gov.

Basis: Section 54.1-113 of the Code of Virginia (commonly referred to as the Callahan Act) requires regulatory boards to periodically review and adjust fees; § 54.1-201 A 4 of the Code of Virginia authorizes regulatory boards to levy and collect fees; subdivision 3 of § 54.1-304 of the Code of Virginia describes the authority of the Department of Professional and Occupational Regulation (DPOR) to collect and account for fees; and § 54.1-308 of the Code of Virginia requires costs to be paid by regulatory boards.

Purpose: The proposed amendments increase licensing fees for regulants of the Board for Asbestos, Lead, and Home Inspectors. The board must establish fees adequate to support the costs of board operations and a proportionate share of DPOR's operations. By the close of the next biennium, fees will not provide adequate revenue for those costs.

DPOR receives no general fund money but, instead, is funded almost entirely from revenue collected from license and certificate application fees, renewal fees, examination fees, and other licensing fees. DPOR serves to protect the health, safety, and welfare of the public by administering regulatory programs for certain professions or occupations that are deemed by the General Assembly as needing to be regulated. Such programs are designed to ensure minimum competency of practitioners who elect to enter these professions by verifying applicants' compliance with specified entry standards (education, experience, and examination). DPOR is self-supporting and must collect adequate revenue to support its mandated and approved activities and operations. Fees must be established at amounts that will provide that revenue. Fee revenue collected on behalf of the various boards funds DPOR's authorized special revenue appropriation.

The Board for Asbestos, Lead, and Home Inspectors has no other source of revenue from which to fund its operations.

Substance: The Board for Asbestos, Lead, and Home Inspectors reviewed the fees listed in 18VAC15-30-162 and 18VAC15-30-163 and, based on projected revenues and expenses, developed a fee schedule that meets the requirements of the applicable statutes while being the least burdensome to the regulant population.

Fee Type		Current Fees	Proposed Fees
Application	Individuals	25	80
Application	Contractors	40	110
Application	Training courses	400/day	500/day
Renewal	Individuals	25	45
Renewal	Contractors	40	70
Renewal	Training courses	100	125
Late Renewal	Individuals	25	35
Late Renewal	Contractors	25	35
Late Renewal	Training courses	25	35

Issues: The primary issue for the proposed fee increase is DPOR's statutory requirement to comply with the Callahan Act. The Callahan Act requires DPOR to review each board's expenditures at the close of each biennium and to adjust fees if necessary. The Board for Asbestos, Lead, and Home Inspectors is expected to incur a deficit of $82,268 by the end of the 2012-2014 biennium and to have a Callahan Act percentage of -11.5%.

The regulatory review process generally takes a minimum of 18 months, so it is essential to consider fee increases now to avoid a greater deficit than currently projected. In order to address the deficit as currently projected, new fees will need to become effective by late in fiscal year 2014. Otherwise, the board's deficit will increase to the point that the new fees would be inadequate to provide sufficient revenue for upcoming operating cycles, which could result in the board having to consider additional fee increases in the near future.

The advantage of these changes is that the regulatory program will be able to continue to function in order to protect the public. The disadvantage is that these changes will increase the cost of the license to the regulated population; however, the impact of these changes on the income of the regulated population should not be of a great significance compared to their level of income.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board for Asbestos, Lead, and Home Inspectors (Board) proposes to increase all fees paid by licensees, certificate holders and registrants that are subject to the Board's authority.

Result of Analysis. There is insufficient information to accurately gauge whether benefits are likely to outweigh costs for these proposed changes.

Estimated Economic Impact. Under current regulations, lead paint removal workers, supervisors, inspectors, risk assessors or project designers pay an initial licensure fee of $25, an annual renewal fee of $25 and a late renewal fee of $50 (if they renew between 30 days and 6 months after the renewal date). Lead contractors currently pay $40 for initial licensure, $40 annually for license renewal and $65 for late renewal. Lead training programs currently pay $400 per day of training for program approval, $100 for renewal of program approval and $125 for late renewal of program approval. Lead refresher training programs currently pay $400 for program approval. Lead project designer refresher training programs currently pay $200 for program approval. The Board now proposes to increase all of these fees.

Below is a comparison table for current and proposed fees:

FEE TYPE	CURRENT FEE	PROPOSED FEE	% INCREASE
Fee for Worker, Supervisor, Inspector, Risk Assessor or Project Designer Initial Licensure	$25	$80	220%
Lead Contractor Initial Licensure	$40	$110	175%
Accredited Lead Training Program Initial Approval (per day of training)	$400	$500	25% per day
Accredited Lead Refresher Training Program Initial Approval	$400	$500	25%
Accredited Lead Project Designer Refresher Training Program Initial Approval	$200	$250	25%
Renewal of Worker, Supervisor, Inspector, Risk Assessor or Project Designer Licensure	$25	$45	80%
Renewal of Lead Contractor Licensure	$40	$70	75%
Renewal of Accredited Lead Training Program Approval	$100	$125	25%
Late Renewal of Worker, Supervisor, Inspector, Risk Assessor or Project Designer Licensure	$50	$80	60%
Late Renewal of Lead Contractor Licensure	$65	$105	61.5%
Late Renewal of Accredited Lead Training Program Approval	$125	$160	28%

Board staff reports that fees were reduced in 2000 because they were set at a level that was too high to be justified by Board expenditures. As a consequence of high fees prior to 2000, the Board had a large surplus that has offset fees that since then were too low to cover all Board expenses. Absent some fee increase, Board staff reports that the Board will run a deficit in the next biennium. In addition to a large surplus finally being depleted, Board staff reports that fees will need to be raised because expenses for developing Department of Professional and Occupational Regulation's (DPOR's) new customer support and licensure software have greatly increased information technology costs over the last several years.

While the number of entities that the Board regulates has increased, other things being equal, the fees from additional regulants would be expected to cover application costs, customer support services costs and any other expenses that the Board might incur in regulating them. Because fees have been kept artificially low for the last decade so that the Board could use up the very large surplus that it had accrued, fees from each new licensee, certificate holder or registrant may not, in this instance, be enough to cover the per person application and customer support costs. This notwithstanding, it is likely that the necessity of raising fees would not be as urgent as it now is without large and continuing increases in information technology (IT) expenses over the last few years.

Board staff reports that DPOR has already paid $3.6 million, and expects to pay an additional $1.6 million, for its new automated licensure system. These costs are additional to other IT (VITA) costs which have increased for all state agencies. It is likely that most of the per regulant expenditure increase in the last decade is due to these increased information systems costs. In FY2005, the Board spent $32.13 per regulant; in FY2006, per regulant spending was $31.40 and in FY2007 it was $29.07. In FY2008 per regulant spending jumped to $45.45. During FY2012, per regulant spending was to $50.37. Board staff expect per regulant spending to increase further in FY2013 (to $57.07). Given this information, it is not at all clear that these increased information systems costs represent a net benefit for the Board's regulated entities.

Increasing fees will increase the cost of being licensed, certified or registered, and so may slightly decrease the number of people who choose to be remain in these jobs or businesses. To the extent that the public benefits from the Board regulating these professional populations, they will also likely benefit from the Board's proposed action given that the regulating will continue. There is insufficient information to ascertain whether the benefits of the continued regulation will outweigh the costs with higher fees.

Businesses and Entities Affected. Board staff reports that the Board currently regulates 5,808 individuals, contractors, labs and training programs.

Localities Particularly Affected. No locality will be particularly affected by this proposed regulatory action.

Projected Impact on Employment. Fee increases in this regulatory action may marginally decrease the number of individuals who choose to work in professional fields that are regulated by the Board. Individuals who work part time or whose earnings are only slightly higher in these regulated fields than they would be in other jobs that do not require licensure or registration will be more likely to be affected.

Effects on the Use and Value of Private Property. Fee increases will likely slightly decrease business profits and make affected businesses slightly less valuable.

Small Businesses: Costs and Other Effects. Board staff reports that most of the entities regulated by the Board likely qualify as small businesses. Affected small businesses will bear the costs of proposed increased fees.

Small Businesses: Alternative Method that Minimizes Adverse Impact. Outside of increasing the efficiency of the business practices of DPOR or lowering other expenses charged to the department, particularly information technology related, there are no clear alternative methods that would reduce the adverse impact on small businesses from the proposed fee increases.

Real Estate Development Costs. This regulatory action will likely have no effect on real estate development costs in the Commonwealth.

Legal Mandate. The Department of Planning and Budget (DPB) has analyzed the economic impact of this proposed regulation in accordance with § 2.2-4007.04 of the Administrative Process Act and Executive Order Number 14 (10). Section 2.2-4007.04 requires that such economic impact analyses include, but need not be limited to, the projected number of businesses or other entities to whom the regulation would apply, the identity of any localities and types of businesses or other entities particularly affected, the projected number of persons and employment positions to be affected, the projected costs to affected businesses or entities to implement or comply with the regulation, and the impact on the use and value of private property. Further, if the proposed regulation has adverse effect on small businesses, § 2.2-4007.04 requires that such economic impact analyses include (i) an identification and estimate of the number of small businesses subject to the regulation; (ii) the projected reporting, recordkeeping, and other administrative costs required for small businesses to comply with the regulation, including the type of professional skills necessary for preparing required reports and other documents; (iii) a statement of the probable effect of the regulation on affected small businesses; and (iv) a description of any less intrusive or less costly alternative methods of achieving the purpose of the regulation. The analysis presented above represents DPB's best estimate of these economic impacts.

Agency's Response to Economic Impact Analysis: The Board for Asbestos, Lead, and Home Inspectors concurs with the approval. However, the board would like to address the statement regarding the efficiency of DPOR's business practices.

DPOR serves to protect the health, safety, and welfare of the public by establishing and administering regulatory programs for certain professions or occupations that are deemed by the General Assembly as needing to be regulated. Such programs are designed to ensure minimum competency of practitioners who elect to enter these professions by verifying applicants' compliance with specified entry standards (education, experience, and examination).

DPOR is mindful of the need to keep costs to a minimum while still maintaining its charge of allowing minimally competent individuals and companies to begin working in their chosen fields as quickly as possible and resolving complaints against licensees in a timely manner. DPOR's staff continuously strives to improve its processes to find more efficient methods of conducting its work. In addition, staff works with its regulatory boards to develop regulations and policies that minimize burdens on its regulants, including minimizing costs associated with licensure, certification, and registration.

Summary:

The amendments increase application and renewal fees paid by licensees, certificate holders, and registrants subject to the authority of the Board for Asbestos, Lead, and Home Inspectors.

18VAC15-30-162. Application fees.

Application fees are as follows:

Fee Type	Fee Amount	When Due
Application for worker, supervisor, inspector, risk assessor or project designer license	$25 $80	With application
Application for a lead contractor license	$40 $110	With application
Application for accredited lead training program approval	$400 $500 per day of training	With application
Application for accredited lead refresher training program approval except for project designer refresher	$400 $500	With application
Application for accredited lead project designer refresher training program approval	$200 $250	With application

18VAC15-30-163. Renewal and late renewal fees.

Renewal and late renewal fees are as follows:

Fee Type	Fee Amount	When Due
Renewal for worker, supervisor, inspector, risk assessor or project designer license	$25 $45	With renewal application
Renewal for lead [ contractor's contractor ] license	$40 $70	With renewal application
Renewal for accredited asbestos training program approval	$100 $125	With renewal application
Late renewal for worker, supervisor, inspector, risk assessor or project designer license (includes a $25 $35 late renewal fee in addition to the regular $25 $45 renewal fee)	$50 $80	With renewal application
Late renewal for lead [ contractor's contractor ] license (includes a $25 $35 late renewal fee in addition to the regular $40 $70 renewal fee)	$65 $105	With renewal application
Late renewal for accredited lead training program approval (includes a $25 $35 late renewal fee in addition to the regular $100 $125 renewal fee)	$125 $160	With renewal application