Propose the following language addition to 12VAC5-620-80. Waiver of Fees:  

G. Any person whose application for a certification letter or permit to construct an onsite sewage disposal system, alternative discharging system, or private well is denied may file one subsequent application for the same site-specific construction permit for which the application fee shall be waived, provided that:

The addition of certification letter in this section is consistent with the proposed revisions in 12VAC5-620-90. Refunds of application fees.  If left unchanged it may take away the Departments ability to waive the state fees when an applicant files an application within 90 days of a certification letter denial. 

Prior to updating the Fee Regulations, the appropriation act deserves clarification.  The 2014 Budget Bill still references "authorized" onsite soil evaluator on several occassions. VDH authorization of onsite soil evaluators expired in 2009.

In addition, the 2014 Budget Bill appears to promote a "fee for service" expectation that the VDH will perform site evaluation and design services that are in direct competition with private sector small business.  It is my understanding that the VDH will be expected to:

1.) Address direct competition with private sector small business.
2.) Define the role of the VDH to avoid direct competition with small business.
3.) Develop a plan to cease delivery of services in direct competition with small business.
4.) Identify legislative and regulatory changes to implement the plan.

I believe this was agreed to in leiu of HB 409 (2014), and the VDH will report their findings to members of the Health, Welfare, and Institutions committe later this year.  The Fee Regulations should reflect these findings.

The Fee Regulations should be updated once these issues are addressed. Thank you for your consideration.

Robert Charnley

I object to the Economic Impact Analysis which shows no impact to small business or use of private property.

While I acknowledge the need to consider revisions to the fee schedule I believe further consideration must be given to small businesses than has been reported. Specifically according to the report the proposed regulations “do not impose any direct costs on these small businesses,” and “The proposed changes are not expected to have a significant direct effect on the use and value of private property.”

No analysis is offered the consequence of fees or refunds to small business.and the value of private property.
Specifically consider: 12VAC5-620-90. Refunds of application fee.

An applicant for a construction permit or certification letter whose application is denied may apply for a refund of the application fee.

In my opinion the refund policy clearly impacts small business:

1. A design firm cannot compete with free services, and is restrained from trade by any offer of free or subsidized services.
2. Following evaluation and denial of a site application by VDH staff a design firm has a higher burden of proof which must be paid for by our client. A consequence to the consumer is the additional expense of site evaluation and design for an advanced or engineered design.
3. A denial casts an encumbrance on that parcel despite being an incomplete evaluation. (VDH policy allows for evaluation of 2 sites for conventional design) These limitations are not disclosed in writing to the applicant.
4. The VDH local offices do not disclose to applicants that public servants are limited in consideration of the owner's interests and may not design advanced systems which a consulting firm is authorized to provide.

Consider further: 2VAC5-620-70. Application Establishing fees. 

"fees to be charged by the department for services related to construction, maintenance, and repair or replacement of onsite sewage disposal systems,"

Smal business owners are in direct competition with the services offered for a subsized fee by VDH offices.

Dr. Larry Getzler (DPB) provided fee analysis during SHIFT indicating that application fees support ~20-23% of the cost of delivering services by VDH onsite program. VDH's Environmental Health Director acknowledged that the agency does not know the cost of providing this service. In documents released since 2010 there is no indication of any time or cost studies by the agency.

The cost to the VDH for delivering services has a fiscal impact which should be considered by the fee regulations. During FY2012, refunds of fees for denied or withdrawn applications exceeded $232,300. FY 2012 data showed 10,736 permit applications, including well, septic, OSE and “bare applications” Total permit revenue is reported as  $4,219,253.

In light of the incomplete analysis in support of this fee regulation,  I believe the report should be revised to reflect current costs of VDH providing direct services, and changing economic and policy considerations including the concern over public services in competition with licensed professionals and engineering design firms.

I also suggest that the comments offered in a previous TownHall Comment forum which closed in May of 2011 have not been addressed in a public response by the responsible agencies which should include VDH, DPOR and Department of Planning & Budget.
 

In light of these shortcomings, and the history of these problems which were considered by JLARC 2002, and other studies I ask that consideration of the impact of fees and policies on professionals licensed to serve the public be incorporated into any regulatory changes.

Jeff T. Walker; LPSS & AOSE 

1-  G1: Should be made consistent with current Agency processing of applications and utilize a consistent schedule of business days

2-  Language should be incorporated to resolve denial of permits due to LOCAL ORDINANCES.  Local requirements that exceed the State Regulations often require the use of additional licensed professionals, reviews by other local departments, etc., all of which typically takes more than 90 days to accomplish. 

I do not think it is good for any agency to set fees without a legislative disclosure.  The current fees do not capture the FULL task of VDH duties.    

After reading this document I say "no" to VDH controlling the fee schedule. I say "yes" to  needed changes such as a reduced fee for component replacement that is not covered otherwise along with a need for a change in well permits that require a fee for an abandonment only this should not be required. But don't change fees for well replacement with proper abandonment leave this alone. I don't understand the numbers stated in the Business and Entities Affected and again under Small Business, are the 350 individuals both private and public sector individuals combined? Under Projected Impact on Emp[loyment it is stated that these proposed changes are expected to reduce administrative staff time that would be necessary to update the regulations through the standard regulatory process on a frequent basis. If these administrative staff people will be constantly looking at the "high frequency of legislative actions affecting fees" to adjust the VDH fee schedule, then these same staff people should not have to spend any more time on taking the changes through the Regulatory process.

This section appears to conflict with 12VAC5-630-220, 12VAC5-630-300, 12VAC5-640-220 and 12VAC5-640-220.

I have personally experienced the abuse of the 90-day, one-time resubmittal regulation.  In several instances my permits were denied based on trivial issues and I was "put on notice" that if I did not correct ALL DEFECTS on the next submittal, my client would be charged a new fee.

In another instance, Loudoun County waited until the 58th day of the 60-day time allotment to deny my client's permit for the second time.  There was no dialog or notice that a defect in the permit application existed until the denial letter was sent.  There was no opportunity to perfect the application before the second denial was issued.  The defect noted on the denial concerned an old easement that was being abadoned and the client was trying to coordinate with various enties, including the County Circuit Court Clerk's office.  The result of the health department's action required a new $1,400 permit fee.

I strongly object to the 90-day one time submittal rule.  An applicant should have a total of 90-days to perfect the application with as many corrections and submittals as necessary before incurring a new application fee.  

The proposed definition of "Owner" is not consistent with the statutory definition in 32.1-163 and 32.1-167.

ver this text and enter your comments here. You are limited to approximately 3000 words.

The definition should read:

"Voluntary upgrade" means a change to or replacement of an existing nonfailing onsite or alternative discharging sewage disposal system for the purposes of reducing threats to the public health, or to ground and surface waters, including the reduction of nitrogen discharges, without an increase in the permitted volume or strength of the sewage, in accordance with the regulations for repairing failing systems.

Regarding:  A. The commissioner shall establish a schedule of fees to be charged by the department for services related to construction, maintenance, and repair or replacement of onsite sewage disposal systems, alternative discharge systems, and private wells and for appeals before the Review Board.

Why is the term "maintenance" included in the above?  Is it VDH's intention to establish "maintenance fees"?

I strongly object to the term maintenance and request that it be removed.

What is an "Installation Inspection Fee"?

Where is the statutory authority to establish and charge this fee?

Why would an applicant pay for an application fee (that supposedly includes inspection) and then have to pay an inspection fee?

I object to the inclusion of the Installation Inspection Fee.

What is a "Currently Active Application"?

It appears from the narrative that a case decision would have been made resulting in a denial.  The narrative suggests that an applicant would have to pay another application in order to appeal the denial.

From B.  ..."check stubs, written letter from an employer, W-2 forms, etc., in order to..."

The term "etc." is not appropriate for the Virginia's Administrative Code.   Something more formal like:

"...shall include, but not limited to check stubs, written letter from an employer, and W-2 forms, in order to..."

Also - there is no mention of Virginia or Federal Income Tax Returns.  I suggest adding both of the these to list.

From C.  "Proof of income must include:..."   How is someone of a fixed income - such as disability, social security, or retirement income going to provide proof of income from an employer?

The economic impact analysis on the effect on small businesses is cursory – at best. These regulations and implied authority claimed by the Virginia Health Department (VDH) as a direct service provider of proprietary services is devastating to the private sector. The EIA states the “majority” of the private sector service providers are estimated to be small businesses. In my opinion, “majority” underestimates the number of small businesses in this particular industry. My experience over the past 12 years is that ALL of the private sector providers are small businesses.

The overarching analysis that the proposed changes “do not impose any significant adverse impact on the small businesses” may be technically correct given the narrow scope of the EIA. The reality of VDH, Inc.'s current business model is:

1. VDH, Inc. is the largest single provider of direct site evaluation and design services in the Commonwealth of the Virginia – providing between 7,000 and 10,000 fee-for-hire service contracts per year.

2. The gross income of the fee-for-hire services ranges between $2.5 millon and $4.25 million per year.

3. All of VDH, Inc.'s fee-for-hire services are almost entirely tax subsidized.

4. VDH, Inc.'s net fee for a certification letter is $30 per site.

5. VDH, Inc.'s net fee for a conventional site evaluation and septic system design is $200 per site.

Compare VDH, Inc. with a private sector small business - the real cost of a site evaluation and preparation a certification letter submittal ranges between $500 and $1,500 per site. The real cost of a conventional septic system evaluation and design ranges $800 and $2,500 per site.

Therefore, tax payers subsidize nearly 100% of the cost of service for VDH, Inc.'s direct service business. It is easy to recognize the devastating impact on small businesses when forced to compete with a competitor of such magnitude coupled with the advantage of tax payer funding.

Consider the loss of tax revenue to the Commonwealth of Virginia. If the private sector provided 100% of the fee-for-service business in this industry, the tax revenue would be about $1 million per year. Contrast this revenue stream with the tax subsidy cost of $3.4 million per year. The economics do not work. Instead of gaining $1 million per year, the Commonwealth of Virginia is actually spending $3.4 million per year to provide a fee-for-service to individuals for improvements to their real property.

Another way to analyze the issue is the overall cost of this service to lot owner. Consider the cost of a house is about $250,000 and the cost of the lot is $75,000. The subsidy provided by the tax payer amounts to a trivial 0.5% of the overall project cost. Of course this percentage drops proportionally as the cost of the project increases. In many cases, the subsidy amounts to less than 0.1%.

Why is the Commonwealth of Virginia subsidizing a service to some of its citizens that the private sector can provide at a significant cost to the entire tax paying citizenry?

This regulation should be put on hold until the fee-for-service issue is resolved.

1. Whether existing Agency fees utilized to administer Title 32.1 of the Code of Virginia cover actual or estimated cost.
2. Whether the Fee Regulations authorize VDH to charge a fee for duties provided under Title 54.1 of the Code of Virginia.
3. Whether a conflict exists whereas the Agency may be collecting ministerial fees for administration of Title 32.1 of the Code of Virginia and fees for service delivery of a regulated professional trade by Title 54.1 of the Code of Virginia.
4. Whether the Department of Planning and Budget (“DPB”) incorrectly assessed the impact(s) on small businesses within the Economic Impact Analysis, whereas the current practice of VDH providing “free soil evaluation and design services” have established anti competitive effects and restraints of trade.

12VAC5-620-30
Apparently a distinction is being made between an “application fee” and a “services provided fee”.
Fees should be established for both conditions. Application fees should be strictly administrative

VDH “services provided fee” should encompass the total hourly process of  administrative services, technical siting and planning discussions, FOIA requests, site visits, sanitary surveys, field evaluations, client discussions, percolation testing, surveys, system specifications, abbreviated designs, level 1 and 2 reviews and document revisions, et. al.   (A. The commissioner shall establish a schedule of fees to be charged by the department for services related to construction, maintenance, and repair or replacement of onsite sewage disposal systems, alternative discharge systems, and private wells and for appeals before the Review Board. B. In establishing fees, the commissioner shall consider the actual or estimated average cost to the agency of delivering each service included in the schedule of fees.)

OSE/PE supported documentation should require an application fee only.
VDH will require “services provided and application fees”

12VAC5-620-70 A.B. appears to satisfy this distintction.

12VAC5-620-80 F5, G1. There should be no time constraints placed on any application

I have two concerns that I hope can be addressed. 

1. As a homeowner I want to know, when I purchase a home the septic / treatment works has been inspected by a licensed, experienced, and trained individual. It is not of matter who does the inspection, just that the inspection is carried out. I will submit that anyone that is not licensed by Depor as a service provider,  an employee of the VDH or a licensed engineer  is not and should not be doing these types of inspections. It would seem to me that anyone who markets themselves as a home inspector and does not have a Depor license as a service provider to inspect septic systems is breaking the law. I think it is only a matter of time before, an informed homeowner who understands the regulations will successfully sue a home inspector, who does not have a Depor license for a treatment works problem that is unforeseen. As a homebuyer I  might realize I can hire my own inspector, but I also realize that most homeowners would believe that a generic home inspector is good enough. I think at a minimum the home buyer needs to understand what he or she is purchasing and that information should be part of a property transaction. 

2. As a manufactures representative of alternative treatment systems we get calls from homeowners who want to understand what they just purchased. Of course we lead the homeowner to a service provider and it is only then they understand the cost of owning a home with an alternative treatment works. In some cases this leads to extensive repairs. 

In the interest of protecting uninformed homebuyers, I believe there needs to be an inspection of treatment works at the time of property transfer. The inspection should be done by a licensed Depor service provider, a VDH employee, or an engineer. It could be a combination of anyone of the two. I have done some research and there are two states, that I can find already doing this Rhode Island and Iowa and there may be more. I believe that a fee should be incorporated into the new fee structure for the VDH to do these inspections. The inspection could be done with a licensed service provider or engineer. I would submit a total fee of $200-$400 at time of property transfer would be reasonable and would protect the home buyer. This is a small cost to pay and could be rolled into closing cost of the property transfer. Another reasonable advantage would be that this fee would help already financially  strapped Health Departments fund their programs. 

While I am an industry stakeholder I do not write this as a stakeholder, As a stakeholder there is no advantage for manufactures. I write this as an informed citizen interested in protecting homebuyers, thus I choose to remain anonymous. 

 Regulations Govering Applications Fees for Construction Permits for Onsite Sewage Disposal Systems and Private Wells ( 12  VAC 5 - 602 )  should not be ammended by VDH for the following reasons :                           

1. The change should be made by the Legislators not by VDH

2. VDH has been directed by the Health , Welfare , and Instutions Committee to provide an impact report on the private sector to the Committee by Oct. 1 , 2014 and no changes to fees by VDH should be proposed before this report is given to the Committee .   This impact statement was directed in leiu of  H B 409.

3.It appears to me that VDH is trying to get more money from the tax payers so that they can continue to unfairly  compete with the private sector. This opinion is based on my prior experence with VDH .

W.R. Willoughby Jr.  AOSE  , V.P. of VA. AOSE Association

Consider addition of "LOCAL FEE SCHEDULE" to 12VAC5-620-10 Definitions of the proposed regulations.  I would suggest adding language to create disclosure whereas the commissioner shall keep a record of all localities authorized by the General Assembly to establish local fees (see 15.2-2157.1 Code of Virginia) that are in addition to the Virginia Department Health (VDH) Fee Schedule.

1) 12VAC5-620-10 is not clear if a permit is required to "modify an existing system".  Lacking the necessity of a permit, this regulation may be in conflict with Local Ordinances that do require permits for modifications and alterations.

2)  Are Local Fees for Service applicable to Minor Modifications as defined by these proposed regulations?

Add langauge to identify "decommissioned".

Pulling a well pump may be considered "decommissioned", thus rendering the well inoperable.

Authorizing the Commissioner of Health to charge the maximum allowable fees per the Code of Virginia or Appropriations Act ignores local fees.  A reduction in states fees provide no incentive to owners if localities are allowed to continue marking up state FEE FOR SERVICES without legislative consideration.   

As others have already expressed their concerns about the direction of any such amendments, please consider the following points:

(i) New amendments should reflect Virginia's decade long transition to a performance-based regulatory program in onsite sewage.  The regulatory framework is currently overdue for synthesizing this transition into the policies of the Onsite Sewage Program "with the least possible intrusion in the lives of citizens".

(vi)  Small businesses providing documentation with client applications are required to pay fees only slightly lower than the Health District charges for performing the work themselves.

While many businesses have suffered from the building recession, the Virginia Department of Health (VDH, Inc.) remains healthy. VDH staffing levels remain virtually unchanged even though the number of permits have decreased substantially since 2008. VDH, Inc. has accomplished this by taking market share from private sector designers many or most of whom are now essentially defunct due to unfair competition from VDH, Inc.

I am convinced that VDH, Inc. will go to any length necessary to keep designing septic systems even though they have no mandate to do so and refuse to accept liability for damages that occur due to their design decisions. So go ahead and give them the ability to do whatever they want to do with fees. This would be the final tool VDH, Inc. needs to function as an effective monopoly on design services.

With all the focus on VDH, Inc. designing septic systems, is anyone actually following up to see if they are keeping their food inspections complete and recent? That would seem like a more important public health issue than designing septic systems.

Tony Bible, AOSE

Southwest Environmental Consulting, Inc.