INDEPENDENT REGULATORY REVIEW COMMISSION Notice of Comments Issued [29 Pa.B. 5677] Section 5(g) of the Regulatory Review Act (71 P. S. § 745.5(g)) provides that the designated standing committees may issue comments within 20 days of the close of the public comment period, and the Independent Regulatory Review Commission (Commission) may issue comments within 10 days of the close of the committee comment period. The Commission comments are based upon the criteria contained in section 5a(h) and (i) of the act (75 P. S. § 745.5a(h)(i)).
The Commission has issued comments on the following proposed regulations. The agency must consider these comments in preparing the final-form regulation. The final-form regulations must be submitted by the dates indicated.
Final-Form
Submission
Reg No. Agency/Title Issued Deadline 16A-615 State Board of
Landscape Architects
Application Fees10/14/99 9/13/01 (29 Pa.B. 4355 (August 14, 1999) 11-186 Insurance Department
Discounting Workers'
Compensation Loss
Reserves10/14/99 9/13/01 (29 Pa.B. 4353 (August 14, 1999) State Board of Landscape Architects Regulation No. 16A-615 Application Fees October 14, 1999 We have reviewed this proposed regulation from the State Board of Landscape Architects (Board) and submit for consideration the following objections and recommendations. Subsections 5.1(h) and 5.1(i) of the Regulatory Review Act (71 P. S. § 745.5a(h) and (i)) specify the criteria the Commission must employ to determine whether a regulation is in the public interest. In applying these criteria, our Comments address issues that relate to fiscal impact and clarity. We recommend that these Comments be carefully considered as you prepare the final-form regulation.
Section 15.12. Fees.--Fiscal impact and Clarity
Administrative overhead costs
In the proposed regulation's Fee Report forms, there are significant differences in the costs covered by different fees except for ''Administrative Overhead'' costs. According to the Preamble, the Bureau of Professional and Occupational Affairs (BPOA) calculated the allocated share of overhead cost for each fee category by dividing total overhead costs by the number of active licensees. This method of overhead cost allocation is not unreasonable and has been consistently applied. On the other hand, the cost allocations are based on estimates of the actual time BPOA staff spends performing the tasks related to each fee.
For overhead cost allocations, there appears to be no relationship to the services covered by the fees or frequency of fee payments. Therefore, there is no indication that the fees will recover actual or projected overhead costs. In addition, the allocated costs are based on past expenditures rather than estimates or projections of future expenditures. There is no certainty that the fees' ''projected revenues will meet or exceed projected expenditures'' under section 905(a) of the Landscape Architects' Registration Law (63 P. S. § 905(a)).
We question the use of a constant overhead cost allocation that appears to be unrelated to the actual costs of activities relating to the different fees. Even though this process was used to determine other fees, why should BPOA maintain this approach? The Board and BPOA should specifically identify the overhead costs, or portion of the total overhead to be recouped by these fees, and review the methodology for allocating these overhead costs. Is it the Board's goal to allocate all overhead costs by category to each fee? If so, we do not believe the current allocation formula gives the desired result.
Differing overhead costs
The administrative overhead cost charged for processing applications for licensure and temporary permits is $32.96. The administrative overhead cost charge for the certification of licensure or examination scores and verification of license or permit is $9.76. The Board should explain why the administrative overhead cost for processing applications is different than the administrative overhead cost for processing certifications and verifications.
Certifications of licenses and verifications of licenses (and permits)
There is a proposed increase in the fee for certification of licensure or examination scores, from $15 to $25, and a proposed new fee of $15 for verification of license or permit. In the Fee Report Form for certification, the staff processing time is .75 of an hour, at an assigned cost of $15.23. In the Fee Report Form for verification, the staff processing time is .08 of an hour, at an assigned cost of $1.62. The assigned administrative overhead cost for both is $9.76.
The descriptions of the processing functions performed by staff for certifications and verifications are very similar, as noted by the House Professional Licensure Committee. Yet, the fee report forms indicate that it takes 40 minutes longer to process a certification than to process a verification. The Board should provide revised information on the fee report forms submitted with the final-form regulation to more clearly explain the 40-minute time differential in these two functions.
Insurance Department Regulation No. 11-186 Discounting Workers' Compensation Loss Reserves October 14, 1999 We have reviewed this proposed regulation from the Insurance Department (Department) and submit for consideration the following objections and recommendations. Subsections 5.1(h) and 5.1(i) of the Regulatory Review Act (71 P. S. § 745.5a(h) and (i)) specify the criteria the Commission must employ to determine whether a regulation is in the public interest. In applying these criteria, our Comments address issues that relate to statutory authority, economic impact, reasonableness, and implementation procedures and clarity. We recommend that these Comments be carefully considered as you prepare the final-form regulation.
1. Applicability of amendments.--Economic impact, reasonableness and implementation procedures.
One commentator questioned whether this regulation will apply to future reserves only. The commentator believes that if the regulation is applied retrospectively, existing reserves and premiums would be adversely affected. The regulation should state the effective date for compliance with the new requirements. If it will be applied to existing reserves, the Department should also explain the effect, if any, on existing reserves.
2. Section 116.4. Restrictions on discounting loss reserves.--Reasonableness and Clarity.
We have two concerns with subsection 116.4(2). First, an insurance company is permitted to use the ''current'' yield to maturity. The term ''current'' is vague. It is not related to any timeframe. How will it be determined that a ''current'' yield has been used?
Second, an insurance company is permitted to use ''a United States Treasury debt instrument with maturities consistent with the expected payout of liabilities.'' One commentator listed several debt instruments, which they believe would meet the regulation's requirement. The Department should explain why it is reasonable to permit the use of a broad range of debt instruments, rather than more specific debt instruments.
3. Section 116.9. Suspension of use of this chapter to discount workers compensation loss reserves.--Statutory authority and Clarity.
This section would allow the Commissioner to suspend this chapter ''upon the publication of reasonable notice.'' There are two areas of concern. First, we question the Commissioner's statutory authority to unilaterally suspend the Department's regulations. Section 316 of the Insurance Department Act (40 P. S. § 115) gives the Commissioner the authority to require an individual insurer to maintain greater reserves if that insurer's current reserves are inadequate. Presumably, the insurer could contest the Commissioner's determination in an adjudicatory proceeding. However, Section 316 does not grant the Commissioner the authority to suspend the use of this chapter for all insurers. For the Commissioner to do so, the Department would have to promulgate another regulation. Therefore, this provision should be deleted or the Department should explain the statutory basis for it.
Second, if the Department can provide the statutory authority for the Commissioner to suspend the regulation, it is unclear how ''reasonable'' notice would be accom-plished. The regulation should state the minimum amount of notice that will be given.
JOHN R. MCGINLEY, Jr.,
Chairperson[Pa.B. Doc. No. 99-1847. Filed for public inspection October 29, 1999, 9:00 a.m.]
