text:
State o f Arizona
of the
Auditor General
RePo* to the Arizona Legislature
By Douglas R. Norton
Auditor General
December 1996
Report 96- 18
AUDITOR GEHEeI\ L
December 2,1996
Members of the Arizona Legislature
The Honorable Fife Symington, Governor
Dr. Wes Clayton, Chairman
Structural Pest Control Commission
Transmitted herewith is a report of the Auditor General, A Performance Audit of the Structural Pest
Control Commission. This report is in response to a May 29,1995, resolution of the Joint Legislative
Audit Committee. The performance audit was conducted as part of the Sunset review set forth in
A. R. S. 5941- 2951 through 41- 2957.
We found that the Commission's most pressing need is to establish a more comprehensive approach
for protecting homeowners against ineffective termite pretreatments. Currently, there are built- in
financial incentives to builders and pest control companies that may discourage quality treatment work.
Although the Commission devotes significant resources to regulating pretreatments, its attempts to
deter poor work through staff observations are limited by the large number of pretreatments
performed. Further, when Commission staff observe faulty pretreatments, they are unable to halt
a home's construction and ensure that problems are corrected. The Commission should consider
increasing entry requirements for those who wish to be authorized to perform pretreatments, and
should seek statutory authority to halt a home's construction when a poor pretreatment is observed.
The report also addresses the need to improve collection of information and fees from pest control
companies, and to strengthen the Commission's inspection program. Finally, if the Legislature
continues to mandate that the Commission provide training to the pest control industry, we
recommend that the Commission consider recovering the costs by charging attendees a fee.
My staff and I will be pleased to discuss or clanfy items in the report
This report will be released to the public on December 3,1996.
~ o u aRs. N orton
Auditor General
2 9 1 0 NORTH 44TH STREET 1 SUITE 4 1 0 PHOENIX, ARIZONA 85018 . ( 6 0 2 ) 5 5 3 - 0 3 3 3 m FAX ( 602) 553- 0051
The Office of the Auditor General has conducted a performance audit and Sunset review of
the Structural Pest Control Commission, pursuant to a May 29,1995, resolution of the Joint
Legislative Audit Committee. The audit was conducted as part of the Sunset review as set
forth in Arizona Revised Statutes ( A. R. S.) 5541- 2951 through 41- 2957.
The Structural Pest Control Commission, overseen by a seven- member Commission appointed
by the Governor, is responsible for protecting the public health and safety by regulating the
practices of structural pest control companies and their employees. The Commission exercises
this responsibility by:
Inspecting, examining, licensing, and certifying pest control companies and applicators;
Renewing credentials annually and investigating and resolving complaints;
Providing initial training to assist licensees to prepare for certification examinations
as well as continuing education for those already certified; and
Disciplining licensees or certificate holders who violate statutory conduct standards.
The Commission Can Take Steps
to Better Protect the Public from
Inadequate Termite Pretreatments
( See pages 7 through 13)
Although it is recognized as a national leader in regulating the pretreatment industry, the
Commission needs a comprehensive approach to ensure that pest control companies properly
perform termite pretreatments and do not burden homeowners with costly and inconvenient
termite damage. Currently, the Commission's approach is limited to staff observations of
pretreatments, which are intended to detect violations and deter pest control companies from
performing inadequate pretreatments. However, due to the large number of pretreatments
performed and limited market incentives for pest control companies to perform quality work,
Commission inspectors cannot systematically deter poor pretreatments. Additionally, even
though Commission inspectors identify violations during almost half of all pretreatment
observations, they often do not initiate a formal complaint against the applicator or company
that performed the pretreatment.
The Commission could strengthen its termite pretreatment program by adopting a more
comprehensive approach to detecting and deterring inadequate pretreatments. First, the
Commission should determine whether its current entry and training requirements into the
pretreatment field are appropriate. Other states have practical training available for those in
the field, and one state requires pretreatment applicators to provide proof of financial
responsibility to cover damages from negligence. Second, the Commission could seek statutory
authority for its inspectors to halt the construction of a home when a poor termite pretreatment
is observed. Finally, the Commission can improve its observation program by improving its
pretreatment site selection process, systematically sampling soil and pesticides during
observations, and conducting more observations.
The Commission Can lmprove
Collection of Fees and Information
from Pest Control Companies
( See pages 15 through 17)
Termite Action Registration Forms provide important information to both the public and pest
control companies, and their associated fees provide the Commission with sigruficant revenues.
However, the Commission does not ensure that pest control companies file the forms with the
Commission. In addition, the Commission makes few efforts to monitor the accuracy or
completeness of this data. Further, even when the Commission detects unfiled or late forms,
it often takes lenient enforcement action against pest control companies.
The Commission can do more to ensure that forms are filed and that their data is recorded
accurately. The Commission should consider conducting audits of pest control companies'
termite treatment records to determine if they are submitting the forms appropriately.
The Commission Can lmprove
Its Inspection Program
( See pages 19 through 22)
The Commission does not adequately ensure that its inspectors regularly inspect pest control
companies. Although inadequate pest control practices can expose the public to harmful
conditions, a review of Commission records found that many pest control companies were not
inspected by Commission staff in 1995. Further, the Commission has also not conducted enough
inspections to satisfy its inspection responsibilities as negotiated with the Environmental
Protection Agency ( EPA).
Several reasons, including the lack of written time frames for inspections, lack of an effective
and accurate inspection tracking system, and insufficient supervisory oversight, contribute to
the Commission's inability to inspect many pest control companies. For example, although the
Commission used to have a written plan that established inspection time frames and the EPA
recommends that each state have one, the Commission has no such plan. Additionally, the
Commission's computer system is unable to determine which companies have been inspected
or to idenbfy companies due for an inspection. Further, Commission management neglects to
hold inspectors accountable for the number of inspections they conduct.
Finally, for the Commission to ensure that pest control companies receive regular inspections,
management should establish written time frames for inspections, improve its inspection
tracking system, and exercise additional oversight over inspectors. In contrast to the
Commission, Texas' Structural Pest Control Board tracks inspections by generating regular
reports. Additionally, North Carolina and South Carolina hold inspectors accountable for the
number of inspections they conduct.
If the Commission Continues to
Provide Training, It Should
Consider Charging a Fee
( See pages 23 through 25)
The Commission is required by statute to provide initial and continuing training sessions each
year for industry and potential industry members. Although it is authorized by statute to charge
a fee, it has never done so. However, by providing training, the Commission incurs fachty rental
costs as well as lost staff time to teach the classes.
If the Commission stopped providing training, industry members could still meet their training
requirements, since several other entities provide training. Moreover, several other states' pest
control agencies do not provide training to current or potential industry members. Additionally,
Arizona state agencies generally do not provide any training to current or potential industry
members. Instead, industry members must satisfy their training requirements through other
sources. Further, since the Commission provides training for free, it prevents private entities
from providing training to industry members.
( This Page Intentionally Left Blank)
Table of Contents
Introduction and Background . . . . . . . . . . . . . . . . . . . . . . . . .
Finding I: The Commission Can Take Steps
to Better Protect the Public from
Inadequate Termite Pretreatments . . . . . . . . . . . . . . . . . . . .
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e . e . e . . . . . . . . o s . e * . . . 7
Numerous Problems Hamper
Commission's Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A Comprehensive Approach
Is Needed to Ensure
EffectivePretreatments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Finding II: The Commission Can Improve
Collection of Fees and Information
from Pest Control Companies . . . . . . . . . . . . . . . . . . . . . . 15
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e . . . . . . . . 15
Many Forms Unfiled,
Due to Several Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Commission Could Conduct
Audits to Help Ensure Forms Are Filed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s . e . . 17
Table of Contents ( con't)
Finding Ill: The Commission Can
Improve Its Inspection Program . . . . . . . . . . . . . . . . . . . . . 19
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Commission Does Not
Ensure That Inspections Are
RoutinelyConducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
The Commission's Inspection
Management Could Be Strengthened . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Finding IV: If The Commission
Continues to Provide Training, It
Should Consider Charging a Fee . . . . . . . . . . . . . . . . . . . . 23
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Commission Provides
Free Training Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Training Could Be Provided
byothersources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . e . m . 25
Sunset Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Agency Response
Table of Contents ( concl'd)
Figure and Table
Figure 1 Structural Pest Control Commission
Active Credential by Type
AsofJuly1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Table 1 Structural Pest Control Commission
Statement of Revenues, Expenditures,
and Changes in Fund Balances
Years Ended or Ending June 30,1995 through 1997
( Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
( This Page Intentionally Left Blank)
The Office of the Auditor General has conducted a performance audit and Sunset review of the
Structural Pest Control Commission ( Commission), pursuant to a May 29,1995, resolution of
the Joint kgslative Audit Committee. This audit was conducted as part of the Sunset review
as set forth in Arizona Revised Statutes ( A. R. S.) § § 41- 2951 through 41- 2957.
Commission's Responsibilities
In 1988, the Legislature established the Structural Pest Control Commission. Structural pest
control refers to the control of household pests, wood- destroying pests, and weeds in places
such as buildings and golf courses, among ornamental trees and shrubs, and along rights- of-way.
The Commission is authorized by statute to regulate the practices of nonagricultural
structural pest control companies and their employees by examining, licensing, and certifying
co~ llpaniesa nd applicators, renewing credentials annually, and investigating and resolving
complaints. Addi? isaally, the Commission is charged with providing initial training to assist
licensees in preparation for certification examinations as well as continuing education for those
already certified.
The Commission is also responsible for disciplining individuals and companies that violate
statutory conduct standards. A. R. S. 532- 2321 authorizes the Commission to revoke or suspend
an individual's or companfs credentials, as well as impose probation requirements, civil
penalties, or administrative warnings against violators.
The Commission issues five types of credentials to people who perform structural pest control
work. These are:
Business License- These licensees are entitled to engage in and advertise to perform
structural pest control work Potential business licensees must furrush the Commission with
proof of financial responsibility, which can be liability insurance, a deposit of money, a
surety bond, or a certified check In addition, the licensee must employ a qualifying party,
as described below.
Qualifying Party Qualifications- These individuals supervise the daily operations of a
structural pest control business. To obtain this qualification, they must pass an examination
administered by the Commission, and have either practical or academic experience in
structural pest control.
Pest Control Advisor License- After successfully completing an examination, these
licensees can make recommendations to consumers in regard to controlling pests.
Applicator Certificates - Individuals may obtain certification by passing an examination
in one or a combination of several categories, including general pest control, wood-destroying
pests, and weed control. Registration allows an employee to work up to 90 days
before becoming a certified applicator. Any individual who works for a pest control
company must obtain this certification within 90 days and must also be registered as
described below.
Employee Registrations - In addition to obtaining required certification or licensure, each
employee of a pest control company who performs structural pest control activities is
required to register with the Commission before begintung work. New registered employees
may work up to 90 days before obtaining certification.
With the exception of registered employees, each of the above credentials is valid for one year.
The Commission does not currently require that those renewing a credential take an
examination, but qualifying parties, certified applicators, and pest control advisors are
statutorily required to demonstrate that they have annually completed at least six hours of
continuing education.
The Commission reported 10,183 active credentials, including employee regstrations, as of July
1996, as shown in Figure 1 ( see page 3).
Staffing and Budget
The seven- member Commission, appointed by the Governor, is comprised of three industry
members holding active licenses, three public members, and one member who is a toxicologist,
doctor, or holds a degree in public or occupational health. The Commission employs an
executive director who oversees agency operations. For fiscal year 1997, the Commission was
a u t h o d 34 full- time equivalent ( FI'E) employees to carry out its investigative ( 17), licensing
( 5), and administrative duties ( 12).
The Commission is self- supporting, and the Legislature approved approximately $ 1.4 million
for its operations in fiscal year 1997. These revenues are from license, renewal, and termite action
regstration fees, and federal grants. Table 1 ( see page 4) summarizes the Commission's actual
revenues and expenditures for fiscal years 1995 and 1996, and the Commission's estimated
expenditures for fiscal year 1997.
Figure 1
Structural Pest Control Commission
Active Credential by Type
As of July 1996'
Applicator Certiticates
Business Licenses
Pest Control Advisor
Licenses - 12
Qualifying Party
Qualifications - 956
' There are also 4,148 registered employees of pest control companies. These individuals may hold Applicator
Certificates, Qualifying Party Qualifications, or Pest Control Advisor Licenses.
Source: Structural Pest Control Commission database of credential holders.
1983 Report Follow- up
and Update
As part of the current audif we revisited the concerns identified in our 1983 performance audit
report of the Structural Pest Control Board ( Auditor General Report 83- 16). The 1983 report
recommended that the Board begin licensing pest control companies as well as individuals,
establish a more equitable fee structure, and increase its oversight of the termite control industry.
The report also recommended that the Legislature consider creating an administrative warning
for the Board to use in cases involving minor violations.
Table 1
Structural Pest Control Commission
Statement of Revenues, Expenditures,
and Changes in Fund Balances
Years Ended or Ending June 30,1995 through 1997
( Unaudited)
1995 1996 1997
( Actual) ( Actual) ( Estimated)
Gross revenues ' $ 1,473,697 $ 1,712,837 $ 1,752,400
Personal services
Employee related
Professional and outside
Travel, in- state
Travel, out- of- sta te
Other operating
Total expenditures
Excess of revenues over
Remittances to State General Fund 323.404 77,108 62,400
Excess of revenues over ( under)
expenditures and remittances
Fund balance beginning of year,
as adjusted for 1996
Fund balance, end of year $ 459,722 $ 571,362 $ 884,262
As a 90/ 10 agency, the Commission remits 10 percent of its gross revenues from the Structural Pest Control
Commission Fund to the General Fund. The Commission also remits the balance of Termite Action Registration
Form fees in excess of $ 100,000 to the General Fund at the end of the fiscal year.
Source: The Uniform Statewide Accounting System Revenues and Expenditures by Fund, Program,
Organization, and Object and Trial Balance by Fund reports for the years ended June 30,1995 and
1996, and Commission revenue projections and the State of Arizona Appropriations Report for the
year ending June 30,1997.
Although the Board and its successor, the Commission, have made progress regarding all issues
raised in the 1983 report, the termite oversight program still needs improvement. The
Commission now licenses companies and uses a modified fee structure. In addition, the
Legislature has amended the Commission's statutes to allow use of an administrative warning
as a disciplinary option for minor violations. The termite oversight program has been
strengthened by including termite control industry standards in rules and by requiring pest
control companies to submit more complete information to the Commission. However, as
reported in Finding I ( see pages 7 through 13)' the current audit found the Commission still
needs to increase its efforts to protect the public from the consequences of inadequate termite
Audit Scope and Methodology
This audit focused on the Commission's ability to ensure that pest control companies and
applicators safely and effectively perform structural pest control work A combination of several
methods was used to study the issues addressed in this audit. For example, we:
1 Surveyed each Commission inspector to determine how much time was spent observing
termite pretreatments and performing other duties;
Randomly selected 25 large and 25 small pest control companies' inspection files the
Commission maintained to determine if each was inspected by a Commission inspector
during calendar years 1994 and 1995;
Interviewed Commissioners and Commission staff;
Compared the number of inspections performed to the goals established by the EPA and
Commission management;
Accompanied inspectors on 12 termite pretreatment observations to determine the nature
and effectiveness of the Commission's pretreatment observation program;
Reviewed 60 complaint files to determine the adequacy of complaint investigation and
Conducted a review of literature, including journal articles and reports from other states;
Contacted 9 other states' structural pest control agencies and national organizations,
including the National Pest Control Association, the Association of American Pesticide
Control Officials, and the Arizona Pest Control Association1; and
Interviewed 9 pest control industry members, 5 homebuilders, 7 representatives from other
agencies that interact with the Commission, and 3 consumer advocacy groups.
This report presents findings and recommendations in four areas:
The need for a comprehensive and strengthened approach to ensuring the effectiveness of
termite pretreatments so the public is better protected from inadequate pretreatments.
The need for stronger controls over the pest control companies' filing of Termite Action
Registration Forms.
The need for a tracking and prioritization system to ensure that the Commission's inspection
efforts are appropriately focused.
The appropriateness of the Commission's providing initial and continuing training at no
cost to industry and potential industry members.
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the Structural Pest Control Commission-ers,
the Executive Director, and Commission staff for their cooperation and assistance
throughout the audit.
1 Pesticide officials in states with desert climates similar to Arizona's were contacted, in addition to states with
exemplary structural pest control agencies according to other state agencies and Commission management.
States contacted were CaWornia, Georgia, Indiana, Louisiana, Mississippi, New Mexico, North Carolina, South
Carolina, and Texas.
The Structural Pest Control Commission needs a comprehensive approach to better protect the
public from ineffective termite pretreatments. Currently, the Commission' s approach is limited
to staff observations of pretreatments, whch are intended to detect violations and deter pest
control companies from performing inadequate pretreatments. Due to the sheer number of
pretreatments performed annually, the Commission's observations are not sufficient to deter
poor pretreatment work. Because the Commission cannot observe every pretreatment, it should
adopt an approach that both detects inadequate pretreatments and deters violators. In addition
to large- scale changes such as increasing entry requirements into the industry and seeking
statutory authority to halt a home's construction until a poor pretreatment is corrected, the
Commission should improve its pretreatment observation program.
Termite pretreatments are performed before homes are constructed and are designed to protect
the homes from termite infestations. Pest control applicators apply a termite- deterring pesticide,
known as termiticide, before builders pour the concrete foundation of a house or other structure.
A properly performed termite pretreatment creates a chemical barrier between soil and the
structure's concrete foundation, preventing termites from infesting its wood. According to the
United States Department of Agriculture, the best and least expensive time to protect against
termite infestation is during the planning and construction of a building. Although pretreatments
do not guarantee that a home will remain termite- free, they reduce the likelihood of an
infestation and possible structural damage.
Although it is charged with regulating the entire structural pest control industry, one of the
Commission's highest priorities is to ensure the effectiveness of termite pretreatments, since
termite damage is known to result in significant cost and inconvenience to homeowners. The
Commission devotes significant resources to its pretreatment observation program, which is
considered to be one of the leading programs in the country. Commission staff monitor
pretreatments through overt observations, when inspectors openly observe pretreatments, and
covert observations, when inspectors conceal their presence. Additionally, the Commission
requires pesticides to be applied in a stronger concentration than is required under federal law.
Other states have sought the Commission's expertise on regulating the pretreatment industry.
For example, a representative from the Commission recently visited Oklahoma's Department
of Agriculture to present strategies on how to effectively ensure adequate pretreatments. Further,
a recently issued federal regulation requires other states to adopt the higher Arizona pesticide
Numerous Problems Hamper
Commission's Approach
Despite being recognized as a national leader in regulating the pretreatment industry, the
Commission faces several limitations in ensuring that termite pretreatments are performed
adequately. First, there are built- in financial incentives to builders and pest control companies
that discourage quality pretreatment work. Additionally, the Commission cannot feasibly
observe every pretreatment that occurs due to both the large number of pretreatments and
weaknesses in the Commission's observation program. Finally, even when Commission
inspectors observe an inadequate pretreatment, they often do not initiate enforcement action.
Process lacks built- in incentives fmgood wmk- Instead of providing automatic incentives for
good work, the pretreatment marketplace may reward inadequate work First, the person most
interested in ensuring an adequate pretreatment - the home's buyer - is rarely involved in the
selection of the termite pretreatment company. Instead, the home's builder, whose priority may
be to minimize costs, selects the company. However, should a home sustain structural damage
resulting from termite infestation, the home's buyer, not the builder, faces the inconvenience
and expense of termite damage and a possible reduction in the home's value.
Because the pretreatment business is highly competitive and includes many pest control
companies from which homebuilders may choose, the companies have an incentive to bid jobs
as low as possible. Although termiticide material costs approximately 15 cents per square foot,
some pest control companies bid and win jobs at less than 13 cents per square foot If adequate
pretreatments were consistently performed at such low prices, pest control companies would
lose money on every job. Three pest control companies contacted during the audit stated that
they perform few pretreatments because they are only minimally profitable.
Further, if homebuilders find that a pretreatment is poorly done, it may be inconvenient and
expensive if they choose to correct the problem. Usually, builders arrange for a home's cement
foundation to be poured immediately after the pretreatment is completed. If the foundation
pour were delayed until after pretreatment problems were corrected, the builder would face
additional costs of rescheduling other steps in the home's progression. Instead of correcting
problems when the Commission notifies them of a poor pretreatment, builders sometimes
continue a home's construction even after the Commission notifies them of a substandard
pretreatment, possibly leaving the home unprotected against termite infestations.
Pest control companies and applicators have little direct financial risk if they perform a poor
pretreatment. Although termite control financially impacts consumers more than any other
aspect of pest control, the Commission has few special requirements for practicing termite
control. To perform termite control work, a pest control company must provide proof of a
$ 50,000 bond or a liability insurance rider to cover termite damage due to negligent treatment,
in addition to the $ 200,000 requirement for performing any other pest control work. According
to one insurance company, a $ 50,000 bond costs a company about $ 2,500, and a liability
insurance rider costs a company about $ 50. However, it is often difficult for a homeowner to
prove a companfs negligence and receive a claim, since homeowners can unintentionally
become responsible for termite damage. For example, homeowners adding landscaping may
install it too close to the home or may add concrete for patios, garages, or carports without
noqing the pest control company. These improvements can disturb the pretreatment's chemical
barrier and make it difficult for a homeowner to prove that a termite infestation resulted from
a pest control companfs negligence or inadequate pretreatment.
Finally, licensing requirements for termite control are not particularly difficult Applicators who
perform termite control face the same requirements as any other pest control applicator. They
must pass an examination, as they do for any other pest control specialty, and obtain an hour
of termite- related continuing education each year.
Cormnission cannot obsme all yvefreatrnents- The Commission cannot rely on its observation
program to detect and deter poor pretreatments, since Commission staff cannot feasibly observe
every pretreatment. First, the large number of pretreatments completed prevents the
Commission from observing more than a small fraction of all pretreatments performed.
According to the Commission, at least 57,000 pretreatments were performed in Arizona during
1995 by approximately 283 pest control companies.' However, the Commission observed only
182 pretreatments during 1995. Th~ ms eans the Commission observed only approximately 3
pretreatments for every 1,000 performed during 1995.
The Commissionfs unsystematic process for selecting pretreatment sites to observe also prevents
it from observing more pretreatments. Currently, inspectors spend considerable time and effort
locating potential pretreatment sites before observations are performed. Inspectors encounter
these sites when they are driving around new home construction sites checking the notices
companies post upon completion of a pretreatment. This method results in extremely time-consuming
observations. Not knowing when companies will be making applications, inspectors
often spend several hours waiting for the applicatofs arrival. In addition, some applicators
never arrive on the site, resulting in wasted time and effort During the audit, Auditor General
staff accompanied Commission inspectors on several time- consuming observations. One
observation lasted over 9 hours, including 8 hours spent waiting for the applicator to arrive.
During another observation, Auditor General staff and 2 inspectors waited 6 hours for an
applicator who never arrived. Further, the selection process does not ensure all companies are
observed. One enforcement staff member estimated that at least 30 to 40 companies have never
been observed due to weaknesses in the Commission's site selection process.
However, according to Commission staff, not all of these companies perform pretreatment work. Some of them
perform other termite- related work, including wood infestation reports.
Dt@ lties in proving violations and cumding problems - Although Commission inspectors
idenbfy violations during almost half of all pretreatment observations, they often do not take
necessary action to penalize violators or correct the problems. Inspectors documented safety
violations in almost 15 percent of all observed pretreatments during 1995, and issued de
minimus violations in 39 percent of these cases, but they initiated formal complaints against
companies or applicators in fewer than 10 percent of the cases with violations. According to
inspection staff, inspectors sometimes do not initiate complaints because they believe the
violators will correct the problem after a conversation at the pretreatment site. About one- third
of the violations observed involved pest control workers using improper quantities of pesticide,
which can lead to inadequate chemical barriers and potential termite infestation.
The Commission's lack of authority to halt construction after witnessing a substandard
pretreatment also hinders its ability to protect the public. Commission inspectors witness and
document pretreatment violations, but are powerless to stop the progression of a home and
ensure that the pest control company or homebuilder corrects any observed deficiencies. If
construction on a home proceeds without action being taken to correct a pretreatment
inadequacy, a si& cant burden may be placed on the homeowner in the form of unnecessary
cost and inconvenience resulting from termite damage.
A Comprehensive Approach Is
Needed to Ensure Effective
The Commission needs to employ a thorough and innovative approach to deterring poor
pretreatments in order to ensure that the public receives quality pretreatments. Changes on a
large scale that would affect the Commission, pest control companies, and builders are needed
to help ensure that pretreatments are performed adequately. By improving the pretreatment
program and using a more comprehensive approach, the expense and inconvenience of deficient
pretreatments could be transferred away from homeowners. Further, the Commission should
modify its pretreatment observation program to improve its overall effectiveness.
l m s i n g entry nequivements - A comprehensive approach to improving pretreatments should
include the determination of whether the current entry requirements into the pretreatment field
are too lenient Although the Commission requires companies performing termite- related work
to provide proof of financial responsibihty, the Commission does not require those who actually
perform the pretreatment to provide such proof. In contrast, Arkansas requires individual
applicators who perform termite- related work to provide proof of a $ 5,000 bond to cover
damages resulting from negligence.' According to the manager of the Arkansas State Plant
Board, the bond was established to protect consumers from applicator negligence.
b similar bond would cost an Arizona applicator $ 100 annually.
The Commission should also consider requiring practical training for those who perform
pretreatment work Currently, the Commission requires individuals performing termite- related
work to obtain only one hour of continuing education about termites annually, with little
practical training available. In contrast, some states have already implemented training
programs specifically geared toward pretreatment work. For example, South Carolina's
Department of Pesticide Regulation at Clemson University has an initial pretreatment training
program and an advanced pretreatment training program; both employ practical pretreatment
application methods. Additionally, Indiana's Purdue University Cooperative Extension Service
offers a training program that includes practical pretreatment application methods. South
Carolina's program lasts two days, and Purdue's lasts three days. According to a recent Pest
Control article, research indicates that practical training can lead to better termite treatments.
Authmity to halt construction could better protect homeowners - The ability to halt a home's
construction could have far- reaching effects and could be the most immediate method of
protecting the public from improper pretreatments. Currently, the Commission has no statutory
authority to halt the construction of homes whose pretreatments were performed inadequately.
In contrast, city and county building inspectors can halt a new home's construction if builders
and subcontractors do not adhere to minimum building standards. Such inspections ensure
that structural deficiencies, such as unsafe electrical wiring, are corrected before construction
continues. Although Commission inspectors often witness inadequacies that could result in
future termite infestations, they cannot require pest control companies or homebuilders to
immediately correct these deficiencies.
Halting a home's progression after a poor pretreatment was observed could influence builders
to more carefully choose pest control companies and oversee their work to ensure the adequacy
of treatments on the homes. If Commission inspectors halted, or " red- tagged" a construction
site, the home's construction could not proceed until the pretreatment deficiencies were
adequately corrected. Because builders would likely incur additional costs due to construction
delays, they might be more careful when selecting the pretreatment company to help ensure
that the pretreatment is performed adequately.
Finally, the Commission needs to increase its communication with the Registrar of Contractors,
since the Registrar is responsible for enforcing standards for homebuilders. If builders
knowingly continue construction after a substandard pretreatment, they could face license
suspension or revocation by the Registrar of Contractors. However, the Commission rarely
reports observed pretreatment violations to the Registrar because Commission staff believe the
Registrar will take no action. According to the Supervisor of Investigations at the Registrar of
Contractors, however, the Registrar of Contractors will take the appropriate action against a
licensed builder who knowingly continues a home's construction after being notified that the
pretreatment was inadequate.
Cmmnission a n improve its obseruation propm - A comprehensive approach to improving
pretreatment could include several improvements to the Commission's pretreatment observation
program. By improving its site selection process, systematically sampling applicators' pesticides,
and increasing observations, the Commission may enhance the observation program's
Systematic approach to observations- A more systematic approach to selecting
pretreatment sites could increase the number of pretreatments Commission inspectors
observe. Currently, the Commission's unsystematic site selection process limits inspectors'
ability to observe all companies' pretreatments. To address this problem, the Commission
could require companies performing pretreatments to n o w it in advance as to when and
where all pretreatments will occur. As part of its complaint resolution process, the
Commission already requires two pest control companies to prenotify prior to performing
pretreatments. The Commission could expand the prenotification to include more pest
control companies. Requiring companies to prenobfy the Commission in this manner could
allow staff to locate all companies performing pretreatments, thus increasing the observation
program's overall effectiveness.
Although the Commission's Executive Director has expressed concern over the limitations
of prenotification, Louisiana has experienced success with such a program. This state's
prenotification program requires all pest control companies to notify the Department of
Agriculture and Forestry at least one hour before performing a pretreatment. Consequently,
the additional information the Department of Agriculture and Forestry gains from
prenotification has increased its ability to focus its observation resources, increasing the
program's overall effectiveness. While this program may not be suitable for Arizona, the
Commission could consider a modified form of the program, such as sampling by
geographic region.
Systematically sampling pesticides - To better detect pretreatment violations involving
improper pesticide concentration, Commission inspectors shodd systematically take samples
of applicators' pesticides. Although the Commission is allowed through its agreement with
the Arizona Department of Agriculture's State Agricultural Laboratory to have 290 samples
analyzed annually, it had only 173 analyzed in 1995. Further, Commission inspectors took
samples during only 20 percent of all pretreatment observations in 1995, even though they
documented violations involving improper pesticide quantities in over one- thrd of all
According to guidelines established by the Association of Structural Pest Control Regulatory
Officials ( ASPCRO), and the Commission, inspectors should take samples to determine if
a pretreatment was performed adequately. According to the Commission, inspectors should
always take a sample if a pretreatment applicator arrives at a site with pesticide that is
already mixed with water, because the pesticide may be improperly diluted, or if the
Commission has never observed the pretreatment company. Additionally, ASPCRO
recommends that inspectors follow a comprehensive protocol that includes taking no fewer
than two samples from certain areas on pretreatment sites.
Increase observations- Although the Commission cannot rely entirely on its observations
to ensure adequate pretreatments, a comprehensive approach could include increasing the
number of pretreatment observations the Commission performs. First, management could
ensure that inspectors spend enough time observing pretreatments. According to an Auditor
General survey administered to all inspectors during the audit, inspectors spent only 11
hours during each 40- hour week on pretreatment observations. In contrast, approximately
12 hours of inspectors' weekly time was reportedly spent on training and administrative
duties. Further, establishing observation requirements could also help ensure that more
observations are completed and that inspectors sufficiently focus their efforts on
pretreatment work. The Commission once used its computer system to track the amount
of time each inspector devoted to pretreatment work. However, management has not used
this system since 1994.
To conduct more observations, the Commission could also explore the possibility of hring
additional inspectors. According to the Commission's Executive Director, the Commission
would benefit from having additional inspectors to observe pretreatments occurring in the
northern and western areas of the State. Additionally, the Commission is required by statute
to have one inspector for every 200 industry members; however, it is well below ths
requirement with 1 inspector for every 425 industry members. To comply with this statutory
requirement, the Commission would need 26 inspectors instead of the 12 it currently has.
However, as part of its most recent budget request, the Commission is requesting 2
additional inspectors.
1. The Commission should increase entry requirements for applicators who perform termite
pretreatments. The Commission should require applicators to provide proof of a bond to
cover damages resulting from negligence, and require practical training for those who
perform pretreatment work.
2. The Legislature should consider modifying A. R. S. 5532- 2301 through 32- 2339 to add a
provision that allows the Commission to halt construction when it observes substandard
termite pretreatments.
3. The Commission should no@ the Registrar of Contractors when it observes substandard
termite pretreatments.
4. The Commission should improve its termite pretreatment observation program by:
a. Considering requiring pest control companies to n o w it before performing
pretreatments; and
b. Increasing the number of observations it performs by ensuring that inspectors spend
enough time on pretreatment observation duties.
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The Commission can do more to ensure that Termite Action Registration Forms ( TARFs) are
filed and that information is properly recorded. These forms provide valuable information to
both the public and pest control companies, and the associated filing fees provide significant
monies to the Commission. However, limited filing incentives for pest control companies and
weak information controls by the Commission may result in lost information and revenue.
Although the Commission's current penalties for failing to submit forms provide little
deterrence, it could use other methods to increase filing incentives.
The Commission maintains a Termite Action Registration Forms database for the public's
benefit, as required by statute.' Database information includes the termite history of a home
and any prior termite treatments performed. The public requests this information to make
decisions about buying homes. Additionally, pest control companies use the information to
determine prior termite treatments and the appropriate course of action for retreatments.
Consequently, unfiled forms limit the public and pest control companies' ability to obtain
accurate termite information about homes and other structures.
According to A. R. S. 532- 2304( D) and Commission rules, each time a pest control company
inspects or treats a structure for termites, it must submit a form and an $ 8 filing fee to the
Commission within 30 days. 2 The Commission relies heavily on TARF filing fees to support
its operations. In fact, in 1995, the fees accounted for 62 percent, or $ 908,600, of the Commission's
revenues. The Commission received, on average, 11,577 forms per month in 1995.
' According to A. R. S. $ 32- 2304( A)( 15), " The commission shall.. . Maintain a computer system which records.. . on
pretreatment projects, initial termite corrective projects, preventative termite treatments, and wood infestation
2 Prior to January 1,1996, the Commission charged a $ 7 filing fee for each form. Currently, the Commission
charges an $ 8 filing fee, plus a late fee of $ 8 for each form submitted after the 30- day filing deadline.
Many Forms Unfiled,
Due to Several Factors
Although TARFs and the associated fees are important, the Commission does not ensure that
companies submit them and that information from the forms is properly recorded on its
computer system. Despite the significance of filing these forms, the Commission's methods to
detect untiled forms are ineffective. Moreover, the Commission's enforcement responses after
detecting unfiled forms appear lenient.
Companies fail tofile f m s - Pest control companies do not always submit their forms to the
Commission, resulting in lost information and revenue. Companies' failure to file has reached
high levels, in some cases. For example, in a 1995 case, a pest control company failed to submit
almost 1,600 forms, an omission that was discovered when the pest control company owner
contacted the Commission and wanted to make restitution Original and late fees for these forms
amounted to $ 22,309. In a second pest control company case, Commission inspectors examined
177 records and found 146 forms were unfiled, which is an 83 percent non- filing rate.
Commission inspectors discovered this problem during an unrelated inspection of company
records. According to the Commission's Executive Director, between 1 and 20 percent of all
forms may not be filed by pest control companies. One Commissioner places this estimate at
approximately 40 percent.
Commission provides few controls- The Commission's efforts to monitor the filing of forms
are ineffective. While Commission staff record the prenumbered blank forms issued to pest
control companies, they do not monitor which forms are actually filed or returned as voided
or unused. Therefore, the Commission does not know wluch forms are actually missing. For
instance, Auditor General staff discovered a block of 33 missing forms that the Commission
had lost. In this case, the pest control company claims to have submitted the forms, but the
Commission had not noticed they were missing. If Commission staff routinely record form
numbers as they are submitted, its staff could easily determine if forms are missing. Commission
staff could then ask pest control companies to explain the discrepancies or resubmit any missing
Further, the Commission cannot rely on its computer system to detect unfiled forms, since
Information contained on the database may be inaccurate or incomplete. TAD Technical Services,
a private vendor, enters information from forms that pest control companies submit to the
Commission database. However, Commission staff do not validate any data entry of the forms,
leaving the Commission with no assurance as to the accuracy or completeness of the data.
During the audit, Auditor General staff discovered several data entry problems. For example,
vendor staff sometimes incorrectly enter information or neglect to enter entire forms.
Cmmnission's actions are Zenient when unfiled forms detected - Even when the Commission
detects unfiled or late forms, it takes a lenient approach to nonfilers that does not provide
adequate deterrence against pest control companies who fail to submit forms. Once detected,
pest control companies pay only the original $ 8 per form filing fee, plus an $ 8 late fee. Although
the Commission may assess up to a $ 100 late fee per form, and it may assess a penalty of up
to $ 1,000 for not filing a form, it has taken neither action since 1991: Pest control companies who
do not file forms may face only a non- serious violation from the Commission. Under such a
violation, pest control companies receive a warning letter but are not assessed any monetary
Commission Could
Conduct Audits to Help
Ensure Forms Are Filed
In addition to improved tracking, the Commission should consider conducting audits of
companies' termite treatment records to increase the numbers of forms filed. In such audits,
enforcement staff would inspect pest control companies' termite- related forms and determine
if they are submitted as required. Further, they would compare chemical purchase records with
termite work records to determine if pest control companies have filed all forms. According
to the Commission's Executive Director, Commissioners do not believe audits of these forms
fall within the scope of their proper review, unless a complaint has been filed or other
justification exists in the particular case. However, the Commission's Attorney General
representative stated that no legal barriers prevent Commission staff from auditing these forms.
1. The Commission should improve controls over forms by:
a. Tracking blank forms received by pest control companies versus forms actually filed
by those companies; and
b. Tracking forms sent to and returned by the Commission's data entry contractor.
2. The Commission should assess higher late filing fees to encourage pest control companies
to file forms within the 30- day statutory deadline.
3. The Commission should conduct audits of forms to ensure pest control companies file the
forms and pay the filing fees.
1 According to A. RS. $ 32- 2304( D), " The commission may assess a penalty of not to exceed one hundred dollars
per form for failing to submit the required form and fee within thirty days." Additionally, A. R. S. § 32- 2321( A)
authorizes the Commission to " impose a civil penalty of not more than one thousand dollars for each [ unfiled
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FINDING Ill
Inspections of pest control companies should occur at regular intervals to protect licensees and
the public from unsafe pesticide application and storage. However, the Commission does not
effectively ensure inspections are conducted. The lack of inspection guidelines, an inadequate
computer tracking system, and insufficient supervisory oversight contribute to ineffective
management of company inspections. The Commission's management can more effectively
ensure inspections are conducted by establishing an inspection schedule, improving its
inspection tracking system, and strengthening its supervisory efforts.
As authorized by statute, the Commission conducts inspections of pest control companies to
ensure compliance with state laws and rules? In addition to the oversight of pesticide use such
as pretreatment observations, the Commission inspects pest control company facilities to verify
that records and safety equipment are properly maintained. For example, Commission
inspectors determine if hazardous chemicals are properly stored by pest control companies,
that trucks do not leak, and that applicators have adequate protective equipment. Additionally,
the Commission conducts inspections to satisfy federal requirements. Specifically, the
Commission has entered into an agreement with the EPA under the Federal Insecticide,
Fungicide and Rodenticide Act. The EPA provides the Commission with monies to conduct
certain inspections, including inspections of federal facilities. Each year, the two agencies
negotiate the inspections the Commission will be required to conduct. For fiscal year 1995, the
EPA awarded the Commission $ 69,500 to conduct 132 inspections.
The Commission Does Not
Ensure That Inspections Are
Routinely Conducted
Despite the importance of inspections, the Commission does not regularly inspect pest control
companies. A review of Commission records identhed many pest control companies that have
Pursuant to A. R. S. $ 32- 2304( A) a nd A. R. S. $ 32- 2304( l3) t, he Structural Pest Control Commission is authorized
to conduct regular facility inspections of Arizona licensed pest control companies.
not been inspected within the last two years by Commission staff. Additionally, the Commission
has not conducted enough inspections to satisfy its EPA requirements.
Not all companies are inspected - The Commission has not met its internal goal of inspecting
every licensed pest control company annually. Commission management estimate approxi-mately
20 percent of the 790 licensed pest control companies in Arizona were not inspected in
1995. A review of 25 medium- to- large and 25 small, randomly selected pest control companies
found that 5 mdum- to- large and 14 small companies had not been inspected during calendar
year 1995.' Of these 19, ll had not been inspected in the prior year, and 9 of these 11 had still
not been inspected as of July 1996.
EPA requirements not mt- The Commission also has not conducted enough inspections to
meet its EPA negotiated responsibilities. In its evaluation report for fiscal year 1995, the EPA
noted that the Commission failed to meet its inspection targets in two of the three categories
of inspections it is required to conduct. Specifically, it reported that in fiscal year 1995, the
Commission conducted only 9 of 12 ( 75 percent) required inspections of pest control operations
at federal facilities and 14 of 20 ( 70 percent) inspections of employees at these facilities to
determine whether they are properly certified to handle restricted pesticides. The EPA can
withhold monies from the Commission if it fails to meet federal inspection requirements.
The Commission's Inspection
Management Could Be Strengthened
Management weaknesses contribute to inadequate inspections. First, the Commission lacks a
written plan regarding company inspections and inspector productivity. Second, the
Commission lacks a systematic method for tracking pest control company and applicator
inspections. Finally, insufficient supervision of inspectors further contributes to the Commis-sion's
inabhty to ensure that inspections are completed and that inspection data is appropriately
Lack of a - tten phn hi& inspectiom- The Commission lacks a written plan establishng
inspection time frames for pest control companies. Although such a policy existed previously,
Commission management replaced it in 1994 with an unwritten and more flexible goal of
inspecting each company annually. However, the EPA recommends that each state establish
a written inspection plan to prioritize inspections and discover companies that are not in
compliance with state and federal laws.
Further, the Commission lacks written standards concerning productivity and recordkeeping.
If the Commission required each inspector to conduct approximately 5 inspections per month,
each of the 790 licensed pest control companies could receive an inspection annually.
The Commission defines medium- to- large pest control companies as those with six or more certified
applicators, and small pest control companies as those with five or fewer certified applicators.
Additionally, the Commission does not have written policies requiring inspectors to record
inspection results within a specified time period after an inspection is completed.
Aware of the need to establish a more precise inspection schedule, supervisory staff report that
the Commission plans to initiate a scheduling process to ensure that its inspection goals are met
m s plan would prioritize companies with the longest wait since their last inspection, and assign
each inspector a list of companies to inspect within a specified time period. Although the plan
appears promising, its success will depend upon management oversight and improving the
accuracy of information on the inspection database.
Lack of eflective and accurate tracking system- As a result of inadequate data entry,
Commission management cannot rely upon its computer system to determine which companies
have been inspected or to identify companies due for inspection. To determine whether
inspection data is properly recorded, a separate review of 33 randomly selected company
inspection files was conducted. The review found that 12 of the 33 files contained evidence of
inspections conducted in 1995 that were not recorded in the computer system. Commission
management reported that inspectors do not always enter data into the system appropriately.
Many records showed different spellings or abbreviations of the company name or business
license number. Although the Commission maintains a manual describing the correct methods
for entering data, management reported that it is not currently used.
In contrast to the Commission's system, the Texas Structural Pest Control Board requires all
inspectors to enter inspection results into its computer database weekly. Data is recorded under
the inspected company's business license number. To ensure that the data on the system is
accurate, supervisors regularly venfy recorded information. Additionally, the Board generates
a weekly report of the overall number of inspections conducted in the previous week, the name
of the pest control companies inspected, and the type of inspections conducted. Further, the
Board generates monthly and quarterly reports to help track inspections of pest control
companies. To ensure that all companies receive an inspection every two years, Board personnel
are able to generate a report indicating which companies have and have not been inspected
within a specified period of time.
Supmiso y oversight could be improved- The lack of effective supervision also impacts the
Commission's ability to manage inspections. First, inspections are conducted at the inspectors'
discretion with little supervisory oversight to ensure that they are completed. Follow- up
inspections are also conducted at the inspectofs discretion, although the EPA says that follow- up
inspections are a necessary component of a state's enforcement program. Second, Commission
supervisory staff report that they track and verfy a company's inspection status by periodically
checking inspection data maintained by inspectors. However, several inspectors report that their
records have either not been inspected, or that it has been several months since they have
received a supervisory review.
Additionally, management neglects to hold inspectors accountable for their productivity. A11
inspectors are responsible for conducting inspections; yet the number of inspections each
inspector conducted varies. Further, the Commission's performance evaluation form does not
document the number of inspections completed.
The Commission should strengthen its supervision of inspectors to both manage inspections
and hold inspectors accountable for their productivity. In contrast to the Commission's
evaluation tool, the North Carolina Structural Pest Control Division and the South Carolina
Department of Pesticide Regulation consider the number of inspections conducted when
evaluating inspectors' performance.
1. The Commission should strengthen its inspection program by:
a. Implementing a written plan specifying that each licensed pest control company is to
be inspected within a specific time frame and that EPA requirements are met; and
b. Establishing an inspection policy requiring inspectors to conduct a specific number of
inspections within a specified time frame.
2. The Commission should improve its inspection database system to allow Commission staff
the ability to accurately track inspections conducted at each pest control company.
3. The Commission should consider strengthening its supervision of inspectors by:
a. Ensuring that inspections and follow- up inspections are conducted appropriately; and
b. Developing a performance evaluation tool that measures/ documents inspector
If it continues to provide training, the Structural Pest Control Commission should consider
charging attendees a fee. Currently, the Commission provides numerous training sessions
annually to industry and potential industry members. Although the Commission's statutes allow
it to recover costs incurred by providing training, the Commission has never charged attendees
a fee. Moreover, the industry could still meet its training requirements through many other
entities if the Commission stopped providing training. Finally, since the Commission provides
training for free, it inhibits competition and prevents private enterprises from offering training.
The Structural Pest Control Commission is required by law to provide quarterly continuing
education as well as monthly initial training to industry and potential industry members. The
initial training assists applicants in preparing for certhcation exams, whde continuing education
classes ensure that all applicators and licensees can meet the requirements for renewing their
credentials? Both types of training are provided at no cost to attendees. The Commission uses
its own staff as well as industry volunteers to conduct the training sessions, which are held at
facdities throughout the State. For example, training sessions have been held in Yuma, Kingman,
Globe, and Safford. According to Commission management, each initial training session is
taught by at least one Commission staff member, and often two if the training is held in Phoenix
or Tucson.
The Commission Provides
Free Training Sessions
Although the Commission provides many initial training and continuing education sessions
each year for industry and potential industry members, it has never charged attendees a fee.
However, the Commission incurs costs in the form of facility rentals and staff time.
Each certified applicator, qualifying party, and pest control advisor is required to complete at least six hours of
continuing education every year.
Commission uses inspectors and i mfaci lity mtal costs - C oordinating and teaching courses
consumes Commission resources. The Commission conducts many training sessions annually,
relying on its own staff to teach most sessions. In 1995, the Commission provided 22 training
sessions, and 42 sessions are scheduled for 1996. While training costs are only a small portion
of the Commission's total expenditures, the Commission incurred costs of approximately $ 4,900
and $ 3,100 in 1995 and 1996, respectively, to rent the facdities where those training sessions were
In addition, the Commission incurs costs in terms of staff time. According to Commission
records, staff spent 102 classroom hours providing training in 1995, and are scheduled to provide
204 classroom hours in 1996 at estimated costs of $ 1,250 and $ 2,500, respectively. Additional
staff time is expended preparing training materials and traveling to and from rural training sites.
The Commission could charge for training- Although the Commission provides training at
no cost to the structural pest control industry, its statutes authorize it to charge attendees a fee.
Specifically, A. R. S. 532- 2319( C) and @) authorize the Commission to assess a fee for each initial
training class or continuing education credit hour. Since the Commission is a 90/ 10 agency, its
fee structure is intended to cover all of its statutory responsibilities. Thus, recovering training
costs from those who use the training could enable the Commission to adjust its other fees
Training Could Be Provided
by Other Sources
The structural pest control industry could meet its training requirements even if the Commission
stopped providing training. Pesticide manufacturers and community colleges provide many
training sessions each year. Additionally, some pest control companies provide in- house training
to their employees. Further, Arizona regulatory agencies, and pest control agencies in some other
states, do not provide training to their regulated industry members. Finally, the Commission's
free training prevents private entities from providing training to the industry.
Otlm sources couMfilj? ll tmining needs - Entities other than the Commission provide training
to the structural pest control industry. For example, pesticide suppliers provide training sessions
that industry members can use to meet their continuing education requirements. In addition,
community colleges in Glendale, Mesa, and Pima County provide courses industry members
can use to satisfy their continuing education requirements. Further, one pest control company
has a school that provides initial and continuing training sessions.
Mamj Arizona agencies provide no tmining- Arizona state agencies generally do not provide
any training to industry or potential industry members. For example, the Department of
Insurance, the Registrar of Contractors, the Board of Behavioral Health Examiners, the
Department of Real Estate, the Board of Psychologist Examiners, and the Board of Cosmetology
do not provide initial training for applicants to prepare for certification or licensure
examinations. Further, neither the Board of Psychologist Examiners nor the Board of Behavioral
Health Examiners provides continuing education, even though they require industry members
to complete continuing education requirements. Instead, industry members must satisfy these
requirements through other sources.
S msta tesfp est control ag& s provide no training- Of nine states contacted, six states' pest
control agencies do not provide any training to industry and potential industry members.' Only
one state, New Mexico, provides free initial training to applicants. In addition, Georgia and
South Carolina provide funds to the cooperative extension to provide training to industry
members. Only two states' pest control agencies contacted, North Carolina's and Texas', provide
free continuing education to industry members.
Commissionfsfree trazning prevents othersfrom providing training- Since the Commission
provides training for free, it prevents private enterprises from offering training. Private training
providers would have considerable difficulty competing with the Commission, since industry
members can already obtain free training from the Commission. Although the state agencies
are generally prolubited by A. R. S. 941- 2752 from competing with private enterprises by
providing the same goods or services, the Commission is exempt from this law since it is
required by statute to provide training.
1. The Legislature should consider revising A. R. S. 532- 2319 to remove the requirement that
the Commission provide initial and continuing training to the pest control industry.
2. If the Commission continues to provide training, it should consider recovering its costs by
charging attendees a fee as allowed by A. R. S. § 32- 2319( C) and ( D).
States contacted were California, Georgia, Indiana, Louisiana, Mississippi, New Mexico, North Carolina, South
Carolina, and Texas.
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In accordance with A. R. S. 541- 2954, the Legislature should consider the following 12 factors
in determining whether the Structural Pest Control Commission should be continued or
1. Objective and purpose in establishing the Commission.
The Legislature established the Structural Pest Control Commission ( Commission) in 1988,
replacing the Structural Pest Control Board. The Commission was established to protect
the public's health and safety against unsafe structural pest control practices. According
to A. R. S. 532- 2304( A)( 1), the Commission shall regulate the use, storage, and application
of pesticides and devices used in structural pest control. Additionally, the Commission
provides public protection through standards of qualification for individuals and
companies seeking to perform structural pest control work.
To carry out this responsibility, a seven- member Commission is empowered by statute
to determine minimum competency standards for individuals and companies who
perform structural pest control activities. The Commission is charged with issuing
credentials to and collecting fees from those who meet these minimum standards. The
Commission is also responsible for conducting investigations to determine the validity
of complaints, and for disciplining violators of the Commission's statutes and rules.
Additionally, the Commission is charged with providing initial training and continuing
education to those in the pest control industry.
2. The effectiveness with which the Commission has met its objectives and
purpose and the efficiency with which the Commission has operated.
Although it has generally met its objectives and purpose, the Commission can improve
its effectiveness and efficiency in protecting the public from ineffective and unsafe pest
control practices. First, our review found that the Commission needs a more comprehen-sive
approach to protect the public from inadequate termite pretreatments ( see Finding
I, pages 7 through 13). In addition, the Commission should improve its controls over the
filing and recording of termite inspection and treatment forms ( see Finding II, pages 15
through 17). Despite the importance of the information the public may receive from the
forms and the simcant revenue the forms represent to the Commission, the Commission
lacks controls to ensure that the forms are filed and that the information is accurately
entered into its computer system.
Further, the Commission can improve the methods it uses to track and schedule its
inspections of pest control companies. Although the Commission strives to inspect every
pest control company and each branch office at least annually, the Commission does not
effectively plan and track these inspections ( see Finding m, pages 19 through 22). Finally,
the Legislature should consider removing the Commission's statutory requirement to
provide training to the pest control industry. If the Commission continues to provide
training, it should consider recovering some costs by charging attendees a fee.
3. The extent to which the Commission has operated within the public interest.
The Commission has generally operated within the public interest through its licensure
and certification functions. These functions serve the public interest by ensuring that
Commission- credentialed pest control companies and individuals meet minimum
competency standards and that unlicensed individuals do not practice this profession
except as provided by law.
However, the Commission should improve public protection against inadequate termite
pretreatments. Although Commission staff observe many termite pretreatments to promote
compliance with state standards and prevent termite infestations, this approach is severely
hited by several factors ( see Finding I, pages 7 through 13). In addition, the Commission
does not possess the statutory authority to halt a home's construction and ensure that
deficiencies are corrected after an inadequate pretreatment is observed ( see Finding I).
Furthermore, the Commission could do more to ensure that inspections of pest control
companies are conducted appropriately. Inspections uncover serious safety violations that
could impact the public's health and welfare. However, the Commission has neither an
inspection schedule nor a tracking system in place to ensure that its inspection efforts are
directed effectively ( see Finding 111, pages 19 through 22).
Additionally, it should be noted that the Commission's inspectors work successfully with
the Department of Health Services, the Department of Agriculture, and the Arizona
Department of Environmental Quality in matters pertaining to health or environmental
4. The extent to which rules adopted by the Commission are consistent with the
legislative mandate.
Rules and regulations appear consistent with the legislative mandate. According to the
Commission's Attorney General representative, all required rules have been promulgated.
However, as part of its five- year rule review process, the Commission is currently
considering amending some of its rules. For example, a list of nonserious violations is
being introduced to provide the industry with additional guidelines.
5. The extent to which the Commission has encouraged input from the public
before adopting its rules and the extent to which it has informed the public as
to its actions and their expected impact on the public.
The Commission appears to encourage public input prior to adopting rules, holding public
hearings, and holding regularly scheduled meetings. First, the Commission encourages
public input before adopting rules and also informs the public as to its activities. In
addition to providing public hearings regarding proposed rule changes, the Commission
plans to n o w licensees of its rule- making activities in its newsletter. As of January 1996,
the Commission has sent its newsletter to all licensed pest control companies, the Arizona
Pest Control Association, and other interested parties. Further, we found that the
Commission has complied with open meeting law requirements. In particular, the
Commission appropriately posts its meeting notices with at least 24 hours' notice and in
the required location.
The Commission also keeps the public informed of its actions against pest control
operators and companies. Although not done on a regular basis, the Commission
occasionally notifies the media of actions taken against pest control operators. Additionally,
the Commission notifies complainants before holding hearings or settlement conferences
regarding their complaints.
6. The extent to which the Commission has been able to investigate and resolve
complaints that are within its jurisdiction.
The Commission, which is authorized by statute to handle complaints against those who
perform structural pest control work, appears to adequately investigate and resolve
complaints. A. R. S. $ 532- 2304( A)( 19) and 32- 232l( A) provide that the Commission has the
authority to investigate and resolve complaints of misconduct by companies and
individuals. During calendar year 1995, the Commission reported that it handled 251
complaints involving poor pest control work, safety violations, unlicensed practice, and
other types of violations. While some complaints were handled by dismissal, others were
resolved through disciplinary actions including license suspension, probation, revocation,
or an administrative warning. Additionally, over one- half of these complaints were still
unresolved at the time of this audit. However, based on a review of 60 complaints, it
appears that the Commission investigates and resolves complaints appropriately and in
a timely manner.
7. The extent to which the Attorney General or any other applicable agency of
State government has the authority to prosecute actions under the enabling
A. R. S. 532- 2304( A)( 14) authorizes the Commission to refer all termite pretreatment cases
involving alleged criminal fraud to the Attorney General's Office, and to refer any case
that the Commission determines may contain information relating to a possible felony to
the proper law enforcement agency. Additionally, the Commission has specific statutory
authority to assess civil penalties, or suspend or revoke a license, certificate, or .
qualification. A. R. S. 532- 2336 requires the Attorney General to bring actions for collecting
civil penalties.
8. The extent to which the Commission has addressed deficiencies in its enabling
statutes which prevent it from fulfilling its statutory mandate.
The Commission' s Executive Director believes that the Commission's exemption allowing
gardeners to perform unlicensed pest control work is a statutory deficiency. During the
1995 legislative session, the Commission sought to introduce Senate Bill 1279, which would
have stricken the exemption that allowed gardeners to perform pest control work without
being required to obtain certification through the Commission. However, this bill was not
voted on and thus did not pass.
In the same bill, the Commission attempted to address the statute that requires the
Commission to maintain a certain level of inspection staff. Although A. R. S. 532- 2304( C)
requires the Commission to maintain a ratio of at least 1 inspector for every 200 industry
members, the Commission's current ratio is about 1 inspector for every 425 industry
members. Complying with this statute would mean that the Commission needs over twice
the number of inspectors it currently has. The Commission's Executive Director does not
believe that adding more inspectors would sigruficantly impact its ability to observe more
termite pretreatments.
9. The extent to which changes are necessary in the laws of the Commission to
adequately comply with the factors listed in the Sunset laws.
Based on our audit work, we recommend that the Legislature consider expanding the
Commission's authority ( A. R. S. 532- 2304) to allow it to halt a home' s construction when
an inadequate termite pretreatment is observed by Commission inspectors. Since the
Commission is currently limited to notiQing the home's builder after observing a poor
pretreatment, the public is not assured that corrective action will be taken to ensure that
the pretreatment is adequate. In addition, the Legislature should consider changing A. R. S.
532- 2319 to ehinate the Commission's statutory requirement to provide monthly initial
training and quarterly continuing education to the pest control industry. Some other states'
pest control agencies and other Arizona state agencies provide no such training.
10. The extent to which the termination of the Commission would significantly harm
the public health, safety, or welfare.
Termination of the Commission could harm the public by eliminating regulation of the
pest control profession. The absence of regulation would create a void by removing
competency requirements and an enforcement process that is necessary to protect the
public from personal injury caused by dangerous pesticides, or financial loss due to
unethical pest control companies and applicators. For example, several of the complaints
we reviewed involved critical safety considerations, such as misuse of pesticides or
improper pesticide storage. Other complaints dealt with termite pretreatments and
inadequate termite inspections of homes.
11. The extent to which the level of regulation exercised by the Commission is
appropriate and whether less or more stringent levels of regulation would be
Our review found that the Commission can strengthen its termite pretreatment
observation program to promote adequate pretreatment and detect violations ( see Finding
I, pages 7 through 13). In addition, the Commission should exercise more controls over
the filing of Termite Action Registration Forms ( see Finding II, pages 15 through 17).
12. The extent to which the Commission has used private contractors in the
performance of its duties and how effective use of private contractors could
be accomplished.
The Commission has used private contractors for services it cannot provide in- house.
Specifically, the Commission has contracted with the Arizona State Agricultural
Laboratory for analysis of soil and pesticide samples it takes during inspections and
investigations. In addition, the Commission has contracted with TAD Technical Services
to perform data entry related to the Termite Action Registration Forms that companies
file with the Commission after completing termite inspections or treatments. Further,
A. R. S. 532- 2304( A)( 16) requires the Commission to contract with the Department of
Administration for hearing officers that conduct its administrative hearings.
Additionally, private companies could assume the Commission's training responsibilities
if the Legislature removes the statutory requirement that the Commission provide initial
and continuing training ( see Finding IV, pages 23 through 25). Currently, the Commission
provides many initial and continuing training sessions annually at no cost to industry
members. However, the Commission's provision of training at no cost prevents private
entities from offering training to the industry. Although state agencies are prohbited by
law from competing with private enterprises, the Commission is exempt since its own
statutes require it to provide training.
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Agency Response
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( 602) 255- 3664
Executive Director
November 22,1996
Mr. Doug! as R. Norton
Auditor General
Office of the Auditor General
2910 North 44th Street, Suite 410
Phoenix, Arizona 850 1 8
Dear Mr. Norton:
We have reviewed the Structural Pest Control Commission's performance audit and Sunset review
recently completed by your office. In general we are in agreement with the findings, however, on
behalf of the Commission, I would like to make several general comments regarding the overall tone
of the audit. The audit, in our estimation, is to examine the purpose, functions and duties of our
agency in light of the objectives set by the Legislature; it is not to critique the regulated industry
itself. Throughout the report there are references to " limited market incentives for pest control
companies to perform quality work", " little direct financial risk", and " built- in financial incentives
... that discourage quality pretreatment work." These comments set an adversarial tone to the
relationship between the Commission and the regulated industry and imply a standard of poor
workmanship for the entire industry which we do not feel exists.
As correctly noted, the Commission was formed by the Legislature in 1988 after the previous Board
was dissolved. The standards applied in the industry at that time were quite different than those
practiced now, particularly in the area of termite pretreatments. We are proud of the work which has
been accomplished since 1988 and do not believe a 1983 performance audit of the previous Board
should be used as a baseline for assessing change.
The Commission offers the following comments regarding your office's findings.
1. The Commission should increase entry requirements for applicators who perform termite
pretreatments. The Commission should require applicators to provide proof of a bond to cover
damages resulting from negligence, and require practical training for those who perform
pretreatment work.
The Commission recognizes that the potential financial damage from termite destruction is
significantly higher than from that of other pests and that training and entry into the specialty of
termite pretreatments should be correspondingly higher. Initial testing for License " C" ( termite) has
been made more rigid during the past twelve months and ensures that field experience is a
prerequisite. Our tracking supports this as failure rates for initial testing in this category have risen.
In addition, the test for License " C" initial certification is being rewritten and will test, among other
things, the ability to measure sites, determine correct volume and calibrate termiticide applications.
To further ensure adequate preparation for this specialty, the Commission would support a statutory
change to require five hours practical training prior to being authorized to make applications, similar
to the five hours now required in statute ( ARS $ 32- 2323. B) for termite inspection training which is
a requirement for preparation of treatment proposals ( Wood Infestation Reports). It is the
Commission's opinion that consumers are adequately protected through the insurance requirements
placed upon the pest control company itself and that an individual applicator bond is not necessary.
In 1994 the Commission sought and gained approval from the Legislature to strengthen the insurance
requirements by requiring coverage endorsements for each licensed category of work performed.
In addition, pest control companies are required by rule ( R4- 29- 409) to re- treat a structure if there
is an occurrence of subterranean termites, regardless of cause, within five years of the
pretreatment. VA and FHA loans further assure that retreatment will be available if the pest control
company defaults by requiring the builder to cover these costs ( Form 2052). Most conventional loans
also require this assurance.
2. The Legislature should consider modifying ARS 8832- 2301 through 32- 2339 to add a
provision that allows the Commission to halt construction when it observes substandard
termite pretreatments.
While the Commission is concerned about the potential effects of inadequate termite pretreatments
( and post- treatments), we believe it is a more feasible solution to work to remedy poor pretreatments
through the Registrar of Contractors or, through training, with the builders association and
contractors. However, the Commission will consider seeking the statutory authority to " red- tag"
construction sites until corrective work is accomplished. It should be noted that currently " red-tagging"
is an authority carried out at the county and municipal levels.
3. The Commission should notify the Registrar of Contractors when it observes substandard
termite pretreatments.
The Commission's experience, as noted in this report, has been that notifications to the Registrar of
Contractors have not resulted in responses indicating ROC has initiated appropriate action. Some
of these contacts have been by telephone, others written. In the future, we will notice the Registrar
of Contractors with written reports of pretreatment violations using a turnaround form that includes
their response. Pending statutory authority for the Commission to " red tag", we will work with the
appropriate county or municipal authorities and the ROC to have inadequate pretreatments halted
and corrected as soon as possible.
In contrast, it should be noted that the Commission's inspectors work successfully with the
Department of Health Services, Department of Agriculture and Arizona Department of
Environmental Quality in matters pertaining to health or environmental infractions.
4. The Commission should improve its termite pretreatment observation program by:
a. Considering requiring pest control companies to notifjr it before performing pretreatments;
b. Increasing the number of observations it performs by ensuring that inspectors spend enough
time on pretreatment observation duties.
The Commission uses pretreatment notification as an enforcement tool and considers that requiring
all companies to prenotify for all treaments to be an onerous and bureaucratic policy which will not
accomplish the purpose for which it is intended. In FY 1995, 10 companies performed 68% of the
work based on total TARF filings. Pretreatment notification is imposed when evidence from an
investigation shows there have been problems in applications. Prenotification is then imposed by the
Commission for a set period of time to allow inspectors to validate corrected procedures. This is a
more frequently used enforcement tool than quoted in the report for their test period ( two
instances). The sheer quantity of pretreatments annually, 57,000 as estimated earlier in this report,
will not allow us to inspect more than a very small percentage of pretreatments, whether we are
aware of the locations or not. Monitoring in itself only addresses one part of our inspection program.
The Commission believes that better and continuing training is critical to long- term improvement
in the industry. Therefore, monitoring will always play but a part of the entire picture, albeit an
important one.
As clarification of a calculation made earlier in this report by audit staff, the 182 pretreatment
observations cited included overt and covert monitors and did not include tag monitors or spot
checks. Including these observations increases the number of pretreatment monitors to 355. This
figure in turn does not include the number of post treatment monitors which occurred in 1995. As
further clarification, the term " structural damage" as used throughout this report is a specific term
in the industry meaning the structural integrity of a building or its members has been damaged. In
Arizona, although there is intense pressure from termite colonies, particularly in the uncultivated
desert new construction areas, there is less damage than in other parts of the country because of the
specific termite species. Termite destruction is not a frivolous issue, but it is quite rare to see true
" structural damage" to a building here such as can be seen in the southeast, Hawaii, or parts of
As discussed in this report, the Commission is not in statutory compliance concerning the ratio of
inspectors to industry members. At its inception, this ratio was flawed; during the FY 95 legislative
session, SB 1279 was introduced by the Commission to address a variety of issues including
decreasing the statutory ratio, however, after passing the House and Senate, the bill died in
conference committee. To achieve compliance would require more than doubling the number of
inspectors, from 12 to 26. As part of the Commission's FY 98 budget request, two additional
inspectors are being requested to focus on growth areas of the state. We will continue to adjust our
budget requests as the level of activity warrants.
, The Commission will begin a new procedure to ensure equitable observations of pretreatment
activity using random sampling techniques. This methodology and a quota of companies per week
will increase the number of observations of pretreatments and do so in a manner that fairly represents
the potential number of termite applications by individual company.
1. The Commission should improve controls over forms by:
a. Tracking blank forms received by pest control companies versus forms actually filed by
these companies; and
b. Tracking forms sent to and returned by the Commissioner's data entry contractor.
The Commission concurs in finding the TARF filing and fee collection process in need of
improvement. While we are pleased overall with the decision to privatize the inputting, the sheer
volume of TAWS ( almost 140,000 in FY 95) presents problems. Once entered in our computer
system, we are able to track voided TARFs, however the system does not pick up gaps, or missing
TARFs. Our greatest area of concern, however, is with the potential level of activity taking place
without TARFs being completed at all, and the quality of work this may represent.
We will begin sampling inputted TARFs to proof against the original forms. We are investigating
various possibilities for other improvement here, including a " deposit" slip to accompany TARF
payments which would list the TAWS completed; and purchase of a hand held scanner or a separate
machine to count the TARFs, to be used when sending and receiving TARFs from the data entry
provider. Another improvement under consideration would be the printing of TARFs in 25 pack
tablets to be issued to pest control companies. This would ease tracking somewhat. However, as of
this writing, we have an approximate seven month supply of forms, costing $ 2,750 . We are
working to increase the proportion of TARFs being filed electronically as this greatly reduces input
error. Currently, about half of all TARFs are filed by this method.
2. The Commission should assess higher late filing fees to encourage pest control companies
to file forms within the 30- day statutory deadline.
The Commission does not believe that increasing the late fee will encourage prompt filing of
TARFs. As an enforcement tool, the current late fee of loo%, or $ 8.00, plus the added possibility
of Commission disciplinary action and fines up to $ 1000 provides adequate penalty. Higher
penalties, we believe, will only have the effect of further TARF evasion. The Commission will
consider the possibility of requiring prepayment of TAWS which will at least assure that the
revenue is collected. However, as pointed out above, this will not address the issue of treatment work
done without any TAW documentation, and may indeed only increase this rogue activity.
3. The Commission should conduct audits of forms to ensure pest control companies file the
forms and pay the filing fees.
The Commission concurs in this finding and has begun an audit program. To devote adequate time
to this program the Commission has requested an Auditor position in the FY 98 budget submittal
which we believe will more than pay for itself in increased TARF collections. As clarification for
a point ascribed to the Commission's Executive Director, commissioners view audits of termite
treatment records and chemical purchase records without justification and without a complaint
having beenfiled as outside the scope of their proper review.
1. The Commission should strengthen its inspection program by :
a. Implementing a written plan specifying that each licensed pest control company is to be
inspected within a specific time frame and that EPA requirements are met; and
b. Establishing an inspection policy requiring inspectors to conduct a specific number of
inspections within a specified time frame.
The Commission agrees that its inspection program can be strengthened through formal scheduling
of inspections. " Inspections" itself requires definition, however, as a truck inspection may suffice
for a small operator whose entire office is located in the truck, while an office inspection is
warranted for larger operations. " Inspections" also include field monitoring. An inspection policy
has been established which requires inspectors to complete a specified number of inspections within
a specified time frame.
2. The Commission should improve its inspection database system to allow Commission staff
the ability to accurately track inspections conducted at each pest control company.
The Commission concurs that improvements are needed in the system itself and its use and
these improvements have been scheduled with the Commission's programmer.
3. The Commission should consider strengthening its supervision of inspectors by:
a. Ensuring that inspections and follow- up inspections are conducted appropriately; and
b. Developing a performance evaluation tool that measures/ documents inspector productivity.
The Commission will strengthen its supervision of inspectors through development and use of a
feedback form which measures/ documents appropriate handling of cases and inspections.
1. The Legislature should consider revising ARS 832- 2319 to remove the requirement that the
Commission provide initial and continuing training to the pest control industry.
The Commission believes that training is an integral part of what we do, as reflected in our mission
statement: " To advocate and promote through education, training and enforcement the safe
application of pest control technologies which will result in the maximization of the health and
safety of the citizens of Arizona, their property, and the environment." The Commission provides
initial and continuing training statewide, offering training in rural areas of the state where private
contractors have not found it profitable. The regulated community outside metro Phoenix and
Tucson accounts for 25% of the total certified applicators in the state ( 1,543 out of 6,273 at this
writing). This group, many of whom work for small companies, would not be served otherwise, or
would encounter unnecessarily high costs to travel to the Phoenix or Tucson area for training. While
there would be cost savings to the Commission if we did not provide training, this would be offset
somewhat by the increased monitoring of training providers which would be required.
Moreover, the Commission feels that the direct personal contact with industry members gained
through our training is an asset to us as well as to them. In continuing education, we concentrate on
test areas such as the law, environmental concerns and safety issues, while company provided
training is focused more on application techniques and other practical areas. We have received
concurrence from the Environmental Protection Agency for our training which is extended to all
political jurisdictions, including the Native American nations. As an aside, continuing education was
among the projects considered for privatization by the Office for Excellence in Government's recent
Task Force on Competitive Government, however it was not selected.
2. If the Commission continues to provide training, it should consider recovering its costs by
charging attendees a fee as allowed by ARS 832- 2319 ( C) and ( D).
The Commission has considered that, since training is an integral part of its duties, costs incurred
for training are recovered through the Commission's overall fee structure. In addition, as noted
earlier in this report, the Commission receives federal assistance which covers part of the cost of
providing certification and training. We will consider increasing the cost of initial certification
training to cover the cost of providing the core instructional manual and recover directly associated
training costs.
In closing, we appreciate the good work done by your audit staff and will continue to work towards
improvements in the industry and our responsibilities as Commission and staff. On behalf of the
Commission, I will be pleased to discuss any responses in more detail with you or the readers of this
YH. ' B U ~ ' Paulson
Executive Director
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