April 5, 2011

Rep. Carol, McGuire

House Executive Departments and Administration Committee

Dear Rep. McGuire and members of the committee:

Thank you for this opportunity to testify in opposition to SB 157-FN, a bill that would give private service technicians authority to place State of New Hampshire seals on weighing and measuring devices used in commerce, and also reduce the device licensing fees to levels that will not cover the costs of maintaining licensing and monitoring compliance.

Trust and confidence in our systems of weights and measures is the foundation of commerce and the free enterprise system. The Department of Agriculture, Markets & Food Division of Weights and Measures administers and enforces the state's laws affecting the measurement of commodities moving in commerce. The purpose is to ensure consumers receive accurate quantity and adequate information about commodities so they can make valid price and quantity comparisons, and be assured that they receive what they pay for. The mission of the Division of Weights & Measures is to ensure equity in the marketplace, protecting honest business people and consumers.

The Division’s functions include inspection of scales ranging from those used to weigh in thousandths of a pound, up to vehicle scales used to weigh trucks up to 120,000 pounds. The Division inspects meters used for delivery of fuel oil, liquid propane gas and gasoline, and provers or containers used for measuring any type of liquid or solid commodity. Inspections include monitoring for compliance with all State of New Hampshire laws and rules governing the use of weighing and measuring devices in commerce. This includes positioning of scales so that customers can read them, verification of accurate computations and the proper subtraction of tare weights to achieve sales at net weight, etc., etc.

The Division also enforces the uniform date code system for processed food products and numerous other provisions of law affecting pricing and sale of commercial goods. The Division’s metrology laboratory also provides accredited, scientific highly rated measurement and calibration services in the areas of mass, length and volume to institutions and industry located both within and outside the state.

As many members of the committee will recall, the state inspection program was cut during a budget crisis two decades ago. It was restored in the last biennium budget as we demonstrated that the program could pay its own way, and the department had received many consumer complaints and requests for investigations during 2008 when gas prices were at $5.00/gallon. Many legislators expressed shock and dismay when they learned that the familiar and reassuring State of New Hampshire seals they saw on gasoline pumps, etc., had not in fact been placed there by state inspectors—but had instead been ‘sealed’ by service companies or even the dealers themselves who were selling the product.

The Department has tried to work with the many regulated businesses to ensure as smooth a transition as possible. Over 20,000 licensed devices are in use in the state. Many businesses and many types of businesses, including city and towns, are affected by the inspection program in numerous ways--as are all consumers. It is not just owners of devices and the businesses that sell and service devices that are affected. All business activities where sales or purchases of any materials or commodities are based on weight or measure rely on the state inspection program to ensure accuracy. Just one example of such transactions would include New Hampshire municipalities which charge or pay access fees at landfills and transfer stations based on weight.

We are providing a list of the kinds of violations that were occurring during the era of ‘privatized’ weights and measures inspections. These 33 examples of violations occurred repeatedly, and illustrate the need for disinterested, independent, third-party inspection.

Since implementing the state inspection program over the last year, the Division of Weights & Measures staff has inspected nearly 10,000 devices, or about half of all licenses. Of this total, eight percent were rejected, including some scales that were not legal for trade.

However, some types of devices performed worse than others—particularly vehicle and other larger-capacity scales. Of the 17 scales tested thus far in the 5,000-20,000 pound class, 28—59%--failed. Of 78 vehicle scales tested, 28 failed—or 36%. These scales are used to weigh commodities purchased and delivered to entities from farms to construction projects, to food, beverage and other manufacturers. In addition to the solid waste disposal costs mentioned above, state and local taxpayers are also affected by the accuracy of these scales through purchases of sand, gravel, asphalt and road salt.

We are providing charts that show how even small errors in weight or volume can multiply over the large numbers of sales that occur every day, week, month and year in New Hampshire. For the fuel chart, for example, errors in the low end of the range (Delivery Error per 5 gallon numbers 1 through 4) are within the tolerance range for fuel pump metering devices. Errors even within that legal tolerance level add up rapidly. Taxpayers are also affected when gasoline and diesel fuel sales are inaccurately measured, resulting in lost gasoline tax revenues collected by Road Tolls for the highway fund. For example, errors averaging in that 3-4 range at the upper end of tolerance compared to the total number of gallons sold in the state from July 2008 through June 2009 would result in a half million dollars in lost gasoline tax revenue.

Analysis of the first year of state inspection results for retail gasoline stations shows that one out of three pumps tested dispensed less fuel than the customer was charged for. These ‘negative’ tested meters were not randomly distributed throughout all stations, however. Many of the stations with 75% to 100% of their pumps testing ‘negative’ or short-selling had been self-inspecting businesses. At the other end of the extreme were stations where pumps were 75% to 100% ‘positive’ or dispensing fuel in the customers’ favor. The service technicians hired by these station owners apparently took what is known in the industry as a ‘Lick and stick’ approach rather than taking the time and care to inspect and calibrate the meters properly. Private inspection was very expensive for these owners. Under the former regime of privatized inspection the public had no way of telling the difference between these stations.

We ask the committee not to give statutory seal authority to private service technicians. This places one group of businesses in the position of regulating other businesses, with the potential for conflicts of interest. I do not want to again be placed in a position as commissioner, of hearing from a service company that has been caught certifying a scale that was grossly out of compliance. One such business owner came pleading to me about how the state had placed his company in the terrible position of inspecting its own customers. The company owner complained that customers pressured his company to place seals on scales that could not pass inspection. Yet that same company is now seeking passage of SB157 so it can again be in that “terrible position” of conflicting interests.

Preventing SB157 from becoming law will ensure that:

· Consumers and businesses can continue to have confidence that our independent, impartial state inspectors will be inspecting and certifying devices properly, as well as determining how these devices will be used in commerce.

· The service companies who sell, repair and provide maintenance services for their customers will no longer be subject to the unethical pressures of putting a State Seal of approval on scales and gas pumps that are out of compliance.

· Businesses that own and use gas pumps and scales will not feel compelled to pay for costly repairs or replacement of equipment based on the word of service technicians that a device is out of compliance.

· Scale and meter technicians will no longer be able to misuse the intent of their license to be able to tell business owners that “the State requires” the business to hire them to certify their scale or gas pump.

Authorizing private technicians to place State of New Hampshire seals on devices will confuse business owners and the public, creating ambiguity in the marketplace. The proposed license fee reductions will make it impossible for the Department to meet its budget revenue targets and will reduce resources available for monitoring.

To quote from the letter to the Senate ED &A Committee from the Co-op Food Stores and Co-op Service Center of Lebanon and Hanover—one of the oldest and largest consumer cooperatives in the United States:

Consumers believe that the State of New Hampshire seal indicates an independent third party verification, by state employees, of the accuracy and validity of the device that measures or meters the product they are purchasing. To have a commercial weighing or measuring device sealed by the same party who installs, services, repairs, and calibrates it does not promote confidence among the consumers who rely on you to protect them.

Sincerely yours,

Lorraine S. Merrill

Commissioner