in-20250326-IR-075250153RAA: $1,500.00

TITLE 75 SECRETARY OF STATE Regulatory Analysis LSA Document #25-153

I. Description of Rule

This document represents additional analysis and clarification to a previous rulemaking action. With the exception of section headers, content in bold is new to this document. The un-bolded sections were reviewed in a previous rulemaking action. With the advent of the Secretary of State’s office “Business One Stop” and “INBiz” initiatives (circa 2011) the agency was charged with developing and maintaining a state of the art, highly automated on-line business registration hub, which other state agencies could easily interface with (i.e. DOR, IDWD, IPLA), that provided 24-7 self-service access to millions of imaged and digital business records administered by the agency. The agency’s array of IT applications, which the public and other state agencies depend on, exists in a state of nearly constant revision and reinvention – to keep with the pace of IT evolution. The statutory framework for the agency’s Business Services Division calls for its IT infrastructure to be entirely transaction funded from “enhanced access” transaction fees. The fee structure (contentiously developed by previous administrations) appears to have struck a reasonable balance between low filing and transaction fees (Indiana ranks among the 10% lowest in the nation for low-cost business registration costs) and costs of hosting, sustaining, and advancing the necessary IT infrastructure for the array of business services the agency is charged with providing. In keeping with HEA 1623’s directives and intent, the agency will be promulgating administrative rules for its transaction fee-based Notaries Public service department. In general, the Secretary of State, through the Business Services Division, has the statutory authority to administer the commissioning of Notary Publics in the state. Pursuant to IC 33-42 (Notaries Public) the Secretary of State administers Notary Public commission applications, qualification review, bond requirements, certification training, commissioning, and continuing education. Pursuant to IC 33-42-12-1(c)(2) the agency collects a $5 notary public commission application processing fee. Pursuant to IC 33-42-12-1, IC 33-42-12-2 and 74 IAC 7 the agency administers electronic application, certification training and continuing education for notary publics. Pursuant to IC 4-5-10-2 the agency collects fees for electronic, expedited, and enhanced public and commercial access to information maintained by the Secretary of State. “Enhanced Access” fees collected by the agency in connection with notary public applications, training and continuing education range from $5 to $89.55. Pursuant to IC 33-42-14, 74 IAC 7, and IC 4-5-10-2, the agency collects $1,500 to certify remote notarization technology systems for use in Indiana. The agency shares IT infrastructure with the Indiana Professional Licensing Agency (IPLA) for management of notary applications, electronic transactions, and secure storage of personally identifiable information for commissioned notaries. The use of shared infrastructure incurs an additional enhanced access fee remitted to the Indiana Office of Technology (IOT) and credit card payment fees remitted to the State-approved payment processing vendor as follows: Transaction (a) SOS enhanced access fee (b) Payment Processing Fee (c) IOT enhanced access fee 1) Online Notary Public Commission Application $65.04 $1.83 $2.50 2) Online Notary Public Commission Re-Application $65.04 $1.83 $2.50 3) Online Duplicate N.P. Commission Certificate $5.00 $0.55 $2.50 4) Online N.P. Continuing Education Certificate $45.52 $1.35 $2.50 5) Online Remote Notary Public Application $89.55 $2.31 $2.50 Historically, these fees have been set by policy; HEA 1623-2023 requires that all fees be set by rule. These proposed rules accomplish that mandate. There are no new fees, fines or civil penalties proposed within these rules. The fees described in column (a) were described in a separate rulemaking action. The fees described in columns (b) and (c) are existing fees that also have not changed and needed additional clarification. This rulemaking action seeks to promulgate in rule the fees described in columns (b) and (c) based on feedback from the previous rulemaking action and pursuant to the directives of HEA 1623-2023. In the proposed rule the $2.50 IOT fee has been rolled into the EA fee previously promulgated and the credit card processing fee has been added as a separate line item.

II. Fiscal Impact Analysis

The anticipated effective date of the rule is July 1, 2025. There is no anticipated fiscal impact on state or local government created by this rule, as the content of this rule is already being enforced by the Division under the safe harbor provision of HEA 1623-2023 and has been in effect since at least 2021. More generally the agency estimates the expenses associated with the collective duties and infrastructure at 10% of the total to meet the requirements of our Notarial responsibilities per IC 4-5-10-5 and IC 33-42. For context the Business Service Division has 10 individuals, one director and one deputy director that are cross-trained to handle the variety of transactions, registrations, complaints, and commissions we are charged with completing and recording each day. Those people, our vendor-supported call center, along with our INBiz portal provide a high level of service to all who need to interact with us. Legislation directing and authorizing the Secretary of State to provide electronic notary application services, administration of training certification and continuing education, and certification of remote notarization technology for use in Indiana, was enacted in 2017 and 2018, and became effective in 2021. IC 4-5-10 “Technology Enhancement and Service Improvement” authorizing the Secretary of State to provide a transaction fee supported enhanced online access infrastructure for public, commercial, and multiple state agencies was enacted in 1997 and amended in 2011 and 2019. (IC 4-5-10). The $5.00 notary commission fee paid to the state General Fund has not changed in at least 18 years. Enhanced Access fees to support an electronic recordkeeping system and online filing were added in 2011. Additional Enhanced Access fees were added effective 2021 to support notary education and certification, vendor certification and continuing education. As of 2021, 46% of a $74.37 notary commission fee ($34 per applicant) is paid to the state’s education and certification vendor. 47% of a $49.37 notary continuing education fee ($23 per applicant is paid to the state’s education vendor, and 40% of a $99.36 notary remote notarization training and certification fee ($40 per trainee) is paid to the state’s notary education and certification vendor. A detailed breakdown of the total Online fee distribution is below. Transaction Description Statutory Fee SOS EA Fee IOT EA Fee IN.gov Processing Fee Total Online Fee Application for Commission $5.00 $65.04 $2.50 $1.83 $74.37 Re-application for Commission $5.00 $65.04 $2.50 $1.83 $74.37 Duplicate Commission Certificate $0.00 $5.00 $2.50 $0.55 $8.05 Continuing Education $0.00 $45.52 $2.50 $1.35 $49.37 Remote Notary Application $5.00 $89.55 $2.50 $2.31 $99.36 Remote Technology Vendor Application $0.00 $1,500.00 $0.00 N/A $1,500.00 From 2021 the purpose of the fees collected falls into two categories. The first category is notary public training and certification. The second category is the development, maintenance, and improvement of technology infrastructure to provide perpetual maintenance and 24-7 access to essential filing services and records. No changes in the fees are requested currently. This document represents additional clarity of fees based on feedback from the Office of Management and Budget regarding a previous rulemaking action. These are not additional fees. This report describes with additional clarity the fees incurred for electronic transactions related to notaries public. Note revenue and expenses below: Fiscal Year IOT Fee Revenue Payment Processing Fees Paid Transactions FY24 $ 70,732.50 $ 43,708.83 28,299 FY23 $ 70,750.00 $ 43,552.84 27,652 FY22 $ 61,080.00 $ 37,760.96 23,648 FY21 $ 53,325.00 $ 33,308.30 20,205 FY20 $ 34,510.00 $ 24,613.96 13,028 Enhanced Access Fund revenues for notary public commission administration, recordkeeping, training, certification, continuing education, and compliance enforcement: FY20 $134,290 for 13,028 transactions; FY21 $1,147,795 for 20,205 transactions; FY22 $1,317,468 for 23,648 transactions; FY23 $1,508,915 for 27,652 transactions; FY24 (8 months) $982,295 for 17,962 transactions. IOT fee revenues for notary public transactions: FY20 $34,510.00 for 13,028 transactions; FY21 $53,325.00 for 20,205 transactions; FY22 $61,080.00 for 23,648 transactions; FY23 $70,750.00 for 27,652 transactions; FY 24 $70,732.00 for 28,299 transactions. Payment processing fees for notary public transactions: FY20 $24,613.96 for 13,028 transactions; FY21 $33,308.30 for 20,205 transactions; FY22 $37,760.96 for 23,648 transactions; FY23 $43,552.84 for 27,652 transactions; FY 24 $43,708.83 for 28,299 transactions. Enhanced Access Fund expenses for administration of the agency’s notary public commission administration duties, including providing and maintaining an electronic commission administration and recordkeeping system, online filing and access to records, training and certification services, and compliance and enforcement (estimated at 10% of the Agency’s Business One Stop/INBiz program costs): FY20 $520,253; FY21 $427,148; FY22 $527,474; FY23 $672,277; FY24 (8 months) $477,682. Pursuant to IC 4-5-10-5 and IC 33-42, all notary commission enhanced access filing fees are deposited into the agency Enhanced Access Fund (46070) and are dedicated to: a) administration of notary training, certification and continuing education; b) maintaining the IT infrastructure necessary for accepting, payment processing, permanent archiving, 24-7 public, self-serve accessibility , and multi-agency access to business records entrusted to the agency; and c) notary compliance and enforcement. The rule changes do not change or increase fees as explained below but are added for clarity and per requirements of HEA-1623-2023

III. Impacted Parties

At the end of 2023 there were 54,836 active notary commissioned people. Details of the status and or stages they may have been in during the year are recapped below. Description Time Frame Calendar 2023 Total Active Notaries 54,836 Total New Commissioned 6,791 Total Renewed Commissioned 3,235 Total Completed CE 13,037 Total Active RTV companies 15 Since these rules are being promulgated in response to HEA-1623 all of the above parties are currently in compliance so we will explain the impact of these fees based on the life of the Notarial commission as it seems logical to view this against the possible revenue these individuals can generate verses the costs of compliance and our ministerial duties for accurate records and assuring the public and various other business entities that rely on the accuracy of and integrity of their statutory duties.

IV. Changes in Proposed Rule

The provisions of the proposed rules are clarifying amendments to the enhanced access fees previously promulgated. They are the promulgation of fees already permitted to be assessed by the Indiana Code. The following is a table of reasons for rejections, fees, and IC/IAC which sets forth the applicable law: Item IOT Fee EA Fee IC Authority Amended IAC Purpose of change Initial/renewal application $2.50 $1.83 IC 33-42-16-2 75 IAC 7-9-1 Clarify EA fee to include the $2.50 IOT fee and clarify existing payment processing fee. Duplicate commission $2.50 $0.55 IC 33-42-16-2 75 IAC 7-9-2 Continuing Education $2.50 $1.35 IC 33-42-16-2 75 IAC 7-9-3 Remote notary application $2.50 $2.31 IC 33-42-16-2 75 IAC 7-9-4

V. Benefit Analysis

As stated previously legislation directing and authorizing the Secretary of State to provide electronic notary application services, administration of training certification and continuing education, and certification of remote notarization technology for use in Indiana, was enacted in 2017 and 2018, and became effective in 2021. IC 4-5-10 “Technology Enhancement and Service Improvement” authorizing the Secretary of State to provide a transaction fee supported enhanced online access infrastructure for public, commercial, and multiple state agencies was enacted in 1997 and amended in 2011 and 2019. (IC 4-5-10). The fees created at that time for enhanced access have struck a strong balance between cost of acquisition and continuing education of the commissions as well as giving the public needing notarial services a searchable portal to find people to provide the service. The primary benefit of these rules is consumer protection: The fees surrounding the commissioning, screening and continuing education help ensure that the Notaries the agency commissions: The balance of the fees and associated rules ensure the technology infrastructure and vendor partner solutions to provide the ease of access to complete, record, store, and provide search validation for everyone needing to interact with the website and the information contained therein. Indiana SOS Business Service Division has struck a balance between: These fees allow for the maintenance and update of various technology tools and website interface that will increase access and reduce time spent per transaction as well as increase efficiency among staff at the Business Services division as transactional demand increases. It is impossible to calculate the impact of better and complaint individual transactions but the lack of it would create significant additional harm and costs to the commercial systems depending on those transactions and the court systems where people would seek remedies to the harm that results from it.

VI. Cost Analysis

The fees are best reviewed as a total cost of meeting requirements versus the revenue these occupations can generate versus the cost of non-compliant execution of duties. If you view the costs on an individual notary over the 8-year life of their commission the example would look like this. (Not all these costs pass through the Business Service division such as insurances and background checks) Range Application Continuing Education (3 courses total, one every 2 years) Bonding and Insurance (Outside vendor) Background check (outside vendor) Estimated Salary per Zip Recruiter 2023 Basic $74.37 $148.11 $148.00 $16.32 $59,000 Best $74.37 $148.11 $324.00 $16.32 $69,000 Range Total costs over commission Total Salary over commission Percent of Revenue Basic $386.80 $472,000 .08 of 1 percent Best $562.80 $552,000 .10 of 1 percent VII. Sources of Information VIII. Regulatory Analysis B. Summary of Benefits The fees surrounding the commissioning, screening and continuing education help ensure that the Notaries the agency commissions: The balance of the fees and associated rules ensure the technology infrastructure and vendor partner solutions provide the ease of access to complete commission requirements, record, store, and provide search validation for everyone needing to interact with the division, the website, and the information contained therein. Indiana SOS Business Service Division has struck a balance between:

IX. Contact Information of Staff to Answer Substantive Questions

Notice of First Public Comment Period with Proposed Rule: 20250326-IR-075250153FNA Notice of Determination Received: October 29, 2024