Federal Register, Volume 62 Issue 17 (Monday, January 27, 1997)

[Federal Register Volume 62, Number 17 (Monday, January 27, 1997)]
[Proposed Rules]
[Pages 3823-3830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1892]

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DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. 96-038-1]
RIN 0579-AA81

User Fees; Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the user fee regulations by
adjusting the fees charged for certain agricultural quarantine and
inspection services we provide in connection with certain commercial
vessels, commercial trucks, commercial railroad cars, commercial
aircraft, and international airline passengers arriving at ports in the
customs territory of the United States. We are proposing to set user
fees in advance for these services for fiscal years 1997 through 2002.
We have determined that the fees must be adjusted to reflect the
anticipated actual cost of providing these services through FY 2002.

DATES: Consideration will be given only to comments received on or
before March 28, 1997.

ADDRESSES: Please send an original and three copies of your comments to
Docket No. 96-038-1, Regulatory Analysis and Development, PPD, APHIS,
suite 3CO3, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please
state that your comments refer to Docket No. 96-038-1. Comments
received may be inspected at USDA, room 1141, South Building, 14th
Street and Independence Avenue SW., Washington, DC, between 8 a.m. and
4:30 p.m., Monday through Friday, except holidays.

FOR FURTHER INFORMATION CONTACT: For information concerning program
Operations, contact Mr. Jim Smith, Operations Officer, Program Support,
PPQ, APHIS, 4700 River Road Unit 60, Riverdale, MD 20737-1236, (301)
734-8295. For information concerning rate development, contact Ms.
Donna Ford, PPQ User Fees Section Head, FSSB, BAD, APHIS, 4700 River
Road Unit 54, Riverdale, MD 20737-1232, (301) 734-5901.

SUPPLEMENTARY INFORMATION:

Background

The regulations in 7 CFR 354.3 (referred to below as the
``regulations'') contain provisions for the collection of user fees for
certain agricultural quarantine and inspection (AQI) services provided
by the Animal and Plant Health Inspection Service (APHIS). In this
docket, we are proposing to amend the user fees for servicing certain
commercial vessels, commercial trucks, commercial railroad cars,
commercial aircraft, and international airline passengers arriving at
ports in the customs territory of the United States from points outside
the United States. (The customs territory of the United States is
defined in the regulations as the 50 States, the District of Columbia,
and Puerto Rico.)
These user fees are authorized by section 2509(a) of the Food,
Agriculture, Conservation, and Trade Act of 1990 (21 U.S.C. 136a). This
statute, known as the Farm Bill, was amended by section 504 of the
Federal Agriculture Improvement and Reform Act of 1996 (Pub. L. 104-
127), on April 4, 1996.
As amended, the 1990 Farm Bill provides that APHIS may prescribe
and collect fees sufficient to cover the cost of providing AQI services
in connection with the arrival, at a port in the customs territory of
the United States, of commercial vessels, commercial trucks, commercial
railroad cars, commercial aircraft, and international airline
passengers. The Farm Bill also provides that APHIS may prescribe and
collect fees sufficient to cover the cost of providing preclearance or
preinspection at a site outside the customs territory of the United
States to such passengers and vehicles. The Farm Bill further states
that the fees should be sufficient to cover the cost of administering
the fee program, and sufficient to maintain a reasonable balance in the
Agricultural Quarantine Inspection User Fee Account (discussed below).
In addition to user fees, the Farm Bill, as amended, authorizes APHIS
to assess late payment penalties and interest charges if a person fails
to pay a fee when due. The Farm Bill, as amended, establishes a no-year
fund, known as the ``Agricultural Quarantine Inspection User Fee
Account'' (Account), in the Treasury of the United States. All fees,
late payment penalties, and interest charges collected by APHIS through
fiscal year 2002 are to be deposited in the Account. For each fiscal
year 1997 through 2002, funds in the Account are available to APHIS,
until expended, to cover the costs of providing AQI services and
administering the AQI program.
For each of fiscal years 1997 through 2002, fees collected in
excess of $100 million may be used to cover the costs of providing AQI
services and are automatically available.
This is a major change from the situation under our previous
authority. Under our previous authority, reimbursement was controlled
by spending limitations imposed through the annual congressional budget
appropriations process. Since this spending authority was determined
each year, it was not a dependable vehicle for funding long-term needs
such as permanent personnel. This made it extremely difficult to keep
pace with workload demands and be able to respond quickly to
emergencies and unanticipated industry expansion.
Under the Farm Bill, as amended, we may spend all AQI user fees we
collect in excess of $100 million for the next 5 years, as long as we
spend the money only to provide AQI services. Any money we do not spend
must remain in the Account. After FY 2002, any unobligated balance in
the Account and any other amounts collected but not disbursed will be
credited to APHIS for future AQI activities.
We anticipate that this authority will have a major impact on the
way APHIS administers its AQI user fees. Costs to provide services
supported by user fees each year since fees were instituted in 1991 are
shown in the following table. The cost of the AQI program exceeded $100
million in FY 1995, and is projected to exceed $100 million in FY 1996.

Costs To Run the AQI Program
------------------------------------------------------------------------

------------------------------------------------------------------------
FY 1991........................... Appropriated funds for entire fiscal
year (user fees collected were used
to capitalize the AQI User Fee
Account).
FY 1992........................... $ 85,922,000.00.
FY 1993........................... 83,362,000.00.
FY 1994........................... 98,257,160.00.
FY 1995........................... 105,907,999.00.
FY 1996........................... 127,027,001.00 (projected).
------------------------------------------------------------------------

Since FY 1992, APHIS has received no directly appropriated funds to
provide AQI services. Although the Farm Bill, as amended, speaks of
``appropriations,'' the term does not mean money out of the general
treasury to run the program, but only the dollar amount of user fees
and other charges collected by APHIS that the Agency may spend on the
AQI services.
We have always based our user fees on the actual costs to provide a
service during the fiscal year. This means that

[[Page 3824]]

we did not begin calculating user fees for one fiscal year until the
prior fiscal year ended. Further, our user fees are published in the
Code of Federal Regulations. The process of amending the regulations
does take time. The result of this process is that our user fees lag
behind the level of current costs.
Our ability to provide AQI services is completely dependent on user
fees. It is therefore extremely important that the user fees we set
accurately reflect the actual cost of providing services at the time
the services are provided. If our user fees do not accurately reflect
costs, and we do not collect enough in fees and related charges to
cover costs, we may be forced to curtail services. This could be very
damaging to our customers and to international trade.
We are therefore proposing to set user fees in advance for AQI
services for each fiscal year 1997 through 2002. This would help ensure
that we fully recover the actual costs of providing services and that
we can continue to provide at least the same level of service we now
provide. In addition, setting user fees in advance would give our
customers prior notice of fee changes. This would provide our customers
with adequate time to make business plans, reprogram computers, and
otherwise prepare for changing user fees. In the past, we have
implemented new fees within 1 month of publishing a final notice. Users
of our services have commented that better notification of fee changes
would enable them to make better future business plans. We also plan to
publish a notice in the Federal Register prior to the beginning of each
fiscal year to remind or notify the public of the user fees for that
particular fiscal year.
We not only intend to monitor our fees throughout each year, but we
intend to look closely at adjustments to fees that may be needed in
future years. If we determine that any fees are too high and are
contributing to unreasonably high reserve levels, we will publish lower
fees in the Federal Register and make them effective as quickly as
possible. If it becomes necessary to increase any fees because reserve
levels are being drawn too low, we will publish, for public comment,
proposed fee increases in the Federal Register.

Calculation of User Fees

To calculate the proposed user fees, we projected the direct costs
of providing AQI services in FYs 1997 through 2002 for each category of
service: commercial vessels, commercial trucks, commercial railroad
cars, commercial aircraft, and international airline passengers. The
cost of providing these services in prior fiscal years served as a
basis for calculating our projected costs.
In FY 1992, APHIS established accounting procedures to segregate
AQI user fee program costs. We published a detailed description of
these procedures in the Federal Register on December 31, 1992 (57 FR
62469-62471), as part of a document (Docket No. 92-148-1) amending some
of our user fees.
As part of our accounting procedures, we established distinct
accounting codes to record costs that can be directly related to each
inspection activity. At the State level and below, the following costs
are direct-charged to the AQI User Fee Account: salaries and benefits
for inspectors and canine officers, supervisors (such as officers-in-
charge) and clerical staff; equipment used only in connection with
services subject to user fees; contracts; and large supply items such
as x-ray equipment or uniforms.
Other costs that cannot be directly charged to individual accounts
are charged to ``distributable'' accounts established at the State
level. The following types of costs are charged to distributable
accounts: Utilities, rent, telephone, vehicles, office supplies, etc.
The costs in these distributable accounts are prorated (or distributed)
among all the activities that benefit from the expense, based on the
ratio of the costs that are directly charged to each activity divided
by the total costs directly charged to each account at the field level.
For example, if a State office performs work on domestic programs, AQI
user fee programs, and AQI appropriated programs, the costs are
distributed among the programs, based on the percentage of the direct
costs for that activity at the field level that is charged to that
activity. Costs incurred at the regional, headquarters program staff,
and agency-level support offices are also prorated to the separate AQI
activities based on the percentage of the costs that were directly
charged to each activity at the field level, as discussed above.
Using these accounting procedures, we calculated the total cost of
providing AQI services in each past fiscal year by determining the
amounts in each direct-charge account, then adding the pro rata share
of the distributable accounts maintained at the State, regional,
headquarters, and agency levels.
We then projected total costs to provide each category of service
during each future fiscal year. Each projection included the costs of
program delivery, which are incurred at the State level and below. Also
included was a pro rata share of the program direction and support
costs, as explained above, which include items at the regional and
headquarters program staff levels. Finally, each projection included a
pro rata share of agency-level support costs, as discussed above, which
includes activities that support the entire agency, such as recruitment
and development, legislative and public affairs, regulations
development, regulatory enforcement, budget and accounting services,
and payroll and purchasing services. Costs for billing and collection
services, legal counsel, and rate development services that are
directly related to user fee activities are directly added to the user
fee activities they support and are not included in the proration of
agency-level costs.

Development of Estimated Spending Amounts

The estimated spending amounts for FYs 1997 through 2002 are based
on the FY 1996 program level expenditures of $106,188,000. The annual
projections allow for potential promotions for PPQ Officers, plus
annualized pay cost for FY 1996 new hires (217 new hires), plus
estimated pay costs of 3.0% for FY 1997 and 3.1% annually for FYs 1998
through 2002, plus 30 new hires each year, plus cumulative new hire
costs for FYs 1998 through 2002. We hired additional personnel in FY
1996; we anticipate additional new hiring in future years. This is
because of projected increases in the number of conveyances and
passengers subject to inspection. Our annual projected spending amount
also includes the costs of additional preclearance activities in
foreign locations (Bermuda, Bahamas, etc.), plus an allocation for
agency support and departmental charges. In addition, in FYs 1997 and
1998, a one-time investment of $3.175 million has been added for the
complete national implementation of the Customs Service's Automated
Cargo System (ACS) at all international ports of entry. While such an
investment was planned for FY 1996, it was not accomplished. As a
result, the FY 1997 spending estimate was developed as follows:

FY 1996 Base............................................ $106,188,000
Potential Promotions.................................... 1,500,000
Annualized Pay Cost--FY 1996 New Hires.................. 4,400,000
Est. Pay Costs @ 3%..................................... 2,639,000
Additional 30 New Hire.................................. 1,500,000
International Preclearance.............................. 923,000
ACS Implementation...................................... 3,175,000
---------------
Subtotal.......................................... 120,325,000
Agency Support @ 7.48%.................................. 10,027,000

[[Page 3825]]

Departmental Charges @ 2.8%............................. 3,756,000
---------------
FY 1997 Total..................................... $134,108,000

A similar procedure was used to project the annual costs and the
following table indicates the estimated spending amounts for FY 1997-
2002.

------------------------------------------------------------------------
Projected AQI user fee spending (in Increase from previous
thousands) fiscal year
------------------------------------------------------------------------
FY 1997--$134,108......................... 5.6 percent.
FY 1998--139,299.......................... 3.9 percent.
FY 1999--141,101.......................... 1.3 percent.
FY 2000--146,621.......................... 3.9 percent.
FY 2001--152,314.......................... 3.9 percent.
FY 2002--158,184.......................... 3.9 percent.
------------------------------------------------------------------------

Volumes

We estimated the annual number of users, in each category of
service, that would be subject to inspection. The estimates were based
on our annual rates of increased activity for each service category
shown in our FY 1992 through FY 1995 collection history. In our
commercial aircraft, commercial vessel, and commercial truck service
categories, we used the average volume percentage change between FY
1994 and 1995 for all volume amounts. In our international air
passenger and commercial truck decal service categories, we found that
the volume continued to increase each year, but at a decreasing rate.
Using the international air passenger volumes listed below, the
estimated volume percentage increases were calculated in the following
manner: (1) First, the volume percentage decline between FY 1994 and FY
1995 was determined by subtracting the volume percentage increase for
FY 1994 (4.81%) from the volume percentage increase for FY 1995
(3.66%), yielding a negative 1.15%; (2) this figure was then divided by
the volume percentage increase for FY 1994 (4.81%), which yields the
volume percentage decline between FY 1994 and FY 1995 (i.e., -0.2391);
(3) the volume percentage decline (-0.2391) was then multiplied by the
volume percentage increase for FY 1995 (3.66%), yielding a negative
0.87505; (4) finally, this result was added to the volume percentage
increase for FY 1995, yielding a projected volume percentage increase
of 2.78% for FY 1996. This process was repeated to find growth for FY
1997-20020.

------------------------------------------------------------------------
Fiscal year Volume Percent change
------------------------------------------------------------------------
1992................... 35,211,595 ......................
1993................... 39,462,243 12.07
1994................... 41,361,521 4.81
1995................... 42,874,898 3.66
------------------------------------------------------------------------

In our loaded railroad car service category, we determined that the
volume increase from FY 1994 to FY 1995 (74,006 to 102,258) was a
result of NAFTA and that future increases above the FY 1995 level will
be minimal. Therefore, we are projecting a modest 2 percent increase
each year. These rates of increase were then used to project activity
volumes for each category of services for FY 1996 and beyond as shown
in the following table.

--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Estimated Estimated Estimated Estimated Estimated Estimated
Service Category Actual 1995 1996 1997 1998 1999 2000 2001 2002
volume volume volume volume volume volume volume volume
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Vessel............................... 48,131 49,051 49,989 50,945 51,919 52,912 53,924 54,955
(Increase over prior year).................. ........... (1.91%) (1.91%) (1.91%) (1.91%) (1.91%) (1.91%) (1.91%)
Commercial Trucks............................... 612,743 618,776 624,868 631,020 637,233 643,507 649,843 656,241
(Increase over prior year).................. ........... (0.98%) (0.98%) (0.98%) (0.98%) (0.98%) (0.98%) (0.98%)
Commercial Trucks--Decals....................... 14,332 15,054 15,656 16,153 16,559 16,890 17,157 17,373
(Increase over prior year).................. ........... (5.04%) (4.00%) (3.17%) (2.52%) (2.00%) (1.58%) (1.26%)
Loaded Railroad Cars............................ 102,258 104,303 106,389 108,517 110,687 112,901 115,159 117,462
(Increase over prior year).................. ........... (2.00%) (2.00%) (2.00%) (2.00%) (2.00%) (2.00%) (2.00%)
Commercial Aircraft............................. 346,624 354,837 363,245 371,852 380,663 389,683 398,917 408,369
(Increase over prior year).................. ........... (2.37%) (2.37%) (2.37%) (2.37%) (2.37%) (2.37%) (2.37%)
Airline Passengers.............................. 42,874,898 44,068,934 45,002,791 45,728,430 46,289,479 46,721,624 47,053,518 47,307,853
(Increase over prior year).................. ........... (2.78%) (2.12%) (1.61%) (1.23%) (0.93%) (0.71%) (0.54%)
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Fee Adjustments and Rounding of Fees

In calculating the adjusted user fees, we divided the sum of the
costs of providing each service by the projected number of users
subject to inspection, thereby arriving at ``raw'' fees. We then
rounded the raw fees. All raw fees were rounded up, rather than down,
to ensure that we collect enough revenue to cover the costs of
providing services and enough revenue to maintain a reasonable reserve.
The individual fees no longer contain a reserve component. At the end
of FY 1996, the AQI account is expected to have $ 45.4 million in
reserve, about 36 percent of annual operating costs. Any excess
collections due to rounding would be added to the reserve balance for
each individual fee category. At the end of FY 2002, the AQI account is
projected to retain $ 39.8 million in reserves, about 25 percent of the
projected level of operating costs. If an increase in volume results in
additional revenue from user fees, this revenue would not necessarily
increase the reserve because the additional money would be used to
service the increased volume. We rounded all user fees up to the
nearest quarter, except for the international airline passenger user
fee. Given the sheer volume of passengers, if we rounded up to the
nearest quarter we would recover far more than is necessary. Therefore,
we rounded the passenger user fee up to the nearest nickel.

[[Page 3826]]

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Projected
AQI activity Est. total costs Projected volume Raw fee Rounded fee revenue
----------------------------------------------------------------------------------------------------------------
PROPOSED AQI USER FEE RATES--FY 1997
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... $22,335,718 49,989 $446.81 $447.00 $22,345,083
Commercial Trucks\1\............ 3,476,174 937,988 3.71 3.75 2,969,495
Loaded Railroad Cars............ 674,482 106,389 6.34 6.50 691,529
Commercial Aircraft............. 21,466,674 363,245 59.10 59.25 21,522,266
Airline Passengers.............. 86,154,952 45,002,791 1.91 1.95 87,755,442
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Total..................... 134,108,000 ................ ........... ........... 135,283,815
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PROPOSED AQI USER FEE RATES--FY 1998
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... 23,144,561 50,945 454.30 454.50 23,154,503
Commercial Trucks\1\............ 3,610,728 954,080 3.78 4.00 3,816,320
Loaded Railroad Cars............ 700,590 108,517 6.46 6.50 705,361
Commercial Aircraft............. 22,186,158 371,852 59.66 59.75 22,218,157
Airline Passengers.............. 89,656,963 45,728,430 1.96 2.00 91,456,860
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Total..................... 139,299,000 ................ ........... ........... 141,351,201
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PROPOSED AQI USER FEE RATES--FY 1999
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... 23,585,032 51,919 454.27 454.50 23,597,186
Commercial Trucks\2\............ 3,657,338 968,413 3.78 4.00 3,873,652
Loaded Railroad Cars............ 709,738 110,687 6.41 6.50 719,466
Commercial Aircraft............. 22,727,138 380,663 59.70 59.75 22,744,614
Airline Passengers.............. 90,421,754 46,289,479 1.96 2.00 92,578,958
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Total..................... 141,101,000 ................ ........... ........... 143,513,876
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PROPOSED AQI USER FEE RATES--FY 2000
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... 24,429,991 52,912 461.71 461.75 24,432,116
Commercial Trucks\2\............ 3,800,416 981,307 3.87 4.00 3,925,228
Loaded Railroad Cars............ 737,504 112,901 6.53 6.75 762,082
Commercial Aircraft............. 23,469,623 389,683 60.23 60.25 23,478,401
Airline Passengers.............. 94,183,466 46,721,624 2.02 2.05 95,779,329
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Total..................... 146,621,000 ................ ........... ........... 148,377,156
----------------------------------------------------------------------------------------------------------------
PROPOSED AQI USER FEE RATES--FY 2001
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... 25,405,975 53,924 471.14 471.25 25,411,685
Commercial Trucks\3\............ 3,944,933 992,983 3.97 4.00 3,971,932
Loaded Railroad Cars............ 761,570 115,159 6.61 6.75 777,323
Commercial Aircraft............. 24,370,240 398,917 61.09 61.25 24,433,666
Airline Passengers.............. 97,831,282 47,053,518 2.08 2.10 98,812,388
-------------------------------------------------------------------------------
Total..................... 152,314,000 ................ ........... ........... 153,406,994
----------------------------------------------------------------------------------------------------------------
PROPOSED AQI USER FEE RATES--FY 2002
----------------------------------------------------------------------------------------------------------------
Commercial Vessel............... 26,385,091 54,955 480.12 480.25 26,392,139
Commercial Trucks\3\............ 4,096,966 1,003,701 4.08 4.25 4,265,729
Loaded Railroad Cars............ 806,738 117,462 6.87 7.00 822,234
Commercial Aircraft............. 25,356,895 408,369 62.09 62.25 25,420,970
Airline Passengers.............. 101,538,310 47,307,853 2.15 2.15 101,711,884
-------------------------------------------------------------------------------
Total..................... 158,184,000 ................ ........... ........... 158,612,956
----------------------------------------------------------------------------------------------------------------
\1\ Except for FY 1997, decals could be purchased for 20 times the individual crossing rate. As explained
elsewhere in this document, the decal rate would not be increased for FY 1997, although the individual
crossing rate would be. Therefore, projected revenue for FY 1997 reflects 624,868 individual crossings @ 3.75
and 15,656 decal purchases @ 40.00 per decal.
\2\ Decals could be purchased at 20 times the individual crossing rate, or 80.00 per decal.
\3\ Decals may be purchased at 20 times the individual crossing rate, or 85.00 per decal.

Current and Future User Fees

Our current user fees for AQI services and the user fees we are
proposing to charge for these services each fiscal year from 1997
through 2002 are shown below. Each service and the user fee for it are
discussed individually below.

Agricultural Quarantine Inspection (AQI) User Fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed user fees
Service Original Current -----------------------------------------------------------------------------
user fee user fee FY 97 FY 98 FY 99 FY 00 FY 01 FY 02
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Vessel............................... $544.00 $369.50 $447.00 $454.50 $454.50 $461.75 $471.25 $480.25

[[Page 3827]]

Commercial Truck................................ 2.00 2.00 3.75 4.00 4.00 4.00 4.00 4.25
Commercial Truck Decal.......................... 40.00 40.00 40.00 80.00 80.00 80.00 80.00 85.00
Loaded Railroad Car............................. 7.00 7.00 6.50 6.50 6.50 6.75 6.75 7.00
Commercial Aircraft............................. 76.75 53.00 59.25 5.75 59.75 60.25 61.25 62.25
Airline Passenger............................... 2.00 1.45 1.95 2.00 2.00 2.05 2.10 2.15
--------------------------------------------------------------------------------------------------------------------------------------------------------

We have included in our explanation of each activity, the total fee
increase percentage through FY 2002 and the average annual fee increase
percentage. These percentages will differ among the activities
depending on our projected costs and estimated volumes for each
activity. As explained previously, each individual fee is set to
reflect the actual cost of providing the specific service. Therefore,
the percentage increase or decrease in a program is directly related to
the actual volume and costs in that program in the past.

Commercial Vessels

One of the AQI services we provide is inspection of commercial
vessels of 100 net tons or more. Our original user fee for this service
was $544.00, effective May 13, 1991. The current user fee--$369.50--
became effective on January 1, 1993, following publication of an
interim rule in the Federal Register on December 31, 1992 (Docket No.
92-148-1, 57 FR 62468 et seq., at 62472). This fee has not been
adjusted since January 1, 1993, and the reserve will be depleted by the
end of FY 1996.
Our proposed user fees for commercial vessels are: $447.00,
effective FY 1997; $454.50, effective FY 1998; $454.50, effective FY
1999; $461.75, effective FY 2000; $471.25, effective FY 2001; and
$480.25, effective FY 2002. Even though the fee increases over 6 years,
it remains below the original level set in 1991.

Commercial Trucks

We also offer AQI services to commercial trucks. Our truck user
fees are collected for us by the U.S. Customs Service (Customs).
The current truck user fees were established in FY 1991 (Docket 91-
028, 56 FR 14837 et seq., at 14844, effective May 13, 1991). The fees
have not been adjusted since then. Unfortunately, when we established
these user fees we underestimated personnel costs and overestimated the
volume of trucks that would be crossing the U.S.-Mexican border. We
have adjusted the decal portion of our collection system several times
to make it more efficient. However, because of the mechanics of issuing
decals, we have had to wait over a year after each change to evaluate
its effectiveness. In spite of the adjustments we have made, we did not
collect enough money during FYs 1992, 1994, and 1995 to recover the
steadily rising costs of providing AQI services to commercial trucks.
We foresee that FY 1996 will result in a deficit of over $1 million.
Because our user fees are intended to recover full cost, our truck user
fees must be raised.
The regulations currently provide that commercial trucks pay the
APHIS user fee each time they enter the customs territory of the United
States from Mexico ^{1. However, commercial trucks are also subject
to Customs user fees. Our regulations therefore provide that commercial
trucks must prepay the APHIS user fee if they are prepaying the Customs
user fee. In that case, the required APHIS user fee is 20 times the
user fee for each arrival, and is valid for an unlimited number of
entries during the calendar year (see Sec. 354.3(c)(3)(i) of the
regulations). The truck owner or operator, upon payment of the APHIS
and the Customs user fees, receives a decal to place on the truck
windshield. This is a joint decal, indicating that both the Customs and
APHIS user fees for the truck have been paid for that calendar year.
---------------------------------------------------------------------------

\1\ Sec. 354.3(c)(2)(i) of the regulations states that
commercial trucks entering the customs territory of the United
States from Canada are exempt from paying an APHIS user fee.
---------------------------------------------------------------------------

The current truck user fee is $2.00 for individual arrivals; $40.00
for a decal. We are proposing to adopt an individual arrival fee of
$3.75 for FY 1997, $4.00 for FYs 1998 through 2001, and $4.25 in FY
2002. We are proposing decal fees of $40.00 in FY 1997, $80.00 FYs 1998
through 2001, and $85.00 in FY 2002. These proposed fee increases would
ensure that we recover the full cost of providing AQI services to
commercial trucks, except in FY 1997.
With the exception of FY 1997, we are proposing to retain a prepaid
truck user fee of 20 times the user fee for each arrival. For FY 1997
we are proposing a prepaid truck user fee of nearly 11 times the
proposed user fee for each arrival. This would result in a prepaid user
fee for FY 1997 of $40.00, the same as the current prepaid user fee for
commercial trucks. The reason for this is that Customs has already
printed decals for FY 1997. The cost of reprinting decals and replacing
those which have already been issued is greater than the amount in fees
that could be collected if replacement decals were printed.

Commercial Railroad Cars

Another AQI service we offer is inspection of commercial railroad
cars. Our current user fee for this service is $7.00 per loaded
commercial railroad car for each arrival, or, if user fees are prepaid,
an amount 20 times the individual arrival fee for each loaded rail car.
Prepaid user fees cover one calendar year's worth of AQI inspections.
These fees have not been adjusted since they were established in FY
1991 (Docket 91-028, 56 FR 14837 et seq., at 14845, effective May 13,
1991).
We are proposing to adopt user fees of $6.50, effective FYs 1997
through 1999; $6.75, effective FYs 2000 and 2001; and $7.00, effective
FY 2002. These proposed user fees are all less than or equal to the
current fee.

Commercial Aircraft User Fee

Our user fees also cover the cost of AQI services provided by APHIS
in connection with the arrival of international commercial aircraft at
ports in the customs territory of the United States.
The current user fee for international commercial aircraft became
effective on March 1, 1996, following publication of a final rule in
the Federal Register on January 29, 1996 (Docket No. 94-074-2, 61 FR
2660-2665). At that time the fee was reduced to $53.00. This reduction
was the second since the user fee was originally set at $76.75,
effective February 9, 1992. The other reduction was from $76.75 to
$61.00, effective January 1, 1993 (Docket No. 92-148-1, 57 FR 62468-
62473).
We are now proposing to amend the user fee for international
commercial aircraft. The fee would be adjusted as

[[Page 3828]]

follows: $59.25, effective FY 1997; $59.75, effective FYs 1998 and
1999; $60.25, effective FY 2000; $61.25, effective FY 2001; and $62.25,
effective FY 2002. This user fee would remain in FY 2002 substantially
below the $76.75 level it was originally set at in 1992.

International Airline Passenger User Fee

Another service our user fees cover is the cost of AQI services
provided by APHIS in connection with the arrival of international
airline passengers at a port in the customs territory of the United
States.
Our original user fee for international airline passengers was
$2.00, effective May 13, 1991. The current $1.45 user fee became
effective January 1, 1993, following publication of an interim rule in
the Federal Register on December 31, 1992 (Docket No. 92-148-1, 57 FR
62468 et seq., at 62472). This fee has not been adjusted in nearly 3
years, and the reserve has been reduced to 25.23 percent of annual
operating costs. However, if this fee is not increased, the entire
reserve will be depleted sometime in FY 1998.
We are proposing to raise the international air passenger user fee
to $1.95 in FY 1997, $2.00 in FYs 1998 and 1999, $2.05 in FY 2000,
$2.10 in FY 2001, and $2.15 in FY 2002. Under our proposal, this user
fee would increase in FY 1997 to $1.95 and then increase to the
original level and remain stable through FY 1999. In FYs 2000 through
2002 it would increase by approximately 2.5 percent per annum. Spread
over 6 years, this is an average annual increase of less than 1 percent
above the original level, and 48 percent above the current fee.
Most of the increase in this user fee would be in FY 1997. Over the
last several years, increased level of passenger demand has led APHIS
to expand the AQI program to improve service by reducing passenger
delays and better safeguarding U.S. agriculture by reducing the risk of
exotic pests entering the country. We have hired over 250 new officers
and canine teams specifically to clear international airline
passengers. The additional personnel will enable us to keep pace with
workload demand, while performing high quality inspection services.
However, hiring new personnel to reduce passenger delays and reduce the
risk of exotic pests entering the country increases our costs to
provide inspection services. This increase in costs (as well as
eliminating further draw down in the reserve) is reflected in the
initial fee increase.

Miscellaneous Amendments

We are also proposing to amend the regulations to clarify that all
user fees collected from international passengers on behalf of APHIS
are to be held in trust for the United States by each person collecting
such user fees, by any person holding such fees, or by the person who
is ultimately responsible for remittance of such fees to APHIS. By
clarifying that the international passenger user fees are held in
trust, we make it clear that the person collecting or possessing the
fees shall hold only a possessory interest and not an equitable
interest in such fees.
We will allow the person collecting or holding the fees to retain
any interest earned on the fees between the time of collection and the
time the fees are due to be remitted to APHIS. This would help offset
the cost of collecting and remitting the fees to APHIS. All other
provisions of our current regulations, such as the date and form of
remittance, would remain the same.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been reviewed under Executive Order 12866. The rule
has been determined to be significant for the purposes of Executive
Order 12866 and, therefore, has been reviewed by the Office of
Management and Budget.
This proposed rule, if adopted, would, over a 6 year period,
generally increase user fees for certain international airline
passengers, commercial aircraft, commercial vessels, commercial trucks,
and commercial railroad cars, in order to recover the cost to APHIS of
providing services. Some user fees would be initially reduced.
Amendments to user fees are necessary to adjust for changes in service
volume and in costs.
These proposed fee changes would directly affect international
commercial maritime vessels of 100 net tons or more, commercial trucks,
loaded commercial railroad cars, and commercial aircraft arriving at
ports in the customs territory of the United States. The impact of
adjusting each fee is discussed separately below.
The proposed fee changes would also directly impact international
airline passengers arriving at ports in the customs territory of the
United States. However, we have not included a discussion of the effect
on airline passengers, as individuals are not covered by the Regulatory
Flexibility Act.

Commercial Vessels

According to the Bureau of the Census, there were 334 U.S.
businesses in 1992 engaged in water transportation of freight
internationally between the United States and foreign ports. Of these
businesses, at least 93 percent would be considered small according to
SBA criteria for a small entity in this category (i.e., an entity that
employs fewer than 500 persons).
APHIS user fees for commercial vessels apply only to those of 100
net tons or more arriving from foreign ports, except ports in Canada.
All of the United States' oceangoing fleet exceeds 100 net tons, but
only a limited portion engages in foreign trade. Data from the
Department of Transportation's Maritime Administration shows that there
were 319 private oceangoing merchant vessels in the United States at
the beginning of 1996. Of these vessels, 127 are tankers and the
remainder are dry cargo vessels. The vast majority of the tankers
operate nearly exclusively between United States ports. They are
therefore not subject to the APHIS commercial vessel user fee. Those
vessels subject to the APHIS user fee are mostly dry cargo vessels
operating between the United States and foreign ports. We believe,
however, that the impact of the proposed APHIS user fees on these
vessels is likely to be minimal, whether a vessel is operated by a
small or a large entity. Total daily operating costs for dry cargo
vessels idle in port averages between $23,600 and $26,800. The proposed
$77.50 user fee increase for FY 1997 represents less than 0.4 percent
of one day's operating costs of an average dry cargo vessel while in
port, and remains $97.00 below the original fee set in 1991.
For subsequent years, we are proposing either no fee increase (FY
1999) or much smaller increases ($7.50, FY 1998; $7.25, FY 2000; $9.50,
FY 2001; and $9.00, FY 2002). Therefore, we believe the impact of our
proposed commercial vessel user fees on small businesses would be
minimal.

Commercial Trucks

The SBA criterion for a small trucking firm is one whose annual
receipts are less than $18.5 million. We are unable to accurately
estimate the number of U.S. firms that would be considered small by
this criterion. However, we believe U.S. firms would be largely
unaffected by the proposed fee changes. In 1991, transportation
expenses for commercial U.S. trucks traveling from Mexico to the United
States varied between $85.00 and $175.00 per trip for trucks carrying
non-agricultural commodities. Assuming constant costs, adding $2.00 to
the user fee per truck,

[[Page 3829]]

per crossing, as we propose,^{2, would represent an increase in
operating expenses of between 1.1 and 2.4 percent for trucks carrying
non-agricultural commodities. Transportation expenses for trucks
hauling agricultural commodities ranged from $300.00 to $1,700.00 per
trip in 1991. Again, assuming constant costs, our proposed user fee
increases would represent operating expense increases of between 0.12
and 0.67 percent for trucks hauling agricultural goods. It therefore
appears that the impact on small U.S. independent trucking firms would
be insignificant.
---------------------------------------------------------------------------

\2\ A decal is also available which allows unlimited border
crossings per year for one fee. This decal is available only for
trucks which prepay the U.S. Customs user fee which applies to them.
---------------------------------------------------------------------------

Commercial Railroad Cars

There are 5 U.S. railroad companies currently transporting goods
across the U.S.-Mexican border. These railroad companies would be
directly affected by our proposal to reduce our user fee for this
service. These railroad companies would also be directly affected by
the subsequent fee increases we are proposing. However, we are not
proposing to increase this fee until FY 2002, at which time the fee
would increase to an amount equal to the current fee. We are not
proposing to increase the user fee beyond the current rate. Proposed
user fee changes would affect direct operating expenses. Two of these
railroad companies met the SBA criterion for small entities (i.e.,
fewer than 1,500 employees). As of 1991, the most recent year for which
figures are available, these small railroad companies were transporting
between 960 and 2,000 loaded railroad cars into the United States from
Mexico annually. These cars were all subject to the APHIS user fee.
Assuming a similar number of cars subject to inspection in future
years, in FY 1997 reduced user fees would result in a cost savings for
these railroad companies of between $480.00 and $1,000.00. Specific
data on the operating expenses or profit margins of these railroad
companies is not available to us. However, we believe the proposed fee
changes would not have any significant economic effect on small
railroad companies.

Commercial Airlines

According to the latest figures available from the Bureau of the
Census, domestic and international airlines employed a total of 707,148
employees in 1992. SBA criterion for a small airline is one that
employs 1,500 or fewer employees. Although the size distribution of air
carriers affected by our user fees is unknown, we anticipate that the
impact of the proposed fee increases will be minimal. The greatest
proposed fee increase--$6.25 per aircraft per entry in FY 1997--would,
when applied to all aircraft subject to our fee, comprise less than 0.1
percent of the average operating costs of air carriers. In addition,
the APHIS user fee would remain lower in FY 2002 than it was at its
inception, despite increases starting in FY 1997.
In addition to user fees paid directly by airlines for aircraft
inspection, airlines collect user fees on our behalf from passengers.
Airlines already have collection and disbursement systems in place for
international passengers. We believe it is unlikely that there would be
any significant increase in the costs of maintaining these systems as a
result of our proposed rule. We are proposing that airlines establish
trust accounts for user fees collected from passengers. However, we are
also proposing that airlines may retain any interest earned by monies
in such accounts.
Under these circumstances, the Administrator of the Animal and
Plant Health Inspection Service has determined that this action would
not have a significant economic impact on a substantial number of small
entities.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic
Assistance under No. 10.025 and is subject to Executive Order 12372,
which requires intergovernmental consultation with State and local
officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. If this proposed rule is adopted: (1) All State
and local laws and regulations that are inconsistent with this rule
will be preempted; (2) no retroactive effect will be given to this
rule; and (3) administrative proceedings will not be required before
parties may file suit in court challenging this rule.

Paperwork Reduction Act

This proposed rule contains no new information collection or
recordkeeping requirements under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).

List of Subjects in 7 CFR Part 354

Exports, Government employees, Imports, Plant diseases and pests,
Quarantine, Reporting and recordkeeping requirements, Travel and
transportation expenses.

Accordingly, 7 CFR part 354 would be amended as follows:

PART 354--OVERTIME SERVICES RELATING TO IMPORTS AND EXPORTS; AND
USER FEES

1. The authority citation for part 354 would continue to read as
follows:

Authority: 7 U.S.C. 2260; 21 U.S.C. 136 and 136a; 49 U.S.C.
1741; 7 CFR 2.22, 2.80, and 371.2(c).

2. Section 354.3 would be amended by revising paragraphs (b)(1),
(c)(1), (c)(3)(i) introductory text, (d)(1), (e)(1), and (f)(1) to read
as follows, and by adding a new paragraph (f)(4)(i)(C) to read as
follows:

Sec. 354.3 User fees for certain international services.

* * * * *
(b) * * * (1) Except as provided in paragraph (b)(2) of this
section, the master, licensed deck officer, or purser of any commercial
vessel which is subject to inspection under part 330 of this chapter or
9 CFR chapter I, subchapter D, and which is either required to make
entry at the customs house under 19 CFR 4.3 or is a United States-flag
vessel proceeding coastwise under 19 CFR 4.85, shall, upon arrival,
proceed to Customs and pay an APHIS user fee. The APHIS user fee for
each arrival, not to exceed 15 payments in a calendar year, is shown in
the following table. The APHIS user fee shall be collected at each port
of arrival.

------------------------------------------------------------------------
Effective dates Amount
------------------------------------------------------------------------
[Effective date of docket] through September 30, 1997........ $447.50
October 1, 1997 through September 30, 1998................... 454.50
October 1, 1998 through September 30, 1999................... 454.50
October 1, 1999 through September 30, 2000................... 461.75
October 1, 2000 through September 30, 2001................... 471.25
October 1, 2001.............................................. 480.25
------------------------------------------------------------------------

* * * * *
(c) * * * (1) Except as provided in paragraph (c)(2) of this
section, the driver or other person in charge of a commercial truck
which is entering the customs territory of the United States and which
is subject to inspection under part 330 of this chapter or under 9 CFR,
chapter I, subchapter D, must, upon arrival, proceed to Customs and pay
an APHIS user fee for each arrival, as shown in the following table:

[[Page 3830]]

October 1, 1997 through September 30, 1998................... 4.00
October 1, 1998 through September 30, 1999................... 4.00
October 1, 1999 through September 30, 2000................... 4.00
October 1, 2000 through September 30, 2001................... 4.00
October 1, 2001.............................................. 4.25
------------------------------------------------------------------------

* * * * *
(3) * * *
(i) The owner or operator of a commercial truck, if entering the
customs territory of the United States from Mexico and applying for a
prepaid Customs permit for a calendar year, must apply for a prepaid
APHIS permit for the same calendar year. Applicants must apply to
Customs for prepaid APHIS permits.^{1 The following information must
be provided, together with payment of an amount 20 times the APHIS user
fee for each arrival, except, that through September 30, 1997, the
amount to be paid is $40.00:
---------------------------------------------------------------------------

\1\ Applicants should refer to Customs Service regulations (19
CFR part 24) for specific instructions.
---------------------------------------------------------------------------

* * * * *
(d) * * * (1) Except as provided in paragraph (d)(2) of this
section, an APHIS user fee will be charged for each loaded commercial
railroad car which is subject to inspection under part 330 of this
chapter or under 9 CFR chapter I, subchapter D, upon each arrival. The
railroad company receiving a commercial railroad car in interchange at
a port of entry or, barring interchange, the railroad company moving a
commercial railroad car in line haul service into the customs territory
of the United States, is responsible for paying the APHIS user fee. The
APHIS user fee for each arrival of a loaded railroad car is shown in
the following table. If the APHIS user fee is prepaid for all arrivals
of a commercial railroad car during a calendar year, the APHIS user fee
is an amount 20 times the APHIS user fee for each arrival.

------------------------------------------------------------------------
Effective dates Amount
------------------------------------------------------------------------
[Effective date of docket] through September 30, 1997........ $6.50
October 1, 1997 through September 30, 1998................... 6.50
October 1, 1998 through September 30, 1999................... 6.50
October 1, 1999 through September 30, 2000................... 6.75
October 1, 2000 through September 30, 2001................... 6.75
October 1, 2001.............................................. 7.00
------------------------------------------------------------------------

* * * * *
(e) * * * (1) Except as provided in paragraph (e)(2) of this
section, an APHIS user fee will be charged for each commercial aircraft
which is arriving, or which has arrived and is proceeding from one
United States airport to another under a United States Customs Service
``Permit to Proceed,'' as specified in title 19, Code of Federal
Regulations, Secs. 122.81 through 122.85, or an ``Agricultural
Clearance or Safeguard Order'' (PPQ Form 250), used pursuant to title
7, Code of Federal Regulations, Sec. 330.400 and title 9, Code of
Federal Regulations, Sec. 94.5, and which is subject to inspection
under part 330 of this chapter or 9 CFR chapter I, subchapter D. Each
carrier is responsible for paying the APHIS user fee. The APHIS user
fee for each arrival is shown in the following table.

------------------------------------------------------------------------
Effective dates Amount
------------------------------------------------------------------------
[Effective date of docket] through September 30, 1997........ $59.25
October 1, 1997 through September 30, 1998................... 59.75
October 1, 1998 through September 30, 1999................... 59.75
October 1, 1999 through September 30, 2000................... 60.25
October 1, 2000 through September 30, 2001................... 61.25
October 1, 2001.............................................. 62.25
------------------------------------------------------------------------

* * * * *
(f) * * * (1) Except as specified in paragraph (f)(2) of this
section, each passenger aboard a commercial aircraft who is subject to
inspection under part 330 of this chapter or 9 CFR, chapter I,
subchapter D, upon arrival from a place outside of the customs
territory of the United States, must pay an APHIS user fee. The APHIS
user fee for each arrival is shown in the following table.

------------------------------------------------------------------------
Effective dates Amount
------------------------------------------------------------------------
[Effective date of docket] through September 30, 1997........ $1.95
October 1, 1997 through September 30, 1998................... 2.00
October 1, 1998 through September 30, 1999................... 2.00
October 1, 1999 through September 30, 2000................... 2.05
October 1, 2000 through September 30, 2001................... 2.10
October 1, 2001.............................................. 2.15
------------------------------------------------------------------------

* * * * *
(4) * * *
(i) * * *
(C) APHIS user fees collected from international passengers
pursuant to paragraph (f) of this section shall be held in trust for
the United States by the person collecting such fees, by any person
holding such fees, or by the person who is ultimately responsible for
remittance of such fees to APHIS. APHIS user fees collected from
international passengers shall be accounted for separately and shall be
regarded as trust funds held by the person possessing such fees as
agents, for the beneficial interest of the United States. All such user
fees held by any person shall be property in which the person holds
only a possessory interest and not an equitable interest. As
compensation for collecting, handling, and remitting the APHIS user
fees for international passengers, the person holding such user fees
shall be entitled to any interest or other investment return earned on
the user fees between the time of collection and the time the user fees
are due to be remitted to APHIS under this section. Nothing in this
section shall affect APHIS' right to collect interest for late
remittance.
* * * * *
Done in Washington, DC, this 21st day of January 1997.
Terry L. Medley,
Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 97-1892 Filed 1-24-97; 8:45 am]
BILLING CODE 3410-34-P}}}