[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.

-----------------------------------------------------------------------

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%)
--------------------------------------------------------------------------------------------------------------------------------------------------------

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]]



----------------------------------------------------------------------------------------------------------------
                                                                                                    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
                                 -------------------------------------------------------------------------------
      Total.....................       134,108,000  ................  ...........  ...........       135,283,815
----------------------------------------------------------------------------------------------------------------
                                       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
                                 -------------------------------------------------------------------------------
      Total.....................       139,299,000  ................  ...........  ...........       141,351,201
----------------------------------------------------------------------------------------------------------------
                                      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
                                 -------------------------------------------------------------------------------
      Total.....................       141,101,000  ................  ...........  ...........       143,513,876
----------------------------------------------------------------------------------------------------------------
                                       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
                                 -------------------------------------------------------------------------------
      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:

------------------------------------------------------------------------
                       Effective dates                           Amount 
------------------------------------------------------------------------
[Effective date of docket] through September 30, 1997........      $3.75

[[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