[Federal Register Volume 62, Number 142 (Thursday, July 24, 1997)]
[Rules and Regulations]
[Pages 39747-39755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19499]



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  Federal Register / Vol. 62, No. 142 / Thursday, July 24, 1997 / Rules 
and Regulations  

[[Page 39747]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. 96-038-3]
RIN 0579-AA81


User Fees; Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are amending 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 setting 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 fiscal year 2002.

EFFECTIVE DATE: September 1, 1997.

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, User Fees Section Head, FSSB, BAD, APHIS, 4700 River Road Unit 
54, Riverdale, MD 20737-1232, (301) 734-8351.

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). These 
services include, among other things, inspecting 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 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, as amended, 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, as 
amended, 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. 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 (FY) 2002 are to be deposited in 
the Account. For each FY 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 FYs 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.
    Under the Farm Bill, as amended, we may spend all AQI user fees we 
collect in excess of $100 million for FYs 1997 through 2002, 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.
    On January 27, 1997, we published in the Federal Register (62 FR 
3823-3830, Docket No. 96-038-1) a proposal to amend the regulations by 
adjusting our 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 
and setting user fees in advance for these services for FY 1997 through 
2002.
    We solicited comments concerning our proposal for 60 days ending 
March 28, 1997. We received 15 comments by that date. They were from 
county and State government agencies, airline industry representatives, 
maritime representatives, and agriculture representatives, including 
producers and farmers.
    Five commenters approved of the proposal as written. Ten commenters 
opposed some portion of the proposal, supported part of the proposal, 
or offered suggestions for improvements. Several commenters disagreed 
with the amount of our fees, questioned our projections, or questioned 
fees such as the annual truck decal, the vessel fee, and the aircraft 
fee versus the international passenger fee. We carefully considered the 
comments, all of which are discussed below by topic, and reviewed our 
analysis. However, none of the commenters offered additional 
information to revise our analysis. In the absence of any new

[[Page 39748]]

information, we continue to believe that the analysis presented in the 
proposal is sound and that the proposed fees are appropriate. 
Therefore, based on the rationale set forth in the proposed rule and in 
this document, we are adopting the provisions of the proposed rule as a 
final rule without change.

Fees for 6 Years in Advance

    Two commenters disliked our proposal to adopt user fees for 6 years 
in advance; three commenters liked the idea.
    By proposing user fees in advance for a 6-year period, we are 
responding to comments we received in response to past proposals. Those 
commenters stated that it was difficult to make business plans without 
knowing in advance when fees would change and by how much. Also, 
commenters have, in the past, objected to large fee increases, even 
though they occurred infrequently. We believe adopting user fees for 6 
years in advance alleviates these concerns. Under this rule, business 
planning should be easier and fee increases will be more gradual.

Vessel Inspection Fee

    Two commenters objected to the increase in the vessel inspection 
fee. They based their objections on the small percentage of ships that 
are boarded in the Port of Hampton Roads in Virginia.
    We inspect almost all internationally arriving vessels at ports of 
entry in the United States. The user fees for these inspections are 
based on the total cost of the vessel inspection program. The type of 
inspection ranges from an exterior inspection from outside the vessel 
to a boarding of the vessel for full-scale inspection of the interior 
and cargo. The decision to board a vessel is based on numerous 
variables, including the origin, cargo, and type of the vessel, which 
indicate the risk presented by a vessel of introducing foreign pests 
and diseases into the United States. A system that attempted to account 
for every possible inspection situation would be unwieldy and expensive 
to administer and would most likely result in higher user fees.
    One commenter suggested that all options to reduce costs should be 
considered before raising vessel inspection fees.
    We agree with the commenter's approach. We are constantly trying to 
reduce costs and minimize necessary cost increases. We raise our user 
fees only when necessary to reflect unavoidable cost increases. 
Likewise, because APHIS user fees reflect the actual cost of providing 
a service, if we can reduce the cost of a service, we can reduce the 
user fee for that service.

User Fees for Commercial Trucks

    One commenter questioned why commercial trucks entering the United 
States from Canada are exempt from paying an APHIS user fee and 
suggested that trucks from Canada should pay the same fee as trucks 
entering from Mexico.
    APHIS restricts the importation of plants and animals and/or plant 
and animal products from foreign countries based on the pest or disease 
risk associated with those imports. In many cases, such imports from 
Canada present a very low risk, and few restrictions apply. Under these 
circumstances it is not necessary for APHIS to provide inspection 
services for commercial trucks from Canada. Because APHIS provides no 
inspection services, an APHIS user fee is not justified.
    One commenter agreed that the lower truck decal price for FY 1997 
is warranted. However, the commenter suggested that equity might call 
for a 1-year moratorium on increasing the individual truck crossing fee 
so that the two fees would not have a noticeable difference. Another 
commenter questioned who is subsidizing the shortfall in user fees for 
providing AQI inspections for trucks using the annual decal during FY 
1997.
    As explained in the proposed rule, both the truck decal and 
individual truck crossing fees must be raised. The FY 1997 truck decal 
cannot be changed because the decals have already been printed and many 
have been sold. Therefore, APHIS is covering the FY 1997 truck decal 
shortfall from the reserve fund. However, we believe the individual 
crossing fee must be increased for FY 1997, to help ensure that the 
full cost of inspecting these trucks is covered by user fees. It should 
be noted that, by the date this rule is effective, FY 1997 will be more 
than half over, and most truck decals are purchased early in the year. 
Therefore, the disparity between the FY 1997 truck decal fee and the 
individual crossing fee will be temporary and most likely minimal.
    In addition, it is less expensive and more efficient to allow 
prepayment of fees for commercial trucks than to attempt to collect and 
process a fee for each arrival. It is possible that individual trucks 
might pay more in user fees if there were no prepayment provisions. 
However, the possible loss that will be incurred in FY 1997 if there is 
a shortfall is more than offset by the savings of a more efficient 
collection system.
    One commenter stated that the annual decal for commercial trucks 
violates the law, stating that the decal user fee would not cover the 
cost of inspections. For example, if the truck with a decal entered the 
United States enough times, then the average fee per inspection would 
be lower than the actual cost for the service.
    Our user fees cover the cost of providing services for the entire 
inspection program. Therefore, sometimes fees may be more or less than 
the actual cost of services received for individual cases. As explained 
in our proposal, the user fee for the annual decal for commercial 
trucks is calculated as 20 times the individual crossing fee. The total 
collected for commercial truck user fees for annual decals and 
individual crossing fees is expected to recover the cost of providing 
those inspection services.

Commercial Truck Versus Commercial Aircraft User Fees

    One commenter stated that inspecting a commercial truck takes 
approximately the same amount of time as inspecting a commercial 
aircraft and implied that the fees should be the same.
    In our experience, inspecting a commercial aircraft is much more 
involved than inspecting a commercial truck, and, therefore, takes 
longer. The result is a higher user fee for aircraft.
    One commenter complained that commercial airlines should be offered 
quantity discounts similar to that offered commercial trucks through 
our decal system.
    The annual decal available for trucks is a joint APHIS-U.S. Customs 
Service (Customs) decal covering fees for inspections by both agencies. 
Commercial trucks may purchase an annual decal for APHIS inspections 
when they purchase an annual decal from Customs. Although this exact 
approach would probably not be applicable to aircraft, we appreciate 
the commenter's suggestion. If we decide to make any changes based on 
this comment, we will publish a proposal in the Federal Register for 
public comment.

Commercial Aircraft and Airline Passenger User Fees

    One commenter pointed out that passenger and aircraft inspection 
fees would represent a large percent of AQI collections in each year 
from FY 1997 through 2002. The commenter implied that passenger and 
aircraft inspection fees subsidize other AQI services. Further, the 
commenter asserted that

[[Page 39749]]

since we do not charge user fees for private vehicles entering the 
United States at land border ports, it appears that those individuals 
and vehicles who do pay user fees are subsidizing the inspection 
process.
    Each service category was considered separately. Each category 
must, through user fee receipts, return enough money to APHIS to cover 
the cost of providing AQI services to that particular category. Costs 
were assigned directly to a category when the cost directly related to 
providing the service. For example, our detector dog program only 
applies to passenger inspections. Therefore, the passenger inspection 
fees includes the full costs for the detector dog program. However, 
where a cost benefits all categories of service, it was pro-rated among 
the categories based on historic direct labor staff hours.
    AQI user fees are used only for user fee related activities. APHIS 
receives appropriated funds to cover the costs of those AQI services 
not covered by user fees. This includes, among other things, inspection 
of passengers and aircraft from Hawaii and Puerto Rico, and certain 
Mexican land border activities, including pedestrian and personal 
vehicle inspections. Commercial aircraft and aircraft passenger fees do 
not subsidize any other AQI services.
    One commenter stated that the air passenger fee should cover the 
inspection of the aircraft as well. Two commenters stated that a 
separate fee for inspection of the aircraft and its passengers violates 
the law. The commenters asserted that the inspection of the aircraft 
for food items and garbage is specifically passenger related. The 
commenters point out that neither Customs nor the Immigration and 
Naturalization Service (INS) assess a commercial aircraft fee separate 
from a passenger fee.
    On January 9, 1992, we published a final rule in the Federal 
Register (57 FR 755-773, Docket No. 91-135) that amended our user fees 
to shift all passenger-related inspection costs from the aircraft user 
fee to the airline passenger user fee. The airline passenger user fee 
includes the cost of inspections related to the presence of passengers 
on aircraft, such as inspection of the passenger cabin. Specifically, 
the airline passenger user fee covers inspection of the aircraft 
galley, including garbage, the passenger compartment, the baggage hold, 
and all related administrative and overhead expenses. The aircraft fee 
covers the inspection of the aircraft and its cargo.
    Passengers and aircraft, and the cargo it carries, pose different 
risks of bringing foreign diseases and pests into the United States. 
For example, passengers may have visited a farm that may present 
agricultural concerns, or they may be carrying infested fruits or 
vegetables or infected meat on their persons or in their baggage. 
Aircraft may be infested with a pest that has escaped from infested 
cargo or entered the aircraft when it was in an infested locality. 
Therefore, aircraft or cargo may need to be fumigated or disinfected. 
For all these reasons, passengers and their baggage must be inspected 
separately and in a different manner than the aircraft and its cargo.
    It seems appropriate that passengers themselves pay the APHIS user 
fees for passengers. Although airlines collect the APHIS passenger user 
fee along with the price of the ticket and then remit the APHIS user 
fee to APHIS, the airlines could be charged a user fee that would cover 
the entire cost of both aircraft and passenger inspections. If we 
decide to consider such a change, we will publish a proposal in the 
Federal Register for public comment.

International Trade

    One commenter asserted that raising user fees could decrease 
exports.
    Although some countries do not currently charge for export-related 
services, such as inspections, user fees for these services are being 
adopted by more and more countries. Therefore, we do not believe that 
U.S. exporters are at a competitive disadvantage compared with 
exporters in other countries.

Unrestricted Access to Resources

    One commenter suggested that APHIS should not have unrestricted 
access to resources.
    We do not have unrestricted access to the funds collected through 
our user fees. Congress only gives access to the amount appropriated 
plus any amount of collected user fees above $100 million. Our access 
is also restricted in that we may only use the funds for AQI services 
rendered.

Congressional Funding

    One commenter suggested that ``if Congress stopped funding APHIS as 
a cost cutting measure, then APHIS should reduce spending and 
expenses.''
    Congress still funds APHIS with appropriated funds; however, the 
source of most of the appropriations for AQI services is collected user 
fees. The cost of providing AQI services is projected to exceed $100 
million for each of the years 1997 through 2002, and the AQI user fees 
should generate enough funds to cover these costs. As explained in the 
proposed rule, APHIS automatically has access to user fee funds in 
excess of $100 million that are collected each year, but it takes 
appropriation action to make that first $100 million available to APHIS 
each year. If the full $100 million is not appropriated during any year 
between 1997 and 2002, APHIS may find it necessary to increase the 
amounts of individual user fees through rulemaking, thereby increasing 
the amount of fees collected in excess of $100 million. Increasing the 
fees by the proper amount would generate enough funds to compensate for 
the user fee funds diverted by an appropriation of less than $100 
million, and would ensure that APHIS has enough funds to cover the 
costs of providing the AQI services.

Automated Commercial System Investment in FY 1997 and 1998

    One commenter approved of our dedicating funds to fully implement 
our use of Customs' Automated Commercial System (ACS). Several other 
commenters expressed confusion about how and when the $3.175 million 
investment would be made.
    We understand the confusion. To clarify, the implementation costs 
totaling $6.35 million were originally intended to be spent in FY 1996. 
Due to technology constraints, we did not implement the system in FY 
1996. Therefore, our plan is to spread the implementation over 2 years 
with a one-time investment of $3.175 million each year. In the proposed 
rule, the spending estimates for FYs 1997 and 1998 included $3.175 
million in each year for a total investment of $6.35 million for ACS 
implementation.

Cost Cutting and Changes in Inspection Process

    One commenter suggested a USDA-wide reorganization in an effort to 
streamline costs.
    A USDA-wide reorganization is outside the scope of our control and 
beyond the scope of the proposed rule. Nonetheless, we would like to 
point out that USDA has and is still undergoing reorganization to 
reduce costs and increase efficiency. As part of this reorganization, 
APHIS has taken actions to reduce costs and increase efficiency. Many 
of these actions are discussed later on in this document in response to 
other comments.
    Several commenters questioned increasing the number of inspectors. 
One commenter asserted the percentage of these increases during FY 1996 
did not relate to the growth in airline operations or a change in the 
form of the agricultural inspections. The commenter also questioned 
whether the large increase in staff in FY 1996 was a one

[[Page 39750]]

time augmentation or a new rate of growth.
    The large increase in staff in FY 1996 was mandated by Congress to 
bring APHIS up to a reasonable level of service. With these new hires, 
we staffed new terminals, extended service hours, and provided more and 
better service. We increased staff based on need; however, we do not 
foresee increases such as in FY 1996 to become the trend. In fact, as 
stated in our proposal, we are planning to hire only 30 additional 
officers each year, which is fully in line with our estimates of volume 
increases.
    Several commenters suggested that we should cut costs before 
raising user fees.
    We are always looking for ways to reduce our costs. One cost 
cutting change we made this year was to centralize our detector dog 
training program. Previously, we had three separate training centers. 
These have all been combined into a single facility in Orlando, FL. 
This facility trains dogs to detect agricultural products.
    We are planning in the near future to combine our regional offices 
into regional hubs over the next several years. Cost savings and better 
program delivery are two factors considered in this and other 
reorganizations. In addition, we have reduced Headquarters staffing, 
which lowers overhead costs.
    Several commenters suggested that we should improve efficiency 
before raising user fees. One commenter specifically suggested that we 
should find new methods to improve efficiency and enforcement via risk 
assessment and selective or targeted inspection. One commenter 
suggested that we need a new approach to the inspection process and 
should look for innovative ways of performing inspections. One 
commenter complained that APHIS currently does not seem to use 
computers for its work. One commenter stated that cost estimates need 
to consider the need for technology upgrades, such as the development 
and use of tomographic X-ray equipment.
    We are always looking for innovative approaches to improve our 
efficiency. Along with manual inspections, we use alternative 
inspection methods and technologies such as automated information 
systems, X-ray systems, and specially trained detector dogs. Examples 
of what we are doing in these areas and planned enhancements are 
described below.
    We determine where we need our resources based on risk assessment.
    We are focusing on facilitation, education, and compliance. 
Technology and other more efficient approaches facilitate inspections. 
Education informs the public of our mission.
    To facilitate passenger clearance, we use the Interagency Border 
Inspection System (IBIS), where it is available. IBIS contains incoming 
passenger information. To facilitate cargo movement, we use Customs' 
ACS and Automated Targeting Systems (ATS), where they are available. 
Today, more ports are using these systems, and we are continuing to 
expand the use of these systems to all of our ports. In addition, we 
are developing a system that will be integrated to ACS and ATS, so we 
will provide better information and communication with the public about 
the release and approval of cargo.
    In addition, we, along with other Federal inspection agencies, are 
negotiating with the airlines to develop an advance passenger 
information system to provide better technology to facilitate passenger 
clearance.
    We continue to expand the use of X-ray equipment as a screening 
tool in passenger baggage clearance at major international airports. 
There are X-ray scanning machines located at all foreign-arrival and 
predeparture sites. X-ray machines are used at international airports 
and on the U.S.-Mexico border. We replaced old X-ray equipment with 
modern X-rays which have integrated computers and provide improved 
quality through enhanced imaging.
    In partnership with the Federal Aviation Administration and the 
Department of the Army, we are developing a tomographic X-ray system 
that will automatically detect agricultural products in luggage and 
alert inspectors. When operational, we expect this system to provide 
more accurate images of the contents of baggage than current X-ray 
equipment can. We expect to improve our ability to make decisions about 
inspecting passenger baggage prior to passengers' picking up their 
baggage. Therefore, we expect to decrease the number of passengers in 
the inspection area and over time decrease the size of the inspection 
area thus reducing costs and time delays associated with the inspection 
process.
    The prototype for this tomographic X-ray system is scheduled to be 
tested in San Juan, PR, in April 1998. As with all of our enhancements, 
after the pilot test, we plan to implement this new technology at the 
largest, most active airports where the most people will benefit and 
there will be the greatest impact. We will adapt the implementation, as 
needed, to other locations and gradually incorporate this tool 
throughout all international airports.
    We continue to use specially trained dogs to detect prohibited 
items at major international airports. Detector dogs have proven useful 
in selecting bags to inspect and we plan to expand this program to meet 
increased risk.
    Several commenters questioned the apparent change in APHIS' role as 
compared to other Federal inspection agencies. One commenter asserted 
that APHIS' function in the airport environment is secondary to 
Customs, as Customs inspectors perform all primary inspections. The 
comment further asserted that this serves the needs of all agencies 
adequately without multiplying the hurdles confronting the arriving 
passenger.
    In the past, Customs inspectors opened passenger baggage and 
notified our inspectors when agricultural products were found. Customs 
has shifted their focus away from passenger processing to other areas 
that are more important from its perspective. Our priority continues to 
be finding agricultural products that could introduce foreign pests and 
diseases. One of the highest risks is from agricultural products in 
passenger baggage. Passengers may inadvertently carry infested fruits 
or vegetables or infected meat in their baggage. Therefore, we still 
need to open baggage to check for these agricultural products.
    In conjunction with both Customs and INS, we find ways to improve 
processing of passengers and cargo. Along with other Federal inspection 
agencies, we meet with the aircraft industry at least once a month as a 
member of the Federal Inspection Committee. As a result of the efforts 
of these groups and our continued attention to modernizing and 
improving our inspections, we have several efforts underway to improve 
efficiency and cut costs.
    One commenter questioned whether user fees have any correlation to 
the amount of services received by the user. One commenter questioned 
the relative efficiency of one port operation over another. One 
commenter suggested a sliding scale of fees based on location, 
efficiency, and general overhead.
    We realize that the amount of service for each user varies. 
However, the number of variables that determines the amount of service 
or length of time required to provide service is virtually infinite. A 
system that attempted to account for every possible inspection 
situation would be unwieldy and expensive to administer and would 
require the additional expenses to be included in the fee calculation.

[[Page 39751]]

Interpretations/Violations

    One commenter stated that the Farm Bill, as amended, does not 
eliminate the annual review requirement.
    Since the inception of our user fees, we have performed annual 
reviews of our user fees and adjusted fees as required. As stated in 
our proposed rule, 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 
proposed fee increases in the Federal Register for public comment.
    One commenter asserted that the Farm Bill, as amended, does not 
permit adjustment in advance of a determination of need.
    We disagree with the commenter's interpretation of the requirements 
of the Farm Bill, as amended. The Secretary is under no formal 
obligation to make a specific determination of need prior to the 
adjustment of fees. Nonetheless, the user fee adjustments we propose 
for FYs 1997 through 2002 were all based on cost estimates (i.e. a 
determination of need) for providing AQI services for future years. 
None of the fee adjustments will be effective until the fiscal year for 
which they were proposed. As we stated in our proposed rulemaking (see 
62 FR 3824), ``(w)e * * * 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 * * *. 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.'' Therefore, contrary to the 
commenter's assertions, no fees are being adjusted ``in advance of a 
determination of need.''
    One commenter suggested that by proposing user fees for 6 years, we 
avoid notice and comment rulemaking mandated by the Administrative 
Procedure Act (APA) (5 U.S.C. 551 et seq.). The commenter also stated 
that APHIS should be held accountable for timely rulemaking.
    APHIS has been actively pursuing different avenues to make user fee 
rulemaking more timely. Although beneficial for the result, the time 
spent to develop the user fees, analyze their potential impacts, and 
have other government organizations review our documents can cause 
significant delays in implementing our user fees. Therefore, in the 
past, our user fees have been out of date by the time they are 
effective. Proposing potential user fees in advance is an attempt to 
ensure timely rulemaking. Our 6-year proposal has gone through the 
standard notice and comment rulemaking process as required by the APA. 
Also, by proposing user fees for a 6-year period, we are responding to 
comments received in the past by providing information sooner for 
planning purposes and phasing in gradual increases rather than large 
increases.

Projections and Cost Estimates

    Several commenters stated that our proposed fees were either too 
high or too low.
    We have determined, using the best data available, the cost of each 
of the services for which we will charge an APHIS user fee. In 
addition, the services we provide and the cost of providing those 
services will change over time. Therefore, as stated in our proposal, 
we intend to monitor our fees throughout the year and review them at 
least annually. 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 proposed fee increases 
in the Federal Register for public comment.
    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 FYs served as a basis for 
calculating our projected costs.
    In FY 1992, APHIS established accounting procedures to segregate 
AQI user fee program costs. On December 31, 1992, we published a final 
rule in the Federal Register (57 FR 62469-62471, Docket No. 92-148-1) 
that amended some of our user fees and included a detailed description 
of these accounting procedures.
    As part of our accounting procedures, we established distinct 
accounting codes to record costs that can be directly related to each 
inspection activity.
    Other costs that cannot be directly charged to individual accounts 
are charged to ``distributable'' accounts. 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.
    Using these accounting procedures, we calculated the total cost of 
providing AQI services in each past year by determining the amounts in 
each direct-charge account, then adding the pro rata share of the 
distributable accounts.
    We then projected total costs to provide each category of service 
during each future 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, which include items at the regional and headquarters program 
staff levels. Finally, each projection included a pro rata share of 
agency-level support costs, 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.
    Each service category was considered separately. Each category 
must, through user fee receipts, return enough money to APHIS, to cover 
the cost of providing AQI services to that particular category.
    Several commenters questioned our cost estimates and variances 
between years. Specifically, commenters questioned the use of volumes, 
past estimates, and differences between FYs 1995, 1996, and 1997.
    In the proposed rule, different components were included in 
different categories. For example, because FY 1996 spending was used as 
the basis for calculations, the base amount did not include all of the 
components that were added to estimated projected costs for FY 1997.
    As explained in our proposed rule, we hired 217 new inspectors in 
FY 1996. Therefore, there was a large increase between FYs 1995 and 
1996. In addition, there were differences in the

[[Page 39752]]

per employee costs for new employees in various years, because all new 
hires were not employed for the full year.
    The information regarding spending estimates that we provided in 
the proposed rule was, in scope, the same information that we used to 
set the new user fees. Our user fees are based on data gathered at the 
work unit, region, and headquarters levels. For members of the public 
who, like the commenters, wish to obtain additional information, the 
names, addresses, and telephone numbers of knowledgeable APHIS 
personnel were provided in the proposed rule, and are provided in this 
document, under the heading FOR FURTHER INFORMATION CONTACT.
    One commenter stated APHIS' vessel volume was a low figure compared 
with the number that Customs reported entering in FY 1996. A similar 
comment was received comparing APHIS' international air passenger 
volume with INS' international air passenger volume.
    We acknowledge that our volume figures are lower, but it is easy to 
explain. First, the Customs number of vessels entering the United 
States for FY 1996 was for all vessel arrivals. APHIS only charges for 
the first 15 arrivals of vessels over 100 net tons and exempts vessels 
sailing solely between the United States and Canada. Secondly, the INS 
international air passenger volumes include all arriving international 
passengers. Again, APHIS is interested in a different portion of total 
international passengers and various passengers are exempt, including 
all passengers arriving from Canada. Therefore, our projections are and 
should be different from other Federal inspection agencies.

Reserve Fund

    Commenters suggested that the size of the APHIS reserve fund is 
unjustified. Two commenters stated that a far smaller reserve fund 
would be adequate. Both of these commenters compared APHIS' reserve 
fund with INS', which, according to one commenter, maintains a reserve 
fund of approximately 8 percent of annual operating expenses, or, 
according to the other commenter, maintains a reserve fund of 
approximately 1 month's worth of operating costs.
    APHIS' user fee authority provides for the maintenance of a 
reasonable balance in the user fee account. We link the reserve 
requirement in each category to the category's collection schedule. The 
reserves for the commercial aircraft and international air passenger 
user fee accounts are one-fourth of their respective annual costs 
because those fees are collected in arrears on a quarterly basis. The 
reserve requirement for commercial vessels and trucks is one-twelfth of 
that category's annual costs because those fees are remitted to APHIS 
monthly. The reserve requirement for loaded railroad cars is one-sixth 
of that category's annual costs because those fees are remitted to 
APHIS 2 months in arrears. We continue to believe that a fully funded 
reserve in each category's user fee account is essential to ensure the 
continuity of service in cases of bad debt, carrier insolvency, and 
fluctuations in activity volumes.

Additional Uses for Fees

    One commenter suggested additional services that could be funded 
from the AQI user fees.
    We have made no change to the rule based upon this comment since it 
is ouside the scope of this rulemaking proceeding.

Advisory Committee

    Two commenters suggested that APHIS should establish an advisory 
committee to assist in determining appropriate changes to the user fee 
amounts and expenditure of user fee funds. Both commenters referred to 
Customs' and INS' advisory committees.
    Both Customs and INS are mandated to establish advisory committees. 
The Farm Bill, as amended, has not authorized an advisory committee for 
APHIS' AQI user fees. We are taking no action based on these comments 
at this time. The establishment of an advisory committee is outside the 
scope of this rulemaking proceeding.

Miscellaneous Comments

    Two commenters questioned a USDA reorganization, which would 
consolidate the labs into five ``super-labs'' to reduce USDA expenses. 
They questioned the effect this would have on ship inspections.
    APHIS is not involved in any such reorganization. In addition, we 
are not aware of any such planned USDA reorganization to establish five 
``super-labs.'' However, if there was a USDA reorganization to reduce 
the Department's expenses, that reorganization might not reduce APHIS' 
vessel inspection expenses.

Miscellaneous

    We have made a correction to a typographical error in the user fee 
for vessel inspections for FY 1997. In the proposed rule, the user fee 
was shown as $447.00 in the Supplementary Information under the 
background and as $447.50 in the rule portion. The correct fee should 
be $447.00; we have changed the rule portion accordingly.

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 rule, will, 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 are initially reduced. Amendments to user fees are necessary to 
adjust for changes in service volume and in costs.
    These fee changes will 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 fee changes will 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 vessels sailing 
solely between Canadian and U.S. ports. 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

[[Page 39753]]

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 revised 
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 $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, there is 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 commercial 
vessel user fees on small businesses will 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 will 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, per crossing,1 will 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 user 
fee increases will 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 will not be significant.
---------------------------------------------------------------------------

    \1\ 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 Customs user fee which applies to them.
---------------------------------------------------------------------------

Commercial Railroad Cars

    There are five U.S. railroad companies currently transporting goods 
across the U.S.-Mexican border. These railroad companies will be 
directly affected by our reduced user fee for this service. These 
railroad companies will also be directly affected by the subsequent fee 
increases. However, we are not increasing this fee until FY 2002, at 
which time the fee will increase to an amount equal to the current fee. 
We are not increasing the user fee beyond the current rate. User fee 
changes will 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 will 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 fee changes will not have any 
significant economic effect on small railroad companies.

Commercial Airlines

    We received a comment that suggested that there were basic flaws in 
our analysis of the impact on commercial airlines required by the 
Regulatory Flexibility Act. Specifically, the commenter suggested that 
the analysis should have analyzed the impact on the airline industry's 
component parts. In addition, the analysis should have taken into 
consideration that the impact will fall disproportionately on certain 
airlines.
    In the Regulatory Flexibility Analysis prepared for the proposed 
rule, we used information available from the Bureau of the Census on 
domestic and international airlines. Our user fees are spread evenly 
across all incoming international flights, both domestic and 
international carriers are charged the same fee, regardless of size or 
location. Certain exceptions are specified in our regulations. All 
exemptions have been added over time based on suggestions and analysis 
that their pest risk is close to zero. In response to the comment, we 
have reviewed the available data and revised our analysis on commercial 
airlines.
    In FY 1995, 241 different companies, both foreign and domestic, had 
accounts with APHIS to pay user fees for commercial aircraft 
inspections. The separation of these companies into large and small 
categories according to Small Business Administration size 
classifications cannot be determined. While the size distribution of 
these carriers that enter the continental United States and subject to 
the user fee 2 is unknown, APHIS still anticipates that the 
impact of the user fee increase will be small regardless of carrier 
size. The increase of $6.25 in the first year, and a total increase of 
$9.25 over the 6-year period should represent a very small portion of 
operating costs for an international flight arriving in the United 
States.
---------------------------------------------------------------------------

    \2\ The following are exempt from the user fee: aircraft moving 
solely between the United States and Canada, aircraft used 
exclusively in governmental purposes of the United States or a 
foreign government, aircraft making an emergency landing, any 
passenger plane with 64 or fewer seats not carrying cargo such as 
fresh fruit, aircraft moving from the U.S. Virgin Islands to Puerto 
Rico, and aircraft making an in transit stop at a port of entry, but 
not required to go through any portion of the federal clearance 
process.
---------------------------------------------------------------------------

    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 rule. Airlines will establish trust accounts for user 
fees collected from passengers. However, 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws and 
regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule.

Paperwork Reduction Act

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

[[Page 39754]]

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 is amended as follows:

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

    1. The authority citation for part 354 continues 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 is amended by revising paragraphs (b)(1), (c)(1), 
(c)(3)(i) introductory text, (d)(1), (e)(1), and (f)(1) 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 
------------------------------------------------------------------------
September 1, 1997 through September 30, 1997.................    $447.00
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 
------------------------------------------------------------------------
September 1, 1997 through September 30, 1997.................      $3.75
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 
------------------------------------------------------------------------
September 1, 1997 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 
------------------------------------------------------------------------
September 1, 1997 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 
------------------------------------------------------------------------
September 1, 1997 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) * * *

[[Page 39755]]

    (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 18th day of July 1997.
Terry L. Medley,
Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 97-19499 Filed 7-23-97; 8:45 am]
BILLING CODE 3410-34-P