[Federal Register Volume 64, Number 152 (Monday, August 9, 1999)]
[Proposed Rules]
[Pages 43103-43114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20113]


      
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 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 64, No. 152 / Monday, August 9, 1999 / 
Proposed Rules  

[[Page 43103]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. 98-073-1]
RIN 0579-AB05


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. The adjusted fees would cover 
fiscal years 2000 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: We invite you to comment. We will consider all comments that we 
receive by October 8, 1999.

ADDRESSES: Please send an original and three copies of your comments to 
Docket No. 98-073-1, 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. 98-073-1. 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, BASE, ABS, APHIS, 4700 
River Road Unit 54, Riverdale, MD 20737-1232, (301) 734-8351.

SUPPLEMENTARY INFORMATION:

Background

    Section 2509(a) of the Food, Agriculture, Conservation, and Trade 
Act of 1990 (21 U.S.C. 136a), referred to below as the FACT Act, 
authorizes the Animal and Plant Health Inspection Service (APHIS) to 
collect user fees for agricultural quarantine and inspection (AQI) 
services. The FACT Act was amended by Sec. 504 of the Federal 
Agricultural Improvement and Reform Act of 1996 (Pub. L. 104-127), on 
April 4, 1996.
    The FACT Act, as amended, authorizes APHIS to collect user fees for 
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.

According to the FACT Act, as amended, these user fees should recover 
the costs of:

 Providing the AQI services listed above,
 Providing preclearance or preinspection at a site outside the 
customs territory of the United States to such passengers and vehicles,
 Administering the user fee program, and
 Maintaining a reasonable balance in the Agricultural 
Quarantine Inspection User Fee Account (AQI account).

Introduction

    On July 24, 1997, we published in the Federal Register (62 FR 
39747-39755, Docket No. 96-038-3) a rule amending the user fees and 
setting user fees in advance for AQI services for fiscal years 1997 
through 2002.
    APHIS has had to provide AQI services beyond what we anticipated 
when the currently scheduled fees were set in 1997. The increases in 
services stem from an increase in international trade and travel, 
necessitating more inspections at ports of arrival, changes in our 
regulations that result in our having to inspect additional imported 
articles, and enhanced efforts to crack down on the smuggling of 
agricultural commodities. These increases in service are discussed in 
more detail below, under the heading ``New AQI Program Costs.''
    In this document, we are proposing to amend those fees for fiscal 
years 2000 through 2002 in order to compensate for increased AQI 
program costs and to reestablish a reasonable reserve in the AQI 
account.
    Because rulemaking takes time, we anticipate that the revised user 
fees will not take effect until at least the second quarter of FY 2000. 
Therefore, some of the calculations on the following pages, which 
assume an implementation date of October 1, 1999, will have to be 
revised when the final rule is published.
    We 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 also intend to monitor our fees throughout each year and 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.

New AQI Program Costs

    APHIS is continually requested to process international airline 
passengers faster, although we need to inspect passengers and their 
baggage thoroughly to safeguard against the introduction of harmful 
pests and diseases of animals and plants. We are committed to 
processing passengers as quickly as possible, without jeopardizing the 
success of AQI, whose purpose is to prevent the introduction of foreign 
plant and animal pests and diseases which are harmful to this country's 
agriculture; however, faster processing requires more officers, 
additional canine teams, and the purchase of state-of-the-art high 
definition x-ray machines at the medium and large ports throughout the 
country. The new high definition x-ray machines, estimated to cost 
$600,000

[[Page 43104]]

each, will greatly enhance the processing of passengers and reduce 
further need for more inspectors. Due to the expense involved, we plan 
to purchase these machines for the busiest ports to make optimal use of 
the machines.
    New and expanding airport terminals are also increasing the demand 
for AQI services at areas in airports where we do not currently have 
officers located. In the past, we were able to quickly clear 
passengers, because most passengers arrived in the same general area of 
the airport. Not only is the number of passengers increasing, but 
additional international terminals are being built in new locations, 
requiring additional officers and canine teams to keep up with demand 
for service.
    At the same time, we are trying to meet the constant demands from 
brokers and shippers to clear cargo faster at various locations. In 
many instances, in order to move cargo quickly, we must conduct both 
initial and final inspections. Since we cannot hold cargo up at the 
port to conduct a full inspection, we inspect a sampling of cargo at 
the port of first arrival and conduct a more thorough inspection at the 
final destination when the cargo is off-loaded. This requires 
additional officers at the port of first arrival to cover the 
increasing numbers of inspection locations, and new officers at final 
destination points to conduct additional inspection services.
    Further, inspection activities have increased as a result of recent 
rulemakings. For example, additional inspections are necessary to 
implement new regulations intended to prevent the introduction of pests 
in imported solid wood packing material (see 63 FR 50100-50111 and 63 
FR 69539-69543).
    AQI services related to enforcing our regulations have also 
expanded. APHIS compliance officers work in teams with local 
authorities to detect, investigate, and prosecute violators. Recent 
increased efforts include both border blitzes and market surveys.
    Border blitzes involve unannounced, targeted inspections, as well 
as random searches of cargo containers entering the United States where 
no AQI staffing exists, at times when staffing is not usually provided, 
or where existing staff must be supplemented. Market surveys consist of 
searches in grocery stores, plant stores, and fruit and vegetable 
markets for prohibited items.
    When prohibited items are detected, follow-up investigations are 
conducted to identify the item's origin and the responsible shippers, 
importers, and brokers. Previous shipments and their destination points 
are researched, located, and investigated for other prohibited items 
and infested materials. This information is being used to develop a 
violation database to help the teams target specific commodities and 
importers who have a history of smuggling prohibited commodities, and 
allow legitimate importers and exporters to move their products through 
commerce without undue delay.
    These activities are supported by many agricultural industries, who 
see them as positive steps toward detecting and eliminating plant and 
animal pests and diseases before they can become established in the 
United States.

Projected AQI Program Costs for Fiscal Years 1999-2002

    The following table shows the total projected costs of 
administering the AQI program for fiscal years 1999 through 2002. When 
we projected costs for fiscal years 1999 through 2002, we began with 
the base need of $130,001,000 for Plant Protection and Quarantine 
(PPQ), the APHIS unit that administers the AQI program in the United 
States. The base need of PPQ is an increase of approximately $3.6 
million in PPQ's base need as identified in the July 14, 1997, final 
rule, and is due to unanticipated personnel compensation of $1.6 
million for additional Civil Service Retirement assessments, higher 
overtime costs of approximately $1.4 million, and additional pay cost 
increases of $600,000. (The base need of PPQ simply reflects the cost 
required for APHIS to be prepared to provide AQI services at all 
international ports in the United States, without taking into account 
the additional annual costs shown in the following table. The base need 
is not affected by projected changes in the volumes of each category of 
service.)
    We then added new annual costs associated with increased PPQ 
activities in the United States to project the total AQI program costs 
to PPQ for fiscal years 1999 through 2002.
    International Services is the APHIS program that administers the 
AQI program in foreign regions. We projected the annual costs to 
International Services of providing international preclearance services 
for fiscal years 1999 through 2002 based on FY 1998 program costs plus 
new costs associated with preclearance activities in Bermuda and the 
Bahamas. The projected International Services annual costs were then 
added to PPQ's annual costs to arrive at projected AQI annual program 
cost subtotals.
    We then added agency support costs and departmental charges to the 
projected annual costs for PPQ and International Services to arrive at 
projected annual AQI program costs.
    The projected annual program costs take into account the costs of 
providing AQI services only. They do not contain a reserve-building 
component. The projected cost for each fiscal year simply reflects the 
amount we anticipate it will cost to run the AQI program for that year.
    As shown in the following table, we are proposing to phase in new 
AQI services over fiscal years 1999 through 2002 in order to supplement 
our existing work force at expanding and new ports.

                  Agricultural Quarantine Inspection (AQI) Program Projected Costs FY 1999-2002
----------------------------------------------------------------------------------------------------------------
                                                      FY 1999         FY 2000         FY 2001         FY 2002
       Basis for calculating funding need            estimate        estimate        estimate        estimate
----------------------------------------------------------------------------------------------------------------
                                      Plant Protection and Quarantine (PPQ)
----------------------------------------------------------------------------------------------------------------
Base Need (FY 1998 costs + FY 1999 pay costs)...    $130,001,000    $130,001,000    $130,001,000    $130,001,000
Personnel Increase:
    116 New positions @ 2 months................       2,779,000  ..............  ..............  ..............
    315 New positions + 116 in FY 99............  ..............      32,149,000  ..............  ..............
    40 New positions + 116 in FY 99; + 315 in FY  ..............  ..............      41,003,000  ..............
     00.........................................
    40 New positions + 116 in FY 99; + 315 in FY  ..............  ..............  ..............      50,027,000
     00; + 40 in FY 01..........................
Automation/Maintenance..........................       1,900,000       4,500,000       4,500,000       1,000,000
Upgrade/Replace X-Ray Equipment:
    20 machines.................................       1,540,000  ..............  ..............  ..............
    20 machines.................................  ..............       1,540,000  ..............  ..............
    16 machines.................................  ..............  ..............       1,232,000  ..............

[[Page 43105]]

 
New X-Ray Equipment:
    5 machines..................................       3,000,000  ..............  ..............  ..............
    10 machines.................................  ..............       6,000,000  ..............  ..............
    5 machines..................................  ..............  ..............       3,000,000  ..............
    5 machines..................................  ..............  ..............  ..............       3,000,000
New and Replacement Vehicles:
    50 vehicles.................................         800,000  ..............  ..............  ..............
    50 vehicles.................................  ..............         800,000  ..............  ..............
    50 vehicles.................................  ..............  ..............         800,000  ..............
    32 vehicles.................................  ..............  ..............  ..............         512,000
New and Expanding Facility Costs:
    JFK (NY); Laredo IV and Eagle Pass II (TX)..         500,000  ..............  ..............  ..............
    Miami and Sanford (FL); Atlanta (GA),         ..............       1,900,000  ..............  ..............
     Brownsville, El Paso, and Los Tomates (TX);
     Santa Teresa (NM)..........................
                                                 ---------------------------------------------------------------
      PPQ Subtotal..............................     140,520,000     176,890,000     180,536,000     184,540,000
                                                 ---------------------------------------------------------------
International Services (IS).....................       1,099,072       1,826,112       1,991,918       2,132,275
                                                 ---------------------------------------------------------------
      Program Subtotal..........................     141,619,072     178,716,112     182,526,918     186,672,275
                                                 ---------------------------------------------------------------
Support Costs:
    Agency Overhead & Departmental Charges @          16,838,508      21,249,346      21,702,451      22,195,333
     10.63%.....................................
                                                 ===============================================================
        AQI Program Cost........................     158,457,580     199,965,458     204,229,369     208,867,608
----------------------------------------------------------------------------------------------------------------

Reserve Funds

    In order to provide adequate AQI services, we have been forced to 
use reserve funds to cover our costs for fiscal years 1997 through 
1999. This has reduced our reserve levels at an alarming rate. Since 
the current fees do not contain a reserve component, the potential to 
run out of reserve funds entirely could become a reality in FY 2001 if 
we do not add a reserve component to the fees. The following table 
shows our use of reserve funds to recover costs that were higher than 
available user fee collections in FY 1998.

                          FY 1998 Reserve Usage
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Total user fee collections..............................    $150,804,661
    Unavailable collections \1\.........................     -13,829,975
                                                         ---------------
    Available fee collections...........................     136,974,686
    Cost of AQI program administration..................    -140,094,753
                                                         ---------------
    Funding shortage....................................      -3,120,067
    FY 1998 available reserve...........................     +17,785,662
                                                         ---------------
    FY 1999 available reserve...........................      14,665,595
------------------------------------------------------------------------
\1\ These collections were unavailable to pay for services provided in
  FY 1998 because they were either not collected until after the close
  of FY 1998, or are unavailable for expenditure until FY 2003 under
  certain provisions of the FACT Act.

Further, for FY 1999, we are projecting the need to cover $10.2 million 
in costs from our reserve. As a result, the reserve would contain a 
balance of less than $3.9 million at the start of FY 2000 (2 percent of 
the cost of running the program for that year), as shown in the 
following table.

                          AQI User Fee Projected Reserve--Cash Basis Accounting Method
----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal Year
                                 -------------------------------------------------------------------------------
                                       1998            1999            2000            2001            2002
----------------------------------------------------------------------------------------------------------------
Fee Collections.................    $150,804,661    $159,727,857    $201,066,541    $214,822,796    $217,421,963
    Unavailable collections \1\.      13,829,975      12,000,000       5,000,000  ..............  ..............
                                 -------------------------------------------------------------------------------
      Available collections.....     136,974,686     147,727,857     196,066,541     214,822,796     217,421,963
 
AQI Program Cost................     140,094,753     158,457,580     199,965,458     204,229,369     208,867,608
                                 -------------------------------------------------------------------------------
    Shortage/surplus............      -3,120,067     -10,729,723      -3,898,917      10,593,427       8,554,355
                                 -------------------------------------------------------------------------------
    Projected available reserve       17,785,662      14,665,595       3,935,872          36,955      10,630,382
     BEGIN FY...................
                                 -------------------------------------------------------------------------------
    Projected available reserve       14,665,595       3,935,872          36,955      10,630,382      19,184,737
     END FY.....................
----------------------------------------------------------------------------------------------------------------
Unavailable until FY 2003 \1\...
    FY 1997 carry-over..........       2,000,000  ..............  ..............  ..............  ..............
    Annual......................      13,829,975      12,000,000       5,000,000  ..............  ..............

[[Page 43106]]

 
    Cumulative..................      15,829,975      27,829,975      32,829,975      32,829,975     32,829,975
----------------------------------------------------------------------------------------------------------------
\1\ These collections are unavailable to pay for services provided because they were either not collected until
  after the close of the fiscal year in which they were earned, or are unavailable for expenditure until FY 2003
  under provisions of the FACT Act.

Rebuilding the Reserve

    While our spending authority is on a fiscal year basis, the 
accounting method used by the Department of Treasury for user fee 
collections is based on the date the funds are received and recorded in 
the Treasury (cash basis--see the table above), not when they are 
earned (accrual basis). The final amount that is available to us from 
the AQI account each year is based on the amount collected and recorded 
in the account between October 1 and September 30 of each fiscal year. 
Since most of the fourth quarter payments are not due and therefore not 
received until after the fiscal year is over, we are not able to use 
those funds to pay for providing services in the fiscal year when they 
are earned.
    In the July 1997 final rule, we explained that it is necessary to 
maintain a reasonable reserve balance in the AQI account in order to 
account for fees earned for providing AQI services in a given fiscal 
year that were not received until after that fiscal year ended. The 
reserve also provides us with a means to ensure the continuity of AQI 
service in cases of bad debt, carrier insolvency, and fluctuations in 
activity volumes.
    When we set the current user fees, we did not include a reserve-
building component in them because we believed that the reserve levels 
would be maintained with fees we collected in excess of the program 
costs. Although our user fees are designed to recover the cost of 
providing services, in some instances, due to the fact that fees are 
rounded up to the nearest quarter or nickel, we may collect additional 
funds that are applied to the individual activity reserve balances. The 
reserve levels have been maintained in the past through such additional 
collections.
    However, due to increasing costs, we cannot maintain our reserve 
with the current user fees. Therefore, we are proposing to include a 
reserve-building component in the user fees to rebuild the reserve 
levels for each activity over fiscal years 2000 through 2002. Under 
this proposal, the reserve levels for each category of service have 
been calculated to reflect approximately 25 percent of each activity's 
annual cost. The proposed reserve component would gradually rebuild the 
reserve balance to a reasonable level of approximately 25 percent of 
the AQI annual program costs to ensure that the reserve is fully funded 
by fiscal year 2002.
    The table below shows the final annual cost of the AQI program once 
costs to rebuild the reserve are added. The final annual costs are the 
figures on which we based our proposed fees. The fees are designed to 
recover the full cost of the AQI program.

                                             Total AQI Program Costs
----------------------------------------------------------------------------------------------------------------
                                                                      FY 2000         FY 2001         FY 2002
----------------------------------------------------------------------------------------------------------------
Cost of AQI program services....................................     199,965,458     204,229,369     208,867,608
Cost of rebuilding the reserve..................................      17,125,000      17,550,000      21,480,000
    (% of total program cost)...................................         (8.56%)         (8.59%)        (10.28%)
                                                                 -----------------------------------------------
      Total AQI program costs...................................     217,090,458     221,779,369     230,347,608
----------------------------------------------------------------------------------------------------------------

Calculation of Fees

    Once we established the total annual costs to administer the AQI 
program, including an amount to rebuild the AQI account reserve to a 
reasonable level, we began the calculation of our proposed fees.
Volumes
    First, we estimated the annual volume for each category of service 
that would be subject to inspection. The estimates were based on annual 
rates of activity for each service category shown in our FY 1992 
through FY 1997 collection history.
    In our commercial aircraft, commercial vessel, and commercial truck 
service categories, we calculated the percentage of change in volume 
between FY 1995 and FY 1996, and FY 1996 and FY 1997. Then we 
calculated the average percentage of change for those years. We used 
this average percentage of change to project volumes for fiscal years 
1999 through 2002. We have collection data for FY 1998 available, but 
decided not to use it in our calculations because numerous adjustments 
to the FY 1998 collection data could be made through the end of FY 2000 
(i.e., we will have to account for funds for overpaid vessels and 
adjustments to aircraft fees remittances resulting from audit 
findings). Therefore, we will review the FY 1998 collection data prior 
to publishing a final rule and make necessary adjustments to the 
calculations.
    For commercial trucks, however, we had to revise our projected 
volume for FY 1998 because the actual volume appeared to be much 
higher. The average percentage of change from FY 1995 to FY 1996, and 
from FY 1996 to FY 1997, was -1.27 for commercial trucks. The actual 
volume for FY 1998 shows a 10.22 percent increase over the volume in FY 
1997. Nevertheless, we believe the volume increase for FY 1998 is 
misleading. During the first quarter of FY 1998, the wrong fee was 
originally assessed for individual border crossings ($2.00 instead of 
$4.00). In many cases, the corrected fee was eventually collected, but 
was recorded in the system as an individual crossing, thus inflating 
the actual volumes for FY 1998. Furthermore, a review of commercial 
truck volumes for fiscal years 1993 through 1997 shows that the 
percentage of change ranged from 2.59 percent to -2.77 percent. Based 
on these relatively stable but slightly negative changes in volume, we 
are projecting commercial truck volumes for fiscal

[[Page 43107]]

years 1999 through 2002 based on the percentage of change we calculated 
for fiscal years 1995 through 1997 (-1.27 percent). These volumes are 
shown in the following table:

                                                     Volumes/Percentage of Change from Previous Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Commercial aircraft              Commercial vessel               Commercial truck
                       Fiscal year                       -----------------------------------------------------------------------------------------------
                                                              Volume          Change          Volume          Change          Volume          Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
1995....................................................         361,657  ..............          48,098  ..............         612,743  ..............
1996....................................................         351,989          -2.67%          47,655          -0.92%         614,214           0.24%
1997....................................................         380,911           8.22%          48,758           2.31%         597,173          -2.77%
1998....................................................         391,469           2.77%          51,098           4.80%         658,204          10.22%
Average: FY 1996 & FY 1997 percentage of change.........     (-2.67% + 8.22%)/2= 2.77%
                                                             (-0.92% + 2.31%)/2= 0.70%
                                                            (0.24% + (-2.77%))/2= -1.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------


 
                                                             Projected                       Projected                       Projected
                       Fiscal year                            volume          Change          volume          Change          volume          Change
--------------------------------------------------------------------------------------------------------------------------------------------------------
1999....................................................         402,320           2.77%          51,454           0.70%         649,863          -1.27%
2000....................................................         413,472           2.77%          51,813           0.70%         641,628          -1.27%
2001....................................................         424,933           2.77%          52,173           0.70%         633,498          -1.27%
2002....................................................         436,711           2.77%          52,537           0.70%         625,471          -1.27%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In our commercial truck decal service category, we found that the 
volume of users continued to increase, but at a decreasing rate. We 
determined that the volume would most likely continue to increase 
slightly, but that the increase in the number of decals would most 
likely be limited to new or additional growth in trade. The decal 
program has been in operation for several years now, and we believe 
that the companies interested in buying them are doing so now. 
Therefore, we are projecting a modest 5 percent growth increase for 
each year, as shown in the following table:

  Volumes of Commercial Truck Decals/Percentage of Change from Previous
                                  Year
------------------------------------------------------------------------
                                                           Percentage of
               Fiscal year                    Volume          change
------------------------------------------------------------------------
1992....................................           9,256  ..............
1993....................................          12,403          34.00%
1994....................................          13,476           8.66%
1995....................................          14,317           6.24%
1996....................................          15,758          10.07%
1997....................................          18,003          14.24%
1998....................................          19,298           7.20%
1999 (projected)........................          20,263           5.00%
2000 (projected)........................          21,276           5.00%
2001 (projected)........................          22,340           5.00%
2002 (projected)........................          23,457           5.00%
------------------------------------------------------------------------

    In our international air passenger service category, we found that 
the volume of users continued to increase each fiscal year 1992 through 
1998, but at a decreasing rate. Using the international air passenger 
volumes listed below, we estimated percentage of increase in volume for 
FY 1999 in the following manner:
    1. First, we subtracted the percentage of change in volume from FY 
1996 to FY 1997 (4.39%) from the percentage of change in volume from FY 
1997 to FY 1998 (3.28%), yielding a rate of decline of -1.11.
    2. We then divided this figure by the percentage of change in 
volume from FY 1996 to FY 1997 (4.39%) to obtain a rate of decline from 
FY 1996 to FY 1997 of -25.28.
    3. We then multiplied this rate of decline by the percentage of 
change in volume from FY 1997 to FY 1998 (3.28%), yielding a rate of 
decline of -0.8293.
    4. Finally, we added this result to the percentage of change in 
volume from FY 1997 to FY 1998 (3.28%), yielding a projected increase 
in volume of 2.45 percent for FY 1999.
    This process was repeated to estimate growth for each fiscal year 
from 2000 through 2002. These volumes are shown in the table below.

   Volumes of International Air Passengers/ Percentage of Change from
                              Previous Year
------------------------------------------------------------------------
               Fiscal year                    Volume      Percent change
------------------------------------------------------------------------
1992....................................      35,442,923  ..............
1993....................................      39,630,213          11.81%
1994....................................      41,784,350           5.44%
1995....................................      44,710,181           7.00%
1996....................................      48,296,322           8.02%
1997....................................      50,414,566           4.39%

[[Page 43108]]

 
1998....................................      52,068,452           3.28%
1999 (projected)........................      53,346,102           2.45%
2000 (projected)........................      54,325,203           1.84%
2001 (projected)........................      55,070,989           1.37%
2002 (projected)........................      55,636,477           1.03%
------------------------------------------------------------------------

    The volumes in our loaded railroad car service category increased 
from 74,006 in 1994 to 102,265 in 1995 to 147,315 in 1996 as a result 
of the North American Free Trade Agreement. The volume decreased in 
1997, but for 1998, there was a slight increase in volume over 1996. 
However, one of the five railroad companies transiting goods across the 
U.S.-Mexican border has ceased operations indefinitely. In addition, 
due to recent business consolidations, the number of railroad companies 
crossing the border has decreased from five to three. Since our fee is 
assessed to loaded railroad cars only, we do not anticipate much 
increase in individual loaded railroad cars, but better utilization of 
the cars by railroad companies. We believe that future increases above 
the FY 1998 level will be minimal, and are projecting a zero percent 
increase each fiscal year through 2002. We will watch the railroad car 
volumes carefully, and if our volume assumption is incorrect, we will 
take steps immediately to adjust the fees accordingly. The volumes are 
shown in the following table.

 Volumes of Loaded Railroad Car/Percentage of Change from Previous Year
------------------------------------------------------------------------
               Fiscal year                    Volume      Percent change
------------------------------------------------------------------------
1992....................................          56,688  ..............
1993....................................          64,023          12.94%
1994....................................          74,006          15.59%
1995....................................         102,265          38.18%
1996....................................         147,315          44.05%
1997....................................         141,717          -3.80%
1998....................................         148,300           4.65%
1999 (projected)........................         148,300           0.00%
2000 (projected)........................         148,300           0.00%
2001 (projected)........................         148,300           0.00%
2002 (projected)........................         148,300           0.00%
------------------------------------------------------------------------

Distribution of Costs

    Next, we projected the direct costs of providing AQI services in 
fiscal years 1999 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 
62468-62473, Docket No. 92-148-1), as part of a document 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 port 
directors) 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 are 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

[[Page 43109]]

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.

User Fee Calculation

    The following tables show our user fee calculations. To calculate 
the user fees, we divided the sum of the costs for each service by the 
projected volume subject to inspection for that service, thereby 
arriving at ``raw'' fees. We then rounded the raw fees.
    As in the past, we rounded raw fees 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. Any excess 
collections due to rounding would be added to the reserve balance for 
each individual fee category. 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 large 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.

                                       AQI User Fee Calculations, FY 2000
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Projected                                       Projected
          AQI activity              total costs       volume          Raw fee       Rounded fee       revenue
----------------------------------------\1\---------------------------------------------------------------------
Commercial vessel...............      24,115,749          51,813          465.44          465.50      24,118,952
Commercial truck \2\............       4,442,247       1,067,156            4.16            4.25       4,535,413
Loaded railroad cars............         977,907         148,300            6.59            6.75       1,001,025
Commercial aircraft.............      26,397,363         413,472           63.84           64.00      26,462,208
Airline passengers..............     161,157,192      54,325,203            2.97            3.00     162,975,609
                                 -------------------------------------------------------------------------------
      Total.....................     217,090,458  ..............  ..............  ..............    219,093,206
----------------------------------------------------------------------------------------------------------------
\1\ Total program costs include the cost of rebuilding the AQI account available reserve.
\2\ Decals could be purchased at 20 times the individual crossing rate, or $85.00 per decal, and would be valid
  from January 1 through December 31, 2000.


                                       AQI User Fee Calculations, FY 2001
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Projected                                       Projected
          AQI activity              total costs       volume          Raw fee       Rounded fee       revenue
----------------------------------------\1\---------------------------------------------------------------------
Commercial vessel...............      24,755,100          52,173          474.48          474.50      24,756,089
Commercial truck \2\............       4,832,670       1,080,302            4.47            4.50       4,861,359
Loaded railroad cars............       1,018,647         148,300            6.87            7.00       1,038,100
Commercial aircraft.............      27,476,799         424,933           64.66           64.75      27,514,412
Airline passengers..............     163,696,152      55,070,989            2.97            3.00     165,212,967
                                 -------------------------------------------------------------------------------
      Total.....................     221,779,368  ..............  ..............  ..............    223,382,926
----------------------------------------------------------------------------------------------------------------
\1\ Total program costs include the cost of rebuilding the AQI account available reserve.
\2\ Decals could be purchased at 20 times the individual crossing rate, or $90.00 per decal, and would be valid
  from January 1 through December 31, 2001.


                                       AQI User Fee Calculations, FY 2002
----------------------------------------------------------------------------------------------------------------
                                     Estimated       Projected                                       Projected
          AQI activity              total costs       volume          Raw fee       Rounded fee       revenue
----------------------------------------\1\---------------------------------------------------------------------
Commercial vessel...............      25,242,791          52,537          480.48          480.50      25,244,029
Commercial truck \2\............       5,046,927       1,094,614            4.61            4.75       5,199,417
Loaded railroad cars............       1,024,546         148,300            6.91            7.00       1,038,100
Commercial aircraft.............      28,402,958         436,711           6.504           6.525      28,495,393
Airline passengers..............     170,630,386      55,636,477            3.07            3.10     172,473,079
                                 -------------------------------------------------------------------------------
      Total.....................     230,347,608  ..............  ..............  ..............    232,450,016
----------------------------------------------------------------------------------------------------------------
\1\ Total program costs include the cost of rebuilding the AQI account available reserve.
\2\ Decals could be purchased at 20 times the individual crossing rate, or $95.00 per decal, and would be valid
  from January 1 through December 31, 2002.

Current and Proposed User Fees

    Our current user fees for AQI services for fiscal years 1999 
through 2002 and the user fees we are proposing to charge for these 
services for FY 2000 through FY 2002 are shown in the table below. 
Also, below, we describe each AQI service, and explain additional 
activities and costs as they pertain to each service individually.

[[Page 43110]]



                                                   Agricultural Quarantine Inspection (AQI) User Fees
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Currently                 Currently                 Currently
                           Service                             Current  FY   scheduled     Proposed    scheduled     Proposed    scheduled     Proposed
                                                                   1999       FY 2000      FY 2000      FY 2001      FY 2001      FY 2002      FY 2002
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Vessel............................................       454.50       461.75       465.50       471.25       474.50       480.25       480.50
Commercial Truck.............................................         4.00         4.00         4.25         4.00         4.50         4.25         4.75
Commercial Truck Decal.......................................        80.00        80.00    \1\ 85.00        80.00    \1\ 90.00        85.00    \1\ 95.00
Loaded Railroad Car..........................................         6.50         6.75         6.75         6.75         7.00         7.00         7.00
Commercial Aircraft..........................................        59.75        60.25        64.00        61.25        64.75        62.25        65.25
Airline Passenger............................................         2.00         2.05         3.00         2.10         3.00         2.15        3.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Commercial truck decals are issued on a calendar year basis. Decal rates would be effective January 1 of each year.

Commercial Vessels

    We inspect commercial vessels of 100 net tons or more arriving at 
ports of entry into the customs territory of the United States. Vessels 
pay a user fee for the first 15 arrivals at ports. The U.S. Customs 
Service (Customs) collects this user fee for APHIS.
    The proposed fees for fiscal years 2000, 2001, and 2002 are 
approximately 0.8, 0.7, and 0.05 percent higher than the respective 
currently scheduled fees. The proposed fees would allow us to recover 
increased costs attributed to:
     Anticipated new hires in fiscal years 1999 and 2000 of at 
least 51 inspection personnel at seaports throughout the United States, 
including Miami, FL; Elizabeth, NJ; San Juan, PR; and Charleston, SC.
     New and replacement vehicles, equipment, and additional x-
ray equipment.
     The addition of a reserve component to the fees to 
gradually rebuild the vessel reserve to a reasonable level of 
approximately 25 percent of annual operating costs by the end of FY 
2002.
    For fiscal years 2001 and 2002, the proposed fees are less than one 
half of one percent higher than the currently scheduled fees. This is 
attributed to conducting the increased volume of vessel inspections 
with the same number of personnel and new and improved technology.

Commercial Trucks

    We inspect commercial trucks arriving at land ports in the customs 
territory of the United States from Mexico.\1\ Customs also collects 
our truck user fees.
---------------------------------------------------------------------------

    \1\ 7 CFR 354.3(c)(2)(i) of the regulations exempts commercial 
trucks entering the customs territory of the United States from 
Canada from paying this APHIS user fee.
---------------------------------------------------------------------------

    The proposed fees for fiscal years 2000, 2001, and 2002 are 
approximately 6.25, 12.5, and 11.8 percent higher than the respective 
currently scheduled fees. The proposed fees would allow us to recover 
increased costs attributed to:
     Anticipated new hires in fiscal years 1999 through 2002 of 
approximately 39 additional inspection personnel at various land border 
ports, including Brownsville and El Paso, TX, and Santa Teresa, NM.
     New and replacement vehicles, equipment, and additional x-
ray equipment.
     The addition of a reserve component to the fees to 
gradually rebuild the depleted truck reserve to a reasonable level of 
approximately 25 percent of the annual operating costs by the end of FY 
2002.
    The regulations currently require that commercial trucks pay the 
APHIS user fee each time they enter the customs territory of the United 
States from Mexico at the same time they pay the Customs user fee. Our 
regulations also allow commercial trucks to prepay the APHIS user fee; 
however, this only applies 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 7 CFR 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.

Commercial Railroad Cars

    We inspect loaded commercial railroad cars arriving at land ports 
in the customs territory of the United States from Mexico.\2\ The fees 
for this service are calculated and remitted by the individual railroad 
companies within 60 days after the end of each calendar month.
---------------------------------------------------------------------------

    \2\ Section 354.3(c)(2)(i) of the regulations exempts loaded 
commercial railroad cars entering the customs territory of the 
United States from Canada from paying the APHIS user fee.
---------------------------------------------------------------------------

    The proposed fee for fiscal year 2001 is approximately 3.7 percent 
higher than the currently scheduled fee. The fees for fiscal years 2000 
and 2002 will not change. The proposed fees would allow us to recover 
increased costs attributed to:
     Anticipated new hires in fiscal years 2000 through 2002 of 
approximately 18 additional inspection personnel at various land border 
ports, including Los Tomates and Brownsville, TX, and Nogales, AZ.
     New and replacement vehicles and equipment.
     The addition of a reserve component to the fees to 
gradually rebuild the railroad car reserve to a reasonable level of 
approximately 25 percent of the annual operating costs by the end of FY 
2002.

Commercial Aircraft

    We also inspect international commercial aircraft arriving at 
airports in the customs territory of the United States. The fees for 
this service are calculated and remitted by the individual airline 
companies within 31 days after the end of each calendar quarter.
    The proposed fees for fiscal years 2000, 2001, and 2002 are 
approximately 6.2, 5.7, and 4.8 percent higher than the respective 
currently scheduled fees. The proposed fees would allow us to recover 
increased costs attributed to:
     Anticipated new hires in fiscal years 1999 through 2002 of 
approximately 137 additional inspection personnel at various existing 
and expanding or new airport facilities, including Miami, Orlando, and 
Ft. Lauderdale, FL; Atlanta and Savannah, GA; Chicago, IL; JFK 
International Airport, NY; Dallas, San Antonio, and Houston, TX; Los 
Angeles and San Francisco, CA; Honolulu, HI; and San Juan, PR.
     New and replacement vehicles, equipment, and additional x-
ray equipment.
     The addition of a reserve component to the fees to 
gradually rebuild the commercial aircraft reserve to a reasonable level 
of approximately 25 percent of the annual operating costs by the end of 
FY 2002.

[[Page 43111]]

    In addition, we are working closely with Customs on the development 
and installation at major airports of a joint automated cargo tracking 
system, which would greatly improve the paper tracking cargo system 
currently used at most airports.

International Airline Passengers

    We also inspect international airline passengers arriving at 
airports in the customs territory of the United States.
    Millions of travelers pass through U.S. airports daily. APHIS' 
overall goal is a timely, seamless inspection process, integrated with 
clearance processes of other agencies in the Federal Inspection Service 
(FIS) that will ensure the fastest passenger clearance time while 
safeguarding against the introduction of harmful pests and diseases of 
animals and plants. Our joint goal is to improve enforcement and 
regulatory processes in order to clear most international air 
passengers through the FIS inspection process in 30 minutes or less. In 
partnership with the airline industry, advanced information will be 
obtained on 80 percent of international air passengers through the use 
of the Advance Passenger Information System to expedite the overall 
processing of passengers with no loss in enforcement.
    To accomplish these goals and to ensure adequate coverage, we 
anticipate additional costs that would result from:
     Hiring approximately 216 additional inspection personnel 
in fiscal years 1999 through 2002 at various new and expanding airport 
facilities, including Miami, Sanford, and Tampa, FL; New Orleans, LA; 
Atlanta and Savannah, GA; Chicago, IL; JFK International Airport and 
Brooklyn, NY; Dallas, Houston, San Antonio, El Paso, Galveston, and 
Brownsville, TX; Los Angeles, Fresno, Sacramento, and San Francisco, 
CA; Honolulu and Maui, HI; San Juan, PR; Bermuda, and the Bahamas.
     Purchasing new and replacement vehicles, equipment, and 
additional x-ray equipment.
     Purchasing and installing new high definition x-ray 
machines with luggage tracking and marking capability at most of the 
larger airports throughout the country.
     Adding about 50 new canine teams (one officer and one dog 
per team) at airports throughout the country, including JFK 
International Airport, NY; Newark, NJ; Chicago, IL; Honolulu, HI; Miami 
and Ft. Lauderdale, FL; Atlanta, GA; Houston, Dallas, Pharr, Laredo, 
and El Paso, TX; Los Angeles, Oakland, and San Francisco, CA.
     The addition of a reserve component to the fees to 
gradually rebuild the international airline passenger reserve to a 
reasonable level of approximately 25 percent of the annual operating 
costs by the end of FY 2002.

Executive Order 12866 and Regulatory Flexibility Act

    This proposed 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. The economic analysis prepared for this 
proposed rule provides a cost-benefit analysis as required by Executive 
Order 12866 and an analysis of economic effects on small entities as 
required by the Regulatory Flexibility Act. The analysis is summarized 
below. Copies of the full analysis are available by contacting Ms. 
Donna Ford at the address listed under FOR FURTHER INFORMATION CONTACT.

Introduction

    APHIS is proposing to revise existing agricultural quarantine and 
inspection (AQI) user fees to recover additional and unanticipated 
program costs and to rebuild the AQI reserve. The proposed AQI user fee 
revisions would become effective in the first quarter of FY 2000 and 
would be in effect through FY 2002.
    International air passengers, commercial aircraft, commercial 
vessels, commercial trucks, and commercial railroad cars arriving at 
ports in the customs territory of the United States would be affected 
by the increase in AQI user fees.
    The FACT Act, as amended, provides that APHIS may prescribe and 
collect fees to cover the cost of providing quarantine and inspection 
services in connection with the arrival of international airline 
passengers, commercial aircraft, commercial vessels, commercial trucks, 
and commercial railroad cars at ports in the customs territory of the 
United States. The FACT Act further states that the fees should be 
sufficient to cover the cost of administering the program and 
sufficient to maintain a reasonable balance (or reserve) in the AQI 
User Fee Account.

Need for Regulation

    The purpose of AQI inspections at United States ports of entry is 
to prevent international travelers and conveyances from introducing 
harmful plant and animal pests that could damage U.S. agriculture and 
cause substantial economic losses to domestic producers, consumers, 
exporters, and to a range of allied agricultural industries. In the 
case of AQI user fees, those international travelers or conveyances who 
may carry agricultural pests or diseases from abroad are required to 
pay for AQI program activities.
    Generating revenues to operate public programs by charging users is 
widely practiced by Federal, State and local government agencies, and 
is based on the premise that the beneficiaries or users of a public 
system, and not the public at large, should pay for its operation. User 
fees can be an equitable way of matching program costs to program users 
or beneficiaries.

Composition of Proposed Fees

    Computation of AQI user fees is based on direct program delivery 
costs, program support costs, Agency-level support costs, anticipated 
user fee administrative costs, and reserve fund costs.

Direct Program Costs

    Direct program costs include, but are not limited to: Salary and 
benefits for inspectors, canine officers, supervisory and clerical 
staff, uniform allowances, local travel expenses, and specialized 
equipment purchases.

Program Support Costs

    Program support costs include all expenditures necessary to 
maintain regional and headquarters support staffs and offices, 
including APHIS program staff, detection methods development, plant 
risk assessments, and automatic data processing (ADP) support.

Agency-level Costs

    In addition to salary and benefit costs, Agency-level support costs 
include, but are not limited to: Recruitment and development, 
legislative and public affairs, regulatory enforcement, communications, 
postage, budget and accounting services, and the cost for USDA's 
National Finance Center to provide payroll, purchasing, and other 
related financial services.

Administrative Costs

    The FACT Act, as amended, allows the Agency to recover 
administrative costs that the Agency incurs as a direct result of 
developing, collecting, and monitoring AQI user fees.

The Reserve Fund

    The FACT Act allows for a reasonable balance in the AQI User Fee 
Account. The reserve serves several purposes. The reserve insures that 
the Agency has access, through the AQI User Fee Account, to funds for 
normal operating expenses. Second, the reserve fund will insure that 
the Agency has sufficient

[[Page 43112]]

operating funds in cases of bad debt, carrier insolvency, or 
fluctuations in activity volumes. Further, in the July 1997 final rule, 
we explained that it is also necessary to maintain a reasonable reserve 
balance in the AQI account in order to account for fees earned for 
providing AQI services in a given fiscal year that were not received 
until after that fiscal year ended.

Regulatory Flexibility Analysis

    The effects of increased fees on small entities in each of the 
affected industries are discussed separately below. The proposed fee 
changes will also affect international airline passengers arriving at 
ports in the customs territory of the United States; however, 
passengers are not included in this analysis because the Regulatory 
Flexibility Act does not cover individuals.

Commercial Vessels

    We are proposing to amend the scheduled user fees for inspecting 
commercial vessels by increasing the fees by $3.75 in FY 2000, by $3.25 
in FY 2001, and by $0.25 in FY 2002. APHIS inspects vessels of 100 net 
tons or more arriving from all foreign ports, except Canada. Typically, 
APHIS inspects (and charges) dry cargo vessels operating between the 
United States and foreign ports. At the beginning of 1996 there were 
192 U.S. dry cargo vessels.
    Bureau of the Census data compiled by the Small Business 
Administration (SBA) in 1995 show that the affected industry, U.S. 
commercial vessels engaged in deep sea foreign transportation of 
freight, was composed mostly of small firms (less than 500 employees, 
according to the SBA definition). In 1995, there were 125 firms 
engaging in deep sea transportation of freight and 111 of them, or 89 
percent of the affected industry, employed less than 500 employees. 
Also in 1995, the average or typical small U.S. firm engaged in deep 
sea transportation of freight had roughly 31 employees, a payroll of 
less than $1.6 million, and annual receipts of $28 million. Data on 
number of dry cargo vessels per firm or firms exclusively operating dry 
cargo vessels are not available.
    Anecdotal information suggests that many of the companies that are 
subject to AQI inspections are not U.S. firms. Further, it is unclear 
how many of the 125 U.S. firms would actually be affected by the 
increase in AQI user fees, and how many of the affected firms would be 
small entities. We do know that total daily operating costs for dry 
cargo vessels idle in port average between $23,600 and $26,800. The 
proposed user fee increases of $3.75 in FY 2000, $3.25 in FY 2001, and 
$0.25 in FY 2002 are very insignificant fractions of daily operating 
costs, suggesting that the proposed fee revision will not have a 
significant economic impact on small firms operating vessels.

Commercial Trucks

    APHIS inspects trucks entering the United States from Mexico. It is 
unclear how many of these trucks entering the United States from Mexico 
are owned and operated by U.S. firms. According to a recent General 
Accounting Office report, roughly 11,000 trucks cross the border each 
week day (a total of 3,113,091 in FY 1996) from Mexico into the United 
States. The bulk (93 percent) of northbound truck traffic comes through 
seven major customs ports: Otay Mesa, California; Calexico, California; 
Nogales, Arizona; El Paso, Texas; Laredo, Texas; McAllen, Texas; and 
Brownsville, Texas. Many of these trucks are owned and operated by 
Mexican firms. At present, trucks from Mexico are limited to commercial 
zones along the border and many make multiple daily crossings. Mexican 
brokers tend to control much of the truck traffic at some border 
locations. Reliable data on future traffic patterns are not available.
    It is unclear how many U.S. trucking firms would be affected by the 
proposed increase in AQI user fees. Anecdotal evidence from APHIS 
employees indicates that many of the AQI truck decals, which are good 
for multiple inspections, are being purchased by U.S. trucking firms 
operating in Texas, California, and Arizona. 1995 Bureau of the Census 
data show that the overwhelming majority of trucking firms in these 
States would be considered small firms by SBA standards (less than 
$18.5 million in receipts annually). SBA data also show that the 
typical small trucking firm in one of these border States had 10 
employees and earned a little less than $1 million in receipts 
annually.
    If we assume that any small U.S. trucking firm that regularly 
transports freight from Mexico would purchase an APHIS truck decal, 
which is good for an unlimited number of entries during the calendar 
year, the proposed increase in user fees could cost a small firm, at 
most, an additional $5 per truck or an estimated $55 per firm in FY 
2000; and $10 per truck or an estimated $110 per firm in FY 2001 and FY 
2002. This estimate is based on the assumption that a small firm owns a 
maximum of 11 trucks. There are no official statistics on the fleet 
size of small trucking firms either for selected border States, or for 
the United States as a whole. This assumption is based on private 
sector trucking industry data on 256,223 U.S. trucking firms 
representing a combined fleet of over 2.3 million vehicles. This data 
shows that 91 percent of firms own 11 or fewer trucks.
    SBA data show that the typical small trucking firm in Arizona, 
California, or Texas has annual receipts of $932,000. We therefore 
believe that the proposed increase in cost, as explained above ($110 
for the average small firm), would not result in a significant new 
burden on small commercial trucking firms.

Loaded Commercial Railroad Cars

    There are four U.S. railroad companies currently transporting goods 
across the U.S.-Mexican border. Two of these railroad companies meet 
the SBA criteria for small entities (fewer than 1,500 employees). As of 
1991, the smaller railroad companies transported between 960 and 2,000 
loaded rail cars into the United States from Mexico annually. Data on 
operating expenses and profit margins for these companies are not 
available; but proposed user fees would not increase in FY 2000 and FY 
2002, and would only increase by $0.25 in FY 2001, suggesting that 
there would not be a significant economic impact on these two small 
U.S. railroad companies.

Commercial Airlines

    We are proposing to amend the scheduled user fees for inspecting 
commercial aircraft by increasing the fees by $3.75 in FY 2000, $3.50 
in FY 2001, and $3.00 in FY 2002. International scheduled and 
unscheduled (chartered) air passenger, air cargo, and air courier 
carriers arriving at U.S. customs ports are subject to AQI inspections. 
Bureau of the Census data compiled by the SBA show that there were a 
total of 6107 firms in the U.S. air transportation industry in 1995, 
and that more than 5893 (or more than 96.5 percent) would have met the 
SBA criteria for small entity (employing fewer than 1500 employees). 
The typical small firm in the air transportation industry had 15 
employees, an annual payroll of $398 thousand, and estimated annual 
receipts of $2.1 million.
    APHIS regulations affect international flights, many of which are 
operated by foreign-owned firms. Those U.S. air transport firms that do 
not operate international flights are not subject to the proposed rule. 
Agency records show that, in 1995, only 123 of the 6107 firms in the 
air transportation industry were subject to AQI inspections because 
they

[[Page 43113]]

operated international flights. This data suggests that the increased 
user fees will not affect a substantial number of small air 
transportation companies. Even if all 123 U.S. airline firms were small 
entities (which they are not), the proposed fee revision would be 
applicable to only 2 percent of small firms in the industry. Using 
information on the number of firms inspected, the number of projected 
inspections, and the assumption that firms subject to inspection are 
distributed by size in a fashion consistent with the industry as a 
whole, we can develop very rough estimates of impact on small firms.
    Each of the 123 U.S. companies would have had an airplane inspected 
between 1600 and 1700 times per year if inspections were prorated 
equally between large and small firms. In practice, small firms with 
fewer aircraft would probably have substantially fewer annual 
inspections, so we are overestimating the impact of fee revisions on 
small firms. Given the assumptions above, the increased fees listed 
above would translate into additional costs per firm of between $5,000 
and $6,000 per year, which are less than three tenths of one percent of 
estimated annual receipts for the average small air transportation 
firm.
    Given the data, assumptions, and calculations above, it is 
reasonable to conclude that proposed fee revisions will not have 
significant economic impact on a substantial number of small air 
transportation firms.

Other Costs and Benefits

    Additional reporting costs to private airlines associated with 
revising user fees are likely to be very small because mechanisms are 
already in place for collecting fees. There should be no additional 
recordkeeping costs for ticketing agents and tour operators, who are 
not involved in remitting fees and are not expected to remit fees in 
future. Further there will be no additional reporting burdens on 
vessel, aircraft, rail car, and truck operators as a result of the 
proposed changes in user fees.
    The benefit of user fees is the shift in the payment of services 
from taxpayers as a whole to those persons who are receiving the 
government services. While taxes may not change by the same amount as 
the change in user fee collections, there is a related shift in 
appropriations, which allows tax dollars to be applied to other 
programs that benefit the public in general.
    The administrative cost involved in obtaining these savings would 
be minimal. APHIS already has a user fee program and a mechanism for 
collecting user fees in place, and since this proposal would simply 
update existing user fees, increases in administrative costs would be 
small. Because the savings are sufficiently large, and the 
administrative costs would be small, it is likely that the net gain in 
reducing the burden on taxpayers as a whole would outweigh the cost of 
administering the revisions of the user fees.
    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, we propose to amend 7 CFR part 354 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 the tables in 
paragraphs (b)(1), (c)(1), (d)(1), (e)(1), and (f)(1) to read as 
follows:


Sec. 354.3  User fees for certain international services.

* * * * *
    (b) * * *
    (1) * * *

------------------------------------------------------------------------
                      Effective dates                           Amount
------------------------------------------------------------------------
October 1, 1998 through September 30, 1999.................       454.50
October 1, 1999 through September 30, 2000.................       465.50
October 1, 2000 through September 30, 2001.................       474.50
October 1, 2001 through September 30, 2002.................       480.50
------------------------------------------------------------------------

* * * * *
    (c) * * *
    (1) * * *

------------------------------------------------------------------------
                      Effective dates                           Amount
------------------------------------------------------------------------
October 1, 1998 through September 30, 1999.................         4.00
October 1, 1999 through September 30, 2000.................         4.25
October 1, 2000 through September 30, 2001.................         4.50
October 1, 2001 through September 30, 2002.................         4.75
------------------------------------------------------------------------

* * * * *
    (d) * * *
    (1) * * *

------------------------------------------------------------------------
                      Effective dates                           Amount
------------------------------------------------------------------------
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.................         7.00
October 1, 2001 through September 30, 2002.................         7.00
------------------------------------------------------------------------

* * * * *
    (e) * * *
    (1) * * *

------------------------------------------------------------------------
                      Effective dates                           Amount
------------------------------------------------------------------------
October 1, 1998 through September 30, 1999.................        59.75
October 1, 1999 through September 30, 2000.................        64.00
October 1, 2000 through September 30, 2001.................        64.75
October 1, 2001 through September 30, 2002.................        65.25
------------------------------------------------------------------------

* * * * *
    (f) * * *
    (1) * * *

------------------------------------------------------------------------
                      Effective dates                           Amount
------------------------------------------------------------------------
October 1, 1998 through September 30, 1999.................         2.00
October 1, 1999 through September 30, 2000.................         3.00
October 1, 2000 through September 30, 2001.................         3.00
October 1, 2001 through September 30, 2002.................         3.10
------------------------------------------------------------------------


[[Page 43114]]

* * * * *
    3. In Sec. 354.3, paragraph (c)(3)(i) would be amended by removing 
the words ``, except, that through September 30, 1997, the amount to be 
paid is $40.00''.

    Done in Washington, DC, this 30th day of July 1999.
Bobby R. Acord,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 99-20113 Filed 8-6-99; 8:45 am]
BILLING CODE 3410-34-P