[Federal Register Volume 65, Number 160 (Thursday, August 17, 2000)]
[Rules and Regulations]
[Pages 50128-50131]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-20978]


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

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 353

[Docket No. 99-100-2]


Export Certification; Heat Treatment of Solid Wood Packing 
Materials Exported to China

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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

SUMMARY: We are adopting as a final rule, with one change, an interim 
rule that amended the regulations by establishing a program under which 
softwood (coniferous) packing materials used with goods exported from 
the United States to China may be certified as having been heat 
treated. This program is necessary because the Government of the 
People's Republic of China has established a requirement that 
coniferous packing materials exported to China must be accompanied by 
such certification. The one change in this final rule clarifies that 
the required heat treatment must be performed in the United States, 
rather than in other countries. This rule affects persons who use 
coniferous packing materials to export goods from the United States to 
the People's Republic of China.

EFFECTIVE DATE: August 17, 2000.

FOR FURTHER INFORMATION CONTACT: Mr. Russell T. Caplen, Lead Program 
Analyst, PPQ, Policy, Planning and Critical Issues, APHIS, 4700 River 
Road, Unit 147, Riverdale, MD 20737-1236; (301) 734-7601.

SUPPLEMENTARY INFORMATION:

Background

    The export certification regulations contained in 7 CFR part 353 
(referred to below as the regulations) set forth the procedures for 
obtaining certification for plants and plant products offered for 
export or reexport. Export certification is not required by the 
regulations; rather, it is provided by the Animal and Plant Health 
Inspection Service (APHIS) as a service to exporters who are shipping 
plants or plant products to countries that require phytosanitary 
certification as a condition of entry. After assessing the condition of 
the plants or plant products intended for export, relative to the 
receiving country's regulations, an inspector will issue an 
internationally recognized phytosanitary certificate (PPQ Form 577), a 
phytosanitary certificate for reexport (PPQ Form 579), or an export 
certificate for processed plant products (PPQ Form 578), if warranted.
    Since 1975, APHIS has participated with State governments in the 
Cooperative Phytosanitary Export Certification Program, which allows 
certain State and county officials, as well as APHIS officials, to 
issue phytosanitary certificates, phytosanitary certificates for 
reexport, or export certificates for processed plant products. Because 
the number of Federal inspectors is limited, the use of State and 
county inspectors is a considerable service to exporters of plants and 
plant products in terms of both time and convenience.
    The Government of the People's Republic of China has established 
requirements concerning importation of softwood (coniferous) packing 
materials from the United States in order to prevent the introduction 
into China of plant pests, specifically the pinewood nematode. This 
nematode is indigenous to North America and has caused significant 
damage to conifer forests in Asia.
    Since January 1, 2000, the Government of the People's Republic of 
China has required goods from the

[[Page 50129]]

United States to be accompanied either by a statement from the exporter 
that the shipment does not contain any coniferous packing material or 
by a certificate issued by a representative of the United States 
Department of Agriculture (USDA) in which the exporter attests that the 
coniferous packing materials in the shipment have been heat treated by 
being subjected to a minimum core temperature of 56  deg.C for 30 
minutes.
    In an interim rule effective and published in the Federal Register 
on December 27, 1999 (64 FR 72262-72265, Docket No. 99-100-1), we 
amended the regulations to create a new certificate of heat treatment 
and to establish procedures for issuing it to exporters who have 
treated their solid wood packing materials (SWPM) in order to ship 
goods to China. This new certificate of heat treatment, PPQ Form 553, 
is divided into two parts and serves as both a certification by the 
exporter that the required heat treatment was performed and USDA 
endorsement of industry compliance with the certification requirements.
    We solicited comments concerning the interim rule for 60 days 
ending February 25, 2000. We received four comments by that date. They 
were from a State government, a wood products producer, a wooden 
container and pallet association, and a manufacturer and exporter of 
heavy machinery. We have carefully considered all of the comments we 
received. They are discussed below by topic.

Use of Markings on SWPM to Certify Treatment

    Two commenters made similar suggestions to reduce paperwork 
associated with shipments to China. They suggested that SWPM should be 
accepted by China without a certificate of heat treatment (PPQ Form 
553) if it is marked with the brand KD, KD19, or HT (for kiln dried, 
kiln dried  19 percent moisture, or heat treated). These brands are 
currently applied to wood that is heated in U.S. kilns to specified 
internal temperatures in accordance with procedures that are monitored 
by private grading agencies supervised by the U.S. Government. The 
commenters noted that wood eligible for these brands would also meet 
the treatment requirements for SWPM established by China. The 
commenters also noted that APHIS could, if necessary, evaluate the kiln 
drying and heat treatment standards that private grading agencies apply 
when authorizing kilns to apply the KD, KD19, or HT brands to ensure 
that they fully meet the Chinese time/temperature requirements, and 
that APHIS could issue the grading agencies a ``certification of 
adequacy'' to further document that their brands signify compliance 
with the Chinese requirements. Exporters could then attach to their 
shipments an informational statement for Chinese authorities, stating 
that only SWPM bearing such a brand was used in their shipment.
    While APHIS agrees that the suggested procedure could simplify 
procedures and reduce the procedural and paperwork burden on exporters, 
this procedure would not satisfy the requirements currently imposed by 
China. The announcement of that requirement stated that SWPM in 
shipments must be certified to meet the heat treatment requirements 
``by the official quarantine organization(s) from the United States.'' 
This is a requirement for APHIS certification. Based on discussions 
between APHIS and Chinese authorities to date, China is not willing to 
accept a combination of grading brands and exporter statements as a 
substitute for APHIS certification. APHIS will continue to discuss less 
burdensome alternatives for exporters with China, but at this time we 
cannot make any change in response to this comment.

Exporter Obligation to Document Heat Treatment

    One commenter suggested changes to Sec. 353.7(e)(4), which requires 
that the exporter or his or her representative must keep on file 
``documentation showing that heat treatment was performed on packing 
materials in the shipment referred to in the certificate.'' The 
commenter suggested that, as an alternative to this, the exporter could 
keep invoices and purchase orders indicating that the lumber ordered by 
the exporter to fabricate the SWPM was sold to him as lumber that was 
grade marked kiln dried, according to lumber grade rules certified as 
conforming to the American Softwood Lumber Standard PS20 established by 
the Board of Review of the American Lumber Standards Committee. This 
comment addressed the difficulty some exporters face with obtaining 
what they call ``supplementary certifications from upstream suppliers 
in the SWPM supply chain.'' The comment explained that since the 
exporter or his agent must sign the PPQ Form 553, attesting that the 
SWPM has been heat treated for the proper time at the proper 
temperature, the exporter faces a problem if the treatment was 
performed on the SWPM material at a stage of commerce before he 
obtained the material. The comment suggests that the exporter has met 
his responsibility if he keeps on file invoices and purchase orders 
from the seller of the SWPM material that assert that the material was 
properly heat treated.
    We are not making any change in response to this comment. APHIS 
faces the same problem exporters do when dealing with SWPM; the chain 
of commerce has many stages, including tree harvest operations, lumber 
mills, wood product manufacturers, resellers, and others. However, we 
cannot establish rules that would require us to investigate this chain 
for the violator each time an enforcement action is necessary. Our 
rules focus on the immediate action that is being regulated, which is 
exportation of SWPM in this case, and therefore make the exporter the 
party responsible for the accuracy of exporter declarations in PPQ Form 
553. However, even without making the requested change, we believe that 
as long as the exporter has confidence in the integrity of his 
supplier, then exporter records consisting of invoices and purchase 
orders for properly treated SWPM materials would satisfy the 
requirement of Sec. 353.7(e)(4) that the exporter keep ``documentation 
showing that heat treatment was performed on packing materials in the 
shipment referred to in the certificate.'' But having such 
documentation does not absolve the exporter from responsibility if the 
documentation is inaccurate. If an investigation reveals that an 
exporter shipped SWPM that was not properly treated, that exporter 
would have falsely stated in the PPQ Form 553 that the SWPM was 
properly treated and could be subject to penalties.

Using the Heat Treatment Certificate Currently Used for SWPM 
Exports to Europe

    One commenter suggested that we comply with the Chinese requirement 
in the same fashion as we responded to European countries' demands in 
1993 for assurance that shipments of softwood SWPM from the United 
States were free from pinewood nematode. The solution in that case was 
an industry-issued heat treatment certificate (HTC) that was issued by 
kilns conducting heat treatment under supervision of private grading 
agencies. This certificate now accompanies softwood SWPM shipments to 
Europe and satisfies the concerns of the receiving countries.
    As discussed above, China currently requires certification by 
APHIS, not by private agencies or industries. Therefore, we are making 
no change based on this comment.

[[Page 50130]]

Heat Treatment Facilities Operating Under Compliance Agreements

    One commenter noted that, under various APHIS regulations, APHIS 
establishes compliance agreements with commercial facilities when 
materials must be processed in a certain way to remove plant pest 
risks. The commenter suggested that APHIS set up compliance agreements 
with kilns or other wood heat treatment facilities and certify that 
SWPM made with wood from these facilities meets the requirements for 
export to China. This would reduce the procedural and paperwork burden 
on exporters who use only SWPM from such facilities.
    APHIS is exploring this suggestion. However, there are many 
unsettled issues with such an arrangement, and establishing it would 
take time and require additional rulemaking. We are not taking any 
action with regard to this suggestion in this final rule, but may 
return to this suggestion in future rulemaking on the subject of SWPM.

Heat Treatments Performed Outside the United States

    One commenter noted that the regulations do not specifically state 
that the SWPM exported from the United States must have been heat 
treated in the United States, rather than in some other country, and 
suggested that this requirement be made explicit.
    We agree, and are changing the definition of certificate of heat 
treatment in Sec. 353.1, and the language in PPQ Form 553, to state 
that the SWPM must be ``heat treated in the United States by being 
subjected to a minimum core temperature of 56  deg.C for 30 minutes.'' 
That requirement was always our intent, because there are a wide range 
of heat treatments employed in different countries and many of them 
would not meet the requirements of the Government of the People's 
Republic of China. It also becomes extremely difficult for U.S. 
exporters to document that a heat treatment has been properly performed 
when it was performed in a foreign country.

Miscellaneous Comments

    Several comments raised issues outside the scope of the current 
rulemaking, including questions about how APHIS would react if other 
countries impose requirements similar to China's with regard to exports 
of SWPM from the United States, and questions about future APHIS plans 
for dealing with plant pest risks associated with imports of SWPM into 
the United States. APHIS has a long-term rulemaking action underway to 
address SWPM imports on a global basis. This action is described in the 
1999 Regulatory Program of the United States. The first step of this 
action was an advance notice of proposed rulemaking published on 
January 20, 1999 (Docket No. 98-057-1; 64 FR 3049-3052). The 
alternatives discussed in the advance notice were to apply restrictions 
on the importation of SWPM based on risk assessment of regions, apply 
restrictions on a general basis regardless of origin, and prohibit 
importation of any SWPM. We also accepted comments on other 
alternatives to consider. These alternatives will be considered in 
analyses prepared in connection with further rulemaking. Persons 
interested in long-term APHIS plans concerning SWPM should refer to the 
advance notice and the Regulatory Program entry.
    Therefore, for the reasons given in the interim rule and in this 
document, we are adopting the interim rule as a final rule, with the 
change discussed in this document.
    This final rule also affirms the information contained in the 
interim rule concerning Executive Orders 12866, 12372, and 12988. In 
accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq.), the information collection or recordkeeping requirements 
included in the interim rule have been approved by the Office of 
Management and Budget (OMB) under OMB control number 0579-0147.

Regulatory Flexibility Act

    This final rule follows an interim rule that amended the 
regulations by establishing a program under which softwood (coniferous) 
packing materials used with goods exported from the United States to 
China may be certified as having been heat treated.
    In the interim rule, we stated that the emergency situation made 
compliance with section 603 and timely compliance with section 604 of 
the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) impracticable. We 
also stated that if we determined that this rule would have a 
significant economic impact on a substantial number of small entities, 
then we would discuss the issues raised by section 604 of the 
Regulatory Flexibility Act in our final regulatory flexibility 
analysis. That analysis follows.
    At the current time there are no APHIS fees or other direct costs 
for exporters who must obtain the new certificate in order to ship 
goods to China. There will be minor administrative costs incurred by 
each exporter to obtain each certificate, associated with items such as 
courier or express mail costs and long distance telephone inquiries. 
The amounts of these costs will vary depending on how each exporter 
arranges to obtain each certificate, but they should not be large for a 
single certificate.
    The cost to exporters of obtaining and using only heat treated SWPM 
for shipments to China is not a cost associated with this final rule; 
it is a cost associated with the requirements imposed by China.
    This rule affects U.S. exporters, primarily U.S. manufacturers and 
freight forwarders who act on their behalf, who ship goods to China 
using coniferous SWPM. It is estimated that there are about 125,000 
such shipments per year, spread among approximately 5,000 exporters. A 
wide variety of products are shipped to China using coniferous SWPM, 
such as pharmaceuticals, auto parts, diapers, and fruits and 
vegetables.
    This final rule sets forth the administrative procedures that U.S. 
exporters must follow in order to obtain an export certificate from 
APHIS. For affected exporters, the principal burden is the completion 
of part of a 1-page APHIS form (PPQ Form 553) for each shipment, a task 
which is estimated to take no more than 1 minute and cost no more than 
about $0.40 per form.\1\ Based on the per exporter average of 25 
shipments per year, this rule would add only about $10 in labor costs 
and an unpredictable but small amount in postal or courier costs to 
each affected exporter's annual operating costs.\2\ This represents a 
very minor economic effect on affected U.S. exporters.
---------------------------------------------------------------------------

    \1\ The cost of $0.40 per form assumes a labor rate of $24 per 
hour, based on industry averages.
    \2\ The $10 cost is derived as follows: 125,000/5,000 x $0.40. 
Even if the labor rate were double (i.e., $48 per hour or $0.80 per 
minute), the annual cost would only be $20.
---------------------------------------------------------------------------

    The Regulatory Flexibility Act requires that agencies consider the 
economic effect of rules on small entities (i.e., businesses, 
organizations, and governmental jurisdictions). For the reasons 
discussed above, this rule will have an insignificant economic effect 
on each of the approximately 5,000 U.S. exporters expected to be 
affected. The affected exporters represent a broad cross section of 
American industry, including producers of pharmaceuticals, auto parts, 
diapers, and fruits and vegetables.
    The typical size of the affected exporters is unknown. Although the 
overwhelming majority of U.S. businesses in general are small by the 
standards of the Small Business Administration (SBA), it is possible 
that many of the affected manufacturers

[[Page 50131]]

could be large in size, since large manufacturers are more likely than 
small manufacturers to export their products to China or anywhere else. 
Most freight forwarders in the United States are small. In 1996, there 
were 12,022 U.S. firms in SIC 4731, a classification comprised of firms 
primarily engaged in arranging transportation for freight and cargo, 
including freight forwarders. Of the 12,022 firms, 97 percent had sales 
of less than $7.5 million each in 1996. The SBA's small entity 
threshold for firms in SIC 4731 is annual sales of $18.5 million.\3\
---------------------------------------------------------------------------

    \3\ Source: SBA.
---------------------------------------------------------------------------

    APHIS and the cooperating State agencies will also be affected by 
this rule, but they are not ``small entities'' under the Regulatory 
Flexibility Act.
    Under these circumstances, the Administrator of the Animal and 
Plant Health Inspection Service has determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities.

Effective Date

    Pursuant to the administrative procedure provisions in 5 U.S.C. 
553, we find good cause for making this rule effective less than 30 
days after publication in the Federal Register. The interim rule 
adopted as final by this rule was effective on December 27, 1999. This 
rule clarifies that heat treatments conducted in accordance with the 
regulations must be conducted in the United States. Immediate action is 
necessary to provide a means for U.S. exporters to obtain certificates 
that the Government of the People's Republic of China has required to 
accompany certain shipments of U.S. goods to China since January 1, 
2000. Therefore, the Administrator of the Animal and Plant Health 
Inspection Service has determined that this rule should be effective 
upon publication in the Federal Register.

List of Subjects in 7 CFR Part 353

    Exports, Plant diseases and pests, Reporting and recordkeeping 
requirements.

    Accordingly, the interim rule amending 7 CFR part 353 which was 
published at 64 FR 72262-72265 on December 27, 1999, is adopted as a 
final rule with the following changes:

PART 353--EXPORT CERTIFICATION

    1. The authority citation for part 353 is revised to read as 
follows:

    Authority: Title IV, Pub. L. 106-224, 114 Stat. 438, 7 U.S.C. 
7701-7772; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3.


Sec. 353.1  [Amended]

    2. In Sec. 353.1, the definition of Certificate of heat treatment 
is amended by adding the phrase ``in the United States'' immediately 
after the phrase ``have been heat treated''.

    Done in Washington, DC, this 12th day of July 2000.
Bobby R. Acord,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 00-20978 Filed 8-16-00; 8:45 am]
BILLING CODE 3410-34-P