[Federal Register Volume 67, Number 236 (Monday, December 9, 2002)]
[Rules and Regulations]
[Pages 72827-72830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31009]



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  Federal Register / Vol. 67, No. 236 / Monday, December 9, 2002 / 
Rules and Regulations  

[[Page 72827]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Part 93

[Docket No. 02-024-1]


Stall Reservations at Import Quarantine Facilities

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Interim rule and request for comments.

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

SUMMARY: We are amending the regulations regarding the importation of 
horses into the United States by requiring persons who cancel 
reservations for stall space at import quarantine facilities to notify 
us earlier and by increasing the fee for canceling reservations. Under 
the new fee structure, persons who cancel a reservation at least 30 
business days prior to the reservation date will be charged 25 percent 
of the reservation fee; persons who cancel a reservation 15 to 29 
business days prior to the reservation date will be charged 50 percent 
of the reservation fee; and persons who cancel a reservation less than 
15 business days prior to the reservation date will forfeit 100 percent 
of the reservation fee. We are taking this action to discourage 
importers from reserving space that they may not use and canceling when 
it is too late for others to use the space. We believe this action will 
improve the occupancy rate of stall space, and, therefore, the 
efficiency of import quarantine facilities.

DATES: This interim rule is effective December 9, 2002. We will 
consider all comments that we receive on or before February 7, 2003.

ADDRESSES: You may submit comments by postal mail/commercial delivery 
or by e-mail. If you use postal mail/commercial delivery, please send 
four copies of your comment (an original and three copies) to: Docket 
No. 02-024-1, Regulatory Analysis and Development, PPD, APHIS, Station 
3C71, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state 
that your comment refers to Docket No. 02-024-1. If you use e-mail, 
address your comment to [email protected]. Your comment must 
be contained in the body of your message; do not send attached files. 
Please include your name and address in your message and ``Docket No. 
02-024-1'' on the subject line.
    You may read any comments that we receive on this docket in our 
reading room. The reading room is located in room 1141 of the USDA 
South Building, 14th Street and Independence Avenue SW., Washington, 
DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through 
Friday, except holidays. To be sure someone is there to help you, 
please call (202) 690-2817 before coming.
    APHIS documents published in the Federal Register, and related 
information, including the names of organizations and individuals who 
have commented on APHIS dockets, are available on the Internet at 
http://www.aphis.usda.gov/ppd/rad/webrepor.html.

FOR FURTHER INFORMATION CONTACT: Dr. Andrea Morgan, Staff Veterinarian, 
National Center for Import and Export, Technical Trade Services, VS, 
APHIS, 4700 River Road Unit 39, Riverdale, MD 20737-1231; (301) 734-
8364.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in 9 CFR part 93 restrict the importation of 
certain animals and animal products into the United States to prevent 
the introduction of communicable animal diseases. Subpart C--Horses 
(Sec. Sec.  93.300 through 93.326, referred to below as the 
regulations), regulates the importation of horses into the United 
States. Section 93.304 of the regulations contains, among other things, 
specific provisions for reservation fees for space at quarantine 
facilities maintained by the Animal and Plant Health Inspection Service 
(APHIS).
    Under the current regulations in Sec.  93.304(a)(3), the importer 
or importer's agent must pay or ensure payment of a reservation fee for 
each lot of horses to be quarantined in a facility maintained by APHIS. 
The reservation fee is 100 percent of the cost of providing care, feed, 
and handling during quarantine, as estimated by the quarantine 
facility's veterinarian in charge. Any reservation fee will be 
forfeited if the importer or the importer's agent fails to present for 
entry, within 24 hours following the designated time of arrival, the 
horse or horses for which the reservation was made. However, a 
reservation fee will not be forfeited if written notice of cancellation 
from the importer or the importer's agent is received by the office of 
the veterinarian in charge of the quarantine facility during regular 
business hours (8:00 a.m. to 4:30 p.m. (local time) Monday through 
Friday, excluding holidays) no later than 5 business days prior to the 
beginning of the time of importation as specified in the import permit 
or as arranged with the veterinarian in charge of the quarantine 
facility if no import permit is required. When a reservation is 
canceled, a $40 cancellation fee is charged.
    Recently, stall space for imported horses at the United States 
Department of Agriculture (USDA) quarantine facilities has been in high 
demand. Importers or their agents can sometimes expect to wait up to 2 
to 4 months to obtain stall space. Some importers or their agents have 
been making speculative reservations far in advance of the projected 
date of arrival of the imported horses, and then canceling those 
reservations with 5 business days notice if they have no horses to 
import. While 5 business days' notice is what is required under the 
regulations to avoid forfeiture of the total reservation fee, this 
period does not allow sufficient time to offer the canceled space to 
other prospective importers. Five business days also does not allow 
sufficient time for another importer who might be able to make use of 
the available stall space to make the necessary arrangements for 
importing horses. We believe the current cancellation fee does not 
provide sufficient deterrent against speculative reservations and does 
not recover the fixed cost associated with operating quarantine 
facilities when stall space goes unused.
    Therefore, we are amending the regulations to establish a graduated 
fee schedule for cancellations. Under this

[[Page 72828]]

schedule, the fee depends on when the reservations are canceled prior 
to the reservation date. Persons who cancel a reservation 30 business 
days or more prior to the reservation date will be charged 25 percent 
of the reservation fee. Persons who cancel a reservation 15 to 29 
business days prior to the reservation will be charged 50 percent of 
the reservation fee. Persons who cancel a reservation less than 15 
business days prior to the reservation date will forfeit 100 percent of 
the reservation fee.
    We believe that a cancellation fee of 100 percent of the 
reservation fee is appropriate when a cancellation occurs less than 15 
days prior to the expected date of arrival because it is rarely 
possible to find other horses to take the space in that short a time. 
It takes at least 15 days to prepare a horse for importation into the 
United States. Brokers are required to have certain diagnostic tests 
performed on their horses and these tests must be processed at National 
Veterinary Services Laboratories. The reduced cancellation fees for 
more notice reflects the increased likelihood of the space being 
filled.
    We are taking this action to discourage importers from reserving 
space they may not use and cancelling when it is too late for others to 
use the space. We believe this action will improve the occupancy rate 
of stall space, and, therefore, the efficiency of the quarantine 
facilities. Furthermore, the increased cancellation fee will recover a 
larger portion of the fixed costs associated with operating quarantine 
facilities when stall space goes unused.

Alternatives Considered

    We considered an alternative in which APHIS would refund brokers 
their cancellation fee if we were able to fill the stall space with 
other horses. We also considered charging a set cancellation fee 
greater than $40 per reservation regardless of when notice is provided. 
We are not adopting these alternatives for the following reasons:
    As noted, it is generally not feasible to fill spaces canceled 
within 15 days. In cases where cancellation occurs 15 or more days in 
advance, we may be able to fill the space. However, a refund procedure 
would be very complex due to the nature of scheduling shipments and 
arranging stall space. There are times when an entire shipment of 20 
horses may be canceled and we may be able to fill only 10 of those 
slots. There may also be times when the space that becomes available 
may be inappropriate for a new shipment due to size or location of the 
newly available stalls. In addition, we do not have the staffing or 
infrastructure to track and control refunds, especially refunds that 
must be prorated because there would not be an even exchange. We also 
were concerned that providing refunds would mean that the fees would no 
longer be a deterrent to canceling stall space for brokers who can 
arrange for another importer to fill their canceled space. Such 
arrangements also could limit which brokers might have an opportunity 
to use the stall space.
    Regarding the other alternative, which would set a flat fee of 
above $40, we decided instead to establish a graduated fee schedule for 
cancellations. Under this schedule, the fee would depend on when the 
reservations were canceled prior to the reservation date, therefore, 
there would be a greater deterrent to cancelling reservations close to 
the reservation date, while the lower cancellation fees for more notice 
reflects the increased likelihood, but no certainty, of the space being 
filled.

Immediate Action

    Immediate action is necessary to discourage importers from 
reserving space that they may not use and canceling when it is too late 
for others to use the space. APHIS put a freeze on taking reservations 
for stall space from importers until this issue is resolved. Because we 
wish to resume taking stall space reservations at these facilities by 
December 2002, it is important to make this action effective as quickly 
as possible. Under these circumstances, the Administrator has 
determined that prior notice and opportunity for public comment are 
contrary to the public interest and that there is good cause under 5 
U.S.C. 553 for making this action effective less than 30 days after 
publication in the Federal Register.
    We will consider comments we receive during the comment period for 
this interim rule (see DATES above). After the comment period closes, 
we will publish another document in the Federal Register. The document 
will include a discussion of any comments we receive and any amendments 
we are making to the rule.

Executive Order 12866 and Regulatory Flexibility Act

    This rule has been reviewed under Executive Order 12866. The rule 
has been determined to be not significant for the purposes of Executive 
Order 12866 and, therefore, has not been reviewed by the Office of 
Management and Budget.
    We are amending the regulations regarding the importation of horses 
into the United States by requiring persons who cancel reservations for 
stall space at import quarantine facilities to notify us earlier and by 
increasing the fee for canceling reservations. Under the new fee 
structure, persons who cancel a reservation at least 30 business days 
prior to the reservation date will be charged 25 percent of the 
reservation fee; persons who cancel a reservation 15 to 29 business 
days prior to the reservation date will be charged 50 percent of the 
reservation fee; and persons who cancel a reservation less than 15 
business days prior to the reservation date will forfeit 100 percent of 
the reservation fee. We are taking this action to discourage importers 
from reserving space that they may not use and canceling when it is too 
late for others to use the space. We believe this action will improve 
the occupancy rate of stall space, and therefore the efficiency of 
import quarantine facilities.
    In 1999, the U.S. horse industry directly produced goods and 
services of $25.3 billion and had a total economic impact of $112.1 
billion on the U.S. gross domestic product.\1\ Racing, showing, and 
recreation each contributed more than 25 percent to the total value of 
goods and services produced by the industry. Activities related to the 
horse industry generated approximately $1.9 billion in tax revenues, 
most of which were generated in States where parimutuel betting was 
allowed.\2\
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    \1\ American Horse Counci, 2000 House Industry Statistics.
    \2\ American Horse Council, the Economic Impact of the U.S. 
Horse Industry, Executive Summary, Washington, DC January 2000.
---------------------------------------------------------------------------

    The horses quarantined at USDA's New York and Florida quarantine 
facilities include horses that are valued at up to $1 million. The 
average value of these horses in 2001 was $10,400 per horse. The number 
and total value of horses imported into the United States has been 
increasing over the last 8 years (table 1).

[[Page 72829]]



                                 Table 1.--All Horse Import Values and Quantities
                                         [Harmonized Schedule Code 0101]
----------------------------------------------------------------------------------------------------------------
                                                                     1993             1999             2001
----------------------------------------------------------------------------------------------------------------
Value........................................................      $61,000,000     $326,000,000     $319,000,000
Quantity.....................................................           20,725           31,758          37,836
----------------------------------------------------------------------------------------------------------------
Source: World Trade Atlas, United States--General Imports--Customs Value.

    Due to this increase in imported horses and the limited space 
available at USDA horse quarantine facilities, it is important that 
reservation space be fully utilized.
    Horses are quarantined at a USDA facility for either 3 or 7 days 
before being cleared. European horses are quarantined for 3 days; South 
American and Caribbean horses are quarantined for 7 days. The user fee 
for a 3-day quarantine is $792 per horse. The user fee for a 7-day 
quarantine is $1,556 per horse (Table 2).

            Table 2.--Current Stall Fees for Imported Horses
------------------------------------------------------------------------
                                                           Equine stall
                                                          daily user fee
------------------------------------------------------------------------
1st through 3rd day (fee per day).......................            $264
4th through 7th day (fee per day).......................             191
8th and subsequent days (fee per day....................            162
------------------------------------------------------------------------
 Daily user fee Oct. 1, 2002-Sept 30, 2003 (9 CFR 130.7).

    Eighty to ninety percent of the quarantine reservations cancelled 5 
business days before a reservation are not refilled. The 5-day period 
does not allow sufficient time to find a replacement. The USDA 
quarantine facilities in Florida and New York each lose approximately 
$300,000-$470,000 each year in forgone user fees. In addition, the 
horse industry as a whole incurs additional costs through delays in 
being able to import horses. The result is fewer imports than would 
otherwise occur.
    The current practice of charging $40 for a cancellation allows 
horse brokers to reserve stall space even before securing clients for 
the space. Brokers with significant capital resources may make several 
reservations and simply forfeit the $40 reservation fees if a client is 
not found to fill them. This practice of reserving stall space before 
securing a client has led to stall reservations being bartered on the 
open market even though the program receives Federal funding. Some 
brokers have complained that a $40 reservation fee is not an effective 
deterrent to prevent brokers from reserving stall space before a client 
is found.
    The graduated fee schedule for canceled reservations will provide 
greater deterrence against late cancellations. Under a graduated fee 
schedule, brokers and horse owners will lose 25 percent of the 
reservation fee if they cancel at least 30 days prior to the 
reservation. Thirty days notice will provide opportunity for APHIS to 
refill the stall space. Brokers and horse owners who cancel 15-29 days 
prior to the reservation will lose 50 percent of the reservation fee. 
Brokers and horse owners who cancel less than 15 days prior to the 
reservation will be charged 100 percent of the reservation fee due to 
the insufficient time to refill the stall space (Table 3).\3\
---------------------------------------------------------------------------

    \3\ While most equines undergo a 3 or 7 day quarantine, the new 
graduated fee schedule will apply to all quarantine periods for 
which user fees are charged under 9 CFR 130.2. Calculations of 
graduated fee schedule: (GF) = ((a*d)+(b*d)+(c*d)) * Z, where a = 
1st through 3rd day (fee per day) $264, b = 4th through 7th day (fee 
per day) $191, c = 8th and subsequent days (fee per day) $162, d = 
number of days, and Z = percentage determined from the cancellation 
date prior to stall reservation 25% , 50% , and 100%.

                  Table 3.--Graduated Reservation Fees.
------------------------------------------------------------------------
                                               3-day           7-day
    Cancellation time period prior to       quarantine      quarantine
              reservations                 cancellation    cancellation
                                                fee             fee
------------------------------------------------------------------------
30 days or longer (25 percent)..........            $198            $389
15-29 days (50 percent).................             396             778
Less than 15 days (100 percent).........             792           1,556
------------------------------------------------------------------------

Economic Efforts on Small Entities

    Increasing the cancellation fee and the time-period required for 
cancellation has potential to affect both horse owners and brokers. 
Horse brokers who cancel space will incur additional cancellation fees. 
While the cost of cancellations will most likely be borne by the horse 
owners, the effects on those owners should be minimal compared to the 
high values of the horses being quarantined.\4\
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    \4\ SBA lists horse owners as small if they have less than 
$750,000 per head in revenue (NAICS 112920). Census information is 
not available for individual horse owners' sales.
---------------------------------------------------------------------------

    Under these circumstances, the Administrator of the Animal and 
Plant Health Inspection Service has determined that this action will 
not have a significant economic impact on a substantial number of small 
entities.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) Preempts all State and local laws and 
regulations that are in conflict with this rule; (2) has no

[[Page 72830]]

retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule.

Paperwork Reduction Act

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

List of Subjects in 9 CFR Part 93

    Animal diseases, Imports, Livestock, Poultry and poultry products, 
Quarantine, Reporting and recordkeeping requirements.


    Accordingly, we are amending 9 CFR part 93 as follows:

PART 93--IMPORTATION OF CERTAIN ANIMALS, BIRDS, AND POULTRY, AND 
CERTAIN ANIMAL, BIRD, AND POULTRY PRODUCTS; REQUIREMENTS FOR MEANS 
OF CONVEYANCE AND SHIPPING CONTAINERS

    1. The authority citation for part 93 is revised to read as 
follows:

    Authority: 7 U.S.C. 1622, 8303, 8306-8308, 8310, 8313, and 8315; 
21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.

    2. Section 93.304 is amended by revising paragraphs (a)(3)(iv) and 
(a)(3)(vi), and by adding a new paragraph (a)(3)(vii) to read as 
follows:


Sec.  93.304  Import permits for horses from regions affected with CEM 
and for horse specimens for diagnostic purposes; reservation fees for 
space at quarantine facilities maintained by APHIS.

    (a) * * *
    (3) * * *
    (iv) Any reservation fee shall be forfeited if the importer or the 
importer's agent fails to present for entry, within 24 hours following 
the designated time of arrival, the horse for which the reservation was 
made: Except that a reservation fee shall not be forfeited if the 
Administrator determines that services, other than provided by 
carriers, necessary for the importation of the horses within the 
required period are unavailable because of unforeseen circumstances as 
determined by the Administrator (such as the closing of an airport due 
to inclement weather or the unavailability of the reserved space due to 
the extension of another quarantine).
* * * * *
    (vi) If a reservation is canceled, the importer or the importer's 
agent will be charged a fee according to the following schedule:

----------------------------------------------------------------------------------------------------------------
               Cancellation date                                               Fee
----------------------------------------------------------------------------------------------------------------
30 or more days before the scheduled            25 percent of the reservation fee.
 reservation date.
15-29 days before the scheduled reservation     50 percent of the reservation fee.
 date.
Less than 15 days before the scheduled          100 percent of the reservation fee.
 reservation date.
----------------------------------------------------------------------------------------------------------------

    (vii) If the reservation fee was ensured by a letter of credit, the 
Department will draw the amount of the cancellation fee against the 
letter of credit unless the cancellation fee is otherwise paid at least 
3 days prior to the expiration date of the letter of credit.
* * * * *

    Done in Washington, DC, this 4th day of December 2002.
Peter Fernandez,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 02-31009 Filed 12-6-02; 8:45 am]
BILLING CODE 3410-34-P