[Federal Register Volume 71, Number 165 (Friday, August 25, 2006)]
[Rules and Regulations]
[Pages 50320-50328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-14128]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Parts 319 and 354

[Docket No. APHIS 2006-0096]
RIN 0579-AC06


Agricultural Inspection and AQI User Fees Along the U.S./Canada 
Border

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Interim rule and request for comments.

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SUMMARY: We are amending the foreign quarantine and user fee 
regulations by removing the exemptions from inspection for imported 
fruits and vegetables grown in Canada and the exemptions from user fees 
for commercial vessels, commercial trucks, commercial railroad cars, 
commercial aircraft, and international air passengers entering the 
United States from Canada. As a result of this action, all agricultural 
products imported from Canada will be subject to inspection, and 
commercial conveyances, as well as airline passengers arriving on 
flights from Canada, will be subject to inspection and user fees. We 
are taking this action in part because we are not recovering the costs 
of our current inspection activities at the U.S./Canada border. In 
addition, our data show an increasing number of interceptions on the 
U.S./Canada border of prohibited material that originated in regions 
other than Canada that presents a high risk of introducing plant pests 
or animal diseases into the United States. These findings, combined 
with additional Canadian airport preclearance data on interceptions of 
ineligible agricultural products approaching the U.S. border from 
Canada, strongly indicate that we need to expand and strengthen our 
pest exclusion and smuggling interdiction efforts at that border. In 
order to do this and to recover the costs of our existing inspection 
activity, we need to collect user fees for inspection of commercial 
conveyances and international air passengers entering the United States 
from Canada.

DATES: This interim rule is effective November 24, 2006. We will 
consider all comments we receive on or before November 24, 2006.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and, in the lower ``Search Regulations and Federal 
Actions'' box, select ``Animal and Plant Health Inspection Service'' 
from the agency drop-down menu, then click on ``Submit.'' In the Docket 
ID column, select APHIS-2006-0096 to submit or view public comments and 
to view supporting and related materials available electronically. 
Information on using Regulations.gov, including instructions for 
accessing documents, submitting comments, and viewing the docket after 
the close of the comment period, is available through the site's ``User 
Tips'' link.
     Postal Mail/Commercial Delivery: Please send four copies 
of your comment (an original and three copies) to Docket No. APHIS-
2006-0096, Regulatory Analysis and Development, PPD, APHIS, Station 3A-
03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please state 
that your comment refers to Docket No. APHIS-2006-0096.
    Reading Room: 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.
    Other Information: Additional information about APHIS and its 
programs is available on the Internet at http://www.aphis.usda.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Alan S. Green, Executive Director, 
Plant Health Programs, PPQ, APHIS, 4700 River Road Unit 36, Riverdale, 
MD 20737; (301) 734-8261.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in 7 CFR part 319 prohibit or restrict the 
importation of certain plants and plant products into the United States 
to prevent the introduction of plant pests. Similarly, the regulations 
in 9 CFR subchapter D prohibit or restrict the importation of certain 
animals and animal products into the United States to prevent the 
introduction of pests or diseases of livestock. The regulations in 7 
CFR part 354 provide rates and requirements for overtime services 
relating to imports and exports and for user fees.
    The existing regulations in ``Subpart-Fruits and Vegetables'' 
(Sec. Sec.  319.56 through 319.56-8) require, with very few exceptions, 
a specific written permit for the importation of fresh fruits or 
vegetables into the United States. The imported fruits and vegetables 
are

[[Page 50321]]

subject to inspection and, if necessary, cleaning and/or treatment at 
the first port of arrival in the United States. Also, the owner or the 
owner's agent must make full disclosure of the type, quantity, and 
country of origin of the fruits and vegetables at the time the fruits 
and vegetables are presented for inspection.
    Current Sec.  319.56-2(c), however, provides that, with the 
exception of potatoes from specified areas in Canada, fruits and 
vegetables grown in Canada may be imported without restriction under 
the regulations. Canada has been treated more leniently than other 
countries because, at the time the policy was implemented, products 
from Canada were produced in Canada and, in most cases, did not harbor 
plant pests or animal diseases of concern to the United States. In 
addition, we had reviewed Canada's import requirements and determined 
that they were sufficient to ensure that Canada would keep out 
agricultural commodities from other countries that could present plant 
or animal pest or disease risks if those commodities were subsequently 
exported from Canada to the United States. In the two final rules (the 
first published in the Federal Register on April 12, 1991 (56 FR 14837-
14846, Docket No. 91-026) and the second on January 9, 1992 (57 FR 755-
773, Docket No. 91-135)) in which we first established agricultural 
quarantine and inspection (AQI) user fees for commercial conveyances 
and international air passengers, we exempted conveyances and 
passengers from Canada from those fees. Because it was our 
understanding at the time that such conveyances and passengers posed 
little risk of introducing plant or animal pests or diseases into the 
United States, we did not need to routinely provide AQI services for 
them and, therefore, could not justify imposing user fees on them.
    Recent trends have led us to reevaluate our AQI inspection regime 
at the U.S./Canada border. The North American Free Trade Agreement has 
had a significant impact on agricultural trade between the United 
States and Canada. Between 1995 and 2005, Canadian exports to the 
United States of vegetables and fruits and nuts increased by 80 
percent. In addition, a huge demand created by Canada's growing 
cultural diversity has led to an ever-increasing variety of 
agricultural products from all over the world being imported into 
Canada. Canadian re-exports of vegetables and fruits and nuts to the 
United States increased by 336 percent during the same 10-year period. 
Being situated entirely in cool to cold ecoregions, Canada imposes 
fewer phytosanitary requirements than does the United States on imports 
of plant products from most countries where tropical or subtropical 
pests are present. Of the 402 species on the U.S. regulated plant pest 
list as of December 2001, 349, or 87 percent, were not regulated pests 
in Canada. Therefore, most commodities that are refused entry into the 
United States, or are admitted only after certain phytosanitary 
requirements have been met, can be imported into Canada without any 
impediments.
    Canada's import requirements for many foreign plant products allow 
Canada to offer a greater availability of such products than can the 
United States. This greater availability, which may result in lower 
prices, combined with the lack of routine inspection at U.S. ports of 
entry of agricultural products labeled as products of Canada and of 
international air passengers at the Canada/U.S. border, creates an 
incentive for people to bring agricultural commodities that may not be 
eligible for U.S. import into the United States from Canada. Some 
commodities that fall into this category are mangoes, litchis, guava, 
and lemon grass.
    Responding to this incentive, commercial importers can circumvent 
U.S. phytosanitary regulations by having agricultural commodities 
shipped to Canada, having them re-labeled there as products of Canada, 
and then having them shipped to the United States, taking advantage of 
the exemption in Sec.  319.56-2(c) referred to above. Interceptions at 
the border, including one in Detroit in 2004 of Spanish oranges and 
Dutch peppers manifested as products of Canada, provide evidence of 
this practice. There have also been instances of flowers grown in a 
third country being mixed into bouquets with Canadian-grown flowers and 
then shipped to the United States. Hydrangea plants from third 
countries have been cut into small rooted cuttings, labeled as Canadian 
products, and then shipped across the border to the United States. In 
2005, approximately 14,000 hydrangea plants from Japan entered the 
United States via Canada. Importation into the United States of 
hydrangeas from Japan is prohibited due to the possibility that they 
could introduce the quarantine-significant rust Puccinia glyceriae 
(anam. Aecidium hydrangeae-paniculatae Dietel into this country. There 
have been frequent interceptions of litchis and longans that originated 
in Asian countries, were taken out of their original boxes, re-labeled, 
and then shipped across the border from Canada. A 3,000-pound shipment 
of untreated longans, which was part of a mixed load, was intercepted 
at Blaine, WA, in 2003. A shipment of litchis was seized as recently as 
July 2006, also at Blaine.
    Further confirmation of these practices was provided by the results 
of three extensive inspection operations along the U.S./Canada border 
(two in Buffalo, NY, and a third at Blaine, WA). The inspections 
resulted in numerous interceptions of unauthorized material produced in 
regions other than the United States and Canada.
    Prohibited articles found during these inspections included 
untreated citrus fruit, mangoes, and other tropical fruit; meat; live 
birds; and plants in pots with soil. The prohibited plants, plant 
products, birds, and animal products intercepted originated in regions 
throughout the world and presented a high risk of introducing plant 
pests or animal diseases into the United States. In fact, according to 
our interception records, a number of exotic plant pests were found 
during these inspections, including fruit flies and mealybugs on 
cherimoyas; aphids, mites, and scale insects on litchis; white flies 
and fruit flies on guavas; and scale insects and mealybugs on mangoes.
    Additional interception records compiled by APHIS' Plant Protection 
and Quarantine (PPQ) program have documented a number of potential risk 
factors associated with imports of agricultural products from Canada. 
Materials with the potential for carrying foot-and-mouth disease (FMD) 
have been found to approach the border regularly from Canada. Solid 
wood packing material, a pathway for the Asian and citrus longhorned 
beetles, Sirex noctilio, pine shoot beetle, emerald ash borer, and 
other pests and diseases, is estimated to be present in some 70 percent 
of all Canadian rail containers. We view both the packing materials and 
the railway conveyances in which they are carried as more significant 
risk pathways than we did when we first established AQI user fees. 
Fruit flies have been intercepted at U.S. entry ports on mangoes from 
Mexico and Morocco, longans and litchis from various Asian countries, 
citrus from Spain, Spondia spp. from Mexico, Acanthocereus spp. from 
China, and Musa spp. from India that were shipped from those countries 
to the United States via Canada.
    Results of our AQI preclearance activities at Canadian airports 
have demonstrated that air passengers from Canada represent another 
pest pathway. The number of air passengers entering the United States 
from Canada has increased over 70 percent in the last 14 years, from 35 
million in 1992 to a

[[Page 50322]]

projected 60 million in 2006. AQI monitoring of this pathway was first 
implemented in FY 1996 at Vancouver International Airport, with 
permanent staffing placed at that airport in FY 2001. The preclearance 
program was then expanded to include Toronto, Montreal, and Calgary. 
Table 1 below provides data on interceptions of animal products 
prohibited U.S. entry that were carried by preclearance passengers at 
Vancouver International Airport in FYs 2000 and 2001. Imports of animal 
products from the countries listed in the table may present a risk of 
introducing FMD or other animal diseases into the United States. The 
interception totals were higher in FY 2001 because of the permanent 
staffing we had in place during that year. Regrettably, in subsequent 
years, staffing shortfalls elsewhere resulted in AQI personnel being 
reassigned from this location, increasing the possibility that 
prohibited animal products may not be intercepted at Vancouver 
International Airport prior to entering the United States.

      Table 1.--Interceptions of Prohibited Animal Products During
  Preclearance Passenger Inspections at Vancouver International Airport
------------------------------------------------------------------------
                                                     Animal product
                                                      interceptions
               Passenger origin                -------------------------
                                                  FY 2000      FY 2001
------------------------------------------------------------------------
Canada........................................            3            8
China.........................................            2           41
Hong Kong.....................................            0           11
Japan.........................................            0            3
South Korea...................................            0            1
Philippines...................................            0            5
Singapore.....................................            0            1
United Kingdom................................            0            1
Spain.........................................            1            0
Taiwan........................................            2           0
------------------------------------------------------------------------
Source: Work Accomplishment Data System, APHIS, PPQ.

    Table 2 below presents approach rates for FYs 2001 through 2004 for 
samples of preclearance passengers at the four Canadian airport 
locations--Calgary, Montreal, Toronto, and Vancouver--at which we have 
had an AQI presence. The approach rate is the percentage of passengers 
carrying agricultural items prohibited entry into the United States. 
For example, in FY 2001, there were 5,433 passengers sampled, of whom 
358 were found to be carrying prohibited materials, which were then 
seized, resulting in an approach rate of 6.6 percent.

    Table 2.--Approach Rates for Preclearance Passengers at Canadian
                                Airports
------------------------------------------------------------------------
                                               Quarantined     Approach
          Fiscal year             Passengers     material        rate
                                   sampled    interceptions   (percent)
------------------------------------------------------------------------
2001...........................        5,433           358           6.6
2002...........................        4,386           160           3.6
2003...........................       18,285           901           4.9
2004...........................       19,496         1,520           7.8
                                ----------------------------------------
    Average....................       11,900           735          6.2
------------------------------------------------------------------------
Source: APHIS, PPQ, Agricultural Quarantine Inspection Monitoring
  Program.

    In FY 1999, the last year for which we have complete data on the 
number of air passengers precleared in Canada for entry into the United 
States, the total exceeded 10 million passengers. As shown in table 2, 
the average yearly approach rate for such passengers is 6.2 percent. 
This means that approximately 620,000 prohibited agricultural 
commodities may be carried by air passengers attempting to enter the 
United States from Canada each year. When surveys and blitzes were 
conducted on passenger baggage at destination airports in the United 
States, significant amounts of prohibited agricultural materials were 
found.
    In addition to all the conventional risk pathways discussed above, 
in the wake of the terrorist attacks of September 11, 2001, 
bioterrorism has become a much greater source of concern to us than it 
was in the past. The U.S./Canada border, which stretches over 3,985 
miles from the Pacific to the Atlantic Ocean, is the longest undefended 
border in the world. Our current dearth of inspection activity at that 
border could potentially leave the United States vulnerable to 
bioterrorism. A successful bioterrorist attack could, in addition to 
causing death and illness, undermine Americans' confidence in the 
safety of their food system and have a devastating impact on U.S. 
agriculture.
    In order to safeguard U.S. agriculture, we have recently augmented 
our inspection activities at the U.S./Canada borders. The Bureau of 
Customs and Border Protection (CBP) of the U.S. Department of Homeland 
Security, which now conducts agricultural inspections pursuant to 
APHIS' regulations, currently has agricultural inspector positions 
along the U.S./Canadian land border stretching from Maine to Washington 
State. Busy corridors, such as Buffalo, NY, Detroit, MI, and Blaine, 
WA, have had the most inspectors. In recent years, agriculture

[[Page 50323]]

inspectors have been assigned to ports that previously did not have 
coverage for agricultural products, such as those in Maine, Minnesota, 
North Dakota, Montana, and Idaho. In addition to the border inspectors, 
there are the CBP agricultural inspectors located at preclearance 
stations at the larger Canadian airports of Toronto, Vancouver, and 
Montreal.
    Inspectors at the border check and verify import permits and 
conduct inspection of agricultural products, such as cut flowers and 
produce, that are arriving on commercial conveyances, when those 
products are not of Canadian origin or when paperwork is lacking. Such 
commodities as meat and solid wood packing material have also been 
subject to inspection. In addition, the inspectors have been conducting 
some passenger vehicle inspections, which have resulted in the seizure 
of prohibited foreign agricultural commodities, such as untreated Asian 
and Latin American fruits that are eligible to enter Canada without the 
treatment necessary for importation into the United States.
    Lack of funding and personnel have hampered our border inspection 
efforts, however. Because we have not charged user fees for inspecting 
commercial vessels (100 net tons or more), commercial trucks, 
commercial railroad cars, commercial aircraft, or international air 
passengers that enter the United States from Canada, we have not been 
recovering the costs of the inspections that we have been conducting. 
CBP staffing shortages have prevented us from augmenting our inspection 
activities to the extent that we deem necessary. At some of the newly 
staffed border locations referred to earlier, there is only one 
inspector to cover multiple points of entry.
    Based on all the findings discussed above regarding conventional 
risk pathways, as well as our concerns about bioterrorism, we have 
determined that we need to expand and strengthen our pest exclusion 
efforts at the U.S./Canadian border. CBP concurs with this 
determination.
    To sum up then, this interim rule has a threefold purpose:
     Closing the inspection exemption loophole for fruits and 
vegetables entering the United States from Canada;
     Recovering the costs of AQI services we are already 
providing at the U.S./Canada border; and
     Recovering the costs of new, expanded AQI services at the 
U.S./Canada border.
    To address the risks posed by agricultural products agricultural 
products that originate in a third country and are shipped through 
Canada to the United States, we are amending Sec.  319.56-2(c), which, 
as noted above, provides that, with the exception of potatoes from 
specified areas in Canada, fruits and vegetables grown in Canada may be 
imported without restriction under the regulations in ``Subpart-Fruits 
and Vegetables.'' Specifically, we are amending that paragraph to 
provide that such fruits and vegetables will be subject to the 
requirements in Sec.  319.56-6 for inspection at the port of first 
arrival. There are no specific inspection exemptions in other APHIS 
regulations for commodities from Canada. Agricultural commodities from 
Canada other than fruits and vegetables, such as cut flowers and 
nursery stock, are already subject to inspection, though such 
inspections have not been conducted with a frequency commensurate with 
the level of risk now associated with such imports.
    We are also removing the exemptions from AQI user fees in Sec.  
354.3 for commercial vessels, commercial trucks, commercial railroad 
cars, commercial aircraft, and international air passengers \1\ 
entering the United States from Canada. Removing these exemptions will 
enable us to recover the both costs of our current inspection 
activities and the costs associated with implementing an augmented 
inspection regime for these conveyances and passengers.
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    \1\ Fees charged air passengers are collected by the airlines 
and transmitted to APHIS. We have used appropriated funds to cover 
AQI costs attributable to pedestrians and private vehicular traffic.
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    The additional resources generated by the user fees will enable us 
to hire sufficient personnel to help target existing agricultural risk 
pathways for adequate pest exclusion and conduct compliance checks for 
all entrants from Canada. Adequate staffing is also vital to the effort 
to uncover currently unknown pathways. In addition, more inspectors are 
necessary to properly conduct verification of exit for transiting 
commodities at land borders. At Canadian airports, additional personnel 
will enable us to increase inspections of passengers determined to be 
at high risk for carrying restricted or prohibited animal products and 
produce. Anticipated personnel and other costs resulting from this 
interim rule are discussed below in the summary of the economic 
analysis, as well as in the full analysis.
    Our amendments to Sec.  354.3 entail removing or amending those 
paragraphs in the section that provide specific exemptions for 
conveyances or passengers arriving from Canada or that have moved 
solely between the United States and Canada. In the paragraphs that 
provide for the prepayment of user fees for commercial trucks and 
commercial railroad cars, which have applied only to such trucks and 
railroad cars from Mexico due to the exemptions discussed previously 
for those conveyances arriving from Canada, we have removed the words 
``from Mexico'' so those prepayment provisions will apply to 
conveyances arriving from both Canada and Mexico.
    This interim rule does not establish any new user fees. Rather, the 
same AQI user fees that apply to commercial vessels, commercial trucks, 
commercial railroad cars, commercial aircraft, and international air 
passengers from every other nation arriving at ports in the customs 
territory of the United States will now apply to Canada as well.
    In an interim rule published in the Federal Register on December 9, 
2004 (69 FR 71660-71683, Docket No. 04-042-1), and effective on January 
1, 2005, we amended the user fee regulations in Sec.  354.3 by 
adjusting these fees. The fee adjustments were needed to recover the 
costs of increased inspection activity necessitated by the events of 
September 11, 2001, and to account for routine inflationary increases 
in the cost of doing business. The December 2004 interim rule contained 
adjusted AQI user fees for fiscal years (FYs) 2005 through 2010.
    We develop user fees by determining the total annual costs to 
administer each individual AQI program activity for air passengers, 
commercial aircraft, trucks, railroad cars, and maritime vessels, 
including direct costs for providing inspection services, and indirect 
costs, such as agency overhead; the administrative costs of developing, 
collecting, and monitoring AQI user fees; and an amount to maintain a 
reasonable balance in reserve. We divide the total costs for each 
individual program activity by the estimated volume of airline 
passengers and commercial conveyances in that program activity arriving 
from all destinations to calculate each individual program's user fees. 
Depending on the type of commodity or the agricultural risks associated 
with the region from which a conveyance or passenger originates, the 
inspection process may take only a few minutes or it can be quite 
extensive. These factors vary considerably from port to port and season 
to season; however, our fees do not. The number of variables which 
determine the amount of service or length of time required to provide 
service is virtually infinite. A system

[[Page 50324]]

that attempted to account for all these variables would be unwieldy and 
expensive to administer and would require that additional expenses be 
included in the fee calculations.
    AQI user fees are spent only on AQI-related activities-in this 
case, establishing a workforce on the U.S./Canadian border commensurate 
with the volume of traffic that is sufficient to implement and maintain 
an inspection program on that border. Internal recordkeeping ensures 
that revenues received from air passengers and each mode of 
transportation are properly recorded and utilized. While AQI revenues 
all go into one AQI account, they are applied to specific activities. 
Revenues from AQI fees collected from international air passengers are 
only used for expenses associated with providing AQI services for those 
passengers. Similarly, revenues from AQI fees for each type of 
conveyance are only used for expenses associated with providing AQI 
services for that type of conveyance. Any excess collections will be 
used to rebuild the AQI reserve balances for the various service 
categories, which have been depleted in part because we have not been 
recovering the costs of even the limited inspection activities we have 
been conducting on the U.S./Canada border. As APHIS assesses its user 
fees, it will initiate rulemaking to increase or decrease the fees as 
necessary.
    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), as 
amended by section 917 of the Federal Agricultural Improvement and 
Reform Act of 1997 (Pub. L. 104-127), authorizes APHIS to collect user 
fees for AQI services. These include an amount sufficient to maintain a 
reasonable balance, i.e., a reserve fund, in the AQI User Fee Account 
for each service category. The reserve fund serves two purposes. First, 
it ensures that the Agency has access, through the AQI User Fee 
Account, to funds for normal operating expenses for each AQI service 
category. Second, the reserve fund ensures that the Agency has 
sufficient operating funds to carry on with AQI activities in each 
service category in cases of bad debt, carrier insolvency, or 
fluctuations in activity volumes.
    The aftermath of the events of September 11, 2001, shows the 
importance and necessity for such a reserve. For a time, airline 
business stopped completely, and it is still at lower levels than it 
was before September 11, 2001. Many airlines have either filed for 
bankruptcy or simply stopped flying into the United States. Further, 
some U.S. passengers are wary of traveling abroad, and some foreign 
travelers have the same fears of traveling to the United States. 
Without the reserve, AQI operations would have been severely disrupted.

Emergency Action

    This rulemaking, which removes the exemption from inspection for 
imported fruits and vegetables grown in Canada and subjects all air 
passengers and commercial vessels, trucks, railroad cars and aircraft 
from Canada to AQI user fees, is necessary on an emergency basis to 
prevent the introduction of plant pests and animal diseases into the 
United States via conventional pathways or through bioterrorism and to 
recover the cost of the needed inspections. Under these circumstances, 
the Administrator has determined that there is good cause under 5 
U.S.C. 553 for issuing this rule as an interim rule rather than by 
publishing a notice of proposed rulemaking. We are making this rule 
effective 90 days after publication in the Federal Register in order to 
allow adequate time for the transfer of inspectors to the U.S./Canada 
border, the establishment of new inspection protocols, and the 
implementation of collection procedures by those who must collect user 
fees.
    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. This 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.
    For this interim rule, we have prepared an economic analysis. The 
economic analysis, which provides a cost-benefit analysis as required 
by Executive Order 12866 and an analysis of the potential economic 
effects on small entities as required by the Regulatory Flexibility 
Act, is summarized below. Copies of the full analysis are available by 
contacting the person listed under FOR FURTHER INFORMATION CONTACT and 
may be viewed on the Regulations.gov Web site (see ADDRESSES above for 
instructions for accessing Regulations.gov).
    The Regulatory Flexibility Act requires that agencies specifically 
consider the economic effects associated with their rules on small 
entities, which include small businesses, small not-for-profit 
organizations, and small governmental jurisdictions. We do not have 
enough data for a comprehensive analysis of the economic effects of 
this rule on small entities. Therefore, in accordance with 5 U.S.C. 
603, we have performed an initial regulatory flexibility analysis for 
this rule. We are inviting comments about this rule as it relates to 
small entities. In particular, we are interested in determining the 
number and kind of small entities who may incur benefits or costs as a 
result of this rule and the economic effects of those benefits or 
costs.
    Under the Plant Protection Act (7 U.S.C. 7701 et seq.), the 
Secretary of Agriculture is authorized to regulate the importation of 
plants, plant products, means of conveyance, and other articles to 
prevent the introduction into or dissemination within the United States 
of plant pests and diseases and noxious weeds. Similarly, under the 
Animal Health Protection Act (7 U.S.C. 8301 et seq.), the Secretary of 
Agriculture is authorized to regulate the importation or entry into the 
United States of any animal, animal product, means of conveyance, or 
other article to prevent the introduction into or dissemination within 
the United States of any pest or disease of livestock. Also, under the 
FACT Act, the Secretary of Agriculture is authorized to prescribe and 
collect fees that will cover the cost of providing import- and export-
related AQI inspection services in connection with the arrival of 
international passengers, commercial vessels, commercial aircraft, 
commercial trucks, and railroad cars in the customs territory of the 
United States or their preclearance at a site outside the customs 
territory of the United States.
    This interim rule removes exemptions from AQI inspection for 
Canadian-grown fruits and vegetables imported from Canada and the 
exemptions from user fees for commercial vessels, commercial trucks, 
commercial railroad cars, commercial aircraft, and air passengers 
moving into the United States from Canada. As a result of this action, 
fruits and vegetables grown in Canada and imported into the United 
States will be subject to inspection, and commercial vessels, trucks, 
railroad cars, and aircraft, as well as airline passengers coming into 
the United States from Canada, will be subject to inspection and user 
fees. We are taking this action because we are not recovering the costs 
of our current

[[Page 50325]]

inspection activity at the U.S./Canada border and because our data show 
an increasing number of interceptions on the border of prohibited 
material that originated in regions other than Canada. These findings, 
combined with our increased concerns about the threat of bioterrorism, 
make it imperative that we expand and strengthen our pest exclusion 
efforts at the U.S./Canada border and that we have the funds available 
to support both our existing and expanded activity.

Affected Entities and User Fee Revenues

    This interim rule will affect entities that move commodities into 
the United States from Canada. Broadly, these include commercial 
surface, waterborne, and air conveyances.

Surface Conveyances

    For commercial freight trucking, the Small Business Administration 
(SBA) defines a small entity as one having not more than $23.5 million 
in annual receipts. According to the 2002 Economic Census (the most 
recent available), there were 29,321 general long-distance freight 
trucking establishments in the United States (North American Industry 
Classification System [NAICS] code 484121). A total of 403 of these 
establishments, or less than 2 percent, had annual receipts of $21.5 
million or more, the largest revenue category identified. Thus, more 
than 98 percent of trucking establishments in the United States are 
small entities. We do not know the number or size of trucking 
establishments that transport products across the border from Canada, 
but can reasonably assume that they are also mostly small entities.
    For commercial railroad transportation, the SBA defines a small 
business entity as one having not more than 1,500 employees for long-
haul railroads (NAICS code 482111) and not more than 500 employees for 
short-line railroads (NAICS code 482112). Of the 571 firms operating as 
railroad transportation companies in the United States according to the 
2002 Economic Census, 18 firms employed more than 500 workers. 
Therefore, approximately 97 percent of commercial railroad companies in 
the United States could be considered small entities. We assume that 
this percentage applies to railroad companies that transport products 
into the United States from Canada.
    Under this interim rule, all commercial trucks and trains, except 
those exempt from payment under 7 CFR 354.3(d)(2), entering the United 
States from Canada will be subject to AQI user fees. A user fee of 
$5.25 per crossing or $105 for the year will be charged to each truck 
(table 3) in FYs 2006 and 2007. A user fee of $7.50 per crossing will 
be charged to each loaded rail car in FY 2006. In FY 2007, the fee will 
be $7.75. Trucks, trains, and all other surface modes of conveyance 
transported approximately $458 billion worth of goods across the U.S./
Canada border in 2005.\2\ While agricultural shipments are expected to 
be the focus of the border inspections, all commercial conveyances 
crossing the border are subject to inspection and the user fee.
---------------------------------------------------------------------------

    \2\ Bureau of Transportation Statistics. U.S. Surface 
Transportation Trade with Canada, 2006.
---------------------------------------------------------------------------

Waterborne Conveyances

    For commercial water transportation, the SBA defines a small 
business entity as one having not more than 500 employees. According to 
2002 U.S. Census data for Transportation and Warehousing, there were 
1,334 firms that operated in the United States for the entire year 
providing ``deep sea, coastal, and Great Lakes water transportation'' 
(NAICS codes 483111 and 483113). Twelve of these firms employed 500 to 
999 workers, and 10 firms employed 1,000 or more workers. Thus, over 98 
percent of water transportation firms in the United States employed 
fewer than 500 workers and could be considered small.
    Under this interim rule, all commercial vessels of 100 net tons or 
more entering the United States from Canada in FY 2006, unless exempt 
from payment under Sec.  354.3(b)(2), will be charged a user fee of 
$488 per vessel (table 3). The fee rises slightly to $490 in FY 2007. 
All waterborne trade with Canada in 2005 was valued at $14 billion.\3\ 
Approximately 1,895 vessels were used to move cargo from Canada to the 
United States in 2005; however, it is not known how many of these 
vessels carried agricultural goods.\4\
---------------------------------------------------------------------------

    \3\ Bureau of Transportation Statistics. U.S. Surface 
Transportation Trade with Canada, 2006.
    \4\ Bureau of Transportation Statistics. U.S. Surface 
Transportation Trade with Canada, 2006.
---------------------------------------------------------------------------

Air Conveyances

    For commercial air transportation, the SBA defines a small business 
entity as one having not more than 1,500 employees. According to the 
2002 U.S. Economic Census for Transportation and Warehousing, there 
were 1,674 firms in the United States classified under ``scheduled 
freight air transportation'' (NAICS code 481112), of which only 13 
firms employed more than 1,000 workers. Thus, over 99 percent of all 
air transportation firms in the United States could be considered 
small.
    Under this interim rule, commercial aircraft arriving in the United 
States from Canada in FY 2006 will be charged a user fee of $70.25 per 
arrival, unless exempt from payment under Sec.  354.3(e)(2). In FY 
2007, the fee will be $70.50 per arrival. The interim rule also 
requires that air passengers coming to the United States from Canada 
(10.1 million in FY 2005) be charged a user fee of $5.00 each (table 3) 
in both FYs 2006 and 2007, unless exempt from payment under Sec.  
354.3(f)(2).

          Table 3.--Agricultural Inspection (AQI) User Fees for Conveyances Entering the United States
----------------------------------------------------------------------------------------------------------------
                                                                User fee     User fee     Prepaid      Prepaid
                                                                  per          per        user fee     user fee
                         Conveyance                             crossing     crossing    decal (FY    decal (FY
                                                               (FY 2006)    (FY 2007)      2006)        2007)
----------------------------------------------------------------------------------------------------------------
Maritime vessels............................................      $488.00      $490.00          N/A          N/A
Trucks*.....................................................         5.25         5.25      $105.00      $105.00
Railroad cars...............................................         7.50         7.75          N/A          N/A
Aircraft....................................................        70.25        70.50          N/A          N/A
Air passengers (per passenger)..............................         5.00         5.00          N/A          N/A
----------------------------------------------------------------------------------------------------------------
*Truck operators will have a choice of paying per crossing or per year (decal).


[[Page 50326]]

Economic Effects of Changes

    Regardless of what goods they carry, unless exempt, commercial 
trucks, vessels of 100 net tons or more, railroad cars, and aircraft 
are subject to inspection and will be charged a user fee. Table 4 shows 
the revenues that we project will be generated by applying the FY 2006 
and FY 2007 user fees to conveyances arriving from Canada, assuming 
similar Canadian conveyance volumes to the averages recorded for FYs 
2003 through 2005. We estimate that vessel entities would be required 
to pay about $925,000 in user fees in FY 2006 and $938,000 in FY 2007; 
truck entities, about $14.6 million in FY 2006 and $14.8 million in FY 
2007; and rail entities, about $6.2 million in FY 2006 and $6.5 million 
in FY 2007.

                               Table 4.--Value of User Fees by Type of Conveyance
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated       Projected       Projected
          Conveyance            User fees  (FY    User fees  (FY   volumes  (FY     revenue (FY     revenue (FY
                                     2006)            2007)           2006)*           2006)          2007)**
----------------------------------------------------------------------------------------------------------------
Maritime vessels.............  $488.00.........  $490.00........           1,895        $924,760        $937,836
Trucks.......................  5.25............  5.25...........         982,765       5,159,516       5,211,111
Trucks with decal............  105/year........  105/year.......          90,256       9,476,880       9,571,649
Rail car.....................  7.50............  7.75...........         827,793       6,208,448       6,479,550
                              ----------------------------------------------------------------------------------
    Total fees...............  ................  ...............  ..............      21,769,604      22,200,146
----------------------------------------------------------------------------------------------------------------
* Estimated volumes for FY 2006 are based on average FY 2003-FY 2005 border crossings.
** Projected revenues for FY 2007 are based on FY 2006 estimated volumes plus a slight increase in general trade
  volumes of 1 percent.
Source: Figures derived from APHIS' Financial Management Division.

    Projected revenue from user fees for air passengers from Canada 
would total approximately $50.4 million in FY 2006 and $50.9 million in 
FY 2007, and the figures for commercial aircraft entities would be 
approximately $4.9 million in both of those years. Table 5 shows these 
revenues.

                                 Table 5.--Air Passengers and Aircraft User Fees
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated       Projected       Projected
   Entity entering the United     User fees  (FY  User fees  (FY   volumes*  (FY   revenue  (FY    revenue  (FY
       States from Canada              2006)           2007)           2006)           2006)          2007)**
----------------------------------------------------------------------------------------------------------------
Air passenger...................           $5.00           $5.00      10,078,551     $50,392,755     $50,896,683
 Aircraft.......................           70.25           70.50          69,398       4,875,210       4,941,485
                                 -------------------------------------------------------------------------------
    Total fees..................  ..............  ..............  ..............      55,267,965     55,838,168
----------------------------------------------------------------------------------------------------------------
*Estimated volumes from FY 2006 are based on average FY 2003-FY 2005 border crossings.
**Projected revenues for FY 2007 are based on FY 2006 estimated volumes plus a slight increase in general trade
  volumes of 1 percent.
Source: Figures derived from APHIS' Financial Management Division.

    Based upon our projected totals in tables 4 and 5, the total 
projected revenues for surface and air conveyances and airline 
passengers from Canada come to $77 million in FY 2006 and $78 million 
in FY 2007. Any amounts collected in excess of our actual expenditures 
would remain in a no-year account as a reserve until expended on AQI 
services in future years.

Federal Government Costs

    We have estimated that to implement an AQI program for Canada, 136 
full-time employees will need to be deployed along the U.S./Canada land 
border to inspect ground conveyances (passenger vehicles, trucks, and 
trains),\5\ and 65 full-time employees will be required at 7 different 
Canadian airport locations to inspect air passengers and cargo.\6\ CBP 
concurs with these estimates. It is likely that new hiring and 
implementation will be phased in over time.
---------------------------------------------------------------------------

    \5\ Eastern Region Staffing Plan and Western Region Staffing 
Plan for Canadian Border, October 26, 2001.
    \6\ PPQ pre-clearance AQI staffing report for 7 Canadian airport 
locations, April 9, 2003. (To be consistent with the eastern and 
western land border staffing reports, salaries and benefits are 
based on the 2006 general Federal pay rate for airport staff.
---------------------------------------------------------------------------

    The annual cost for 136 staff along the entire U.S.-Canadian border 
is expected to be about $22.45 million. The annual cost of the 65 pre-
clearance airport staff will be approximately $46 million. The total 
direct cost to the Federal Government of providing inspection services 
associated with this rule, based on the estimated cost of 136 positions 
on the Canadian land border and the 65 airport pre-clearance positions, 
is $68.5 million.
    Indirect costs associated with the AQI program include support 
costs (e.g., expenses of maintaining regional and headquarters staff 
and offices, developing detection methods, preparing risk assessments, 
enforcing the regulations, and providing communications, budget, and 
accounting services); administrative costs of developing, collecting, 
and monitoring AQI user fees; and APHIS' share of the costs incurred by 
the U.S. Department of Agriculture (USDA) in providing centralized 
services (e.g., telephone and mail service) to USDA agencies. The 
indirect costs associated with this rule are estimated at $6.3 million, 
as shown below in table 6. The total estimated annual costs associated 
with this rule, i.e., the direct and indirect costs of conducting 
inspections and collecting user fees, are then $74.8 million, assuming 
full implementation of the program.

   Table 6.--Total Estimated Annual Costs of Inspections and User Fee
                       Collections Under This Rule
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Direct costs............................................     $68,466,469
Indirect costs:
  Agency support (7.47 %)...............................       5,114,445

[[Page 50327]]

 
  Departmental charges (1.52 %).........................       1,040,690
  Administrative costs (0.26 %).........................         178,013
    Total indirect costs................................       6,333,148
                                                         ---------------
            Total costs.................................      74,799,617
------------------------------------------------------------------------

    In addition to the estimated costs detailed above, we may incur 
costs for additional staff that may be required at both maritime ports 
and airports to inspect waterborne cargo and air cargo arriving from 
Canada. Since Canadian vessels and aircraft can use any U.S. maritime 
port or airport, it is not yet clear whether additional positions may 
be needed at these locations or, if so, how many.
    Along with the costs of hiring additional staff for maritime ports, 
airports, and the U.S./Canada land border, there will be other costs 
because the current infrastructure will need to be expanded to 
accommodate workers and inspection bays. At this time, we have not 
determined the cost of these staffing and infrastructure requirements. 
As we have discussed above, we anticipate that the costs of 
implementing and maintaining an AQI program at the U.S./Canada border 
will be fully recovered through the collection of AQI user fees.

Alternatives

    One alternative to this rule would be to make no changes to the 
current regulations. However, as we have already discussed, data 
showing an increasing number of interceptions on the U.S./Canada border 
of prohibited material that originated in regions other than Canada 
indicate to us that increased pest exclusion efforts are needed at the 
U.S./Canada border to prevent the introduction of plant pests and 
animal diseases via unauthorized importations into the United States 
through Canada. Increasing our border inspection activities is also 
necessary to protect U.S. agriculture from bioterrorism. Removing the 
Canadian exemption from AQI user fees is necessary to recover the costs 
of our existing inspection activities and to implement an expanded 
inspection program.
    Another alternative to this rule would be to limit user fees to 
commercial vessels, commercial trucks, commercial railroad cars, and 
commercial aircraft, i.e., to exclude international air passengers 
entering the United States from Canada. However, as we discussed 
earlier, data from our preclearance inspections at Canadian airports 
indicate that air passengers attempt to carry tropical and exotic 
fruits and vegetables, as well as prohibited animal products, from 
Canadian markets into the United States. We would not be able to 
prevent or control the movement of such regulated articles into the 
United States if we did not increase our passenger-inspection 
activities, along with our conveyance-inspection activities, at the 
U.S./Canada border and would not be recovering the costs of passenger 
inspections if we did not charge passengers AQI user fees. We are 
already unable to recover the costs of inspecting passengers crossing 
the border in private vehicles because collecting user fees from such 
passengers would not be cost effective and would be administratively 
complex.
    One other alternative would be to only charge AQI user fees for 
inspections of commercial conveyances transporting agricultural goods 
(table 7). We estimate that between 5 and 20 percent of commercial 
conveyances are moving agricultural goods.

Table 7.--Value of User Fees by Type of Conveyance Assuming Only 5 to 20 Percent of Conveyances Would Be Charged
                                              a User Fee (FY 2006)
----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                   Conveyance                        User fee       conveyances      5 percent      20 percent
----------------------------------------------------------------------------------------------------------------
Maritime vessel.................................         $488.00           1,895         $46,238        $184,952
Truck...........................................            5.25         982,765         257,975       1,031,903
Truck with yearly decals........................          105.00          90,256         473,844       1,895,376
Rail car........................................            7.50         827,793         310,422       1,241,690
Commercial aircraft.............................           70.25          69,398         243,760         975,041
                                                 ---------------------------------------------------------------
    Total revenue...............................  ..............  ..............       1,332,241       5,328,963
----------------------------------------------------------------------------------------------------------------

    This option would eliminate the costs to commercial conveyances not 
transporting agricultural goods because those entities would not be 
required to pay a user fee. As we noted earlier, however, both the 
conveyances and packing material that they may be carrying are 
potential pest pathways that must be addressed. APHIS experts familiar 
with the Canadian border crossings have determined that all commercial 
conveyances need to be inspected.
    We also considered developing user fees specific to inspections of 
air passengers and commercial conveyances from Canada. We chose not to 
do so because it is important that user fees be consistent for all 
users. Developing user fees for air passengers and commercial 
conveyances from Canada that would differ from user fees for air 
passengers and commercial conveyances from other places could be 
confusing for the public and commercial carriers.

Costs and Benefits

    This interim rule will impose costs on commercial vessels, 
commercial trucks, commercial railroad cars, commercial aircraft, and 
air passengers entering the United States from Canada. While the costs 
these entities will have to pay in the form of user fees are readily 
apparent, other costs are not so clearly defined. For example, CBP 
inspectors will be required to inspect commercial trucks while 
maintaining a steady traffic flow. The possibility of border delays 
occurring as a result of this interim rule due to increased inspection 
activity was considered; however, APHIS and CBP do not foresee that 
happening, since CBP will have additional employees and resources to 
conduct inspections. The public is invited to comment on the issue of 
whether border delays may result because of AQI inspections and the 
potential cost of these delays for affected commercial transportation 
entities.
    While certain entities will incur costs as a result of this rule, 
the potential benefits of excluding pests and diseases that could be 
introduced through unauthorized imports from Canada may

[[Page 50328]]

be enormous. As discussed previously, AQI inspectors along the U.S./
Canada border have confiscated numerous prohibited fruits and other 
articles that can harbor pests and diseases. Interception of infested 
hosts helps to minimize the chances that the pests and diseases will 
become established in the United States and prevents the costs 
associated with eradicating them.
    This rule contains no information collection requirements (see 
``Paperwork Reduction Act'' below).

Executive Order 12988

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

Paperwork Reduction Act

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

List of Subjects

7 CFR Part 319

    Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant 
diseases and pests, Quarantine, Reporting and recordkeeping 
requirements, Rice, Vegetables.

7 CFR Part 354

    Exports, Government employees, Imports, Plant diseases and pests, 
Quarantine, Reporting and recordkeeping requirements, Travel and 
transportation expenses.

0
Accordingly, we are amending 7 CFR parts 319 and 354 as follows:

PART 319--FOREIGN QUARANTINE NOTICES

0
1. The authority citation for part 319 continues to read as follows:

    Authority: 7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 
and 136a; 7 CFR 2.22, 2.80, and 371.3.


Sec.  319.56-2  [Amended]

0
2. In Sec.  319.56-2, paragraph (c) is amended by adding the words ``, 
except that they are subject to the inspection and other requirements 
in Sec.  319.56-6'' after the word ``subpart''.

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

0
3. The authority citation for part 354 continues to read as follows:

    Authority: 7 U.S.C. 7701-7772, 7781-7786, and 8301-8317; 21 
U.S.C. 136 and 136a; 49 U.S.C. 80503; 7 CFR 2.22, 2.80, and 371.3.

0
4. Section 354.3 is amended as follows:
0
a. In paragraph (b)(2)(i), by removing the words ``other than in 
Canada'' both times they appear.
0
b. In paragraph (b)(2)(iv), by adding the word ``and'' after the 
semicolon.
0
c. In paragraph (b)(2)(v), by removing the word ``; and'' and adding a 
period in its place.
0
d. By removing paragraph (b)(2)(vi).
0
e. In paragraph (c)(1), by revising the first sentence to read as set 
forth below.
0
f. By removing and reserving paragraph (c)(2).
0
g. In the introductory text of paragraph (c)(3)(i), by removing the 
words ``from Mexico''.
0
h. By removing and reserving paragraph (d)(2)(i).
0
i. In paragraph (d)(4)(i), by removing the words ``from Mexico''.
0
j. By removing and reserving paragraphs (e)(2)(i) and (f)(2)(i).
0
k. In paragraph (f)(2)(v), by removing the words ``other than Canada''.
0
l. By revising paragraph (f)(3) to read as set forth below.


Sec.  354.3  User fees for certain international services.

* * * * *
    (c) * * *
    (1) The driver or other person in charge of a commercial truck that 
is entering the customs territory of the United States and that is 
subject to inspection under part 330 of this chapter or under 9 CFR, 
chapter I, subchapter D, must, upon arrival, proceed to Customs and pay 
an AQI user fee for each arrival, as shown in the following table: * * 
*
* * * * *
    (f) * * *
    (3) AQI user fees shall be collected under the following 
circumstances:
    (i) When through tickets or travel documents are issued indicating 
travel to the customs territory of the United States that originates in 
any foreign country; and
    (ii) When passengers arrive in the customs territory of the United 
States in transit from a foreign country and are inspected by APHIS or 
Customs.
* * * * *

    Done in Washington, DC, this 21st day of August 2006.
Bruce Knight,
Under Secretary for Marketing and Regulatory Programs.
 [FR Doc. E6-14128 Filed 8-24-06; 8:45 am]
BILLING CODE 3410-34-P