[Federal Register Volume 75, Number 152 (Monday, August 9, 2010)]
[Rules and Regulations]
[Pages 47701-47709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19700]


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

DEPARTMENT OF HOMELAND SECURITY

U.S. Customs and Border Protection

8 CFR Part 217

[USCBP-2010-0025; CBP Dec. No. 10-25]
RIN 1651-AA83


Electronic System for Travel Authorization (ESTA): Travel 
Promotion Fee and Fee for Use of the System

AGENCY: U.S. Customs and Border Protection, DHS.

ACTION: Interim final rule; solicitation of comments.

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

SUMMARY: Nonimmigrant aliens who wish to enter the United States under 
the Visa Waiver Program at air or sea ports of entry must obtain a 
travel authorization electronically through the Electronic System for 
Travel Authorization (ESTA) from U.S. Customs and Border Protection 
prior to departing for the United States. This rule requires ESTA 
applicants to pay a congressionally mandated fee of $14.00, which is 
the sum of two amounts: a $10 travel promotion fee for an approved ESTA 
statutorily set by the Travel Promotion Act and a $4.00 operational fee 
for the use of ESTA as set by the Secretary of Homeland Security to 
ensure recovery of the full costs of providing and administering the 
ESTA system.

DATES: This interim final rule is effective on September 8, 2010. 
Comments must be received on or before October 8, 2010.

ADDRESSES: Please submit comments, identified by docket number, by one 
of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments via docket number 
USCBP-2010-xxxx.
     Mail: Border Security Regulations Branch, Office of 
International Trade, U.S. Customs and Border Protection, 1300 
Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.
     Instructions: All submissions received must include the 
agency name and docket number for this rulemaking.

[[Page 47702]]

All comments will be posted without change to http://www.regulations.gov, including any personal information provided.
     Docket: For access to the docket to read background 
material or comments, go to http://www.regulations.gov. Comments 
submitted will be available for public inspection in accordance with 
the Freedom of Information Act (5 U.S.C. 552) and 19 CFR 103.11(b) on 
normal business days between the hours of 9 a.m. and 4:30 p.m. at the 
Border Security Regulations Branch, Office of International Trade, U.S. 
Customs and Border Protection, 799 9th Street, NW., 5th Floor, 
Washington, DC 20229. Arrangements to inspect submitted comments should 
be made in advance by calling Mr. Joseph Clark at (202) 325-0118.
     For additional information on ESTA, visit the Web site: 
http://www.cbp.gov/esta.

FOR FURTHER INFORMATION CONTACT: Suzanne Shepherd, Office of Field 
Operations, [email protected] or (202)-344-2073.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Comments
II. Background
    A. Travel Promotion Act of 2009
    B. Operational Fee Amount
    C. Fee Collection
III. Statutory and Regulatory Requirements
    A. Administrative Procedure Act
    B. Executive Order 12866
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act of 1995
    E. Executive Order 13132
    F. Executive Order 12988 Civil Justice Reform
    G. Paperwork Reduction Act
    H. Privacy Interests
List of Subjects
Amendments to the Regulations

I. Public Comments

    Interested persons are invited to submit written comments on all 
aspects of this interim final rule, including the amount of the fee. 
U.S. Customs and Border Protection (CBP) also invites comments on the 
economic, environmental or federalism effects of the rule, as well as 
comments related to the Paperwork Reduction Act. We urge commenters to 
explain the reason for any recommended change, and include data, 
information, or authorities that support such recommended change.

II. Background

    Pursuant to section 217 of the Immigration and Nationality Act 
(INA), 8 U.S.C. 1187, the Secretary of Homeland Security, in 
consultation with the Secretary of State, may designate certain 
qualifying countries as Visa Waiver Program (VWP) countries.\1\ 
Eligible travelers who are nationals of VWP countries are not required 
to obtain a visa to travel to the United States. Other nonimmigrant 
alien travelers generally must obtain a visa from a U.S. embassy or 
consulate and undergo an interview by consular officials overseas, in 
advance of travel to the United States.
---------------------------------------------------------------------------

    \1\ The list of countries currently eligible to participate in 
the VWP is set forth at 8 CFR 217.2(a). Under the VWP, eligible 
nationals of VWP countries may apply for admission to the United 
States at a U.S. port of entry as nonimmigrant aliens for a period 
of ninety (90) days or less for business or pleasure without first 
obtaining a nonimmigrant visa, provided that they are otherwise 
eligible for admission under applicable statutory and regulatory 
authority. Further details regarding the VWP are contained in the 
background section of the June 9, 2008 interim final rule, at 73 FR 
32440, and on the Web site http://www.cbp.gov/esta. As of the date 
of publication of this interim final rule, the current list of 
designated VWP countries can be found at 75 FR 15991 (Mar. 31, 
2010).
---------------------------------------------------------------------------

    On August 3, 2007, the President signed into law the Implementing 
Recommendations of the 9/11 Commission Act of 2007 (9/11 Act), Public 
Law 110-53. Section 711 of the 9/11 Act required that the Secretary of 
Homeland Security (the Secretary), in consultation with the Secretary 
of State, develop and implement a fully automated electronic travel 
authorization system to collect biographical and other information as 
the Secretary determines necessary to evaluate, in advance of travel, 
the eligibility of the applicant to travel to the United States under 
the VWP, and whether such travel poses a law enforcement or security 
risk. On June 9, 2008, the Department of Homeland Security (DHS) 
published an interim final rule (IFR) in the Federal Register (73 FR 
32440) announcing the creation of the Electronic System for Travel 
Authorization (ESTA) program for aliens traveling to the United States 
by air or sea under the VWP. See 8 CFR 217.5.
    The ESTA system now requires VWP travelers arriving in the United 
States by air or sea to provide certain biographical and other 
information electronically to CBP in advance of travel so that CBP can 
determine eligibility for travel to the United States under the VWP. 
Each ESTA travel authorization generally is valid for two years. 
Implementation of ESTA as a mandatory requirement initially was delayed 
to allow carriers and the public to become ESTA-compliant. Since 
January 12, 2009, all nonimmigrant aliens traveling to the United 
States under the VWP on an air or sea carrier must obtain travel 
authorization from the ESTA Web site. 73 FR 67354.
    Travel authorization under ESTA allows an alien from a VWP country 
to travel to the United States, however, it does not serve as a 
determination of admissibility to the United States. If an alien's 
travel authorization application is denied, the alien may still seek to 
obtain a visa to travel to the United States through a U.S. embassy or 
consulate or may reapply through the ESTA Web site at a later date if 
circumstances change or an error was made during the application 
process.
    Although the 9/11 Act authorized the Secretary to charge a fee for 
ESTA to recover the costs of providing and administering the System, 
the ESTA IFR did not establish a fee. At the time the IFR was issued, 
DHS was focused on the successful development and deployment of the 
ESTA system to collect the relevant traveler data and to properly vet 
applicants. DHS wanted to ensure the efficient operation and 
maintenance of the ESTA system before establishing an operational fee 
to recoup the costs of processing ESTA applications and vetting 
individual applicants. On January 12, 2009, when the ESTA system became 
mandatory, DHS began evaluating the costs associated with operating and 
maintaining the system in order to establish a fee. DHS has completed 
this evaluation and a detailed fee analysis explaining how the ESTA 
operational fee is calculated and the methodology used can found in the 
public docket for this rule at http://www.regulations.gov.

A. Travel Promotion Act of 2009

    On March 4, 2010, the United States Capitol Police Administrative 
Technical Corrections Act of 2009, Public Law 111-145 was enacted. The 
Travel Promotion Act of 2009 (TPA), which was contained in section 9, 
mandates that the Secretary establish a fee for the use of the ESTA 
system and begin assessing and collecting that fee no later than 6 
months after enactment of the TPA. See section 217(h)(3)(B) of the 
Immigration and Nationality Act, 8 U.S.C. 1187(h)(3)(B). Accordingly, 
to comply with the TPA, the Secretary is required to assess and collect 
the fee by September 4, 2010.
    The TPA expressly provides that the required initial ESTA fee shall 
consist of the sum of ``$10 per travel authorization'' (travel 
promotion fee) plus ``an amount that will at least ensure recovery of 
the full costs of providing and administering the System, as determined 
by the Secretary'' (operational fee). The TPA provides that the $10 per 
travel authorization is to be

[[Page 47703]]

credited to the Travel Promotion Fund established by the TPA and is to 
be used by the Corporation for Travel Promotion, also established by 
the TPA, to promote international travel to the United States. The 
operational fee is to be transferred to the general fund of the 
Treasury and made available to pay the costs incurred to administer 
ESTA. Under the TPA, the travel promotion fee has a sunset provision 
and the Secretary is authorized to collect this fee only through 
September 30, 2015.\2\ The operational fee, in contrast, does not 
include a sunset provision but will be reassessed on a regular basis to 
ensure it is set at a level to fully recover ESTA operating costs.
---------------------------------------------------------------------------

    \2\ On July 2, 2010, the Homebuyer Assistance and Improvement 
Act of 2010, in part, amended the TPA by extending the sunset 
provision of the travel promotion fee and authorizing the Secretary 
to collect this fee through September 30, 2015. See Pub. L. 111-198.
---------------------------------------------------------------------------

    Based on the TPA, this rule establishes an initial ESTA fee that 
consists of the sum of ``$10 per travel authorization'' (travel 
promotion fee) plus ``an amount that will at least ensure recovery of 
the full costs of providing and administering the [ESTA] System, as 
determined by the Secretary'' (operational fee) no later than 6 months 
after enactment of the TPA. See 8 U.S.C. 1187(h)(3)(B)(i).

B. Operational Fee Amount

    DHS has determined that a $4.00 fee is necessary to ensure recovery 
of the full costs of providing and administering the system. This fee 
takes into account the costs to develop, implement, maintain, and make 
any necessary updates to the ESTA system. A full explanation of the 
methodology used to determine the $4.00 operational ESTA fee is 
contained in the ESTA Fee Analysis (Explanation of the Electronic 
System for Travel Authorization (ESTA) Fee, April 2010), which can be 
found in the public docket for this rulemaking at http://www.regulations.gov. A brief summary of the methodology is provided 
below.
    The following methodology was employed to determine the $4.00 ESTA 
fee for applications through FY 2015:
    1. Determine the costs associated with ESTA--initial investment, 
direct, and indirect costs associated with ESTA development, operation, 
and maintenance. Costs are adjusted upward annually to account for 
inflation.
    2. Estimate the total number of ESTA applicants--total VWP 
travelers adjusted downward to account for travelers who make multiple 
trips during the 2-year period each ESTA is valid. Travelers will remit 
the ESTA fee upon initial application; they need not pay the fee each 
time they visit the United States during the authorization period.
    3. Determine the fee per applicant by dividing the total costs, 
plus an operating carryover amount, by the number of projected ESTA 
applicants. The carryover is included to assure there is sufficient 
funding in the event there is an unforeseen drop in ESTA applicants.
    The estimated costs associated with ESTA from FY 2008 through FY 
2015 are $312 million. Costs in FY 2008 and FY 2009 totaled 
approximately $39.5 million. From FY 2010 through FY 2015, costs 
include the administration, staffing, and operation of the system (plus 
overhead costs), as well as information technology for other CBP and 
non-CBP systems that permit information sharing and services that are 
necessary for ESTA to operate effectively. An additional carryover sum 
of $12.5 million, equal to one fiscal quarter of operating costs, is 
added to the total FY 2008 through FY 2015 costs as a contingency in 
case travel volumes fall below expected levels.
    Using traveler projection data from the Department of Commerce, 
Office of Travel and Tourism Industries, CBP estimated the future 
number of VWP travelers for FY 2011 through FY 2015. CBP then adjusted 
that estimate to account for the estimated number of ``repeat 
travelers'' during that period. These repeat travelers would, in most 
cases, be required to apply for a travel authorization only once over a 
2-year period, not each time they traveled to the United States. Using 
data from CBP's Advance Passenger Information System (APIS), CBP 
calculated an actual percentage of past repeat travelers, which was 
then applied as an estimated percentage of ``repeat travelers'' during 
the period from FY 2011 through FY 2015. With this adjustment for 
repeat travelers, the cumulative total of ESTA applicants FY 2011 
through FY 2015 is an estimated 86 million travelers.
    The $4.00 fee was determined by dividing the total estimated costs 
($312 million in costs + $12.5 million for a carryover reserve) by the 
total ESTA applicants (86 million) through FY 2015, then rounding up to 
the nearest whole dollar amount. Exhibit 1 shows the calculation of the 
fee.

             Exhibit 1--Calculation of ESTA Operational Fee
------------------------------------------------------------------------
 
------------------------------------------------------------------------
(A) Cumulative costs from FY 2008-2015................      $312,025,861
(B) Carryover reserve funding.........................        12,470,060
                                                       -----------------
(C) Total (A + B).....................................       324,495,921
                                                       =================
(D) Estimated number of ESTA applications from FY 2011-       86,180,659
 2015.................................................
(E) Calculated fee (C / D)............................              3.77
Calculated fee, rounded up to the nearest whole dollar              4.00
------------------------------------------------------------------------

    Any changes to the $4.00 ESTA operational fee will be accomplished 
through a future rulemaking consistent with the Administrative 
Procedure Act.

C. Fee Collection

    During the ESTA application process, the ESTA user will be directed 
to provide credit card information to pay the non-refundable $4.00 
operational fee and authorize the $10 travel promotion fee through the 
Federal Government's online payment system, Pay.gov. The $10 travel 
promotion fee will be charged to the applicant's credit card only when 
the ESTA is granted. Pay.gov is a system by which parties can make 
secure electronic payments to many Federal Government agencies. The 
Pay.gov Web site is available 24 hours a day, 7 days a week (holidays 
included) for users to submit payments.
    The operational fee discussed in this notice is for processing the 
application and vetting the individual applicant. The operational fee 
is nonrefundable if a traveler's application is denied. In the event 
that an ESTA application is denied, the traveler may apply for a visa 
through a U.S. embassy or consulate or may reapply through the ESTA Web 
site at a later date if circumstances change or an error was made 
during the ESTA

[[Page 47704]]

application process. Each ESTA applicant will incur the $4.00 
operational fee when he or she submits an ESTA application. By 
contrast, an applicant will incur the $10 travel promotion fee only if 
he or she receives travel authorization.
    VWP travelers with a valid travel authorization will be able to 
update and/or correct certain information provided on the ESTA 
application (such as the destination address in the United States) 
without having to pay another operational or travel promotion fee. 
However, as provided in the ESTA IFR, certain events, such as the 
issuance of a new passport, will require the VWP traveler to apply for 
a new travel authorization through ESTA. In that case, the traveler 
would be required to pay the operational fee as part of the new 
application process. Travelers receiving a new authorization before 
September 30, 2015 would also be required to pay the $10 travel 
promotion fee. Detailed instructions are available on the ESTA Web site 
regarding how to make ESTA updates and corrections and when a new 
travel authorization is required.

III. Statutory and Regulatory Requirements

A. Administrative Procedure Act

    The APA generally requires agencies to publish a notice of proposed 
rulemaking in the Federal Register (5 U.S.C. 553(b)) and provide 
interested persons the opportunity to submit comments (5 U.S.C. 
553(c)). However, pursuant to 5 U.S.C. 553(b)(B), a notice of proposed 
rulemaking is not required when the agency determines, for good cause, 
that notice and public participation is impracticable, unnecessary, or 
contrary to the public interest.
    In this case, the TPA requires the Secretary of Homeland Security 
to begin assessing and collecting a fee equal to the sum of the travel 
promotion fee ($10) and the operational fee ($4.00) within 6 months of 
the TPA's enactment, which is September 4, 2010. See 8 U.S.C. 1187 
(h)(3)(B)(i). The $10 travel promotion fee is intended to fund the 
Corporation for Travel Promotion (Corporation) and, once collected, the 
$10 travel promotion fees are to be made available by the Secretary of 
the Treasury to the Corporation for start-up expenses. Accordingly, the 
TPA requires DHS to be able to collect the ESTA fees to fund the 
Corporation. If DHS is unable to collect the ESTA fee, the Secretary of 
the Treasury would be unable to appropriate funding to cover the 
Corporation's initial expenses and activities. Moreover, given the 
limited duration of the travel promotion fee, which expires on 
September 30, 2015, it seems likely that Congress intended that the 
ESTA fee would be collected as soon as possible, but no later than six 
months from enactment of the TPA, which is September 4, 2010.
    Considering the TPA's time constraints, implementing the new ESTA 
fees through notice and comment rulemaking process would prevent the 
Corporation from promptly receiving the funds necessary to serve its 
function of promoting tourism to the United States. As such, the 
statutory timeline imposed by the TPA to collect the sum of the travel 
promotion fee and the operational fee by September 4, 2010, when 
coupled with the sunset provision for the travel promotion fee, makes 
it impracticable for DHS to engage in the notice and comment rulemaking 
process. This IFR provides the mechanism through which DHS is able to 
assess and collect the ESTA fees in a manner consistent with the 
statutory provisions.
    In sum, providing the public the opportunity to comment on these 
regulations prior to implementation would hamper the ability of DHS to 
collect the necessary fees as required under the TPA by September 4, 
2010. Accordingly, DHS has determined that there is good cause to 
publish this rule without prior public notice and comment procedures. 
The Department, however, is interested in obtaining public comments on 
this interim final rule prior to the issuance of a final rule. 
Therefore, DHS is providing the public with the opportunity to comment 
after publication of this interim final rule. All comments received 
will become a matter of the public record.

B. Executive Order 12866

    Executive Order 12866 (Regulatory Planning and Review; September 
30, 1993) requires Federal agencies to conduct economic analyses of 
significant regulatory actions as a means to improve regulatory 
decision-making. Significant regulatory actions include those that may 
``(1) [h]ave an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local or tribal governments or communities; 
(2) [c]reate a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency; (3) [m]aterially alter the 
budgetary impact of entitlements, grants, user fees, or loan programs 
or the rights and obligations of recipients thereof; or (4) [r]aise 
novel legal or policy issues arising out of legal mandates, the 
President's priorities, or the principles set forth in this Executive 
Order.'' This rule is a significant regulatory action because the 
annual effect on the economy is $100 million or more in any one year. 
The annualized cost to applicants, primarily in the form of transfers 
from foreign citizens to the U.S. government, is estimated between $152 
million and $258 million. As a result, this rule has been reviewed by 
the Office of Management and Budget (OMB) under Executive Order 12866. 
The following summary presents the costs to applicants and benefits of 
the rule.\3\
---------------------------------------------------------------------------

    \3\ The complete ``Regulatory Assessment'' can be found in the 
docket for this rulemaking: http://www.regulations.gov.
---------------------------------------------------------------------------

    OMB Circular A-4 states the following with regard to the scope of 
Federal regulatory assessments: ``Your analysis should focus on 
benefits and costs that accrue to citizens and residents of the United 
States. Where you choose to evaluate a regulation that is likely to 
have effects beyond the borders of the United States, these effects 
should be reported separately.'' \4\ Additionally, Circular A-4 states: 
``You should not include transfers in the estimates of the benefits and 
costs of a regulation. Instead, address them in a separate discussion 
of the regulation's distributional effects.'' \5\ CBP notes that the 
costs estimated in this analysis are primarily transfers, in the form 
of fees, from foreign visitors to the U.S. government. As described in 
more detail below, CBP has also estimated a charge for currency 
conversion that ESTA users will incur when they make their fee payments 
in pay.gov. These currency conversion costs are not transfers, but they 
are incurred by foreign travelers and are paid to foreign financial 
institutions. Thus, the costs to applicants presented in this section 
are transfers or costs incurred by foreign entities.
---------------------------------------------------------------------------

    \4\ See U.S. Office of Management and Budget. September 17, 
2003. Circular A-4 ``Regulatory Analysis.'' Page 15.
    \5\ See OMB Circular A-4, Page 38.
---------------------------------------------------------------------------

    To determine the total cost to applicants of ESTA, CBP used the 
population of travelers identified in the analysis for the ESTA IFR.\6\ 
For that analysis, CBP developed four methods to predict ESTA-affected 
travelers to the

[[Page 47705]]

United States over the next 10 years using information available from 
the Department of Commerce, Office of Travel and Tourism Industries 
(OTTI), documenting historic travel levels and future projections. 
Method 1 employs the travel-projection percentages provided by OTTI and 
extrapolates them to the end of the period of analysis (OTTI projects 
travel only through 2013; CBP calculates a simple extrapolation to 
2020). Method 2 (modified OTTI projections) presents a more pessimistic 
outlook on travel: all projected percentages from Method 1 are reduced 
by 2 percent throughout the period of analysis. Methods 3 and 4 
incorporate periodic downturns (one late in the period; one early), 
which are prevalent, though not necessarily predictable, in 
international travel. CBP used Method 1 for the fee calculation because 
it takes into account the most recent OTTI estimate, accounts for the 
2008 downturn in air travel, and it is a midrange estimate compared to 
the other methods. The other methods are presented here for further 
information.
---------------------------------------------------------------------------

    \6\ See ``The Regulatory Assessment for the Interim Final Rule 
for Changes to the Visa Waiver Program to Implement the Electronic 
System for Travel Authorization.'' U.S. Customs and Border 
Protection, June 2008. This document is available at http://www.regulations.gov under docket no. USCBP--2008-0003, supporting 
and related materials.
---------------------------------------------------------------------------

    Because a travel authorization obtained through ESTA generally is 
valid for 2 years, CBP adjusted the populations in accordance with the 
ESTA Fee Analysis to reflect only those travelers who will be required 
to apply for authorization in any given year. For the purposes of this 
analysis and to make the calculations more tractable, CBP assumed the 
fee will be charged beginning in January 2011. Exhibit 2 compares the 
estimated number of travelers and the estimated number of ESTA 
applicants (``Applicants'') per year.

                                                     Exhibit 2--Total Travelers and ESTA Applicants
                                                                [2011-2020, in millions]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        2011      2012      2013      2014      2015      2016      2017      2018      2019      2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Method 1:                                             ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    Total Travelers.................................     19.40     20.19     20.92     21.68     22.47     23.29     24.15     25.04     25.97     26.94
    Applicants......................................     15.97     16.62     17.23     17.85     18.50     19.18     19.88     20.62     21.38     22.18
                                                      ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
Method 2:                                             ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    Total Travelers.................................     18.26     18.64     18.94     19.25     19.57     19.89     20.23     20.57     20.92     21.28
    Applicants......................................     15.03     15.35     15.59     15.85     16.11     16.38     16.65     16.93     17.22     17.52
                                                      ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
Method 3:                                             ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    Total Travelers.................................     19.40     17.72     20.63     24.03     27.29     26.36     29.93     33.94     39.65     38.38
    Applicants......................................     15.97     14.59     16.99     19.79     22.48     21.71     24.67     27.98     32.69     31.65
                                                      ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
Method 4:                                             ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
    Total Travelers.................................     24.04     27.29     26.33     29.94     33.93     39.62     38.29     43.62     50.60     59.28
    Applicants......................................     19.81     22.48     21.69     24.68     27.96     32.67     31.57     35.97     41.75     48.92
--------------------------------------------------------------------------------------------------------------------------------------------------------

Costs to Travelers
    CBP determined that the ESTA operational fee will be $4.00 per 
application. The methodology and calculations used to determine this 
fee can be found in the ESTA Fee Analysis (Explanation of the 
Electronic System for Travel Authorization (ESTA) Fee, April 2010). The 
TPA also requires a $10 travel promotion fee to be charged through ESTA 
that will be credited to the Travel Promotion Fund established by the 
TPA and is to be used by the Corporation for Travel Promotion, also 
established by the TPA, to promote international travel to the United 
States. Per the legislation, this fee will be effective through 
September 30, 2015.
    In addition to the ESTA operational and travel promotion fees, many 
credit card issuers charge a fee for foreign currency transactions, 
which is generally a percentage of the total transaction amount. 
Because the ESTA fees must be paid by credit card in U.S. dollars and 
not local currency, travelers from VWP countries will likely incur a 
transaction fee. For this analysis, CBP assumes all travelers will 
incur a transaction fee, whether they apply using the ESTA website or 
are registered by a carrier or travel agent who will then pass the fee 
on to the traveler. CBP calculated a weighted average of foreign 
currency transaction fees based on market share in order to take into 
account not only the fee charged by each issuer, but the volume of 
purchases made using the cards of each issuer.
    When the average foreign currency transaction fee of 2.7 percent is 
applied to the ESTA fees, the total charge will be $14.37. Exhibit 3 
displays the total fees, including those charged by the credit card 
companies, for visitors from each country in 2011, the first full year 
CBP estimates that the fee will be charged. These totals are based on 
the populations used by CBP to calculate the fee and only reflect 
unique travelers who would be required to apply in 2011.\7\
---------------------------------------------------------------------------

    \7\ Because Andorra, Brunei, Monaco, Lichtenstein, and San 
Marino have limited historic data, no predicted growth rates, or 
very few visitors (only about 1,000 each on an annual bases), they 
are excluded from the analysis. Travelers from these countries will 
still be subject to the ESTA application fee.

                              Exhibit 3--Total ESTA Fees for All Travelers in 2011
                                                 [Undiscounted]
----------------------------------------------------------------------------------------------------------------
                                              Method 1          Method 2          Method 3          Method 4
----------------------------------------------------------------------------------------------------------------
Australia...............................       $ 9,435,603       $ 8,892,390       $ 9,435,603      $ 10,091,673
Austria.................................         2,224,768         2,094,348         2,224,768         2,800,120
Belgium.................................         3,317,849         3,123,469         3,317,849         4,011,893
Czech Republic..........................           782,466           737,637           782,466           773,296
Denmark.................................         3,441,443         3,240,839         3,441,443         4,009,018

[[Page 47706]]

 
Estonia.................................           132,189           123,881           132,189           199,972
Finland.................................         1,527,821         1,438,263         1,527,821         1,839,227
France..................................        17,975,811        16,915,414        17,975,811        21,624,714
Germany.................................        22,406,375        21,077,979        22,406,375        28,683,080
Greece..................................           842,330           793,361           842,330           941,230
Hungary.................................           612,894           576,300           612,894           708,057
Iceland.................................           474,855           444,672           474,855           755,962
Ireland.................................         7,114,881         6,690,302         7,114,881         9,835,632
Italy...................................        11,195,318        10,529,662        11,195,318        13,987,260
Japan...................................        44,835,862        42,216,569        44,835,862        58,384,185
Latvia..................................           130,794           122,602           130,794           184,118
Lithuania...............................           167,330           157,298           167,330           177,061
Luxembourg..............................           137,535           129,371           137,535           147,108
Malta...................................            69,105            64,966            69,105            61,186
Netherlands.............................         9,043,867         8,513,431         9,043,867        10,595,705
New Zealand.............................         2,699,106         2,544,999         2,699,106         2,790,044
Norway..................................         2,611,488         2,459,019         2,611,488         2,924,101
Portugal................................         1,511,077         1,422,122         1,511,077         1,818,487
Singapore...............................         1,367,203         1,287,189         1,367,203         1,667,412
Slovakia................................           349,336           329,832           349,336           291,686
Slovenia................................           261,574           246,195           261,574           283,967
South Korea.............................         8,728,408         8,224,994         8,728,408        11,154,010
Spain...................................         8,829,048         8,303,456         8,829,048        11,715,276
Sweden..................................         5,141,050         4,839,519         5,141,050         6,103,610
Switzerland.............................         3,561,371         3,352,158         3,561,371         4,320,266
UK......................................        58,650,315        55,176,504        58,650,315        71,806,658
                                         -----------------------------------------------------------------------
        Total...........................      $229,579,076      $216,068,741      $229,579,076      $284,686,015
----------------------------------------------------------------------------------------------------------------

    CBP next totaled these costs to applicants over the next 10 years 
at a 3 and 7 percent discount rate, per guidance provided in OMB 
Circular A-4. Total present value of the costs to applicants over the 
period of analysis could total $1.2 billion to $2.2 billion. Annualized 
costs to applicants are estimated at $152 million to $258 million. 
Method 1 was the method used to estimate the total costs and transfers 
due to the fee and is our primary estimate. Again, CBP notes that the 
bulk of these costs to applicants are transfers from foreign travelers 
to the U.S. government. See Exhibit 4.

          Exhibit 4--Total Present Value and Annualized Costs to Applicants of the ESTA Fee, 2011-2020
----------------------------------------------------------------------------------------------------------------
                                           Total present value  ($millions)     Annualized costs to  applicants
                                         ------------------------------------             ($millions)
                                                                             -----------------------------------
                                                 3%                7%                3%                7%
----------------------------------------------------------------------------------------------------------------
Method 1................................            $1,510            $1,295              $172              $179
Method 2................................             1,338             1,159               152               159
Method 3................................             1,672             1,398               190               195
Method 4................................             2,208             1,829               251               258
----------------------------------------------------------------------------------------------------------------

    Travelers using ESTA will incur costs in addition to the fee, 
including the time burden of applying for authorization and the time 
burden and cost to obtain a visa if authorization is denied. These 
costs were already addressed in the Regulatory Assessment for the June 
2008 ESTA IFR and should not be considered here in order to avoid 
double counting these costs.
Change in Travel Demand
    While the ESTA operational and travel promotion fees are very low 
relative to the overall costs of international travel, it is still 
possible that they could cause a reduction in the number of travelers 
coming to the United States from VWP countries. For this reason, CBP 
uses an ``elasticity of demand'' for long-haul international leisure 
and long-haul international business trips available from the published 
travel literature to analyze the impact of the change in cost (out-of-
pocket expenses) for travelers using ESTA. Using an elasticity of 
demand allows CBP to get a sense of potential changes in the number of 
travelers in response to a change in the cost of a trip. Elasticities 
should not be viewed as the definitive level that demand could decrease 
due to an increase in travel price. In reality, a relatively minimal 
charge of $14.37 is much more likely to reduce the amount of money a 
traveler spends on other portions of the trip than to cause a traveler 
to cancel the trip altogether.
    Because the elasticity of demand differs for business and leisure 
travelers, we first identify the portion of travel to the United States 
from VWP countries that can be assigned to those purposes using air 
traveler survey data from OTTI. CBP then uses OTTI data to identify the 
average cost per VWP traveler for a flight to the United States.

[[Page 47707]]

Airfare costs vary by purpose of travel, but range from an average 
$1,406 per flight for a leisure traveler on vacation to $2,687 per 
flight for a business traveler.\8\
---------------------------------------------------------------------------

    \8\ U.S. Office of Travel and Tourism Industries. 2008. 
``Overseas Travelers to the United States.'' Table 26.
---------------------------------------------------------------------------

    To calculate the percent change in the average cost per flight, CBP 
divided the amount of the total charges by the original average cost 
per flight. CBP then multiplied the resulting percent increase by the 
elasticity of demand for air travel estimated in a study by the 
Canadian Department of Finance, -0.265 for long-haul international 
business travel and -1.040 for long-haul international leisure travel, 
to calculate the expected percent decrease in passenger volume.\9\ 
Exhibit 5 shows the total estimated number of passengers that could 
potentially be lost for each of the four population projections. While 
the impact varies for different categories of travelers, CBP estimates 
that up to 0.85 percent of travelers could be lost in a given year.
---------------------------------------------------------------------------

    \9\ Gillen, David W., William G. Morrison and Christopher 
Stewart. ``Air Travel Demand Elasticities: Concepts, Issues and 
Measurement.'' Canada Department of Finance, October 6, 2008. 
Available at http://www.fin.gc.ca/consultresp/Airtravel/airtravStdy_-eng.asp.

                             Exhibit 5--Total Change in Visitors by Year, 2011-2020
                     [Excluding intended benefits to tourism from spending the TPA revenue]
----------------------------------------------------------------------------------------------------------------
                                              Method 1          Method 2          Method 3          Method 4
----------------------------------------------------------------------------------------------------------------
2011....................................          -135,337          -127,363          -135,337          -167,978
2012....................................          -140,542          -129,715          -123,615          -190,212
2013....................................          -145,501          -131,698          -143,820          -182,306
2014....................................          -150,652          -133,728          -167,269          -208,382
2015....................................          -156,005          -135,807          -189,536          -235,856
2016....................................           -50,142           -42,808           -56,415           -85,365
2017....................................           -51,936           -43,484           -64,418           -81,972
2018....................................           -53,802           -44,177           -72,961           -93,111
2019....................................           -55,742           -44,888           -85,111          -108,127
2020....................................           -57,759           -45,615           -81,877          -126,441
----------------------------------------------------------------------------------------------------------------

    It is important to recognize, however, the positive impacts that 
the Travel Promotion Fund could have on international travelers to the 
United States. CBP is not able to estimate or project these impacts 
with any degree of confidence because the program and fund are not yet 
in place and the details of the administration of the fund to promote 
travel is currently unknown. Consequently, this analysis is not making 
specific projections about the overall net increase or decrease 
increase in travel due to the Travel Promotion Act.
    Because there are many unknown variables in this analysis, there 
are potential costs that CBP cannot quantify with any degree of 
confidence. Costs that are important to consider, but that CBP has not 
quantified include potential decreases in visitor spending, and 
possible reciprocity by VWP countries (where these countries could 
develop ESTA-like systems and charge U.S. VWP travelers for 
applications of admissibility).
Benefits of the Regulation
    This rule allows CBP to comply with the TPA's express mandate that 
the Secretary establish a fee for the use of the ESTA system and also 
establish a $10 travel promotion fee. The benefits of ESTA include 
enhanced security, cost savings associated with advanced determination 
of inadmissibility, and costs forgone by travelers, such as visa fees. 
These are discussed in the ESTA IFR Regulatory Assessment and are not 
considered here to avoid double-counting.
    As noted above, the United States travel and tourism may benefit 
from increased international travelers based on promotion efforts made 
possible by the Travel Promotion Fund.
A-4 Accounting Statement
    Note that the transfers listed in the A-4 Accounting Statement 
below are only for the ESTA fees ($14.00), and do not include the 
currency conversion charge ($0.37). This $0.37 charge is paid by 
foreign entities to foreign entities and is not included in this 
accounting statement of impacts to the U.S. economy.

                Classification of Expenditures, 2011-2020
                                 [$2010]
------------------------------------------------------------------------
                                3% Discount rate      7% Discount rate
------------------------------------------------------------------------
Costs:
    Annualized monetized                            ....................
     costs.
    Annualized quantified,                          ....................
     but un-monetized costs.
    Qualitative (un-                                ....................
     quantified) costs.
    Transfers...............
 
Benefits:
    Annualized monetized                            ....................
     benefits.
    Annualized quantified,                          ....................
     but un-monetized
     benefits.

[[Page 47708]]

 
    Qualitative (un-          Allows compliance     Allows compliance
     quantified) benefits.     with the TPA's        with the TPA's
                               express mandate to    express mandate to
                               establish a fee for   establish a fee for
                               the use of the ESTA   the use of the ESTA
                               system and also       system and also
                               establish a $10       establish a $10
                               travel promotion      travel promotion
                               fee.                  fee.
    Transfers...............  $168 million from     $175 million from
                               foreign visitors to   foreign visitors to
                               the U.S. government.  the U.S.
                                                     government.
------------------------------------------------------------------------

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 603(a)), as amended by the 
Small Business Regulatory Enforcement and Fairness Act of 1996 
(SBREFA), requires an agency to prepare and make available to the 
public a regulatory flexibility analysis that describes the effect of a 
proposed rule on small entities (i.e., small businesses, small 
organizations, and small governmental jurisdictions) when the agency is 
required to publish a general notice of proposed rulemaking for any 
proposed rule.
    Since a general notice of proposed rulemaking is not necessary, a 
regulatory flexibility analysis is not required. Nonetheless, DHS has 
considered the impact of this rule on small entities. This rule 
directly regulates individuals, and individuals are not considered 
small entities. Some small entities may be indirectly impacted to the 
extent that business travelers work for small businesses. However, the 
combined charge (the ESTA fees and the credit card transaction fee) of 
$14.37 is only 0.3 percent of the average cost of a business trip as 
estimated by OTTI ($5,231).\10\ Therefore, CBP certifies that this rule 
will not have a significant economic impact on a substantial number of 
small entities.
---------------------------------------------------------------------------

    \10\ U.S. Office of Travel and Tourism Industries. 2008. 
``Overseas Travelers to the United States.'' Table 26.
---------------------------------------------------------------------------

D. Unfunded Mandates Reform Act of 1995

    This rule will not result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the U.S. private sector, of 
$100 million (adjusted for inflation) or more in any one year, and it 
will not significantly or uniquely affect small governments. Therefore, 
no actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

E. Executive Order 13132

    The rule will not have substantial direct effects on the States, on 
the relationship between the National Government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. Therefore, in accordance with section 6 of Executive 
Order 13132, DHS has determined that this interim final rule does not 
have sufficient federalism implications to warrant the preparation of a 
federalism summary impact statement.

F. Executive Order 12988 Civil Justice Reform

    This rule meets the applicable standards set forth in sections 3(a) 
and 3(b)(2) of Executive Order 12988.

G. Paperwork Reduction Act

    An agency may not conduct, and a person is not required to respond 
to, a collection of information unless the collection of information 
displays a valid control number assigned by OMB. These regulations are 
being issued without prior public notice and comment procedures 
pursuant to the APA, as described above. For this reason, CBP obtained 
temporary, emergency approval from OMB, in accordance with the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) 
for the portion of OMB clearance 1651-0111 that was affected by this 
rule. CBP will solicit public comments when CBP submits a request for 
permanent OMB approval. The estimated burden hours related to ESTA for 
OMB Control Number 1651-0111 are as follows:
    Estimated Number of Respondents: 18,900,000.
    Estimated Time per Response: 15 minutes (0.25 hours).
    Estimated Total Annual Burden Hours: 4,725,000 hours.
    The burden hours in this collection have been updated to reflect 
new traveler levels predicted in 2011. Additionally, a portion of these 
travelers is new ESTA applicants, while a portion is repeat travelers. 
Only the new applicants or applicants whose authorization has expired 
will be required to pay the new fees. As noted above, approximately 16 
million applicants will need to pay the fee annually (Method 1), for a 
total cost of $230 million. This is based on the average estimated 
number of respondents paying the combined charge (the ESTA fees and the 
credit card transaction fee) annually (16,000,000) x $14.37 = 
$229,920,000.

H. Privacy Interests

    DHS published an ESTA Privacy Impact Assessment (PIA) for the 
Interim Final Rule announcing ESTA on June 9, 2008. Additionally, at 
that time, DHS prepared a separate System of Record Notice (SORN) which 
was published in conjunction with the IFR on June 9, 2008. DHS has 
updated the ESTA PIA and SORN and both are available for viewing on 
CBP's Web site at http://www.foia.cbp.gov/.

List of Subjects in 8 CFR Part 217

    Air carriers, Aliens, Maritime carriers, Passports and visas.

Amendments to Regulations

0
For the reasons stated in the preamble, DHS is amending part 217 of 
title 8 of the Code of Federal Regulations (8 CFR part 217) as follows:

PART 217--VISA WAIVER PROGRAM

0
1. The authority citation for Part 217 continues to read as follows:

    Authority:  8 U.S.C. 1103, 1187; 8 CFR part 2.


0
2. Section 217.5 is amended by revising paragraph (a) and adding a new 
paragraph (h) to read as follows:


Sec.  217.5  Electronic System for Travel Authorization.

    (a) Travel authorization required. Each nonimmigrant alien 
intending to travel by air or sea to the United States under the Visa 
Waiver Program (VWP) must, within the time specified in paragraph (b) 
of this section, receive a travel authorization, which is a positive 
determination of eligibility to travel to the United States under the 
VWP via the Electronic System for Travel Authorization (ESTA), from 
CBP. In order to receive a travel authorization,

[[Page 47709]]

each nonimmigrant alien intending to travel to the United States by air 
or sea under the VWP must provide the data elements set forth in 
paragraph (c) of this section to CBP, in English, in the manner 
specified herein, and must pay a fee as described in paragraph (h) of 
this section.
* * * * *
    (h) Fee. (1) Until September 30, 2015, the fee for an approved ESTA 
is $14.00, which is the sum of two amounts: a $10 travel promotion fee 
to fund the Corporation for Travel Promotion and a $4.00 operational 
fee to at least ensure recovery of the full costs of providing and 
administering the system. In the event the ESTA application is denied, 
the fee is $4.00 to cover the operational costs.
    (2) Beginning October 1, 2015, the fee for using ESTA is an 
operational fee of $4.00 to at least ensure recovery of the full costs 
of providing and administering the system. ESTA applicants must pay the 
ESTA fee through the Treasury Department's Pay.gov financial management 
system.

Janet Napolitano,
Secretary.
[FR Doc. 2010-19700 Filed 8-6-10; 8:45 am]
BILLING CODE 9111-14-P