[Federal Register Volume 85, Number 11 (Thursday, January 16, 2020)]
[Rules and Regulations]
[Pages 2621-2624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00659]



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 Rules and Regulations
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  Federal Register / Vol. 85, No. 11 / Thursday, January 16, 2020 / 
Rules and Regulations  

[[Page 2621]]



DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. APHIS-2013-0021]
RIN 0579-AD77


User Fees for Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final interpretive rule.

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SUMMARY: On May 13, 2016, the Air Transport Association of America, 
Inc., and the International Air Transport Association filed suit 
against the United States Department of Agriculture, the Animal and 
Plant Health Inspection Service (APHIS), the Department of Homeland 
Security, Customs and Border Protection Agency (CBP), the Secretary of 
Agriculture, the Administrator of APHIS, the Commissioner of CBP, and 
the Secretary of Homeland Security, claiming APHIS' 2015 final rule 
setting fee structures for its Agricultural Quarantine and Inspection 
(AQI) program (Docket No. APHIS-2013-0021, effective December 28, 2015) 
(2015 Final Rule) violated the Food, Agriculture, Conservation and 
Trade Act of 1990 (FACT Act) and the Administrative Procedure Act 
(APA). In its March 28, 2018, Order, the U.S. District Court for the 
District of Columbia affirmed APHIS' cost methodology and the 
sufficiency of its data. Air Transport Ass'n of Am., Inc. v. U.S. Dep't 
of Agric., 303 F. Supp. 3d 28 (D.D.C. 2018). However, the Court held 
that in the rulemaking for the 2015 Final Rule, the ground upon which 
APHIS relied to justify setting fees at a level that enabled APHIS to 
maintain a reasonable balance in the AQI user fee account was an 
expired provision in the FACT Act. The Court remanded to APHIS the 
reserve portion of the 2015 Final Rule updating user fees for the AQI 
program. Accordingly, on April 26, 2019, APHIS published in the Federal 
Register a interpretative rule and request for comments, titled ``User 
Fees for Agricultural Quarantine and Inspection Services'' (Docket No. 
APHIS-2013-0021) (the Interpretive Rule). The Interpretive Rule 
clarified the agency's statutory authority to collect a reserve fund in 
support of AQI inspection activities, including by citing unexpired 
provisions of the FACT Act as the basis for collecting and maintaining 
a reserve. The Interpretive Rule requested public comment related to 
the legal authority for the reserve component of the AQI User Fee 
Program. This document responds to comments received on the 
Interpretive Rule and finalizes that rule.

DATES: This final interpretive rule is effective February 18, 2020.

FOR FURTHER INFORMATION CONTACT: Mr. George Balady, Senior Regulatory 
Policy Specialist, Office of the Executive Director-Policy Management, 
PPQ, APHIS, 4700 River Road, Unit 131, Riverdale, MD 20737 1231; (301) 
851-2338; email: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    On May 13, 2016, the Air Transport Association of America, Inc., 
and the International Air Transport Association filed suit against the 
United States Department of Agriculture, the Animal and Plant Health 
Inspection Service (APHIS), the Department of Homeland Security, the 
Customs and Border Protection Agency (CBP), the Secretary of 
Agriculture, the Administrator of APHIS, the Commissioner of CBP, and 
the Secretary of Homeland Security, claiming APHIS' 2015 Final Rule 
setting fee structures for its Agricultural Quarantine and Inspection 
(AQI) program (80 FR 66748, Docket No. APHIS-2013-0021, effective 
December 28, 2015, referred to below as ``the Final Rule'' or ``the 
2015 Final Rule'') violated the Food, Agriculture, Conservation and 
Trade Act of 1990 (FACT Act), 21 U.S.C. 136a, and the Administrative 
Procedure Act (APA), 5 U.S.C. 500 et seq. In its March 28, 2018 Order, 
the U.S. District Court for the District of Columbia affirmed APHIS' 
cost methodology and the sufficiency of its data. Air Transport Ass'n 
of Am., Inc. v. U.S. Dep't of Agric., 303 F. Supp. 3d 28 (D.D.C. 2018). 
The Court rejected the plaintiffs' claims that the Final Rule's 
imposition of the commercial aircraft fee is duplicative of the air 
passenger fee; that the Final Rule results in cross-subsidization; and 
that the Final Rule relied on unreliable data that was not disclosed to 
the public. However, the Court held that APHIS improperly relied on an 
expired provision in the FACT Act to justify setting fees at a level 
that enabled APHIS to maintain a reasonable balance in the AQI user fee 
account. The Court remanded to APHIS the reserve portion of the 2015 
Final Rule updating user fees for the AQI program. The Court expressly 
did not vacate the rule pending further explanation by the agency. See 
Air Transport Ass'n of Am., Inc. v. U.S. Dep't of Agric., 317 F. Supp. 
3d 385, 392 (D.D.C. 2018).
    In its memorandum opinion on summary judgment, the Court stated 
that the agency unreasonably relied on the ``reasonable balance'' 
allowance in 21 U.S.C. 136a(a)(1)(C) of the FACT Act to justify its 
continued fee collection to maintain a reserve, as that allowance 
expired after fiscal year 2002. The Court did not rule on whether APHIS 
had authority for continued fee collection to maintain a reserve under 
any other subsection of the FACT Act and, therefore, remanded to the 
Agency for ``reconsideration of its authority to charge a surcharge for 
the reserve account.'' See Air Transport Ass'n, 303 F. Supp. 3d at 57. 
The Court expressly declined to consider APHIS' explanation in its 
legal filings that, consistent with its past explanations and practice, 
APHIS justified its authority to collect such fees under other 
subsections of 21 U.S.C. 136a(a)(1). Air Transport Ass'n, 303 F. Supp. 
3d at 51; see, e.g., User Fees for Agricultural Quarantine & Inspection 
Services, 71 FR 49984 (August 24, 2006). The Court did ``not evaluate 
or rule on the agency's . . . argument that it had authority to fund a 
reserve under'' a different part of the statute, and instead remanded 
the rule to the agency without vacating for further consideration of 
the agency's authority. Air Transport Ass'n, 303 F. Supp. 3d at 51. The 
Court ordered APHIS to complete notice and comment rulemaking to 
address whether ``there is support for APHIS authority to set a reserve 
fee elsewhere in the statute

[[Page 2622]]

[other than 21 U.S.C. 136a(a)(1)(C)].'' Air Transport Ass'n, 317 F. 
Supp. 3d at 392.
    Accordingly, on April 26, 2019, APHIS issued an interpretive rule 
and request for comments (Interpretive Rule) \1\ (84 FR 17729-17731, 
Docket No. APHIS-2013-0021) to the 2015 Final Rule. In the document, 
APHIS clarified that subsections 136a(a)(1)(A) and (B) of the FACT Act 
provide adequate authority to continue setting user fees in amounts to 
maintain the AQI reserve, irrespective of the expiration of subsection 
136a(a)(1)(C).
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    \1\ To view the Interpretive Rule and the comments that we 
received, go to https://www.regulations.gov/docket?D=APHIS-2013-0021. The comments received on the correction can best be accessed 
by clicking on ``view all'' next to the Comments field, and then 
sorting by ``date posted'' on the resulting screen.
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    APHIS took comments on its Interpretive Rule for 30 days ending May 
28, 2019. We received 10 comments by that date. The received comments 
were from an organization representing the pork industry in the United 
States, an organization representing the trucking industry in the 
United States, an organization representing commercial airlines, an 
organization representing county agricultural commissioners in one 
State, a maritime exchange, and private citizens. Three commenters 
supported APHIS' interpretation of the FACT Act without further 
comment, and two comments were not germane to the AQI User Fee program 
or the Interpretive Rule.
    Two commenters generally agreed with APHIS' interpretation of the 
FACT Act, but also provided comment on how the reserve should be 
maintained or used in order to fully comply with the intent of the FACT 
Act. Three commenters disagreed with APHIS' interpretation of the FACT 
Act and provided reasons why they considered a reserve to be in 
violation of the Act.
    The issues raised by the commenters are discussed below, by topic.

Comments Expressing Concern Regarding Transparency

    Two commenters, one of whom supported APHIS' interpretation of the 
FACT Act and one of whom disagreed with it, stated that a reserve 
maintained to administer the User Fee program could theoretically be 
used for any program purpose. The commenters expressed concern that 
this would not allow the general public to know how large an amount was 
maintained in the reserve, how it was derived, and for what purposes it 
was being used. One of the commenters stated that, if APHIS wished to 
use subsections 136a(a)(1)(A) and (B) of the FACT Act as a basis for 
maintaining a reserve to administer the AQI User Fee program, it should 
make the user fee sources from which the reserve had been derived 
publicly available, indicating the percentage of the reserve drawn from 
each user fee group, and should make the total amount of the reserve 
publicly available as well.
    The reserve is not drawn from specific user fee sources by 
percentage. Rather, AQI user fee rates are calculated so that a 
percentage allocated for the reserve (currently 3.5 percent) is built 
into each fee collected (see the 2015 Final Rule at 80 FR 66753).
    While we do not believe the statute requires us to make the amount 
in the reserve publicly available, we have decided to post the amount 
in the reserve on APHIS' AQI user fees web page and update it on an 
annual basis. The page will indicate that the amount listed represents 
the amount in the reserve at a particular moment in time, and will 
further indicate that it does not include accounts due to APHIS or 
accounts payable from the reserve. We plan to announce the amount in 
the reserve, as well as the schedule for future announcements, through 
a notice published in the Federal Register in calendar year 2020. With 
respect to the purposes of the reserve, this notice will also provide 
examples of one-time expenditures from the reserve that were made in 
previous fiscal years; other expenditures cannot easily be itemized in 
the manner requested by the commenter.

Comments Regarding Cross-Subsidization

    One commenter stated that, if the reserve is drawn from all user 
fee groups but is used on an activity that only benefits a particular 
user fee group, this amounts to cross-subsidization of that activity.
    Subsection 136a(a)(2) of the FACT Act requires that APHIS ensure 
that, when setting fees, the amount of an AQI user fee is commensurate 
with the costs of agricultural quarantine and inspection services with 
respect to the class of persons or entities paying the fee. APHIS 
considers this subsection to prohibit us from setting fees for one AQI 
program in a manner that would knowingly cross-subsidize another AQI 
program. In contrast, the commenter's interpretation would preclude us 
from using fees for activities necessary for the overall administration 
of the program, which would run counter to the intent of subsection 
136a(a)(1)(B) of the FACT Act.
    The same commenter stated that, if the reserve were used to cover 
revenue shortfall due to delinquent accounts, this would also 
constitute cross-subsidization, since the delinquent party would 
effectively receive services paid for by another party. The commenter 
also expressed concern that using the reserve in this manner could 
encourage delinquent parties to remain in arrears.
    We do not consider this practice to constitute cross-subsidization, 
as it does not implicate how APHIS sets its user fees. Once again, the 
FACT Act only requires that, ``in setting the fees . . . the Secretary 
shall ensure that the amount of fees is commensurate with the costs of 
agricultural quarantine and inspection services with respect to the 
class of persons or entities paying the fees.'' 21 U.S.C. 136a(a)(2) 
(emphasis added). Furthermore, we do not believe use of the reserve 
fund poses a significant risk of encouraging delinquent parties to 
remain in arrears. We note that there are several procedures in place 
within the AQI User Fees program to discourage delinquency; delinquent 
accounts are sent multiple billing notices, sent a letter of warning, 
and ultimately referred to the Department of the Treasury for 
collection.

Comments Regarding Congressional Intent

    Two commenters disagreed with APHIS' interpretation that 
subsections 136a(a)(1)(A) and (B) of the FACT Act provide authority to 
set user fees in amounts to maintain an AQI reserve. The commenters 
opined that this would effectively render subsection 136a(a)(1)(C), 
which explicitly authorized maintaining the reserve through fiscal year 
(FY) 2002, superfluous and thus ineffectual. Both of the commenters 
suggested that the FACT Act establishes three distinct bases for 
collecting AQI User Fees: (1) To recover costs of providing AQI 
services in connection with the arrival at a port in the customs 
territory of the United States; (2) to recover costs of administering 
the program; and (3) through FY 2002, to maintain a reasonable balance 
in the AQI User Fee Account. The commenters stated that APHIS' 
interpretation of the FACT Act thus contravenes Congressional intent.
    We disagree that our interpretation of subsections 136a(a)(1)(A) 
and (B) as allowing collection and maintenance of a reserve following 
the end of FY 2002 renders subsection 136a(a)(1)(C), which authorized 
the maintenance of a reasonable balance in the AQI User Fee Account 
through the end of FY 2002,

[[Page 2623]]

superfluous. Congress enacted the 1996 amendments in order to respond 
to escalating budget pressures and increasing demand for AQI services 
due to consistent annual increases in passenger and commercial air 
travel by changing AQI's funding structure to transition from being 
funded from an account subject to annual appropriations to a true 
``user fee account.'' Revoking APHIS' ability to maintain a reasonable 
balance in the reserve at the same time that Congress was transitioning 
the AQI User Fee Account to one for which fees could only be adjusted 
through notice-and-comment rulemaking is inconsistent with the purpose 
of ensuring that the funding structure responded to the needs of the 
program.
    The same commenters stated that a plain reading of the FACT Act 
limits APHIS' authority to maintain a reserve to the time period 
between the passage of the amended act in 1996 and the end of FY 2002.
    We disagree. A plain reading of the FACT Act gives specific 
authority to maintain a reasonable balance until the end of FY 2002, 
but does not address whether a reserve could continue to be maintained 
after FY 2002 to recover costs associated with providing AQI services 
or administering AQI programs. As we discussed in the Interpretive 
Rule, we consider the FACT Act to grant such authority.
    One commenter stated that APHIS' interpretation of the FACT Act as 
stated in the Interpretive Rule violated the precedent established in 
Corley versus United States (556 U.S. 303), Marx versus General Revenue 
Corporation (568 U.S. 371), Michigan versus the Environmental 
Protection Agency (135 S. Ct. 2699), Chevron versus Natural Resources 
Defense Council (467 U.S. 837), and Laurel Baye Health Care of Lake 
Lanier, Inc., versus National Labor Relations Board (564 F.3d 469 (D.C. 
Cir. 2009)).
    We consider the APHIS' interpretation of the FACT Act to be 
consistent with relevant legal precedent and authorities. The agency's 
legal position has been expressed in full in briefs in the Air 
Transport Ass'n of Am., Inc. v. U.S. Dep't of Agric. litigation and 
APHIS continues to hold the views expressed therein. Specifically, 
APHIS' view is that its interpretation of the FACT Act gives effect to 
each of the Act's provisions.

Comment Regarding Commensurability of Fees

    One commenter pointed out that section 136a(a)(2) of the FACT Act 
stipulates that in setting AQI User Fees, APHIS must ensure that the 
amount of each fee be commensurate with the costs of providing AQI 
services to the class of users paying the fees. The commenter opined 
that this section precludes fees from being set at a level that exceeds 
actual costs of providing services.
    APHIS disagrees with the commenter's interpretation of section 
136a(a)(2) of the FACT Act, which would, inter alia, render ineffective 
subsection 136a(a)(1)(B)'s authorization to collect fees at a level 
necessary for the administration of the program. Administrative costs 
often impact the AQI program as a whole; therefore, it is not possible 
to divide these costs based on individual user fee groups. For example, 
the development of policies regarding inspection procedures and 
sampling of agricultural commodities at ports of entry, the maintenance 
of manuals regarding the entry requirements for agricultural products, 
and the issuance of permits for agricultural commodities intended for 
import into the United States are not rendered to a particular user 
group but to the program as a whole.

Comment Regarding Calculation Process

    One commenter stated that the 2015 Final Rule that set the user fee 
schedule for the AQI program was based on a Grant Thornton, LLC 
guidance document, and the Grant Thornton document appeared to 
calculate the fee model on the presupposition that subsection 
136a(a)(1)(C) of the FACT Act was still operative. The commenter also 
stated that nowhere had the Grant Thornton document made it explicit 
that the reserve fee calculation was based on actual or imputed costs 
of providing AQI services or administering the AQI program. The same 
commenter also stated that the 2015 rule itself indicated that the 
reserve fee had been calculated based on the assumption that subsection 
136a(a)(1)(C) of the FACT Act was still operative. The commenter 
believed that 136a(a)(1)(A) and (B) provide a more limited basis for 
collecting and maintaining a reserve.
    The 2015 Final Rule took the recommendations of Grant Thornton into 
consideration, but the final calculation of the reserve fee was 
ultimately determined by APHIS. The calculation of the reserve fee was 
not based on the assumption that subsection 136a(a)(1)(C) of the FACT 
Act was still operative; the specific methodology used for calculation 
of the fee is set forth at length in the 2015 Final Rule (see 80 FR 
66752-66753) and makes no reference to subsection 136a(a)(1)(C) of the 
FACT Act. Finally, we disagree with the commenter's assertion that 
subsections 136a(a)(1)(A) and (B) provide a more limited basis for 
collecting and maintaining a reserve than subsection 136a(a)(1)(C). 
APHIS' final calculation for the reserve is supported by subsections 
136a(a)(1)(A) and (B) of the FACT Act and enables full cost recovery 
under the FACT Act for all the reasons stated above.

Comment Disagreeing With APHIS' Interpretation of Previous Rulemakings

    In the Interpretive Rule, we stated that our interpretation of the 
FACT Act was consistent with long-standing practice, which had been 
explained to the public through multiple rulemaking proceedings, 
beginning in 2002. See 67 FR 56217, Docket No. 02-085-1; 69 FR 71660, 
Docket No. 04-042-1; 71 FR 49985, Docket No. 04-042-2.
    A commenter stated that each rule cited by APHIS as evidence of the 
long-standing nature of the APHIS' interpretation of the FACT Act 
instead provided evidence that reserve fees have consistently been 
calculated based on the assumption that subsection 136a(a)(1)(C) was 
still operative. The commenter stated that APHIS had therefore 
deliberately mischaracterized prior rulemakings in the correction.
    We disagree. Since 2004, we have consistently stressed the need to 
maintain a reserve in order to administer the AQI User Fee program and 
ensure continuity of services, thus effectively claiming subsections 
136a(a)(1)(A) and (B) as the bases for the reserve. For example, in a 
2004 rulemaking, the first rulemaking APHIS initiated after FY 2002, 
APHIS ``included a reserve-building component in the user fees.'' See 
69 FR 71660, 71664. In that rulemaking, APHIS stated that ``the FACT 
Act, as amended'' directed that ``user fees should cover the costs of'' 
only three things: [(1)] Providing the AQI services for the conveyances 
and the passengers listed . . . , [(2)] Providing preclearance or 
preinspection [services], and [(3)] Administering the user fee 
program.'' 69 FR 71660; see also id. (not mentioning FACT Act's 
``reasonable balance'' language). Nonetheless, in that same rulemaking, 
APHIS set fees that ``includ[ed] a reserve-building component.'' Id. at 
71664. APHIS stated that it was doing so because ``[m]aintaining an 
adequate reserve fund is . . . essential for the AQI program,'' and 
explained why it ``need[s] to maintain a reasonable reserve balance in 
the AQI account.'' Id. (``The reserve fund provides us with a means to 
ensure the continuity of AQI services in cases

[[Page 2624]]

of fluctuations in activity volumes, bad debt, carrier insolvency, or 
other unforeseen events.'') This explanation in that 2004 rulemaking 
makes clear that, of the three items the cost of which user fees should 
cover, APHIS was justifying its inclusion ``of a reserve-building 
component'' directly on the third--``[a]dministering the user fee 
program.'' As noted previously in the Interpretive Rule and in this 
document, this rationale effectively relies on subsection 136a(a)(1)(B) 
of the FACT Act as a basis for the reserve.
    The 2004 rulemaking also aligned administering the program with 
ensuring continuity of AQI services by indicating that one of the ways 
in which APHIS administers the program is by maintaining sufficient 
funds in reserve to ensure continuity of AQI services within the 
program. As noted previously in the Interpretive Rule and in this 
document, this rationale effectively relies on subsection 136a(a)(1)(A) 
of the FACT Act as another basis for the reserve.
    In the 2006 final rule that responded to comments on the 2004 
rulemaking, we again aligned administering the program with maintaining 
sufficient funds in reserve to ensure continuity of AQI services. See 
71 FR 49985.
    APHIS' 2014 proposed rule to revise the AQI user fee schedule again 
aligned administration of the user fee program with maintaining 
sufficient funds to provide AQI services. See 79 FR 22896.

Comment Requesting Assistance for Domestic Programs

    One commenter asked that APHIS fund domestic control and 
eradication programs undertaken by State cooperators using AQI user 
fees.
    The FACT Act prohibits such subsidization.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs designated this action 
as not a major rule, as defined by 5 U.S.C. 804(2).

    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.

    Done in Washington, DC, this 13th day of January 2020.
Kevin Shea,
Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 2020-00659 Filed 1-15-20; 8:45 am]
 BILLING CODE 3410-34-P