Federal Register, Volume 75 Issue 45 (Tuesday, March 9, 2010)

[Federal Register Volume 75, Number 45 (Tuesday, March 9, 2010)]
[Rules and Regulations]
[Pages 10634-10644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-4949]

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 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: Final rule.

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SUMMARY: We are adopting as a final rule, with changes, an interim rule
that amended 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. The interim rule was necessary in part
because we were not recovering the costs of the inspection activities
we were engaged in at the U.S./Canada border. In addition, our data
showed an increasing number of interceptions on the U.S./Canada border
of prohibited material that originated in Canada and countries 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 indicated that we needed to expand and strengthen our
pest exclusion and smuggling interdiction efforts at that border. As a
result of the interim rule, all agricultural products imported from
Canada are subject to inspection, and all commercial conveyances, with
certain exceptions established by this final rule, as well as airline
passengers arriving on flights from Canada, are subject to user fees.

DATES: Effective Date: March 9, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Cynthia Stahl, Senior Staff
Officer, Quarantine Policy, Analysis and Support, PPQ, APHIS, 4700
River Road Unit 60, Riverdale, MD 20737; (301) 734-8415.

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.
In an interim rule\1\ effective November 24, 2006, and published in
the Federal Register on August 25, 2006 (71 FR 50320-50328, Docket
APHIS-2006-0096), we amended the foreign quarantine regulations in part
319 and the user fee regulations in part 354 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,

[[Page 10635]]

commercial railroad cars, commercial aircraft, and international air
passengers entering the United States from Canada. As a result of the
interim rule, all agricultural products imported from Canada are
subject to inspection, and commercial conveyances, as well as airline
passengers arriving on flights from Canada, are subject to inspection
and user fees. We took that action in part because we were not
recovering the costs of our inspection activities at the U.S./Canada
border. In addition, our data showed an increasing number of
interceptions on the U.S./Canada border of prohibited material that
originated in Canada and countries 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 indicated that we
needed to expand and strengthen our pest exclusion and smuggling
interdiction efforts at that border.
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\1\ To view the interim rule and the comments we received, go to
http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=APHIS-2006-0096.
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On November 22, 2006, we published in the Federal Register (71 FR
67436) a notice delaying the effective date for the changes affecting
user fees for international air passengers until January 1, 2007, and
all other user fee-related provisions of the rule until March 1, 2007.
We published a subsequent notice on February 26, 2007 (72 FR 8261),
that further delayed the effective date for user fees for commercial
trucks and loaded railroad cars entering the United States from Canada
until June 1, 2007. These delays of effective date did not extend the
comment period for the interim rule.
We solicited comments on the interim rule for 90 days ending
November 24, 2006. We received 112 comments by that date. They were
from private citizens; industry groups; representatives of the Canadian
Government and Canadian State governments; individual shipping,
manufacturing, and food processing companies; trade groups;
representatives of trucking, airline, railroad, and vessel companies;
State governments; and representatives of Federal and State agencies.
Eleven commenters supported the interim rule. The remaining
commenters expressed concerns with the interim rule. The issues raised
by those commenters are discussed below by topic.

Border Delays

Many commenters expressed concern that the interim rule would cause
border delays due to congestion resulting from increased inspections,
which in turn would heavily tax existing infrastructure. Delays were a
particular concern for those entities shipping perishable items such as
food products, and for express carriers and companies with strict
shipping schedules. Some commenters stated that delays at the U.S./
Canada border could have an effect on products shipped through the
United States to Mexico or that they could lead to increased fuel costs
or job losses. One commenter expressed concern regarding delays as a
result of insufficient numbers of the Animal and Plant Health
Inspection Service (APHIS) employees to conduct inspections.
Although APHIS retains the authority to establish and collect
agricultural quarantine and inspection (AQI) user fees, the Homeland
Security Act of 2002 (Pub. L. 107-296), which established the
Department of Homeland Security (DHS), transferred the responsibility
for inspecting imported agricultural products from APHIS to DHS' Bureau
of Customs and Border Protection (CBP). Prior to the effective date of
the interim rule, CBP was already conducting inspections of APHIS-
regulated products at the U.S./Canada border with the exception of
Canadian-origin fruits and vegetables; the interim rule did not create
a new inspection function. Among other things, the collection of user
fees at the Canadian border has already allowed CBP to hire additional
inspectors to offset any potential staffing shortages as a result of
the increased inspections of Canadian-grown fruits and vegetables
required by the interim rule. Since implementation of the interim rule,
we are not aware of any increase in delays at U.S./Canada border ports
as a result of the rule.
Border delays can be affected by a variety of factors; in addition
to the inspections of fruits and vegetables that are necessary as a
result of the rule, the past 3 years have seen the implementation of
new national security initiatives such as the passport requirement for
all citizens reentering the United States from Canada and the
commencement of infrastructure improvement projects at several land
border crossings on the U.S./Canada border. While we cannot
unequivocally state that there have been no additional delays that can
be attributed to the interim rule, the fact that CBP was already
conducting inspections of conveyances at the U.S./Canada border prior
to the interim rule's implementation makes it unlikely that the interim
rule has resulted in the delays or other issues cited by the
commenters. CBP monitors the flow of traffic across the Canadian border
through ports of entry and will take action to help alleviate future
border delays.
Several commenters stated that requiring cash payments at border
crossings would also increase border delays because rail and truck
crossings are not set up to handle cash payments and because such
payments would require having to make change. Many commenters also
stated that requiring cash payments renders current programs designed
to reduce wait times by allowing the use of pre-paid decals or other
means useless.
Because CBP has been collecting customs user fees all along, the
user fee collection infrastructure is already in place. AQI user fee
payments for importers who move their products by rail are submitted
directly to APHIS after-the-fact, therefore there are no user fee
collections or resulting delays at rail crossings due to the need to
handle cash payments. In addition, as stated in the interim rule,
importers who frequently cross the border by truck will benefit from
the purchase of a transponder that is good for a calendar year of
unlimited border crossings. Over 80 percent of all importers who cross
the border by truck are already benefitting from this provision. The
remaining importers who must pay the per-entry user fees will be able
to pay them at the same time they pay CBP fees. However, as noted
previously, since implementation of the interim rule resulting in the
collection of AQI user fees and the conducting of additional
inspections, we are not aware of any delays at the U.S./Canada border.
Several commenters asked how the 136 new agricultural inspectors
that we expected to be hired as a result of the interim rule would be
able to manage all border crossings 7 days a week and all 3 shifts
during the day. One of those commenters stated that as most CBP
personnel work from 8 a.m. to 4:30 p.m. and most agricultural products
arrive in the United States overnight, this suggests that trucks will
have to sit and wait for inspectors to arrive at work.
Since most border crossings are staffed by CBP agriculture
inspectors from 8:30 a.m. to 4:30 p.m. on weekdays, the additional
inspectors would not be expected to manage all U.S./Canada border
crossings 7 days a week and 24 hours a day. As noted by one of the
commenters, trucks arriving after these hours will most likely have to
wait until the following business day when inspections resume. However,
most border port offices did not have agriculture inspectors available
7 days a week and 24 hours a day before the implementation of the
interim rule. Therefore, waiting at the border already

[[Page 10636]]

occurred for trucks arriving before or after these hours. As stated
previously, since implementation of the interim rule, we are not aware
of any delays at the U.S./Canada border as a result of the interim
rule, including any delays of this nature.
Two commenters asked over what timeframe the 136 inspectors would
be hired. One commenter asked what will happen in the interim before
full staffing is reached.
The staffing plan in the interim rule was developed in 2001 before
the transfer of inspection duties from APHIS to CBP. CBP staffs all
ports according to current and anticipated needs. We are in
consultation with CBP regarding their staffing plan and are providing
recommendations to them regarding staffing issues. Training for these
inspectors commenced in November 2006 and classes continue to be
conducted. As of August 1, 2009, there were 181 CBP agricultural
inspectors on the U.S./Canada border. The deployment of inspectors has
been and will continue to be as quick as possible. In the interim, the
number of inspections conducted will be dependent on the resources
available. Inspections will also be conducted randomly. As the number
of additional staff increases, the number of inspections will increase
accordingly.
One commenter cited delays of up to 24 hours due to waiting for
plant samples to be identified and stated that money from user fee
collection should go to training inspectors in pest identification or
should be spent on technology to better help identify samples.
We are continually working to improve our efficiency and cut costs,
while carrying out our mission to protect U.S. agriculture from pest
and disease outbreaks. This includes funding new technologies that may
help expedite pest identification and hiring and training knowledgeable
staff to assist with pest identification.

Conducting Inspections

Several commenters asked how inspections would be carried out and
where they would be conducted.
Selective inspections will be conducted at U.S. ports of entry by
CBP agriculture inspectors. They will be the same type of agriculture
inspections currently conducted at our other ports of entry. The
specific means of commercial conveyance to be inspected and the type of
inspection provided at a port of entry are determined by APHIS and CBP
risk analyses to target conveyances or host material that may carry
agricultural pests. Additionally, CBP will conduct random inspections.
As pathways continue to change, random inspections become increasingly
necessary to monitor the flow of imports to ensure that agricultural
pests are not entering the country via previously unknown means. This
dynamic approach to pest interdiction is critical to the success of our
programs.

Definition of Commercial Vehicle

Two commenters asked what the definition of a commercial vehicle is
in the context of the rule.
We do not consider the term ``commercial vehicle'' to have any
specialized meaning beyond its commonly understood meaning. Definitions
for commercial aircraft, commercial truck, and commercial vessel may be
found in Sec. 354.3 of the user fee regulations.

Private Vehicle, Train, and Bus Passengers

Several commenters asked how other pathways not addressed by the
rule, such as private vehicles and train and bus passengers, would be
inspected.
Although the interim rule does not directly address the risk from
private vehicles or train and bus passengers, these pathways have been
subject to inspection based upon risk. The full economic analysis for
this final rule includes a discussion of the inspection of passenger
vehicles. Those inspections are funded by appropriated funds.

Private Property and Businesses on the Border

One commenter asked how carriers coming from a place sitting
exactly on the border between the United States and Canada would be
treated. Examples given were a pulp or sawmill.
Our AQI program is in place at designated ports of entry along the
U.S./Canada border and not private properties along the border.
Therefore, a carrier coming from a place sitting exactly on the border,
such as a pulp or sawmill, would be treated like any other carrier and
could be directed to one of these ports.

Empty Containers and Movement of Nonagricultural Goods

Many of the commenters stated that particular products that are not
agricultural goods or conveyances that are not involved in the movement
of agricultural goods should be exempt from paying agricultural user
fees because they do not present a risk of introducing plant pests into
the United States. Other commenters pointed to the hazardous nature of
some nonagricultural commodities or other difficulties inherent in
inspecting certain nonagricultural commodities or conveyances. Several
commenters asked how empty conveyances would be dealt with or stated
that they should also be exempt from the user fees.
Risks to agricultural and natural resources can arise from
shipments of nonagricultural goods and from conveyances moving
nonagricultural goods. An example given in the interim rule was wood
packaging material, such as wooden pallets, which is used to ship
nonagricultural products such as electronic items. Wood packaging
material can carry pests such as wood-boring insects. Noxious weed
seeds, gypsy moths, and other hitchhiking pests that can attach
themselves to nonagricultural items as well as the vehicle itself also
pose a concern. In addition, prohibited soil may be attached to the
articles in a shipment or to the conveyance itself. If the conveyance
has traveled through, or if the conveyance or shipment has originated
in, an area of Canada quarantined or regulated for plant pests such as
nematodes, these agricultural pests may be carried into the United
States in soil. Therefore, it is appropriate that all conveyances be
subject to the requirements described in the interim rule except as
otherwise noted. These same requirements have been in place along the
U.S./Mexico border for the past 18 years. With the publication of the
interim rule, conveyances entering the United States from all foreign
countries are subject to the same AQI user fees.

Commercial Trucks and Railroad Cars--Exempt Movement That Originates
and Ends in Canada

Several commenters stated that a railroad car or truck that
originates and terminates in the United States and that does not load
or unload cargo in Canada or that originates and terminates in Canada
and that does not load or unload cargo in the United States should be
exempt from paying the user fees.
The current regulations already exempt from AQI user fees those
commercial railroad cars that are part of a train that originates and
terminates in the United States and no passengers board or disembark
and no cargo is loaded or unloaded while the train is in a foreign
country. We recognize that there is a similar risk profile for
commercial railroad cars that are part of a train that originates and
terminates in Canada and no passengers board or disembark and no cargo
is loaded or unloaded while the train is in the United States.
Therefore, we have

[[Page 10637]]

amended the regulations in this final rule to state that such movements
are also exempt from the AQI user fee. However, we do not agree that a
similar exemption from the AQI user fee should be granted to trucks
that originate and terminate in the United States and do not load or
unload cargo in Canada or that originate and terminate in Canada and do
not load or unload cargo in the United States. This is because, unlike
railroad cars, trucks are not bound to a fixed track where stops and
loading or unloading may only feasibly occur at designated stations.
Therefore, the risk is high that cargo may be loaded or unloaded at any
point.

Vessels That Travel to Canada To Refuel

One commenter stated that vessels that travel to Canada only to
refuel should be exempt from paying an AQI user fee upon their return
to the United States.
We agree with the commenter. Although U.S.-origin vessels that
travel to Canada to take on fuel are not currently exempt from paying
an AQI user fee when they return to the United States, we note that
Canadian-origin vessels that travel to the United States solely to take
on fuel are exempt from paying an AQI user fee. Because we recognize
that there is a similar risk profile for U.S. vessels returning from
Canada if they have only traveled to Canada to take on fuel, we have
amended the regulations in this final rule to state that such movements
are also exempt from the AQI user fee.

Small Aircraft

Several commenters stated that the user fee exemption should be
extended to apply to aircraft that are not currently exempt due to
their size or because they contain more than the maximum number of
seats to qualify for a user fee exemption, because such planes carry
little cargo.
Currently, all passenger aircraft, originating in any country, that
have 64 or fewer seats and that are not carrying certain regulated
articles specified in Sec. 354.3(e)(2)(iv) are exempt from paying the
aircraft AQI user fee. The interim rule and this final rule are focused
on AQI user fees for conveyances and air passengers from Canada. Any
new AQI user fee exemptions that could impact passengers or conveyances
originating from countries around the world, such as the exemption
suggested by the commenters, would have to be addressed in a separate
rulemaking.

Barges

Several commenters stated that the user fee exemption should be
extended to apply to barges that are not currently exempt due to their
size, but that carry little cargo.
We note that ferries, which are not considered to be commercial
vessels, and commercial vessels weighing less than 100 net tons are
already exempt from paying AQI user fees. While we do not agree that
additional exemptions should be given to barges because of their size,
we do recognize that barges traveling solely between the United States
and Canada are operating in a lower-risk environment: A limited range
of waterways between and around the U.S./Canada border such as the
Puget Sound and the Great Lakes, which means that such barges present a
much lower risk of carrying cargo or hitchhiking pests from a third
country. Because of the risk of ocean-going barges traveling to
countries outside of the United States and Canada, we have restricted
our definition of barge to a non self-propelled vessel that transports
cargo that is not contained in shipping containers. This definition
does not include integrated tug-barge combinations. Further, we are
limiting the exemption to barges that carry bulk cargo that originates
only in the United States or Canada and that do not carry any plants or
plant products or animals or animal products, and that do not carry
soil or quarry products from areas in Canada listed in Sec. 319.77-3
as being infested with gypsy moth. Therefore, we are amending the
regulations to exempt barges that meet the above conditions from paying
the AQI user fee.

Participation in Trade Security Systems

Several commenters expressed concern that the interim rule removes
the benefits of complying with systems such as the Customs-Trade
Partnership against Terrorism (C-TPAT) and suggested that those in the
trade community who participate in such programs should be waived from
having to comply with the provisions of the interim rule.
C-TPAT does not have an agricultural component that specifically
addresses sanitary or phytosanitary risks. C-TPAT members' shipments
are subject to agricultural inspection regardless of the reduced
inspection benefits granted by membership in the program. Therefore, we
do not believe it is appropriate to exempt C-TPAT members from being
required to pay the AQI user fee.

Transition to Full Staffing and Inspection Levels

Several commenters expressed concern that the collection of user
fees does not mean any additional inspections will be conducted and
therefore, stated the user fees are not justified. Some of the
commenters expressed concern that the fees for one type of conveyance
would be used to subsidize inspections on another type of conveyance
because of what the commenters perceived as an apparent disparity in
user fees charged between different conveyances or an apparent
disparity in the inspection cost projections between different
conveyances. Several commenters on the interim rule expressed concern
regarding the cost projection for the initial staffing plan: 65 airport
pre-clearance inspectors in Canada, costing $46 million, and 136
inspectors along the U.S./Canada border, costing $22.45 million.
As stated previously, the staffing plan in the interim rule was
developed in 2001 before the transfer of inspection duties from APHIS
to CBP. We are in consultation with CBP regarding their staffing plan
and are providing recommendations to them regarding staffing issues.
Inspections will be fewer and more random until the transition to full
staffing occurs, but from then on will be conducted on a greater number
of conveyances and agricultural products. The apparent disparity in
user fees or the cost of inspections between different conveyance types
is due to various factors, including the time and staff needed to
conduct the inspections as well as the costs associated with staffing
inspectors in Canada versus inspectors in the United States. Any excess
of collections over costs remains available from year to year in a
dedicated reserve account to be used only to fund agricultural
quarantine inspection and related program costs. We take into account
the balance in this reserve account, along with our current user fees,
volumes, and collections before increasing or decreasing user fees.

User Fee Costs

The majority of commenters stated that the cost of the user fees is
excessive. Several commenters expressed concern regarding how APHIS
arrived at the current user fees. One commenter asked how APHIS could
have set user fees in 2004 that will be in effect until 2010 when APHIS
does not know what costs will be in 2010.

[[Page 10638]]

As stated previously, the interim rule was designed, in part, to
recover the costs of our current inspection activities at the U.S./
Canada border. APHIS has the authority to collect user fees to fund
inspections. Until recently, APHIS had determined that increased
inspections at the Canadian border were not necessary. However, due to
evidence of increased pest risk, APHIS believes it is necessary to
increase its inspection regime at the Canadian border and therefore
must collect user fees to fund those inspections. Therefore, we are
requiring that commercial conveyances from Canada and international
airline passengers arriving on flights from Canada be subject to the
same agricultural quarantine user fees that are already charged to
commercial conveyances and international airline passengers arriving in
the United States from all other foreign countries. To calculate the
proposed user fees, we projected the direct costs of providing all AQI
services in fiscal years (FY) 2004 through 2010 (and beyond) for
international airline passengers and for each category of conveyance:
Commercial vessels, commercial trucks, commercial railroad cars, and
commercial aircraft. The cost of providing these services in prior FYs
served as a basis for calculating our projected costs. We then
projected our costs using economic factors provided to us in the
economic schedules in the President's budget. In publishing our user
fees in advance, we are acting on behalf of affected industries who
suggested that they would be able to plan for the effects of fee
changes more effectively if fees were set in advance. To the extent
that costs of inspections and collections of user fees change, we
retain the option of increasing or reducing any of the fees.

Taxes Versus User Fees

Some commenters expressed concern that the user fees will serve as
a new tax on cross-border commerce or stated that Government funding
should be obtained to hire additional permanent inspectors and acquire
other needed resources rather than increasing user fees, or that
appropriations have already addressed the need for additional
inspectors.
A tax is money paid by the general public to support general
Government operations. A user fee is money paid for a specific
Government service by the beneficiary of that service and is designed
to recover the costs of providing that service. The AQI user fees
covered by the interim rule are intended to recover the costs of
providing AQI services for commercial vessels, commercial trucks,
loaded commercial railroad cars, commercial aircraft, and international
airline passengers and are paid by commercial vessel companies,
commercial truck drivers, commercial railroad companies, commercial
airlines, and international airline passengers. As such, our AQI user
fees are user fees and not taxes. We have congressional authority to
collect these fees. The Food, Agriculture, Conservation, and Trade
(FACT) Act of 1990, as amended, authorizes the Secretary of Agriculture
to prescribe and collect fees to cover the cost of providing the AQI
services covered by the interim rule. Although appropriations may be
used to partially fund certain related aspects of the AQI program, the
FACT Act mandates that the majority of the cost must be borne by the
beneficiaries of the program's services.

Canadian Costs and Fees

Two commenters expressed concern that the interim rule would cause
Canada to retaliate by imposing user fees on all conveyances crossing
the border into Canada regardless of whether inspections will be
carried out.
Although we understand the commenter's concern, Canada's actions
are not under our control. The interim rule was implemented to address
the increased pest risk presented by agricultural shipments and
conveyances from Canada and to provide for full cost recovery of our
AQI program. The conveyances entering the United States from Canada are
not only Canadian-owned; all conveyances, including U.S.-owned
conveyances, are impacted by this rule. Also, we note that the user
fees have been in effect since 2007. Since that time, there have been
no signs of retaliation by Canada.

Inspection Costs

Several commenters stated that APHIS does not know what the costs
of performing inspections are and, therefore, asked how APHIS can
comply with the statutory mandate in 21 U.S.C. 136a(a)(2) that fees
must be commensurate with the costs of inspections. One commenter
expressed concern that the interim rule did not contain provisions for
the adjustment of fees if necessary.
The user fees implemented at the U.S./Canada border as a result of
the interim rule are the same as those already in place at our other
border ports. Those user fees were determined by dividing the sum of
the costs of providing each service by the projected number of users
subject to inspection, thereby arriving at ``raw'' fees. We then
rounded the raw fees up to determine the user fees. We consider this
approach adequate in our identification of the costs of inspection and
related pest identification and mitigation activities. As APHIS
assesses its user fees, volumes, collections, and ongoing reserve
balances, it will initiate rulemaking to increase or decrease the fees
as necessary. We review our fees on a biennial basis to ensure that the
fees charged are commensurate with the costs of inspection and
inspection-related activities and, if necessary, undertake rulemaking
to amend them. We will adjust a fee up or down, as appropriate,
depending on the actual cost of providing services. In most cases, we
propose user fee increases so that the fees will keep up with
inflationary costs as well as any new costs that must be paid. However,
we have adjusted user fees downward in the past. In a final rule
published in the Federal Register on January 19, 1996, (61 FR 2660-2665
Docket No. 94-074-2) and effective on March 1, 1996, we decreased our
AQI user fee for commercial aircraft by 13.1 percent after our cost
analysis revealed that this fee was too high.

Decals

Several commenters expressed concern regarding the provision for
annual decals. One commenter stated that if the option to purchase an
annual decal is available for trucks that it should also be extended to
all other conveyances. Two commenters questioned the economic
feasibility of an annual decal for some importers because they do not
cross the border enough times to justify the cost of the decal or
because the decal is vehicle-specific.
Although currently there is not an option to purchase an annual
decal for loaded railroad car and commercial vessel border crossings,
the regulations do contain maximum charge provisions. For commercial
vessels, the maximum user fee is 15 times the AQI user fee per arrival.
For loaded railroad cars, the maximum user fee is 20 times the AQI user
fee per arrival. The maximum charge provisions provide the same
benefits to users as a decal in instances where issuing a decal may not
be feasible due to difficulty in electronically reading the decal on a
particular type of conveyance or how user fees are collected for a
particular conveyance.

Air Industry--Two AQI User Fees

One commenter asked why air transport is subject to two fees (cargo
and passenger) when other modes of transport are only subject to cargo
fees. The commenter also asked why all

[[Page 10639]]

aircraft are subject to the same aircraft fee, regardless of whether
they are cargo or passenger aircraft.
Except as otherwise noted, the fees charged to commercial
conveyances from Canada and international airline passengers arriving
on flights from Canada are the same fees already charged to commercial
conveyances and international airline passengers arriving in the United
States from all other foreign countries. As mentioned previously, all
passenger aircraft originating in any country with 64 or fewer seats
and that do not carry certain regulated articles are already exempt
from paying the aircraft AQI user fee. The passenger fee pays the costs
of inspecting passengers and passenger baggage, the aircraft galley
including garbage, the passenger compartment and the baggage hold,
while the commercial aircraft fee pays the costs of inspecting the
aircraft, excluding the areas covered under the passenger fee, and the
crew and cargo.

Legality

Many commenters stated that the interim rule is contrary to
bilateral efforts and political commitments between the United States
and Canada or broader international agreements and serves to undermine
them.
APHIS has been in discussions with Canadian officials for many
years regarding agricultural risk from agricultural products,
commercial conveyances, and air passengers arriving in the United
States from Canada. We have also established workgroups with Canada to
discuss enhancements within their agricultural programs to complement
the U.S. pest interdiction and prevention programs. When the original
user fee rules were implemented and the exemption for Canadian
conveyances made, we considered commercial conveyances and agricultural
shipments from Canada to have a risk profile similar to that of
products and conveyances from the United States.\2\ As a result of this
assumption, few inspections were conducted at the Canadian border,
However, recent trends have shown that this assumption about risk is no
longer true and inspections have increased accordingly. Therefore, in
order to recover the costs of the existing inspection program and to
implement an expanded inspection program, we determined the removal of
the inspection and user fee exemption was necessary.
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\2\ See the rule published in the Federal Register (56 FR 8148-
8156) on February 27, 1991.
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Basis of the Rule

Several commenters questioned the basis of the rule, asking for
risk assessments, pest survey data, or other information to support the
rulemaking.
Our decision to implement the interim rule was based on the fact
that we were conducting inspections on the U.S./Canada border during
which we were detecting exotic and dangerous pests, and were not
recovering the costs of these inspections. For example, U.S. inspectors
have intercepted fruit flies 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. In each case, the material was from a country other than
Canada and was re-labeled as a product of Canada and then shipped to
the United States to take advantage of the exemption from AQI user fees
for Canadian fruits and vegetables. Therefore, we determined that the
inspection exemption for fruits and vegetables from Canada needed to be
removed to allow for regular inspections at the border and that AQI
user fees were needed to recover the costs of our ongoing inspection
activities. We provide more examples/data in our Final Regulatory
Flexibility Analysis that illustrate the risks associated with material
imported from Canada that originated in Canada and countries other than
Canada. We reiterate that the interim rule merely subjected users
entering the United States from Canada to the same user fees that are
already being charged to users entering from all other countries.

Emergency Rulemaking

Many commenters expressed concerns regarding the use of emergency
rulemaking rather than engaging in talks with interested entities and
that the interim rule's comment period ended on the same day as its
implementation. Several commenters stated that the delay in
implementing the rule illustrates that the rule was not justified as an
emergency action.
APHIS has been in discussions with Canadian officials for many
years regarding the risk from agricultural shipments and commercial
conveyances from Canada. We value our relationship with our Canadian
partners, and we continue to communicate with our partners regarding
how best to improve mitigation activities as well as to determine where
harmonization of regulatory actions between the United States and
Canada may be appropriate. Because the interim rule removed the
inspection exemption for imported fruits and vegetables grown in Canada
and commercial conveyances from Canada in order to prevent the
introduction of plant pests and animal diseases into the United States
and removed the user fee exemption for Canada in order to recover the
costs of the needed inspections, we found good cause to publish the
rule without a prior proposal. However, affected industries and the
general public did have an opportunity to comment on the interim rule
following its publication. The effective date of the interim rule was
delayed in response to strong industry requests for more time to
prepare for the implementation of the AQI user fees and to allow time
to coordinate the additional inspections and collection of fees with
CBP.
One of the difficulties in mitigating the risk of plant pests
entering the United States is ensuring that loaded or unloaded railroad
cars and trucks that previously carried shipments of non-Canadian
origin (i.e., third country origin) cargo are not infested with pests
at the time they enter the United States. After the interim rule was
published, APHIS met on several occasions with individual companies and
industry groups that operate across the land border to discuss
agricultural risks associated with rail and truck supply systems. In
particular, we hoped to obtain further information regarding the use of
containers which previously hauled high risk non-Canadian products.
However, we were unable to obtain such information.

Miscellaneous Comments

One commenter stated that it is impermissible for the Department of
Agriculture to charge user fees on behalf of another agency since CBP
conducts the inspections rather than the Department of Agriculture.
Another commenter stated that collection of user fees adds an
additional clerical function on border officers and that not only is it
time-consuming, but that it requires additional recordkeeping and
financial controls.
While the Homeland Security Act of 2002 transferred certain AQI
activities from APHIS to CBP, including conducting inspections, the
management of the AQI user fee account, setting fees, and monitoring
inspection related expenses and collections continues to be APHIS'
responsibility. Since CBP is currently collecting customs fees, the
collection of AQI user fees does not present an additional clerical
function because the AQI user fees are collected at the same

[[Page 10640]]

time as CBP customs fees. In addition, as had been the case prior to
the interim rule, CBP continues to conduct inspections and collect AQI
user fees at the Mexican border without any collection-related delays.
Likewise, we are not aware of any collection-related delays at the
Canadian border since implementation of the interim rule.

Comments Regarding the Economic Analysis

Several commenters expressed concerns regarding the economic
analysis for the rule, particularly the accuracy of user fee collection
and cost estimates, and asked for a detailed cost-benefit analysis.
Several commenters stated that because we did not provide a
quantitative comparison of expected benefits and costs of the rule,
APHIS failed to satisfy the requirements of Executive Order 12866. One
commenter cited the information we presented indicating that most motor
carriers qualify as small businesses and stated that, because of this,
APHIS should reevaluate the effect of the user fees.
Our economic analysis included a cost-benefit analysis and
evaluated the economic impacts on small entities with the best
information available at that time. In this final rule, we have
provided an updated final economic analysis. The commenters are correct
in that we are unable to quantitatively project the benefits that will
be attributable to the November 2006 interim rule and this final rule
in terms of the reduced risk of animal and plant pests and diseases
entering from Canada. It is difficult to determine the animal and plant
pests and diseases that may be present in Canada or that may travel
through Canada destined for the United States. It is also difficult to
trace infestations already established in the United States back to
their point of origin. However, we do know that these risks are
genuine. U.S. agriculture and other sectors of the economy are
unfortunately well acquainted with the costs of pest or disease
introductions when interception fails, given the large public and
private expenditures devoted to ongoing animal and plant pest control
and eradication programs.
Although we are not able to quantify the benefits of this rule, we
are confident that the benefits of this rule (costs forgone because the
resources made available will help prevent pest and disease entry from
Canada) will outweigh its costs. This conclusion satisfies a principal
requirement of Executive Order 12866. In addition, Executive Order
12866 does not require that benefits and costs be quantified, only that
they be evaluated as completely as possible.

Alternatives Suggested by Commenters

Many commenters suggested alternatives to the interim rule. One of
these suggestions was to require permits and phytosanitary certificates
for agricultural goods from Canada that are imported into the United
States. Another suggestion was to utilize preclearance systems to
inform CBP about shipment information before arrival at the border in
order to target inspections toward shipments of presumed greater risk.
A third suggestion was to conduct inspections closer to the third-
country source, such as at the production facility, because third-
country products seem to hold the most risk.
While permits, phytosanitary certificates, and preinspection
systems are valuable ways to gain information about shipments before
arrival, they do not prevent plant pest hitchhikers from attaching
themselves to vehicles or shipments, or prevent importers from
falsifying information or adding additional items to shipments before
crossing the border. Therefore, inspection at the border would still be
necessary to ensure that any such systems are working as intended. In
addition, because pathways change, it is necessary to continue to
monitor the flow of imports to ensure that agricultural pests are not
entering the country via previously unknown means. Therefore,
inspections at the border would still be necessary to mitigate risk.
APHIS is continually working with Canadian officials to explore ways to
lower and control pest risk.
Therefore, for the reasons given in the interim rule and in this
document, we are adopting the interim rule as a final rule with the
changes discussed in this document.

Effective Date

We are making final, with certain changes, an interim rule
published in the Federal Register on August 25, 2006, that amended the
foreign quarantine and user fee regulations by removing the exemption
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.
Certain provisions of the interim rule became effective on January 1,
2007, and on March 1, 2007, with the remainder becoming effective on
June 1, 2007. The changes in this final rule include user fee
exemptions for railroad cars that are part of a train that originates
and terminates in Canada where no passengers embark or disembark and no
cargo is loaded or unloaded while in the United States and vessels
traveling to Canada only to refuel. In addition, this final rule
exempts from user fees barges that carry non-containerized cargo that
originates only in the United States or Canada and that does not carry
any plants or plant products, animals or animal products, or soil or
quarry products from areas in Canada regulated for gypsy moth. Because
this final rule provides specified exemptions from user fees and thus
relieves restrictions, the Administrator has determined that this rule
can be made effective less than 30 days after publication in the
Federal Register.

Executive Order 12866 and Regulatory Flexibility Act

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.
We have prepared an economic analysis for this final rule. It
provides a cost-benefit analysis as required by Executive Order 12866,
as well as a final regulatory flexibility analysis that considers the
potential economic effects of this final rule on small entities, as
required by the Regulatory Flexibility Act. The economic analysis is
summarized below. Copies of the full analysis are available on the
Regulations.gov Web site (see footnote 1 in this document for a link to
Regulations.gov) or by contacting the person listed under FOR FURTHER
INFORMATION CONTACT.
We are adopting as a final rule, with the changes discussed in this
document, an interim rule that amended the foreign quarantine and user
fee regulations by removing the exemptions from inspection for certain
agricultural products imported from 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 that action, all
agricultural products imported from Canada are subject to inspection,
and commercial conveyances, except as otherwise noted, as well as
airline passengers arriving on flights from Canada, are subject to user
fees.

Expected Benefits

The objectives of the amended regulations were to expand and

[[Page 10641]]

strengthen our pest exclusion and smuggling interdiction efforts at the
Canadian border by subjecting all agricultural products and all
commercial conveyances, with certain exceptions established by this
rule, to inspection and to enable the Federal Government to recover the
cost of those inspections through user fees. In 1991, APHIS established
AQI user fees for inspections of commercial conveyances and
international air passengers arriving in the United States from all
foreign countries except Canada. The exemption of Canada from the AQI
user fees was based on our understanding that conveyances and
passengers from Canada posed little risk of introducing plant or animal
pests or diseases into the United States. Since 1991, the nominal value
of U.S. agricultural imports from Canada has increased over fourfold,
from $3.3 billion in 1991 to $15.2 billion in 2007. In addition, with
the globalization of trade, shipments of re-exported agricultural
products that originate in countries other than Canada but enter from
Canada into the United States have increased significantly. For
example, total exports of fruits and vegetables to the United States
from Canada increased by 167 percent over the 10-year period between
1998 and 2007, while Canada's re-export of fruits and vegetables to the
United States increased by 738 percent during this same period. In
addition to the growing volume of legitimate re-exports, there is
incentive to commingle third-country goods with Canadian-produced goods
because of lower U.S. tariffs for goods for Canadian origin.
Opportunities to smuggle goods across the border also have increased as
the volume of commercial traffic and number of air passengers have
grown.
Emergency Action Notifications (EANs) issued illustrate the
increasing risks associated with the agricultural products entering
from Canada. An EAN is an APHIS form used by CBP to communicate to
importers the sanitary or phytosanitary reasons for an emergency action
and what the action entails, such as treatment, re-export, or
destruction of the goods. The EAN records indicate an increasing number
of emergency actions related to agricultural goods entering from
Canada. For example, during FY 2007, a total of 1,193 EANs were issued
for products shipped from Canada to the United States. Nine hundred
thirty-three of these EANs (or 78 percent) were issued for Canadian
products and 260 (22 percent) were issued for products of non-Canadian
origin. As 22 percent is substantially higher than the 5 percent of
Canada's fruit and vegetable shipments to the United States in 2007
that were re-exports, this represents a disproportionately high
quantity of EANs for re-exports in comparison to the total number of
EANs issued for shipments from Canada.
Among EANs issued for re-exported products, 126 EANs were for
products that originated in Asia and 62 EANs were for products that
originated in regions south of the United States, i.e., Mexico, Central
America, and South America. In FY 2007, 55 countries other than Canada
were reported as countries of origin on EANs for products entering from
Canada. Altogether, over 100 pest species were intercepted in FY 2007
and FY 2008. Examples of intercepted pests are the Mexican fruit fly
(Anastrepha ludens Loew (Tephritidae)), found in containers that
originated in Mexico, and the gypsy moth (Lymantria dispar Linnaeus
(Lymantriidae)), found in shipments of firewood of Canadian origin.
Data generated by the Agricultural Quarantine Inspection Monitoring
(AQIM) program also illustrate a greater sanitary and phytosanitary
risk associated with agricultural products that enter the United States
from Canada than anticipated when we first established AQI user fees
and exempted Canada from those fees. Under the AQIM program, CBP
agricultural inspectors conduct random inspections within each major
pathway to assess their relative risk, and APHIS-PPQ monitors the
collected data. AQIM keeps track of Quarantine Material Interceptions
(QMIs), which are regulated agricultural materials seized because of
prohibition, permit denial, pest risk, or abandonment. Approach rates,
defined as the number of QMIs as a percentage of the number of
conveyances inspected, for commercial trucks at the U.S./Canada border
show a substantial 1-year increase in interceptions, from 0.68 percent
of trucks sampled in FY 2006 to 1.73 percent of trucks sampled in FY
2007. This increase cannot be explained by an increase in the rate of
inspection for FY 2007 over FY 2006. Applying the FY 2007 approach rate
of 1.73 percent to the 6.6 million trucks that CBP reports as having
entered the United States from Canada that year, implies that over
100,000 of the trucks may have been carrying quarantine material.
As an example of the risk of foreign pest introduction, plum pox is
a disease that was introduced into the United States. It is a
devastating viral disease of stone fruit, such as peaches, apricots,
plums, nectarines, almonds, and cherries. It is transmitted within an
orchard by aphids and over long distances through the movement of
infected nursery stock, propagative material, and fruit. The plum pox
virus first appeared in the United States in Pennsylvania in October
1999. In 2006, it was detected in New York and Michigan. APHIS
established an eradication program to prevent the spread of plum pox to
noninfested areas of the United States. Since 2000, APHIS has set aside
$50.7 million to address plum pox disease. We do not have evidence that
plum pox was introduced from Canada, where it is also known to exist.
However, the expenses incurred because of this disease exemplify the
types of costs that may be avoided or reduced by removing the
inspection exemption and providing additional resources for AQI
inspections at the U.S./Canada border.
We are unable to quantify either the risk that existed prior to
implementation of the interim rule, nor the reduction in risk following
its implementation. Our knowledge of the disease and pest threats posed
by goods entering from Canada and the extent to which the AQI
inspection activities mitigate those threats is currently imperfect.
Rarely are we able to precisely trace an established infestation by an
invasive species to its country of origin. However, we do know that
these risks are genuine. The disproportionately large number of EANs
issued for shipments of third-country origin and the approach rates
shown in the AQIM program point to significant and growing risks of
disease and pest introduction. The intentional or unintentional
commingling of products of third-country origin with goods of Canadian
origin heightens these risks. Outright smuggling of goods across the
U.S./Canada border is also a growing threat due to the increasing
volume of commodities and number of travelers that cross the border
into the United States each year. U.S. agriculture and other sectors of
the economy are unfortunately well acquainted with the costs associated
with pest and disease introductions when interception fails. Large
public and private expenditures have been devoted to animal and plant
pest and disease control and eradication programs, as exemplified by
the costs of plum pox. This rulemaking will enable us to increase our
inspections and targeting activities at the U.S./Canada border. The
inspections will help safeguard against the risk of pest and disease
introductions and, therefore, reduce agricultural losses and
expenditures for pest and disease control and eradication. The
regulations

[[Page 10642]]

will also allow us to recover the costs of these activities.

Costs of the Rule

The amended regulations impose a direct fee on all commercial
conveyances crossing the U.S./Canada border, except in three instances:
(i) Barges operating solely between U.S. and Canadian ports that carry
only bulk cargo that does not originate outside of the United States or
Canada and that do not carry any plants or plant products or animal or
animal products, and that do not carry soil or quarry products from
areas in Canada listed in Sec. 319.77-3 as being infested with gypsy
moth; (ii) railroad cars that are part of a train that originates and
terminates in Canada and that does not load or unload passengers or
cargo while in the United States; \3\ and (iii) vessels returning to
the United States after traveling to Canada solely to take on fuel.
---------------------------------------------------------------------------

\3\ The railroad cars are required to be part of the same train
when they return to Canada. The current AQI user fee regulations (7
CFR 354.3) provide a similar exemption for all U.S. railroad cars
that transit Canada or Mexico and return to the United States.
Sanitary and phytosanitary risks are minimal for these types of
shipments.
---------------------------------------------------------------------------

In the preliminary economic analysis for the interim rule, we noted
the possibility of shipping delays because of the AQI inspections.
Additional cost that might arise due to shipping delays was one of the
most frequently raised concerns among our stakeholders. CBP inspectors
are required to inspect commercial trucks while maintaining a steady
traffic flow. CBP performs inspections based on risk profiles and
available resources, as well as randomly.

User Fees

Four modes of conveyance--trucks, railroad cars, maritime vessels,
and aircraft--and international air passengers are assessed AQI user
fees, as shown in Table 1.

Table 1--AQI User Fees for Conveyances and Air Passengers Entering the United States, Fiscal Years 2007, 2008,
and 2009
----------------------------------------------------------------------------------------------------------------
FY 2007 FY 2008 FY 2009
----------------------------------------------------------------------------------------------------------------
Maritime vessels......... $490 per crossing (max 15 $492 per crossing (max 15 $494 per crossing (max 15
payments per year). payments per year). payments per year).
Trucks \1\............... $5.25 per crossing or $105 $5.25 per crossing or $105 $5.25 per crossing or $105
per year. per year. per year.
Railroad cars \2\........ $7.75 crossing............. $7.75 per crossing......... $7.75 per crossing.
Aircraft................. $70.50 per arrival......... $70.50 per arrival......... $70.75 per arrival.
Air passengers........... $5 per passenger........... $5 per passenger........... $5 per passenger.
----------------------------------------------------------------------------------------------------------------
\1\ Truck operators have the choice of paying per crossing or purchasing a yearly decal. The cost of the yearly
decal ($105) is 20 times the fee for an individual crossing ($5.25).
\2\ If the AQI user fee is prepaid for all arrivals of a commercial railroad car during a calendar year, the AQI
user fee is an amount 20 times the AQI user fee for each arrival.

Surface conveyances. All trucks and trains transporting goods to
the United States are subject to inspection. A user fee of $5.25 per
crossing, or $105 per year, is charged for each truck, and a fee of
$7.75 per crossing is charged for each loaded railroad car, other than
for railroad cars in transit, as described above.
Trucks, trains, and all other commercial surface conveyances
transported goods valued at approximately $511 billion across the U.S./
Canada border in 2007, with $285 billion in imports into the United
States from Canada and $226 billion in exports from the United States
to Canada.\4\ Trucks remain the dominant commercial mode of
transportation, carrying $150 billion in U.S. imports and $174 billion
in U.S. exports across the U.S./Canada border in 2007. That same year,
railroads transported $66 billion in U.S. imports and $25 billion in
U.S. exports across the U.S./Canada border. While agricultural
shipments are generally the focus of AQI inspections, all commercial
surface conveyances crossing the border are subject to inspection.
---------------------------------------------------------------------------

\4\ Bureau of Transportation Statistics, TransBorder Surface
Freight dataset, http://www.bts.gov/transborder/.
---------------------------------------------------------------------------

For commercial trucking, the Small Business Administration (SBA)
defines a small entity as one having not more than $25.5 million in
annual receipts. According to the 2002 Economic Census, there were
29,220 general long-distance freight trucking firms in the United
States (North American Industry Classification System [NAICS] code
484121). A total of 371 of these firms, or less than 2 percent, had
annual receipts of $25 million or more, the largest revenue category
identified. Thus, not less than 98 percent of trucking firms in the
United States are small entities. We do not know the number or size of
trucking firms 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
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, 18 firms
employed more than 500 workers. Therefore, approximately 97 percent of
commercial railroad companies in the United States are considered small
entities. We can reasonably assume that this percentage applies to
railroad companies that transport products into the United States from
Canada.
Waterborne conveyances. Commercial vessels transporting goods to
the United States (100 net tons or more) are subject to inspection.
Beginning March 1, 2007, waterborne conveyances were charged a user fee
of $490 per crossing in FY 2007. In FY 2008, the fee was $492 per
crossing, and increased to $494 per crossing in FY 2009. Total
waterborne trade with Canada was valued at $18 billion in 2005, $14
billion in U.S. imports and $4 billion in U.S. exports.\5\ Commodities
transported by waterborne conveyances comprised 26 percent of total
tonnage crossing the U.S./Canada border in 2005, with this mode of
conveyance especially suitable for heavy bulk products such as grain
and crude petroleum. As with the surface conveyances, we expect the
focus of inspections of waterborne conveyances to be shipments of
agricultural commodities.
---------------------------------------------------------------------------

\5\ Bureau of Transportation Statistics, North American Freight
Transportation, June 2006.
---------------------------------------------------------------------------

For commercial water transportation, the SBA defines a small entity
as one

[[Page 10643]]

having not more than 500 employees. According to the 2002 U.S. Economic
Census for Transportation and Warehousing, 724 firms operated in the
United States providing ``deep sea, coastal, and Great Lakes water
transportation'' (NAICS codes 483111 and 483113). Nine of these firms
employed 500 to 999 employees and 5 firms employed 1,000 or more
employees. Thus, over 98 percent of water transportation firms in the
United States employed fewer than 500 workers and can be considered
small. Approximately 1,895 vessels were used to move cargo from Canada
to the United States in 2005. We can assume that most if not all of the
firms owning these vessels are small entities.
Aircraft and air passengers. All air cargo and conveyances arriving
in the United States are subject to inspection. Commercial aircraft
were charged a user fee of $70.50 per arrival in FY 2008, and the user
fee was increased to $70.75 in FY 2009. The modal share of air cargo as
a percentage of total U.S. imports from Canada steadily declined to 4.1
percent in 2006, from a peak of 6.6 percent in 2000. Preliminary data
for 2007 indicate a slight increase in air cargo's modal share, to 4.4
percent.\6\
---------------------------------------------------------------------------

\6\ Transport Canada, Transportation in Canada 2007 http://www.tc.gc.ca/policy/report/aca/anre2007/pdf/add2007-e.pdf. Exports
to the U.S. include re-exports and domestic exports.
---------------------------------------------------------------------------

All air passengers arriving in the United States are charged a user
fee of $5. In FY 2007, the total number of air passengers traveling
from Canada to the United States was 11.9 million, an increase over the
previous year and a return to pre-9/11 levels for the first time.\7\
---------------------------------------------------------------------------

\7\ CBP. The data include air passengers and crews.
---------------------------------------------------------------------------

For commercial air transportation, the SBA defines a small entity
as one having not more than 1,500 employees. According to the 2002 U.S.
Economic Census for Transportation and Warehousing, there were 513
firms in the United States classified under ``scheduled freight air
transportation'' (NAICS code 48111), of which only 12 firms employed
more than 1,000 employees. Thus, about 98 percent of all air
transportation firms in the United States are small.
Clearly, most of the surface, waterborne, and air conveyance
entities that are directly affected by the rule are small, although we
do not have precise estimates of their numbers.

Estimated User Fee Collection and Federal Expenditures

Table 2 shows FY 2008 estimated user fee collections and
expenditures for the inspection of conveyances and air passengers
arriving from Canada. Expected AQI expenditures for the U.S./Canada
border set forth in this final rule differ from those presented in the
preliminary economic analysis for the interim rule. We projected
Federal expenditures for a single year for the interim rule that
totaled about $74.8 million, with about $68.5 million for additional
CBP staffing and direct support, and about $6.3 million for indirect
support (agency, departmental, and other administrative costs). In
Table 2, we explicitly acknowledge the complementary roles that CBP and
APHIS play in fulfilling the AQI mission at the U.S./Canada border by
estimating FY 2008 expenditures separately for the two agencies.
Broadly speaking, CBP is responsible for AQI inspection activities,
while APHIS is responsible for setting policy, providing training, and
establishing and collecting user fees to pay for the CBP inspections.
As shown in table 2, we estimated FY 2008 AQI user fee collection
to total about $89.3 million and Federal expenditures for the AQI
activities for conveyances and air passengers from Canada to total
about $98.7 million (about $78.6 million to fund the CBP program and
about $20.1 million to fund the APHIS program). The CBP expenditures
are based on the estimated volume of inbound border crossings from
Canada for the various modes of conveyance covered by the rule and for
airline passengers.\8\ Although our estimated figures show a deficit of
about $9.4 million, a reserve fund is maintained to carry on with AQI
activities in cases of bad debt, carrier insolvency, or fluctuations in
activity volumes.
---------------------------------------------------------------------------

\8\ CBP uses an Activity Based Costing (ABC) methodology,
whereby data are collected from various CBP sources and compiled for
a cost-of-operations perspective of the organization. ABC is a means
of operationally analyzing how an organization consumes its
resources (direct and indirect). The focus is on activities
performed within given processes.
---------------------------------------------------------------------------

APHIS performs a number of functions in support of AQI activities
at the U.S./Canada border that can be categorized within the following
areas: Port operations and policy, science and technical support,
training for CBP agriculture inspectors, import analysis and risk
management, pest and disease identification, and regulatory enforcement
and anti-smuggling programs. The overall cost for APHIS is composed of
expenditures on these various functions. Expenditures for both APHIS
and CBP also include administrative and other overhead costs.

Table 2--Estimated User Fee Collection and Federal Expenditures for the
U.S./Canada Border AQI Services, FY 2008 (Million Dollars)
------------------------------------------------------------------------

------------------------------------------------------------------------
AQI user fee collection......................................... $89.3
CBP expenditure................................................. 78.6
APHIS expenditure............................................... 20.1
-------
Total Federal expenditures.................................... 98.7
------------------------------------------------------------------------
Sources: APHIS-Financial Management Division, CBP-Budget Cost Management
Division, APHIS-PPQ and APHIS-Budget & Program Analysis.

Alternatives

Four possible alternatives to the interim rule were identified,
none of which would accomplish the objectives of the rule or minimize
effects for small entities.
One alternative would have been to make no changes to the current
regulations. However, inspections along the U.S./Canada border have
resulted in an increasing number of interceptions of prohibited
material that originated from countries other than Canada. The growth
in imports and in the number of air passengers arriving from Canada has
placed increased demands on CBP staff at U.S./Canada border ports and
airports. This rule is necessary in order to strengthen our AQI
activities and lessen the risk of introduction of plant and animal
pests and diseases. 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 the interim rule would have been to limit
our inspections to commercial conveyances and not include international
passengers entering the United States from Canada in the AQI inspection
program. However, results of AQI preclearance activities at Canadian
airports have demonstrated that air passengers from Canada represent an
important pest pathway. As stated in the full economic analysis, data
gathered at four airports (Calgary, Toronto, Vancouver, and
Montr[eacute]al) over a four-year period (FY 2001-FY 2004) showed that
over 6 percent of all U.S.-bound passengers (Canadian and non-Canadian
origin) carried prohibited agricultural products. Most of these
passengers were taking flights to States such as California, Florida,
Arizona, and Texas, where the prohibited products could place major
agricultural industries at

[[Page 10644]]

risk.\9\ Air passengers from all foreign countries, not just Canada,
are considered important pest pathways due to the fact they may travel
to multiple destinations in one trip and travel great distances over a
relatively short amount of time. Therefore, it is necessary for all air
passengers, including Canadian air passengers to be subject to AQI user
fees. In addition, in surveys and inspection blitzes conducted on
passenger baggage at destination airports in the United States,
significant amounts of prohibited agricultural materials were found,
such as tropical and exotic fruits and vegetables purchased at Canadian
markets, as well as prohibited animal products. 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 at Canadian airports, along with our conveyance inspection
activities, at the U.S/Canada border. We could not recover the costs of
passenger inspections if we did not charge passengers AQI user fees.
---------------------------------------------------------------------------

\9\ APHIS-PPQ, AQI Monitoring (AQIM) program. For the AQIM
program, CBP agricultural inspectors conduct random inspections
within each major pathway to assess their relative risk, and APHIS-
PPQ monitors the collected data. PPQ and CBP use the AQIM data to
evaluate the effectiveness of port-of-entry operations, set goals,
and compare performance after making operational changes. The AQIM
program was instituted to assist with the mandate of the Government
Performance and Results Act (GPRA) of 1993. Source: APHIS AQIM
Handbook.
---------------------------------------------------------------------------

A third alternative would have been to only charge AQI user fees
for inspections of commercial conveyances transporting agricultural
goods. This alternative would eliminate impacts on conveyances that do
not transport agricultural goods by eliminating the need for them to
pay user fees. However, animal and plant pests may be found on or in
conveyances even if they are not carrying agricultural products and
even if they are empty. For example, solid wood packing material,
estimated to be present in some 70 percent of all Canadian rail
containers, can be a pathway for the Asian and citrus longhorned
beetles, pine shoot beetle, emerald ash borer, and other pests. In
addition, restricted nonagricultural products, such as Italian tile
shipments that could be carrying hitchhiking snails, seat cushions
stuffed with restricted grasses, or wooden handicrafts that could be
harboring wood-boring insects pose a risk to American agriculture if
they enter the United States. Therefore, APHIS employees familiar with
the risks presented by the conveyances themselves and by containers
importing nonagricultural products determined that it is necessary for
all conveyances from Canada to be inspected. In order to recover the
costs of these inspections, AQI user fees would still be necessary,
except as otherwise noted.
A fourth alternative would have been to develop new user fees
specific to Canada that would be different from the user fees charged
to all other countries. However, we concluded that it was not a valid
alternative as our intention in the interim rule was to harmonize the
inspection requirements and the AQI user fees charged for conveyances
entering the United States from Canada with the inspections and AQI
user fees for conveyances entering the United States from all other
countries in the world. In addition, we have determined that charging
different user fees specific to Canada would result in potential delays
and increased expenses as a new collection system would have to be
developed and implemented to collect those fees.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule: (1) has no retroactive effect and (2) does
not require administrative proceedings before parties may file suit in
court challenging this rule.

Paperwork Reduction Act

This final 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 in 7 CFR Part 354

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

0
Accordingly, the interim rule amending 7 CFR parts 319 and 354 that was
published at 71 FR 50320 on August 25, 2006, is adopted as a final rule
with the following changes:

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

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1. 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
2. Section 354.3 is amended as follows:
0
a. In paragraph (a), by adding a definition for barge to read as set
forth below.
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b. In paragraph (b)(2)(iv), by removing the word ``bunkers'' and adding
the word ``fuel'' in its place.
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c. By adding new paragraphs (b)(2)(vi), (b)(2)(vii), and (d)(2)(i) to
read as set forth below.

Sec. 354.3 User fees for certain international services.

(a) * * *
Barge. A non-self-propelled commercial vessel that transports cargo
that is not contained in shipping containers. This does not include
integrated tug barge combinations.
* * * * *
(b) * * *
(2) * * *
(vi) Barges traveling solely between the United States and Canada
that do not carry cargo originating from countries other than the
United States or Canada and do not carry plants or plant products, or
animals or animal products, and that do not carry soil or quarry
products from areas in Canada listed in Sec. 319.77-3 of this chapter
as being infested with gypsy moth.
(vii) Vessels returning to the United States after traveling to
Canada solely to take on fuel.
* * * * *
(d) * * *
(2) * * *
(i) Any commercial railroad car that is part of a train whose
journey originates and terminates in Canada if--
(A) The commercial railroad car is part of the train when the train
departs Canada; and
(B) No passengers board or disembark from the commercial railroad
car, and no cargo is loaded or unloaded from the commercial railroad
car, while the train is within the United States.
* * * * *

Done in Washington, DC, this 3rd day of March 2010.
Edward Avalos,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2010-4949 Filed 3-8-10; 8:45 am]
BILLING CODE 3410-34-P