Harry S Truman Animal Import Center (HSTAIC); Exclusive Use

Federal RegisterMar 1, 1994

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DEPARTMENT OF AGRICULTURE

9 CFR Part 92

[Docket No. 91-165-2]

RIN 0579-AA56

Harry S Truman Animal Import Center (HSTAIC); Exclusive Use

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are amending the regulations governing the use of the Harry

S Truman Animal Import Center (HSTAIC): To require a $32,000 deposit in

the form of a certified check or money order, payable in U.S. funds,

for each application; to change the application and lottery dates; to

require the lottery winner to pay the costs of maintaining HSTAIC for

certain periods when it is reserved for the lottery winner and not

available to other importers; to state that we will not accept

applications from or enter into HSTAIC cooperative-service agreements

with persons with outstanding debts to the Animal and Plant Health

Inspection Service; and to discontinue the practice of ``tiering'' the

lottery that currently gives certain categories of animals priority to

use HSTAIC. These changes are necessary to discourage frivolous

applications, to help ensure that there is adequate time to assemble

necessary information prior to each lottery, and to minimize financial

losses incurred by the Animal and Plant Health Inspection Service.

EFFECTIVE DATE: This regulation is effective August 31, 1994. This rule

will first apply to the lottery to be held in 1994 for importations

during calendar year 1995, then to all subsequent lotteries.

FOR FURTHER INFORMATION CONTACT: Dr. David Vogt, Staff Veterinarian,

Import Export Animals Staff, National Center for Import-Export,

Veterinary Services, APHIS, USDA, room 767, Federal Building, 6505

Belcrest Road, Hyattsville, MD 20782, 301-436-8172.

SUPPLEMENTARY INFORMATION:

Background

The regulations in 9 CFR part 92, subparts D and E, govern the

importation of animals into the United States through the Harry S

Truman Animal Import Center (HSTAIC) in Fleming Key, Florida. Under the

regulations, the Animal and Plant Health Inspection Service (APHIS)

holds an annual lottery to allocate space in HSTAIC for each calendar

year. To participate in the lottery, prospective importers must submit

an application for each importation.

On July 14, 1993, we published in the Federal Register (58 FR

37878-37884, Docket No. 91-165-1) a proposal to amend the regulations:

(1) To require a $32,000 deposit in the form of a certified check or

money order, payable in U.S. funds, for each application; (2) to change

the application and lottery dates; (3) to require the lottery winner to

pay the costs of maintaining HSTAIC for certain periods when it is

reserved for the lottery winner and not available to other importers;

(4) to state that we will not accept applications from or enter into

HSTAIC cooperative-service agreements with persons with outstanding

debts to APHIS; and (5) to discontinue the practice of ``tiering'' the

lottery that currently gives certain categories of animals priority to

use HSTAIC. We proposed to apply the changes to the regulations first

to the lottery to be held in 1994 for importations during calendar year

1995.

We solicited comments concerning our proposal for a 60-day period

ending September 13, 1993. We received one comment by that date, from

an importer who expressed concerns regarding certain provisions of the

proposed rule. We carefully considered this comment and discuss it

below.

In our proposal, we proposed to require that applicants for the

HSTAIC lottery deposit with APHIS $32,000 in the form of a certified

check or money order payable in U.S. funds prior to the date of the

lottery. This provision was proposed as a replacement for the existing

requirement that an application for the lottery be accompanied by a

deposit in the form of a $50,000 irrevocable letter of credit. We

proposed the change to allow small businesses to compete more equitably

with large importers, who can more easily obtain multiple letters of

credit for multiple applications.

The commenter disagreed that the proposed change would benefit

small importers. According to the commenter, under the requirement for

a $50,000 letter of credit, a small importer would be most likely

either to utilize his or her credit line with a bank, or to post the

funds in a certificate of deposit and borrow against those funds for a

letter of credit. According to the commenter, if the latter option were

chosen, the applicant would pay the financial institution only the

difference between the rate of return on the certificate of deposit and

the lending rate. The commenter stated that the proposed change would

make it more difficult for a small importer to submit multiple

applications, by tying up the importer's funds with USDA for up to a

year with no interest, and removing those funds from the bank, thereby

reducing the importer's collateral.

We are making no changes based on the comment. While we agree that

a $32,000 deposit represents more of a financial commitment than a

$50,000 letter of credit, we disagree that the proposed change would be

less advantageous to small importers than are the existing regulations.

We continue to believe, as we stated in the proposal, that large

importers, because of their stronger credit and deposit relationship

with banks, can obtain letters of credit significantly more easily than

can small importers. Our experience with the HSTAIC lottery has been

that a number of these multiple applications have been frivolous, with

the applicants having no intention of using their ``winning'' slots in

the lottery to import animals. We expect that requiring a $32,000

deposit in the form of a check or money order will reduce the number of

multiple applications received and will minimize frivolous

applications.

Although we expect significantly fewer applications under the new

regulations, we anticipate that the applications that are received will

in most cases be from applicants actually intending to import animals

through HSTAIC. With fewer applicants in the lottery, and with those

that are chosen serious about importing animals, applicants will have a

better idea than at present what their chances are of importing animals

through HSTAIC in a given year. This will enable the applicants to

decide whether it is worthwhile to leave their deposit with APHIS after

the lottery results are announced. Those that have little chance of

importing animals could choose to withdraw their money shortly after

the lottery.

The commenter also expressed concern that the proposed requirement

that the lottery winner pay the costs of maintaining HSTAIC for certain

periods when it is reserved for the lottery winner and not available to

other importers would put the winner of the lottery at a disadvantage

compared to the applicants drawn later in the lottery. Under the

provisions of the proposal, we would draw upon the $32,000 deposit of

the winner of the lottery from the day the winner receives a

cooperative-service agreement for the use of HSTAIC from us, and we

would continue drawing on it either until we receive a signed

cooperative-service agreement from the applicant or until the applicant

provides written notification to us that he or she does not intend to

sign the cooperative-service agreement, up to a maximum of 30 days.

The commenter stated that this provision would require the winner

of the lottery to rush to put his or her import together, while the

third or fourth applicants chosen would have extra time while we

negotiate with the applicants chosen earlier in the lottery. According

to the commenter, it is impossible for any importer to determine the

feasibility of a high security animal import in less than 30 days.

We are making no changes based on this comment. The very purpose of

the proposed change was to discourage applicants who are not seriously

considering importing animals through HSTAIC, and therefore to minimize

unnecessary ``downtime'' at HSTAIC. We believe that applicants

seriously interested in importing animals through HSTAIC should already

have closely examined the feasibility of a particular importation

before submitting an application. Further, once the cooperative-service

agreement is signed, the importer has 42 days to complete arrangements

with responsible officials in the country from which the animals are to

be exported. We consider this a reasonable period of time to make such

arrangements.

Therefore, based on the rationale set forth in the proposed rule

and in this document, we are adopting the provisions of the proposal as

a final rule with only minor nonsubstantive changes.

Executive Order 12866 and Regulatory Flexibility Act

We are issuing this rule in conformance with Executive Order 12866.

Based on information compiled by the Department, we have determined

that this rule: (1) Will have an effect on the economy of less than

$100 million; (2) will not adversely affect in a material way the

economy, a sector of the economy, productivity, competition, jobs, the

environment, public health or safety, or State, local, or tribal

governments or communities; (3) will not create a serious inconsistency

or otherwise interfere with an action taken or planned by another

agency; (4) will not alter the budgetary impact of entitlements,

grants, user fees, or loan programs or rights and obligations of

recipients thereof; and (5) will not raise novel legal or policy issues

arising out of legal mandates, the President's priorities, or

principles set forth in Executive Order 12866.

In the past we have received approximately 230 applications to use

HSTAIC during a particular calendar year. However, many of these

applications were duplicative. Therefore, when the provisions in this

rule become effective, we expect that number to drop significantly.

Although we cannot determine precisely how many importers will submit

applications, based on past experience we believe only approximately 5

percent will be small entities.

We expect that requiring a deposit of $32,000 in the form of a

certified check or money order with each application will reduce the

number of multiple applications by large importers and discourage

applications from importers who are not sure whether they will use

HSTAIC. We expect this final rule to have the ultimate effect of

increasing the possibility that small entities will use HSTAIC.

The regulations prior to the effective date of this rule require

that applicants for the importation of certain animals through HSTAIC

deposit an irrevocable letter of credit for $50,000. Requiring a

deposit in the form of a certified check or money order will have an

impact on potential importers, in that earnings will be foregone on the

deposit while it is held by APHIS. Under this rule, the deposit will

have to be ``received by APHIS at least 7 calendar days prior to the

date of the lottery.'' Prospective importers can minimize the time

their money is on deposit by submitting their deposit as close to this

deadline as possible. We have calculated that, based on a rate of

return of from 5-7 percent, the interest foregone on a deposit will be

approximately $4.10 to $6.15 per day. The minimum amount of time

applicants will forego interest will be for the week before the lottery

and for at least one week following the lottery until notification of

the lottery results. Therefore, all applicants will forego

approximately $61.60 to $86.10 in interest. This compares with an

average cost to import one animal through HSTAIC of $3,747.

Of the parties that will submit applications for importations

through HSTAIC in 1995, most of whom will probably not be small

entities, we expect that only approximately 5 will be picked high

enough in the lottery to provide them a reasonable chance of bringing

animals through HSTAIC. If these applicants choose to stay on the

lottery list, they will lose interest for each day they remain on the

list until their deposit is applied toward an importation, or until

they choose to remove their name from the list. How long they remain on

the list will be their decision, and we are unable to calculate at this

time the interest they will forego.

Changing application and lottery dates will impose no financial

burden on prospective importers. The current regulations require that

importers wishing to import in the next calendar year submit their

application no earlier than September 1 and no later than September 15

for the lottery held during the first seven days of October of the

current calendar year. Shifting these dates to October and December,

respectively, would likely shorten the waiting period between

application and actual import dates.

Requiring the lottery winner to pay the costs of maintaining HSTAIC

for periods when it is maintained in readiness for that importer, and

not available to other importers, will shift the burden of operating

costs from APHIS, and ultimately the taxpayer, to persons offered the

right to use HSTAIC. According to the regulations prior to the

effective date of this rule, a lottery winner has 30 days from the date

of the receipt of the cooperative-service agreement to either accept or

reject the cooperative-service agreement regarding the importation of

animals. During that time, the facility is reserved, and APHIS prepares

and maintains it in readiness for that importer's animals. Charging the

importer for this time, on a daily basis, will increase the importer's

costs by approximately $1,067 per day, up to a maximum of $32,000. This

compares with an average total cost for an importation through HSTAIC

of $857,000. The length of time that expires before the cooperative-

service agreement is accepted or rejected will be up to the lottery

winner.

Under this rule, APHIS will not accept applications from, or enter

into HSTAIC cooperative-service agreements with, entities with

outstanding debts to APHIS. If a prospective applicant has not paid

outstanding debts, they will not be allowed to use HSTAIC. However,

this provision will not necessarily impose a financial burden on

prospective applicants because the decision whether to pay off debts

will be entirely the prospective applicant's.

We are also eliminating the practice of giving certain types of

animals, and animals from certain locations, priority in the lottery.

This amendment, which will simplify the drawing for the lottery, will

not affect a substantial number of importers. In the past we have

received approximately 230 applications to use HSTAIC during a

particular year. As stated above, we expect fewer applicants when this

rule takes effect. Of the total number of applicants, only two to three

will actually be able to use HSTAIC in any given year. Additionally, as

we stated above, we expect the great majority of applicants to be other

than small entities, so the chances are small that each of the two or

three importers using HSTAIC will be small entities.

Under these circumstances, the Administrator of the Animal and

Plant Health Inspection Service has determined that this rule will not

have a significant economic impact on a substantial number of small

entities.

Executive Order 12778

This rule has been reviewed under Executive Order 12778, Civil

Justice Reform. This rule: (1) Preempts all State and local laws and

regulations that are inconsistent with this rule; (2) has no

retroactive effect; and (3) does not require administrative proceedings

before parties may file suit in court challenging this rule.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.

3501 et seq.), the information collection or recordkeeping requirements

included in this rule will be submitted for approval to the Office of

Management and Budget.

List of Subjects in 9 CFR Part 92

Animal diseases, Imports, Livestock, Poultry and poultry products,

Quarantine, Reporting and recordkeeping requirements.

Accordingly, 9 CFR part 92 is amended as follows:

PART 92--IMPORTATION OF CERTAIN ANIMALS AND POULTRY AND CERTAIN

ANIMAL AND POULTRY PRODUCTS; INSPECTION AND OTHER REQUIREMENTS FOR

CERTAIN MEANS OF CONVEYANCE AND SHIPPING CONTAINERS THEREON

1. The authority citation for part 92 continues to read as follows:

Authority: 7 U.S.C. 1622; 19 U.S.C. 1306; 21 U.S.C. 102-105,

111, 114a, 134a, 134b, 134c, 134d, 134f, 135, 136 and 136a; 31

U.S.C. 9701; 7 CFR 2.17, 2.51, and 371.2(d).

Sec. 92.430 [Amended]

2. Section 92.430 is amended as follows:

a. Paragraph (a) is amended by adding, immediately after the first

sentence, ``Applications for the HSTAIC lottery will not be accepted

from, and a cooperative-service agreement to use HSTAIC will not be

offered to or entered into with, any person who has debts owing to

APHIS that have not been paid by the date specified in APHIS's original

billing notification to the person. Any person who has debts owing to

APHIS that have not been paid by the date specified in APHIS's original

billing notification to that person will be removed from the current

priority list.''

b. Paragraph (a) is amended by adding, immediately after the fourth

sentence, ``The animal qualification process begins on the date the

cooperative-service agreement is delivered to the address listed on the

importer's HSTAIC application, for the importer's signature, if HSTAIC

is not available to other importers, up to a maximum of 30 days. A

cooperative-service agreement will be deemed to have been delivered

when the importer signs the U.S. Postal Service domestic return

receipt, or the importer refuses delivery of the cooperative-service

agreement by the U.S. Postal Service, or the cooperative-service

agreement is returned by the U.S. Postal Service as either unclaimed or

undeliverable.''

c. Paragraph (b)(1)(ii) is revised to read as set forth below.

d. Paragraph (b)(2)(i) is amended by removing ``October'' both

times it appears, and by adding ``December'' in its place; and by

removing ``September'' where it appears in the second sentence, and

adding ``October'' in its place.

e. In paragraph (b)(2)(i), footnote 12 is amended by removing

``October'' and adding ``December'' in its place.

f. Paragraph (b)(2)(ii) is amended by removing the last sentence

and adding in its place ``Deposits required by paragraph (b)(1)(ii) of

this section must be received by APHIS at least 7 calendar days prior

to the date of the lottery.''

g. Paragraph (b)(3)(i) is removed.

h. Paragraph (b)(3)(ii) is redesignated as paragraph (b)(3) and is

revised to read as set forth below.

i. Paragraph (b)(4) is amended by revising the first sentence to

read as set forth below; removing ``October'' in the fifth sentence and

adding ``December'' in its place; and removing ``September'' where it

appears in the fifth and sixth sentences, and adding ``October'' in its

place.

j. Paragraph (b)(5) is amended by removing ``October'' both times

it appears and adding ``December'' in its place; and by removing

``September'' both times it appears and adding ``October'' in its

place.

k. In paragraph (b)(6), the second sentence is amended by removing

``, in lieu of an irrevocable letter of credit,''; and by removing

``$50,000'' and adding ``$32,000 by certified check or money order,

payable in U.S. funds'' in its place.

l. In paragraph (b)(6), footnote 13 is amended by removing

``September'' and adding ``October'' in its place.

m. In paragraph (c) introductory text, the third and fourth

sentences are revised to read as set forth below, and the fifth

sentence is removed.

n. In paragraph (c)(1), the second sentence is amended by adding

``any portion of'' immediately before ``the importer's deposit'' and by

adding ``that has not been expended'' immediately before the period.

o. In paragraph (c)(3), the second sentence is amended by adding

``expenses for preparing and maintaining HSTAIC in readiness for the

importation;'' immediately after ``must assume responsibility

includes:''.

p. In paragraph (d), sample cooperative-service agreement, under

``The importer agrees:'', paragraph 2 is revised to read as set forth

below.

q. In paragraph (d), sample cooperative-service agreement, under

``The importer agrees:'', paragraph 3 is removed, and paragraphs 4

through 13 are redesignated as paragraphs 3 through 12, respectively.

r. In paragraph (d), sample cooperative-service agreement, under

``The importer agrees:'', redesignated paragraph 4, the first sentence

is amended by adding ``preparing and maintaining HSTAIC in readiness

for the importation, and to'' immediately after ``all costs (except

capital expenditures at HSTAIC) attributable to''.

s. In paragraph (d), sample cooperative-service agreement, under

``The importer agrees:'', redesignated paragraph 12 is revised to read

as set forth below.

Sec. 92.430 Importation of ruminants through the Harry S Truman

Animal Import Center (HSTAIC).

* * * * *

(b) * * *

(1) * * *

(ii) Each applicant for the importation of animals through HSTAIC

must make a deposit of $32,000 in the form of a certified check or

money order, payable in U.S. funds. The deposit of each applicant who

is not given the opportunity to use HSTAIC will be returned to the

applicant at the end of the calendar year of the prospective

importation, or whenever the applicant removes his or her name from the

priority list described in paragraph (b)(4) of this section. The Animal

and Plant Health Inspection Service will draw on the deposit of the

applicant whose application is selected, to pay for the costs of

preparing and maintaining HSTAIC in readiness for the applicant's

animals. A charge of $1,067 will be made for each day that HSTAIC is

not available to another importer, starting on the date the

cooperative-service agreement is delivered to the address listed on the

importer's HSTAIC application, and ending either with the day that

APHIS receives the signed cooperative-service agreement or the day the

applicant notifies APHIS in writing that he or she does not intend to

sign the cooperative-service agreement, up to a maximum of 30 days. A

cooperative-service agreement will be deemed to have been delivered

when the importer signs the U.S. Postal Service domestic return

receipt, or refuses delivery of the cooperative-service agreement by

the U.S. Postal Service, or the cooperative-service agreement is

returned by the U.S. Postal Service as either unclaimed or

undeliverable.

* * * * *

(3) The priority list established by the annual December lottery

will remain effective from January 1 through December 31 of the next

calendar year, superseding all previous lists. Which year's list is

used is governed by the date exclusive use of HSTAIC is offered and not

by the date the applicant's animals are scheduled to arrive at HSTAIC.

(4) The names of all applicants whose applications have reached the

Import-Export Animals Staff, Veterinary Services, no earlier than

October 1 and no later than October 15 (see paragraphs (b)(1) and (2)

of this section), and whose deposits have reached APHIS at least 7

calendar days prior to the date of the lottery, will be drawn during

the December lottery. * * *

* * * * *

a certified check or money order, or an irrevocable letter of credit

(the letter of credit having an effective date 90 days after the

animals' scheduled release date from HSTAIC), payable in U.S. funds,

for the amount specified in the cooperative-service agreement. Any

funds remaining from the $32,000 deposit will be applied to the

quarantine costs, and will be deducted from the balance due with the

cooperative-service agreement. * * *

* * * * *

(d) * * *

The importer agrees:

* * * * *

2. To remit with the cooperative-service agreement a certified

check, money order, or irrevocable letter of credit having an

effective date that extends 90 days beyond the animals' scheduled

release from HSTAIC, payable in U.S. funds to the United States

Department of Agriculture, Animal and Plant Health Inspection

Service, in the amount of $____________. (This amount represents the

estimated cost (except capital expenditures at HSTAIC) of qualifying

the animals for importation through HSTAIC, less any unused portion

of the $32,000 deposited in conjunction with the application for the

exclusive right to use HSTAIC.

* * * * *

12. To pay, upon receipt, post-quarantine billings incurred

during this importation, for costs exceeding the amount remitted

with this cooperative-service agreement plus the initial $32,000

deposit.

* * * * *

Sec. 92.522 [Amended]

3. Section 92.522 is amended as follows: