Solid Wood Packing Material From China

SUMMARY: We are amending the regulations for importing logs, lumber,

and other unmanufactured wood articles by adding treatment and

documentation requirements for solid wood packing material imported

from China. This change means that wooden pallets, crating, dunnage,

and other wooden packing material imported into the United States from

China will have to be heat treated, fumigated, or treated with

preservatives prior to departure from China. This action will affect

anyone who uses solid wood packing material in connection with

exporting commodities from China to the United States. This action is

necessary to control the risk that solid wood packing material from

China could introduce dangerous plant pests, including forest pests,

into the United States, a risk demonstrated by many recent incidents

where exotic pests were detected in solid wood packing material from

China.

DATES: Interim rule effective December 17, 1998. Consideration will be

given only to comments received on or before November 17, 1998. We also

will consider comments made at three public hearings scheduled to be

held during the public comment period in Washington, DC, on October 16,

1998, and in Seattle, WA, and Los Angeles, CA, on dates to be

announced.

ADDRESSES: Please send an original and three copies of your comments to

Docket No. 98-087-1, Regulatory Analysis and Development, PPD, APHIS,

suite 3C03, 4700 River Road Unit, 118, Riverdale, MD 20737-1238. Please

state that your comments refer to Docket No. 98-087-1. Comments

received may be inspected at USDA, room 1141, South Building, 14th

Street and Independence Avenue SW., Washington, DC, between 8 a.m. and

4:30 p.m., Monday through Friday, except holidays. Persons wishing to

inspect comments are requested to call ahead on (202) 690-2817 to

facilitate entry into the comment reading room.

The Washington, DC, public hearing will be held on October 16,

1998, at the Jefferson Auditorium, U.S. Department of Agriculture,

South Building, 14th Street and Independence Avenue SW., Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Mr. Ronald Campbell, Import

Specialist, Phytosanitary Issues Management Team, PPQ, APHIS, 4700

River Road, Unit 140, Riverdale, MD 20737-1236, (301) 734-6799.

SUPPLEMENTARY INFORMATION:

Background

Logs, lumber, and other unmanufactured wood articles imported into

the United States could pose a significant hazard of introducing plant

pests detrimental to agriculture and to natural, cultivated, and urban

forest resources. The regulations in 7 CFR 319.40-1 through 319.40-11

(referred to below as the regulations) are intended to mitigate the

plant pest risk presented by the importation of logs, lumber, and other

unmanufactured wood articles.

One of the classes of wood articles that is subject to import

restrictions is solid wood packing material (SWPM). The regulations

define SWPM in Sec. 319.40-1 as ``Wood packing materials other than

loose wood packing materials, used or for use with cargo to prevent

damage, including, but not limited to, dunnage, crating, pallets,

packing blocks, drums, cases, and skids.'' Most of the wooden pallets,

crates, dunnage and similar articles used to assist the movement of

commodities in international commerce meet the definition of SWPM and

are subject to the regulations. However, it is important to note that

more and more synthetic or highly processed wood materials are being

used as packing material, and these articles (e.g., plywood, oriented

strand board, corrugated paperboard, plastic, resin composites) are not

subject to the requirements for SWPM.

The importation of SWPM is regulated because this material presents

a number of plant pest risks. SWPM is often constructed from raw wood

just shortly before it is used, often includes bark on some surfaces,

and is often made from low quality wood that sometimes may be of low

quality due to pest damage. These factors all mean that SWPM presents a

high risk of spreading wood pests that exist in the areas where the

SWPM was constructed. Additionally, the SWPM in transit is in close

contact with the commodities (including wood products) it is used to

pack, with an excellent opportunity for pests to move from SWPM to

commodities. After commodities arrive in the United States, pests from

the SWPM have many opportunities to escape and become established,

especially since the SWPM associated with commodities often moves long

distances throughout the United States, is reused frequently, and is

often stored outdoors at ports and warehouses when not in use.

To control these risks, Sec. 319.40-3 of the regulations imposes

certain requirements on imported SWPM. If the SWPM is not free of bark,

it must be heat treated, fumigated, or treated with preservatives in

accordance with the regulations prior to arrival. Even if the SWPM is

free of bark, the SWPM must be heat treated, fumigated, or treated with

preservatives in accordance with the regulations prior to arrival if it

is used to pack regulated wood commodities in transit. However, SWPM

used to move regulated wood commodities need not be heat treated,

fumigated, or treated with preservatives if the SWPM meets all the

importation and entry conditions required for the regulated wood

commodities the SWPM is used to move.

The least restrictive requirement for importing SWPM occurs when

the SWPM is used to move nonregulated articles (articles that are not

wood, or that are highly processed wood excluded from regulation). When

SWPM is used to move nonregulated articles, the SWPM must be totally

free from bark and apparently free from live plant pests. It need not

be heat treated, fumigated, or treated with preservatives.

The Animal and Plant Health Inspection Service (APHIS) inspects and

monitors shipments of imported wood at the port of first arrival to

ensure that articles are imported in compliance with the regulations.

Inspectors have documented instances where imported SWPM was not in

compliance with the regulations. The single largest source of SWPM not

in compliance with the regulations has been commercial shipments from

China. (China means the People's Republic of China, including the Hong

Kong Special Administrative Region.) During the period from August 23,

1995 (when the regulations went into effect), until March 15, 1998,

inspectors reported 132 shipments containing SWPM from China that were

infested with exotic plant pests. In each of these reported instances,

the shipment was treated, reexported, or destroyed. There were also

many additional reports of pallets, crating and other SWPM that had

bark

[[Page 50101]]

on the surface and thus were not in compliance with the regulations.

These reports indicate that a very large problem exists with SWPM

imported from China. APHIS inspects a percentage of shipments arriving

from China if the shipments are not regulated wood products. However,

virtually all of these shipments have SWPM as packing materials. Some

of the cargo in which APHIS has found exotic plant pests in the

accompanying SWPM include cable wire, granite, marble tiles, pipe

flanges, machinery, and tools.

APHIS has recently found numerous exotic plant pests associated

with SWPM imported from China, including extremely destructive wood-

boring insects of the genera Anoplophora, Ceresium, Hesperophanes, and

Monochamus. Pests of these genera have moved with the SWPM that carries

them to numerous States, including California, Florida, Illinois,

Indiana, Michigan, New Jersey, New York, North Carolina, Tennessee,

Texas, Washington, and Wisconsin. By the end of fiscal year 1998,

approximately $5 million will have been spent in ongoing efforts to

eradicate these outbreaks in the States of New York and Illinois. In

each of the other States listed, the pests were intercepted and

destroyed before becoming established.

An infestation of one particularly destructive exotic pest of

maple, poplar, and other hardwood trees, the Asian longhorned beetle

(Anoplophora glabripennis), was discovered near a maritime facility in

Brooklyn, NY, in August 1996. State and Federal authorities have since

uprooted, chipped, and burned thousands of trees on public and private

land to control the infestation. An outbreak of the same pest was

reported in Ravenswood, IL, and surrounding areas in July 1998. Control

efforts in both areas continue. Even though the Asian longhorned beetle

was likely established in these areas prior to implementation of our

current regulations governing SWPM, the Asian longhorned beetle

continues to be intercepted on shipments associated with SWPM from

China.

The damage and losses that would occur if additional plant pests

associated with SWPM from China should become established and spread in

the United States would be substantial. For example, many species of

hardwood trees would be destroyed, severely harming industries that

depend on the wood and other products of these trees (e.g., maple

syrup, maple sugar, fruit). Hardwood lumber industries would face

critical supply shortages and would be forced to try to meet their

needs with imported hardwoods. Mature ornamental trees would be

attacked, and domestic supplies of trees for nursery and landscaping

companies would be reduced or eliminated. Widespread destruction of

hardwood trees in public and private forest land would occur, causing

enormous direct losses in tourism and related industries and enormous

losses that cannot be easily measured to the aesthetics of our

woodlands.

APHIS, Plant Protection and Quarantine, recently completed a plant

pest risk assessment that focuses on four taxa intercepted on SWPM from

China. The assessment provides scientific references and details on the

biology of Ceresium spp., Monochamus spp., Hesperophanes spp., and the

Asian longhorned beetle (Anoplophora glabripennis), as well as

qualitative characterizations of the biological consequences and

likelihood of introduction. The assessment is consistent with

guidelines for conducting plant pest risk analyses provided by the

International Plant Protection Convention (IPPC) of the United Nations

Food and Agriculture Organization (FAO) and the North American Plant

Protection Organization (NAPPO). The assessment concluded that each of

these taxa constitutes a significant and immediate threat to the United

States. In addition, APHIS has conducted an environmental assessment of

the impacts of the interim rule. Copies of both of these documents are

available from the office identified above under FOR FURTHER

INFORMATION CONTACT.

The United States Department of Agriculture has tried to convince

the national government of China and individual exporters of Chinese

goods to take steps to control the problems caused by exotic plant

pests in SWPM from China. The compliance of Chinese shipments with the

current regulatory requirements for SWPM continues to be very poor,

with many shipments arriving with bark and obvious signs of live pests

on SWPM.

To control this serious problem, APHIS is initiating additional

treatment and certification requirements for SWPM from China. These

imports represent the largest identifiable source of the introductions

discussed above. Additionally, APHIS will continue to evaluate the

problem of SWPM imports in general. We are currently preparing an

advance notice of proposed rulemaking to seek information and develop

regulatory options on the general problem of imported SWPM from all

countries and the particular problem of how to respond to the scheduled

discontinued use, both domestically and overseas, of methyl bromide

fumigation for imported wood products, in accordance with the Clean Air

Act's and Montreal Protocol's phase-out schedules. Because there are

multiple risks to U.S. resources from exotic wood-boring insects

associated with SWPM of other origins, and because of the potential for

adverse environmental effects from the use of methyl bromide and other

pesticides as a result of this rule, APHIS considers this interim rule

to be the first step towards better exclusion of pest risks from SWPM.

APHIS will initiate an interagency review in order to develop an

advance notice of proposed rulemaking that will identify various

options for amending existing regulations for importing SWPM from all

foreign countries to further improve exclusion procedures and protect

forest resources, while at the same time minimizing the further use of

methyl bromide in order to protect the stratospheric ozone layer. APHIS

intends to implement this interim rule until APHIS has completed the

rulemaking process described above for improved measures for mitigating

the pest risk of SWPM from all sources. During the period this interim

rule is in effect, APHIS will work with China to obtain information on

actions China has taken to comply with the interim rule, including the

use of methyl bromide and other pesticides. If the amount of methyl

bromide used in China is greater than expected, or if the interim rule

remains in effect longer than 2 years, additional environmental

analysis may be necessary. We will consider comments received on the

advance notice of proposed rulemaking, as well as on this interim rule,

in developing any proposed or final rule changing the requirements for

importing SWPM.

Hong Kong Special Administrative Region

This interim rule is intended to address the problem of serious

plant pests, such as Asian longhorned beetle, being introduced into the

United States on SWPM imported from the mainland of China. Due to the

close and unique economic connections between the Hong Kong Special

Administrative Region and the mainland of China, and the fact that

about half of the mainland's exports to the United States come through

Hong Kong, it is necessary to include the Hong Kong Special

Administrative Region in this interim rule in some form to effectively

address the problem. This interim rule is intended to require

certification of all SWPM originating on the mainland of China as

having been treated. In view of

[[Page 50102]]

the separate customs territory status and separate quarantine and

inspection regime maintained by the Hong Kong Special Administrative

Region with regard to the mainland of China, and in view of the fact

that a large amount of goods not originating on the mainland of China

or in the Hong Kong Special Administrative Region pass through the Hong

Kong Special Administrative Region on the way to the United States, we

are considering changes to the interim rule in order to avoid

unnecessary effect on Hong Kong's trade with the United States and

other parts of the world while preventing further introductions of

serious plant pests from Hong Kong or the mainland of China.

New Regulatory Requirements for SWPM From China

We are amending the regulations to require that SWPM imported into

the United States from China be heat treated, fumigated, or treated

with preservatives prior to departure from China. We will also require

that each shipment from China that contains SWPM must be accompanied by

a certificate, issued by the national government of China, stating that

the SWPM was heat treated, fumigated, or treated with preservatives

prior to departure from China. Shipments from China that do not employ

SWPM must be accompanied by an exporter statement stating that the

shipment contains no SWPM. An exporter statement is not a government-

issued document but rather is a written declaration by the exporter,

such as an exporter statement on or attached to the commercial invoice,

and as an attachment to the bill of lading, stating the nature of the

shipment and that it does not contain any SWPM. A definition of

exporter statement is added to the definitions in Sec. 319.40-1.

Because the certificate requirement may slow clearance of shipments

at U.S. ports while inspectors match certificates with the associated

SWPM, we are also providing exporters of SWPM from China with the

option of having each article of SWPM that has been treated, marked at

the treatment facility with a stamp or weatherproof label that reads

``CHINA TREATED.'' This marking, while not required, may help to

expedite release of shipments at the port of first arrival. This type

of marking, however, is not a substitute for the required certificate.

Heat treatment, fumigation, or treatment with preservatives may be

performed in accordance with the treatment schedules authorized for

SWPM in the regulations or in the PPQ Treatment Manual, which is

incorporated by reference at 7 CFR 300.1 of this chapter. It is

anticipated that most treatments conducted to meet the regulatory

requirements will employ methyl bromide fumigation, although some other

fumigants such as phosphene, or a number of preservatives, may be

employed. Preservatives in common use include arsenic, copper sulfate,

creosote, and copper-8-quinolinate.

We are not establishing a time limit for treatment of SWPM; i.e.,

SWPM will not be required to be treated within a certain number of days

prior to embarking for the United States. Such a requirement would make

it far more difficult for exporters to schedule treatment of SWPM and

conduct treatments in large, cost-effective batches. A time limit on

treatment of SWPM would likely encourage a higher level of

noncompliance by exporters, which would result in an increased risk

level. However, to guard against reinfestation during the entire

interval between treatment and export, the SWPM must be stored,

handled, or safeguarded in a manner which excludes any infestation of

it by plant pests.

If a shipment containing SWPM from China arrives at a port in the

United States and the SWPM is found to contain plant pests, or the SWPM

has not been heat treated, fumigated, or treated with preservatives, or

there is no accompanying certificate documenting such treatment, an

APHIS inspector may deny entry to the entire lot or shipment (cargo and

SWPM). Alternatively, the inspector will allow the importer to separate

the cargo from the SWPM, at a location and within a time period

specified by the inspector, and destroy or reexport the SWPM, if the

inspector determines that this can be done without risk of spreading

plant pests. This may only be done in cases where there is a secure

facility for separation of the cargo, available means to destroy the

SWPM (incineration, or chipping and incineration, are the authorized

methods), and available APHIS inspectors to supervise the process. The

importer will be responsible for all expenses associated with this

process.

Alternatives Considered

APHIS considered several alternatives in an effort to achieve the

necessary control over the pest problems associated with SWPM from

China while imposing the minimum necessary adverse impacts on persons

who will be affected by this rule. We attempted to set requirements

that allowed exporters and importers to mitigate the risks associated

with SWPM from China in a variety of ways--by using alternative non-

regulated packing material, or by using one of several treatment

options for the packing material, or by purchasing pre-treated packing

material that is available from many sources--that would allow them to

make sound business decisions on the best way their particular

enterprise could comply with our regulatory requirements.

The major alternatives we considered for this rule were: (1)

Prohibiting the entry of SWPM from China; (2) requiring treatment and

certification abroad of SWPM from China; (3) treatment either abroad or

in the United States; and (4) taking no action (continuing the existing

permitting process for SWPM).

The first alternative we considered to this rule was a total ban on

importing SWPM from China. In terms of managing pest risks, a total ban

on SWPM from China was the most effective, enforceable, and simple

alternative. It was also consistent with APHIS' actions in the past,

where we implemented import bans on a product from a country when the

association of plant pests with the product was well established and it

was not practical to enforce treatment for the pests. In this case, the

association of dangerous exotic plant pests with SWPM from China is

well established, and, while treatments for those plant pests are

available, constant enforcement may not be practical. A huge volume of

cargo with SWPM arrives daily in the United States from China. Checking

at ports to confirm that arriving SWPM has been treated, and has

certificates issued by the national government of China confirming

treatment, will require substantial additional APHIS resources at

ports. Additional resources will also be needed to deal with shipments

that arrive without certification or with untreated SWPM.

Although a ban on SWPM from China would be the most effective and

practical means of controlling the pest risk, it would have an adverse

impact on trade with China and on those sectors of the U.S. economy

that rely on Chinese imports. These effects are discussed below under

``Executive Order 12866 and Regulatory Flexibility Act.'' A ban would

affect a large fraction of the more than one million shipments imported

into the United States from China each year, valued at over $72 billion

in 1997. The primary effects of a ban would be to delay delivery of

shipments while exporters arrange to use alternative materials other

than SWPM, and to increase the cost of each shipment for which more

expensive packing materials are substituted for SWPM.

[[Page 50103]]

The second alternative APHIS considered was to allow SWPM from

China to enter the United States if treated prior to departure from

China and accompanied by certification of treatment. APHIS believes

that effective implementation of this option will minimize trade

disruption and other adverse impacts while managing pest risks. The

costs associated with this alternative are also discussed below under

``Executive Order 12866 and Regulatory Flexibility Act,'' and include

primarily costs of treating SWPM.

The third alternative APHIS considered was to inspect SWPM from

China at the port of arrival in the United States, and to order

treatment if necessary after arrival in the United States. Under this

alternative, exporters could also have treated their SWPM prior to

departure from China if they expected treatment would be necessary.

This alternative could have allowed some shipments to be cleared by

inspection upon arrival, with no need for treatment. Although this

option would provide less of a trade disruption than the previous

alternatives, we believe that it would increase pest risks to an

unacceptable level. This alternative probably would not induce most

exporters to treat SWPM from China prior to departure and would,

instead, result in a vastly increased demand for treatment, especially

methyl bromide fumigation, at ports of arrival in the United States.

Treatment upon arrival would be very labor intensive, would also have

adverse consequences on the efficiency of port operations, would have

severe budget implications for APHIS, and would not be consistent with

our policy for regulating SWPM from all other parts of the world, which

is, essentially, that the SWPM must be rendered safe prior to arrival.

The option of treating the SWPM in the United States carries with it

the risk that pests associated with untreated SWPM arriving from China

could escape prior to treatment and become established in the United

States. It should also be noted that many articles in commerce have

components (e.g., soft rubber) that can be damaged by methyl bromide

fumigation, and that it makes more sense to treat SWPM used with these

articles separately, before they are packed for export.

For the reasons discussed above, this interim rule does not allow

treatment of SWPM from China after arrival in the United States.

However, if SWPM arrives untreated or without certification, this rule

provides that an inspector will allow the importer to separate the

cargo from the SWPM and destroy or reexport the SWPM, if the inspector

determines this can be done without risk of spreading plant pests. This

alternative to denying entry to the entire shipment will only be an

option where there is a secure facility for separation of the cargo,

available means to destroy the SWPM (incineration, or chipping and

incineration, are the authorized methods), and available APHIS

inspectors to supervise the process.

The final alternative we considered was to take no action, rely on

the existing import requirements, and allow the United States and China

to continue to work on a bilateral basis to develop cooperative

solutions to mitigate the risks associated with importing SWPM from

China. This alternative could include efforts to encourage importers

and exporters in both countries to develop strategies to reduce risk.

However, efforts to date in this area resulted in little cooperation

from China, and it does not appear likely this alternative would solve

the immediate risk facing the United States.

APHIS has decided to implement the requirements of this rule

instead, allowing SWPM from China to enter the United States if treated

prior to departure from China and accompanied by certification of

treatment. We believe it is possible to reassign the necessary

resources to U.S. ports to implement the requirements imposed by this

rule. However, we will closely monitor the effectiveness of these

procedures in reducing pest introductions, and, if they do not succeed,

we will take further action to ensure that the importation of SWPM does

not endanger our forest and agricultural resources.

Effects of This Rule on Federal Agency Operations and Resource

Requirements

Both APHIS and the United States Customs Service will need to make

substantial adjustments to their activities to implement this interim

rule. These two agencies already work in cooperation at U.S. ports to

clear shipments from China for entry. This rule will require new

documentation that will have to be examined as appropriate at the time

of entry, and will require selective additional inspections by both

APHIS and U.S. Customs Service inspectors to verify that shipments

comply with the regulations. Additionally, the exporter statement

required for shipments from China not containing SWPM is a type of

document that has not been programmed to be included in the Automated

Broker Interface (ABI) of Customs Automated Commercial System (ACS).

APHIS expects to reassign inspectors from other areas to the ports

that receive the bulk of imports from China to perform the additional

inspections and other procedures required by this rule (e.g., checking

whether cargo accompanied by an exporter statement truly contains no

SWPM, supervising destruction or reexport of SWPM when it is required).

It will probably be necessary to hire additional staff as well. The

cost of reassigning this staff, hiring any additional staff, training

them in the new procedures, and related costs is roughly estimated at

$2.7 million per year for APHIS. The U.S. Customs Service will also

incur additional costs for its role in implementing these regulations,

although no estimate of that cost is currently available.

New User Fee for Services Provided to Facilitate Entry of SWPM

We will charge a new hourly user fee for providing APHIS services--

primarily additional inspection services, and supervising separation of

SWPM from cargo--to facilitate the entry of SWPM when the services

exceed the normal inspection and paperwork activities for which user

fees are currently established in 7 CFR 354.3. The new user fee will

cover situations where APHIS must inspect a shipment that lacks the

exporter statement or certificate required by new Sec. 319.40-5(g) or

(h), or where these documents are incomplete. The inspections will be

necessary to determine whether the cargo contains SWPM, and if so,

whether the cargo must be reexported or whether it can be safely

separated from its SWPM. We expect the new user fee will primarily

apply to situations under new Sec. 319.40-5(g)(3). Under new

Sec. 319.40-5(g)(3), when an inspector determines that a shipment

imported from China contains SWPM that was not heat treated, fumigated,

or treated with preservatives, or that was not accompanied by a

certificate documenting such treatment, the inspector may, in lieu of

refusing entry, allow the importer to separate the cargo and destroy or

reexport the SWPM under supervision of an APHIS inspector.

These services exceed those normally provided for arriving

international shipments. Normal services usually include reviewing

paperwork to determine whether cargo contains prohibited or restricted

articles, checking for any required permits or certificates, and

occasional inspection to verify the status of cargo documented in the

paperwork. These normal services are paid for by user fees established

in

[[Page 50104]]

7 CFR 354.3, currently $454.50 for each arriving vessel of 100 tons or

more and $59.75 for each arriving commercial aircraft. We will charge

hourly user fees for cases where inspectors must perform additional

duties related to clearing shipments from China, as it would be

difficult to establish a flat fee. This is because costs could vary

widely from one customer to another, based on the nature and size of

the shipment; consequently, a flat fee would be very inequitable to

some importers and exporters.

We are amending 7 CFR part 354--``Overtime Services Relating To

Imports and Exports; and User Fees,'' to establish this new fee. The

hourly user fee rate will be $56.00, or $14 per quarter hour, with a

$14 minimum. If the services must be conducted on a Sunday or holiday

or at any other time outside the normal tour of duty of the employee,

then the premium user fee rate as listed below applies, as well as the

2-hour minimum charge and a commuted traveltime period required by

Sec. 354.1(a)(2). If the services requested are performed on a Sunday,

the hourly user fee rate will be $74.00, or $18.50 per quarter hour,

with a $18.50 minimum. If the services requested are performed on a day

other than Sunday outside the normal tour of duty of the employee

providing the service, the hourly user fee rate will be $65.00, or

$16.25 per quarter hour, with a $16.25 minimum.

This hourly rate user fee has been calculated to cover the full

direct labor cost of providing that service. Direct labor costs are the

costs of employee time spent specifically to provide the service. For

fees charged in accordance with this rule, costs have been calculated

based on the direct labor costs of APHIS inspectors at the ports of

arrival (estimated at the salary cost for a GS-9 step 5 inspector plus

a benefits cost of 31 percent of salary), direct materials costs,

administrative support, Agency overhead, and Departmental charges.

Immediate Action

The Administrator of the Animal and Plant Health Inspection Service

has determined that there is good cause for publishing this interim

rule without prior opportunity for public comment. Immediate action is

necessary to prevent further introduction and spread of exotic pests

associated with SWPM from China.

Although this rule does not take effect until 90 days after the

date of publication, it is necessary to set the effective date now,

rather than accept comments on a proposal and give notice of a final

action and effective date later. Importers, exporters, national

governments and others will need the full 90 days to prepare for the

significant changes in operations that will become necessary on the

effective date of this rule. Because prior notice and other public

procedures with respect to this action are impracticable and contrary

to the public interest under these conditions, we find good cause under

5 U.S.C. 553 to make this rule effective 90 days after the date of

publication in the Federal Register.

If APHIS decides, based on comments received on this interim rule,

to publish a final rule that significantly changes the regulatory

requirements in this interim rule in such a way that persons affected

by the final rule need time to change their business procedures, we

will set an appropriate effective date for the final rule to allow time

for implementation of such changes.

We will consider comments that are received within 60 days of

publication of this rule in the Federal Register. After the comment

period closes, we will publish another document in the Federal

Register. The document will include a discussion of any comments we

receive and any amendments we are making to the rule as a result of the

comments.

Public Hearings

APHIS will host three public hearings to provide interested persons

a full opportunity to present their views regarding this interim rule.

One public hearing will be held on October 16, 1998, at the Jefferson

Auditorium, U.S. Department of Agriculture, South Building, 14th Street

and Independence Avenue SW., Washington, DC. The other hearings are

tentatively scheduled to be held in Seattle, WA, and Los Angeles, CA,

during the public comment period. Specific dates and locations for

these hearings will be announced in a separate Federal Register notice.

A representative of APHIS will preside at the public hearings. Any

interested person may appear and be heard in person, by attorney, or by

other representative. Persons who wish to speak at the public hearings

will be asked to sign in, listing their names and organizations.

The public hearings will begin at 9:00 a.m. local time and are

scheduled to end at 5:00 p.m. local time. However, the hearings may be

terminated at any time after they begin if all persons desiring to

speak have been heard. We ask that anyone who reads a statement provide

two copies to the presiding officer at the hearing. If the number of

speakers at the hearing warrants, the presiding officer may limit the

time for each presentation so that everyone wishing to speak has the

opportunity.

The purpose of the hearings is to give interested persons an

opportunity for oral presentations of data, views, and arguments.

Questions about the content of the interim rule may be part of the

commenters' oral presentations. Neither the presiding officer nor any

other representative of APHIS will respond to comments at the hearings.

However, they will be able to answer questions to clarify or explain

provisions of the interim rule.

Executive Order 12866 and Regulatory Flexibility Act

This interim rule has been reviewed under Executive Order 12866.

The rule has been determined to be economically significant for the

purposes of Executive Order 12866 and, therefore, has been reviewed by

the Office of Management and Budget.

This action requires treatment and certification for all SWPM

imported from China. The emergency situation under which we are issuing

this rule makes compliance with section 603 and timely compliance with

section 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604)

impracticable.

This rule may have a significant economic impact on a substantial

number of small entities. If we determine this is so, then we will

discuss the issues raised by section 604 of the Regulatory Flexibility

Act in our Final Regulatory Flexibility Act Analysis.

Our preliminary cost-benefit analysis is presented below.

Section I--Purpose and Need for Regulation

The free trade of goods in international commerce potentially

brings with it negative externalities due to the unintended

introduction of exotic plant pests and pathogens. Such actions result

in costs to various sectors of society (for example, alterations to

forest ecosystem diversity and productivity). The private cost of

importing commodities does not reflect full social costs since

importers responsible for pest introductions are not charged for their

contribution to the damages caused by exotic pests on domestic forest

resources. The market left to itself would engage in undesirable

commercial practices (in this case, the use of unprocessed SWPM) that

could lead to detrimental effects on agricultural and natural resources

of the United States. Because costs to the U.S. economy as a whole

could be

[[Page 50105]]

substantial, Federal intervention is required. The increasing number of

interceptions requires that emergency measures be used to prevent

further dissemination of pests throughout the United States.

This analysis presents preliminary estimates of the benefits and

costs of implementing the interim rule to require the treatment and

certification of SWPM from China before it is allowed into the United

States. In assessing the regulatory alternatives available to the

agency, three other options were also considered: (1) Prohibiting the

entry of SWPM from China; (2) requiring treatment and certification

abroad of SWPM from China; (3) treatment either abroad or in the United

States; (4) taking no action (continuing the existing permitting

process for SWPM).

To provide a context of the pest risk situation, a discussion of

the forest and agricultural resources at risk in the United States is

outlined in section II. A background discussion of U.S. trade with

China, including magnitude and composition of trade, is presented in

section III. The potential impacts of the regulatory options are

presented in section IV. Given the emergency nature of the rule,

quantifiable estimates of benefits and costs are presented to the

extent possible.

Section II--Forest and Agricultural Resources at Risk

While there are many quarantine pests associated with SWPM, the

initial pest risk assessment (PRA) conducted in support of this interim

rule addresses a subset of frequently intercepted insect borers, in the

beetle family Cerambycidae, that have escaped detection at ports of

entry and been introduced into the United States. These intercepted

quarantine pests are of the genera Anoplophora, Ceresium,

Hesperophanes, and Monochamus.

Species of Anoplophora, Ceresium and Hesperophanes are known to

infest hardwoods (broad-leaved and deciduous trees). Host trees listed

in the scientific literature and observed in outbreaks in the United

States include: maple (Acer), horse chestnut (Aesculus), apple (Malus),

poplar (Populus), plum (Prunus), pear (Pyrus), locust (Robinia), elm

(Ulmus), chinaberry (melia), mulberry (Morus), willow (Salix), and

citrus (Citrus). Monochamus sp. primarily attacks softwood or

coniferous trees such as evergreen. While it is difficult to predict

with accuracy the actual damage if these species of wood-boring insects

were to become established in the U.S., these pests have the potential

of causing extensive losses to domestic forest and agricultural

resources. The following types of economic effects could be expected if

these wood-boring pests were to become widespread in the United States:

Effects on the Timber Industry

A significant share of the value of forest resources is derived

from their contribution to the timber and wood manufacturing

industries. In 1986, timber was the most important agricultural crop in

the United States in terms of dollar value of production, surpassing

corn, soybean and hay in value of production. The estimated value of

timber harvest in 1986 was $7.7 billion (in 1996 dollars), with 84

percent derived from softwood timber and the remaining 16 percent from

hardwood species.1

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

\1\ Source: ``An Analysis of the Timber Situation in the United

States: 1989-2040''. A Technical Document Supporting the 1989 USDA

Forest Service RPA Assessment. Forest Service, U.S. Department of

Agriculture, December 1990.

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

Value estimates in this section are adjusted to 1996 dollars

utilizing the Gross Domestic Product implicit price deflator. When the

value added from harvesting the timber and moving it to local points of

delivery is included, the value of the 1986 timber output in the United

States was approximately $17.1 billion. Total U.S. shipments of wood

manufactured products were valued at $252 billion, with $113 billion

being value added. Industry shipments in the Northeast region alone,

where current outbreaks are located, were valued at $46

billion.2

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

\2\ Value added is a net measure of an industry's contribution

to the economy because the value of materials received from other

firms and used in the manufacturing process is subtracted from the

value of the products shipped.

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

Effects on the Maple Syrup Industry

Sugar maple trees are a preferred host for at least one of the

pests of concern, the Asian longhorned beetle. The maple syrup industry

relies on healthy maple trees, especially sugar maple, for its

production. Maple syrup is produced in 10 states, with Vermont, New

York, Wisconsin, and Maine producing 72 percent of the total output.

Over 1.5 million gallons of maple syrup were produced in 1991, with a

total value of $53 million (in 1996 dollars).3

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

\3\ Data obtained from Louis C. Wyman Forest Services

Laboratory, USDA Forest Service, Durham, New Hampshire.

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Effects on the Commercial Fruit Industry

The commercial fruit industry is also at risk of pest infestation,

as pear, apple, plum and citrus trees are susceptible hosts. A rough

approximation of the value of replacing these fruit trees can be

obtained from utilizing estimates on the cost of establishing an

orchard, which includes expenses associated with planting and cultural

practices and irrigation. It is estimated that the cost of replacing

host fruit trees would amount to $5.2 billion for pear, apple and plum

orchards alone, and $10.4 billion for citrus, for a total cost of $15.6

billion.4

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\4\ Based on 1997 bearing acreages of 69,000 acres of pears,

453,220 acres of apples, and 89,600 acres of plums; and cost of

establishing an orchard, over four years, of $9,400 per acre for

pear and apple, and $3,600 per acre for plum. Bearing acreage of

citrus was estimated at 1.15 million acres in 1996-97; average cost

of establishing an orchard in Florida, over four years estimated at

$10,912 per acre and $5,100 per acre in other states except Florida.

Source: Economic Research Service, U.S. Department of Agriculture.

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

In addition, fruits of host trees would also be affected by a

widespread pest infestation. The average 1995-1997 value of utilized

production of these four types of fruits was estimated at $4.7 billion,

with over 50 percent of the value derived from citrus.5

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

\5\ Source: National Agricultural Statistics Service, USDA.

Citrus includes the following varieties: orange, grapefruit, lemon,

lime, tangerine, K-early, tangelos and tangerine. Citrus data are

based on 1996-1997 crop year.

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Effects on the Nursery Industry

Another economically significant industry that relies on healthy

hardwood trees and is therefore potentially at risk of beetle

infestation is the nursery industry. In 1993, sales of plants (trees

and shrubs) by nurseries and greenhouses in the United States totaled

an estimated $3.3 billion, of which $226 million was derived from sales

in seven northeastern States. During the year ending September 30,

1993, 103.9 million landscape trees were sold in the United States,

including 5.7 million in seven northeastern states. Approximately one-

half of all landscape trees sold in the United States are hardwood

trees.6

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\6\ The seven northeastern states are Maine, New Hampshire,

Vermont, Connecticut, Massachusetts, Rhode Island, and New Jersey.

Nursery and greenhouse data, including information on landscape

trees sold, were furnished by the American Association of

Nurseryman.

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Effects on Tourism

The tourism industry is tied heavily to leaf color changes in the

autumn months, and the maple tree is noted for producing some of the

most vivid colors. Between mid-September and late October, the hardwood

forests of New England draw 1 million tourists and generate $1 billion

in revenue. It is estimated that up to one fourth of the tourism

revenue generated annually in

[[Page 50106]]

New England is due to the fall foliage displays.7

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\7\ Revenue and tourist count data obtained from New York Times

article, ``The Rise of Fall,'' (Sept. 19, 1993) and from Boston

Globe article, ``A Beetle Bores in Brooklyn,'' (Sept. 21, 1996).

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

Other Non-market Effects on Urban Trees

Pest species of the Anoplophora genera prefer healthy maple and

horsechestnut trees, which are favorite street trees in many urban

areas. Urban backyard trees directly affect the value of real estate

assets. Besides the aesthetic value of urban trees, benefits of the 70

million acres of urban forests are multifold, and include cleaning the

air of pollutants, microclimate effects, dimunition of storm water

runoff, reduction in street noise, and enhancement of local wildlife

populations.8 Most of these benefits are non-market in

nature and are not readily measurable. While several approaches exist

in order to obtain measures of these non-market values, time

constraints do not permit the estimation of these values.

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

\8\ Source: Nowak, D.J. and John Dwyer. ``Understanding the

Benefits and Costs of Urban Forest Ecosystems'', in Urban and

Community Forestry in the Northeast. Plenum Publishing Co., New

York. In press, 28 pp.

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

In sum, the establishment of wood-boring insects of the genera

Anoplophora, Ceresium, Hesperophanes, and Monochamus could cause

significant economic damages to forest and agricultural resources in

the United States. If left unchecked, these pests have the potential to

create losses in excess of $41 billion to forest products, commercial

fruit, maple syrup, nursery, and tourist industries.9

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\9\ This estimate includes the $17.1 billion figure for the

value of timber harvests. This estimate does not include the

potentially significant non-market values of urban trees, or value-

added losses that may occur if manufacturers of finished wood

products are unable to obtain substitute supplies for domestic

hardwoods unavailable due to pest damage.

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Section III--Effects of This Rule on U.S. Trade With China

In 1997, China's total exports of agricultural and nonagricultural

products to the United States were valued at $72.8 billion (including

$10.3 billion from Hong Kong), or 8.4 percent share of total U.S.

imports. This represented a 18.8 percent increase in value of Chinese

imports from 1996. China ranks behind Canada, Japan and Mexico as the

fourth largest source of imports for the United States.10

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\10\ Trade data are obtained from the Bureau of the Census, U.S.

Department of Commerce.

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

U.S. exports to China were valued at $27.9 billion in 1997

(including $15.1 billion to Hong Kong), or 4.1 percent of the total

value of exports. China is the fifth largest export market for U.S.

commodities.

There are 79 maritime ports of entry where APHIS conducts

inspections on imported commodities.11 The port in Long

Beach, CA, is estimated to receive roughly 50 percent of Chinese

imports. Other ports receiving a relatively large share of Chinese

cargo include Seattle, WA, and Charleston, SC. The three combined ports

are estimated to receive about 75 percent of the total imports from

China.

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\11\ Data obtained from PPQ, APHIS. Some ports of entry are

combined sea and air ports.

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

The majority of imports from China are non-bulk commodities and are

thus likely to arrive with SWPM. In 1997, the U.S. Customs Service

estimated that there were 1.141 million shipments from China. Trade

data from the U.S. Department of Commerce shows 100 listings of 2-digit

codes of commodities imported from China. The composition of the 10

largest imports from China, with values in excess of $1 billion, are:

Electrical machinery

Sports equipment and toys

Footwear

Machinery

Woven apparel

Furniture and bedding

Leather articles

Plastics

Optical and medical instruments

Knit apparel

Electrical machinery, sports equipment, machinery, furniture, and

optical and medical instruments are commodities that are likely to be

imported with SWPM. APHIS estimates that between 50 to 95 percent of

shipments of electrical machinery, sports equipment, and machinery

contain some type of SWPM, while 30 percent or less of furniture and

optical/medical instruments are packaged with SWPM.12 In

general, clothing articles, textiles, and food and agricultural items

are not likely to be shipped with SWPM.

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

\12\ Information obtained from survey of APHIS inspectors at

three ports: Long Beach, California; Seattle, Washington, and

Charleston, South Carolina.

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

As the composition of trade in recent years shifted from textiles

and light manufactured products and more towards machinery, sports

equipment and metal products, so too has the import of SWPM increased

in shipments of these products. Since 1985, there has been a steady

increase in the number of insect interceptions on wood products from

China at U.S. ports, likely reflecting the growing volume of Chinese

imports (Table 1). At U.S. ports of entry from 1985 through 1996, APHIS

intercepted and destroyed insects on various wood products on nearly

5,900 occasions. Most of these interceptions were associated with

crating (49 percent), dunnage (36 percent), and pallets (6

percent).13

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

\13\ Source: Haack, R.A., et al. ``New York's Battle with the

Asian Long-horned Beetle'', Journal of Forestry, Vol. 95, No. 12,

December 1997.

Table 1.--Growth of U.S. Imports and Insect Interceptions on Wood

Products From China

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

Percent

of total

U.S. Percent of

imports total insect

from interceptions

China

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

1985.......................................... 1.1 1.2

1986.......................................... 1.3 1.2

1987.......................................... 1.6 0.7

1988.......................................... 1.9 1.5

1989.......................................... 2.5 0.6

1990.......................................... 3.1 1.2

1991.......................................... 3.9 0.6

1992.......................................... 4.8 4.4

1993.......................................... 5.4 7.3

1994.......................................... 5.8 8.3

1995.......................................... 6.1 11.2

1996.......................................... 6.4 21.2

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

Source: Haack, R.A. et al. ``New York's Battle with the Asian Long-

horned Beetle.'' Journal of Forestry, Vol. 95, No. 12, December 1997.

Section IV--Analysis of Impacts of Regulatory Options

1. No Action

This alternative would mean that APHIS would not change its

existing regulations.14

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\14\ Under this option, APHIS would not revise its existing

regulations, but presumably the Agency would initiate bilateral

negotiations with China in order to minimize pest risk.

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

The benefit to this option is that the impact on trade from China,

valued at $72.8 billion in imports and $27.9 billion in exports in

1997, would be unaffected. The welfare of U.S. consumers of Chinese

products and U.S. exporters to China would be unchanged.

This option would require increased inspection staff at ports of

entry and inland destinations solely to target inspections of high risk

cargo from China. Based on the volume of shipments, it is estimated

that an additional $9.5 million per year would be needed for APHIS

staff to perform inspection of Chinese cargo.15

[[Page 50107]]

Increasing the inspection level alone, however, has a limited effect on

reducing the pest risk, since wood-boring insects are difficult to

detect by visual inspection. Also, wooden crates are often made of

unprocessed, poor quality wood, often with bark left attached inside

crate walls, which would further impede visual inspection. It is highly

likely, therefore, that outbreaks would still occur even with increased

inspection. Individual outbreaks are costly; current eradication

efforts of Asian longhorned beetle outbreaks in New York and Chicago

are estimated to cost the State and federal governments at least $5

million by the end of FY 1998. Moreover, if these targeted pests were

to become established, losses to the forest and agricultural industries

could amount to $41 billion. Given the pervasive evidence on pest risk

directly associated with imports from China and the potential

significant economic losses if the pest were to become established,

this option is deemed unacceptable.

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\15\ This cost is composed of salary and benefits of 140 APHIS

inspectors (estimated at a salary cost for GS9 step 5 plus a

benefits cost of 31% of salary); cost for travel, vehicles, and

other miscellaneous expenses (furniture, uniforms, cell phones,

etc.) Data obtained from Financial Management and Analysis Staff,

PPQ, APHIS.

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2. Treatment and Certification Abroad (Interim Rule)

This alternative involves the implementation of phytosanitary

measures beyond the existing permit requirements for SWPM from China.

Through an interim rule, with a 90-day phase-in period, APHIS will

require that all SWPM associated with cargo from China be accompanied

by official certification from the Chinese Government stating that the

SWPM was heat treated, fumigated, or treated with preservatives prior

to departure from China. Uncertified SWPM associated with Chinese cargo

will be prohibited entry and reexported or, under certain

circumstances, destroyed in the United States. Certified SWPM found

infested will be prohibited entry.

One of the benefits of this option is that the risk of pest

introduction will be greatly reduced. The loss of forest and

agricultural resources that could be avoided by adopting this

alternative is estimated at $41 billion. Additionally, the increase in

the number of inspectors required under this option would be less than

30 percent of that required under option 1. This option will ultimately

encourage the use of treated SWPM or alternatives to SWPM in the long

run.

An approximation of the maximum potential cost of this option is

the value of Chinese imports that is potentially affected by the

interim rule. The actual cost of the interim rule will be the cost of

treating SWPM or switching to other substitutes. This cost cannot be

estimated at this time without data on the costs of treatment in China,

the costs of alternative packing materials in China, and the

availability of alternative markets (in countries that do not require

treatment of SWPM) for goods China currently ships to the United

States. It is estimated that, in 1997, approximately 24 to 31 percent

of imports from China, with corresponding values of $17 billion to $23

billion, arrived with some type of SWPM.16 However, roughly

30 percent of Chinese imports that arrive with SWPM are voluntarily

fumigated before arrival. Thus, the value of imports from China

potentially affected by this interim rule is estimated to range between

$12 billion and $16 billion, or 17 to 22 percent of the total value of

imports from China. These estimates, however, represent a maximum cost

that would occur only if all these imports were lost to U.S. markets, a

situation that is realistically unlikely to occur. As mentioned above,

we do not have data to estimate the actual lower cost associated with

treating and certifying the SWPM, the cost of switching to substitutes

for SWPM, and how those costs would be passed on to U.S. consumers.

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

\16\ These estimates are based on surveys of APHIS inspectors at

three main ports of entry of Chinese imports: Long Beach, CA;

Seattle, WA; and Charleston, SC. Roughly 75 percent of imports from

China are shipped through these ports.

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

The cost to APHIS of implementing this option (verification that

shipments comply with the regulations) is estimated at $2.7 million

annually.17 However, importers will be charged user fees in

order to cover most of the additional costs of inspecting and

supervising activities under this rule. These new user fees are

expected to equal about 15 percent of the fees currently collected for

vessel (ship) clearance, and would increase total agricultural

quarantine inspection fee collections by 2.3 percent.18 It

is anticipated that the U.S. Customs Service may incur additional costs

as well in processing certificates and exporter statements.

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

\17\ This cost is composed of salary, benefits and miscellaneous

expenses of 40 APHIS inspectors.

\18\ In 1997, total AQI user fee collections for the clearance

of air passengers, aircrafts, trucks, vessels, and rail cars

amounted to $116.6 million, of which $18.3 million was for the

inspection of vessels. Data obtained from User Fee Branch,

Management and Budget Division, APHIS.

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3. Allow Treatment in the United States.

This alternative would favor treatment of SWPM from China prior to

departure from China, but if untreated SWPM arrived at a U.S. port, the

SWPM would be allowed treatment in the United States, reexported, or

destroyed. This alternative would provide a benefit to Chinese

importers in the flexibility afforded them.

It is anticipated, however, that this option would not induce most

exporters to treat SWPM prior to departure from China, and would

instead result in a vastly increased demand for treatment, especially

methyl bromide fumigation, at ports of arrival. There are not currently

enough fumigation facilities at U.S. ports to provide the treatments

that would be required under this alternative. The effect on trade

would be the same as in Option 2 (require certification without

allowing treatment in the United States), in that the same volume of

trade would still be disrupted (up to about $16 billion), but with

added costs to APHIS for supervising fumigation at ports of entry. It

is estimated that the cost of additional APHIS inspectors would be $6.8

million annually in order to implement this option.19 As in

option 2, most of the additional costs of inspection would likely be

borne by importers in the form of user fees.

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

\19\ This cost is composed of salary, benefits and miscellaneous

expenses of 100 APHIS inspectors.

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Additionally, the potential for pest dissemination in the United

States is higher than under option 2 as importers would routinely be

allowed to separate cargo before destroying infested SWPM. This

alternative is not consistent with our policy for regulating SWPM from

all other parts of the world, which is essentially that the SWPM must

be rendered safe prior to arrival.

4. Prohibit SWPM from China

The most restrictive alternative would be for APHIS to prohibit

entry into the United States of all SWPM from China. No options for

treatment or certification would be available. SWPM arriving at U.S.

ports would be refused entry, or would be seized and destroyed.

Under this option, pest introductions from SWPM from China would

theoretically be eliminated. The benefits to this option would be the

avoidance of potential damages to forest and agricultural resources

estimated at $41 billion. The need for treatments would be eliminated,

and the need for inspections would be greatly reduced.

The cost of this option would be a disruption of trade with China,

with an estimated $23 billion worth of imports that are now shipped

with SWPM potentially affected. It is unclear whether any retaliatory

actions would be taken against the $27.9 billion U.S. export market to

China.

While this option would be the most effective means of controlling

the pest

[[Page 50108]]

risk, APHIS believes that the requirements in this interim rule, Option

2, would strike the appropriate balance under current conditions

between the need to manage the immediate pest risk with the need to

minimize trade disruptions. The agency continues to evaluate the

problem of SWPM imports in general and is seeking information to

develop longer-term solutions to the problem.

Summary and Conclusions

Pests of the genera Anoplophora, Ceresium, Hesperophanes, and

Monochamus, including the Asian longhorned beetle, are destructive

wood-boring insects that can seriously damage and eventually kill

healthy trees. The Asian longhorned beetle was first discovered in the

United States in 1996 and subsequent discoveries have been made in

numerous inland distribution warehouses. There is evidence that SWPM

from China is the source of the pest infestations. If left unchecked,

these pests have the potential to cause economic losses of $41 billion,

affecting the forest products, commercial fruit, maple syrup, nursery,

and tourist industries in the United States.

The interim rule would require that SWPM from China be treated or

fumigated prior to departure from China. Other options to minimize pest

risk were considered, but the interim rule is consistent with APHIS'

policy on the need to treat materials prior to entry and render them

safe on arrival. We believe that, under current conditions, this

interim rule strikes an appropriate balance between the need to manage

the immediate pest risk and the need to minimize trade disruptions.

Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L.

104-121, 5 U.S.C. Secs. 801-808).

This rule has been designated by the Administrator, Office of

Information and Regulatory Affairs, Office of Management and Budget, as

a major rule under the Small Business Regulatory Enforcement Fairness

Act of 1996 (Act).

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil

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

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

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

before parties may file suit in court challenging this rule.

National Environmental Policy Act and Environmental Effects Abroad

of Major Federal Actions

An environmental assessment and finding of no significant impact

have been prepared for this rule. The assessment provides a basis for

the conclusion that the fumigation, heat treatment, and treatment with

preservatives of SWPM imported from China will present a negligible

risk of introducing or disseminating plant pests and will not have a

significant impact on the quality of the human environment. Based on

the finding of no significant impact, the Administrator of the Animal

and Plant Health Inspection Service has determined that an

environmental impact statement need not be prepared.

The environmental assessment and finding of no significant impact

were prepared in accordance with: (1) The National Environmental Policy

Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.), (2) Regulations of the

Council on Environmental Quality for implementing the procedural

provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations

implementing NEPA (7 CFR part 1b),(4) APHIS' NEPA Implementing

Procedures (7 CFR part 372), and (5) Executive Order 12114 of January

4, 1979, ``Environmental Effects Abroad of Major Federal Actions'' (44

FR 1957-1962).

Executive Order 12114 ``* * * represents the United States

Government's exclusive and complete determination of the procedural and

other actions to be taken by Federal agencies to further the purpose of

the NEPA with respect to the environment outside the United States, its

territories, and possessions'' (section 1-1). This environmental

assessment has been designed to satisfy the provisions of the Executive

Order and NEPA and its implementing regulations, to the extent

applicable.

In the environmental assessment prepared to aid development of this

rule, APHIS considered carefully four alternatives in detail: (1)

Taking no action (continuing the existing permitting process for SWPM);

(2) requiring treatment and certification abroad (the preferred

action); (3) treatment abroad or in the United States; and (4)

prohibiting entry of SWPM. The potential environmental effects of each

alternative are considered below.

The no action alternative does not provide the necessary degree of

protection from deep wood boring pest species in Chinese imports. The

frequency of interception of infested commodities with SWPM from China

makes it likely that continued enforcement of the current regulations

would not exclude wood borers and other plant pests.

Ultimately, it would be expected that those plant pests present in

the SWPM from China would be introduced into the United States. Their

movement from the site of introduction would be expected to result in

increasingly greater damage to forest ecosystem commensurate with the

spread. The response to this increased damage would be expected to

include greater uncoordinated applications of pesticides to control

pest damage and more destruction of forest, shade, and ornamental

trees. The potential environmental consequences of this alternative are

anticipated to be greater than the other alternatives. This approach

would enhance the likelihood of pest introduction and the potential for

damage to forest ecosystems from pest introductions.

Treatment and certification abroad (the preferred alternative)

would involve the implementation of additional phytosanitary measures

not included in the existing permit requirements for SWPM from China.

Most treatments would be expected to occur in China, although exporters

in China might purchase some SWPM treated elsewhere. Alternative

packing materials, such as plastic, metal, and loose wood packing

materials, could be used in lieu of treatment to qualify the shipment

for certification. The potential environmental consequences of this

alternative relate primarily to treatment chemicals and are anticipated

to be less than the no action alternative, but greater than the

prohibition alternative.

Heat treatments must be performed only at a facility in China

approved by APHIS or an inspector authorized by the Administrator and

the national government of the People's Republic of China. The

operation of the facility must comply with the standards set by APHIS

to ensure proper treatment and elimination of pest risk. Approved heat

treatment and proper handling of the regulated articles eliminates pest

risk and has minimal environmental consequences.

The environmental effects of fumigation of SWPM under the preferred

alternative are as follows. Most fumigations of wood products have

historically involved treatments with methyl bromide due to

convenience, cost, availability, ease of handling, timely completion of

treatment, and good efficacy. In addition, formulations of sulfuryl

fluoride and phosphene have been used, but their applications have been

more

[[Page 50109]]

limited. Sulfuryl fluoride has been difficult to handle effectively and

safely. Phosphene works well for small enclosed areas, but is less

efficient for larger treatments. The required length of treatment for

good penetration and efficacy of these compounds is generally greater

than for methyl bromide.

Approved fumigation and proper handling of the regulated articles

eliminates pest risk and poses no direct risks to personnel involved in

the treatment or nontarget species. There are, however, potential

effects on the ozone layer from using methyl bromide, and these are

discussed in detail in the environmental consequences section of the

environmental assessment.

To evaluate the potential for environmental impacts from pest

introductions under the preferred (``treatment abroad'') alternative,

this assessment considers data from recent voluntary fumigation

treatments by some shippers in China. APHIS port inspectors reviewed

their records of shipments from China that had been fumigated prior to

arrival (which comprised some 30 percent of Chinese shipments to that

port). Inspectors found live, quarantine pests in 1 percent of those

shipments that were reported to have been fumigated. Although not all

shipments were inspected and inspections do not always reveal

infestations, extrapolation of these rates of compliance for shipments

to all regulated loads would be expected to result in an overall

effective treatment rate of 96-97 percent. It is anticipated that some

forest pests present in the SWPM from China could still be introduced

into the United States, but the frequency of introduction and the

number of pests would be expected to be much less than under the

current regulations (no action alternative).

Preservative treatments authorized by the United States

Environmental Protection Agency (EPA) are also allowed under the

preferred alternative. The major chemicals used for this purpose are

creosote, chlorpyrifos, and oxine-copper applied to the surface of the

wood. Proper adherence to label instructions is required to prevent

adverse health effects to the applicators and those individuals

involved in the shipping and handling processes. Compliance with the

label ensures that environmental consequences are minimal to human

health and nontarget species.

This alternative could result in a substantial increase in the need

for treatments, including fumigation with chemicals such as methyl

bromide and phosphene, at ports and other locations in China. It is

difficult to quantify the increase in treatments or in pesticides that

may be used because the interim rule does provide for the use of

nonchemical alternatives. Potential increase in the use of methyl

bromide is of concern because it is a chemical that is associated with

ozone depletion and resulting excessive ultraviolet radiation.

Methyl bromide is one of several man-made substances that react

chemically with ozone in the atmosphere to deplete the stratospheric

ozone layer that protects the earth's surface from excessive

ultraviolet radiation. Methyl bromide is considered a Class I ozone

depleting substance under the Clean Air Act and the Montreal Protocol.

Thus, the use of methyl bromide in fumigations required by this interim

rule could have a substantial effect on stratospheric ozone depletion.

APHIS estimates that, if China were to comply with the interim rule

by fumigating SWPM shipments with methyl bromide, China could use

between 1,040 to 12,565 metric tons of methyl bromide annually. The

pest risk assessment and environmental assessment presuppose that China

could comply with the treatment requirements of the interim rule

through an increase in its use of methyl bromide. However, it is likely

that China would employ a variety of approved strategies to comply with

the interim rule, including use of nonregulated packing materials, heat

treatments, and other fumigants such as phosphene.

APHIS is concerned that any increase in methyl bromide use as a

result of this interim rule does not cause long-lasting damage to the

ozone layer. APHIS also emphasizes that this is an interim measure that

will remain in effect for only as long as it takes to develop a more

effective solution to the problem--a pest problem that could, if not

addressed, result in substantial environmental damage to the forests

and ecosystems of the United States. As discussed previously in this

interim rule, APHIS will be reviewing regulations pertaining to SWPM

from all foreign countries with the intent of developing effective and

long-lasting pest control measures that are environmentally acceptable.

The potential environmental consequences of the next alternative

(allowing treatment to occur in the United States, or abroad) are

anticipated to be comparable to the previously described ``treatment

abroad'' alternative in terms of direct effects of treatment chemicals.

However, the overall environmental effects of the ``treatment in the

United States'' alternative are expected to be greater due to the

elevated risk of introduction of pest species into the United States.

The treatments for this alternative would be similar to those for the

preferred action, but the location of heat treatment or fumigation

could be at ports in the United States, and treatment by preservatives

in the United States would not be an option. Shippers could also elect

to re-export their cargo or have it destroyed at the United States port

rather than undergo treatment, but it is expected that most shippers

would prefer the treatment costs over the costs of re-export or

destruction of cargo. The effects of each treatment would be expected

to be similar to those for the preferred action and pose comparable

risks.

Alternative packing techniques and use of material other than SWPM

are an option under all alternatives. Structural substitutes for SWPM,

such as plastic, metal, and loose wood packing materials, could be

used. Tight placement of shipments in a manner that eliminates the need

for packing materials could have some applications. This option enables

the shipper to transport commodities to the United States without the

treatments needed for SWPM. The cost, applicability to particular

cargoes, and availability of these other packing materials is expected

to determine the feasibility for different shipments. Use of these

packing materials eliminates pest risk and has minimal environmental

consequences. The need of shippers to manufacture or obtain substitute

packing materials could result in some environmental effects, dependent

upon the potential effects of the manufacturing process.

The final and most stringent alternative would be for APHIS to

prohibit entry into the United States of all SWPM from China. There

would be no options for treatment and certification. SWPM arriving at

U.S. ports would be reexported, or would be seized and destroyed. This

alternative makes introductions of pests in SWPM much less likely, but

inaccurate documentation and limited capacity for monitoring of

compliance with these regulations are still possible. This would be

expected to eliminate most of the need for treatments and decrease the

need for inspections. The potential environmental consequences of this

alternative are anticipated to be less than the other alternatives.

Inspectors would have to check some containers to ensure shipper

compliance, but this could be done by a brief look in the container to

verify that no SWPM is present. Such inspections are less burdensome

than thorough pest inspections when SWPM is present. The

[[Page 50110]]

direct environmental consequences of prohibition are minimal, but the

methods of destruction of seized cargo with SWPM could include

incineration and other processes that affect environmental quality.

Copies of the environmental assessment and finding of no

significant impact are available for public inspection at USDA, room

1141, South Building, 14th Street and Independence Avenue SW.,

Washington, DC, between 8 a.m. and 4:30 p.m., Monday through Friday,

except holidays. Persons wishing to inspect copies are requested to

call ahead on (202) 690-2817 to facilitate entry into the reading room.

In addition, copies may be obtained by writing to the individual listed

under FOR FURTHER INFORMATION CONTACT.

Paperwork Reduction Act

In accordance with section 3507(j) of the Paperwork Reduction Act

of 1995 (44 U.S.C. 3501 et seq.), the information collection and

recordkeeping requirements included in this interim rule have been

submitted for expedited approval to the Office of Management and Budget

(OMB). Notwithstanding any other provision of the law, no person is

required to respond to, nor shall any person be subject to a penalty

for failure to comply with, a collection of information subject to the

requirements of the Paperwork Reduction Act unless that collection of

information displays a currently valid OMB control number. When OMB

completes its review of the information collection requirements

contained in this rule, we will publish a notice in the Federal

Register of OMB's decision. If OMB approves the information collection,

the notice will include the OMB control number.

Please send written comments to the Office of Information and

Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington,

DC 20503. Please state that your comments refer to Docket No. 98-087-1.

Please send a copy of your comments to: (1) Docket No. 98-087-1,

Regulatory Analysis and Development, PPD, APHIS, suite 3C03, 4700 River

Road Unit 118, Riverdale, MD 20737-1238, and (2) Clearance Officer,

OCIO, USDA, room 404-W, 14th Street and Independence Avenue SW.,

Washington, DC 20250. A comment to OMB is best assured of having its

full effect if OMB receives it within 30 days of publication of this

interim rule.

The paperwork associated with this interim rule will include the

completion of foreign government certificates and exporter statements.

There will also be requests for inspections. We are soliciting comments

from the public (as well as affected agencies) concerning our

information collection and recordkeeping requirements. We need this

outside input to help us:

(1) Evaluate whether the information collection is necessary for

the proper performance of our agency's functions, including whether the

information will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the

information collection, including the validity of the methodology and

assumptions used;

(3) Enhance the quality, utility, and clarity of the information to

be collected; and

(4) Minimize the burden of the information collection on those who

are to respond (such as through the use of appropriate automated,

electronic, mechanical, or other technological collection techniques or

other forms of information technology, e.g., permitting electronic

submission of responses).

Estimate of burden: Public reporting burden for this collection of

information is estimated to average 0.087 hours per response.

Estimated number of respondents: 29,000.

Estimated number of responses per respondent: 29.31.

Estimated total annual burden on respondents: 73,950 hours.

Copies of this information collection can be obtained from:

Clearance Officer, OCIO, USDA, Room 404-W, 14th Street and Independence

Ave., SW, Washington, DC 20250.

Unfunded Mandates Reform Act of 1995

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.

L. 104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, tribal

governments, and the private sector. Under section 202 of the UMRA,

APHIS generally must prepare a written statement, including a cost-

benefit analysis, for proposed and final rules with ``Federal

mandates'' that may result in expenditures by State, local, or tribal

governments, in the aggregate, or by the private sector, of $100

million or more in any one year. When such a statement is needed for a

rule, section 205 of the UMRA generally requires APHIS to identify and

consider a reasonable number of regulatory alternatives and adopt the

least costly, more cost-effective, or least burdensome alternative that

achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) that may result in expenditures by

State, local, and tribal governments, in the aggregate, or by the

private sector, of $100 million or more in any one year. Thus, this

rule is not subject to the requirements of sections 202 and 205 of the

UMRA.

List of Subjects

7 CFR Part 319

Bees, Coffee, Cotton, Fruits, Honey, Imports, Incorporation by

reference, Nursery Stock, Plant diseases and pests, Quarantine,

Reporting and recordkeeping requirements, Rice, Vegetables.

7 CFR Part 354

Exports, Government employees, Imports, Plant diseases and pests,

Quarantine, Reporting and recordkeeping requirements, Travel and

transportation expenses.

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

PART 319--FOREIGN QUARANTINE NOTICES

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

follows:

Authority: 7 U.S.C. 150dd, 150ee, 150ff, 151-167, 450, 2803, and

2809; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.2(c).

2. In Sec. 319.40-1, a new definition is added in alphabetical

order to read as follows:

Sec. 319.40-1 Definitions

* * * * *

Exporter statement. A written declaration by the exporter,

accompanying a shipment at the time of importation, declaring the

nature of the shipment and that the shipment contains no solid wood

packing material.

* * * * *

Sec. 319.40-3 [Amended]

3. In Sec. 319.40-3, paragraphs (b)(1), (b)(2), and (b)(3), the

first sentence of the introductory text in each paragraph is amended by

adding the phrase``, except that solid wood packing material from China

must be imported in accordance with Sec. 319.40-5(g)'' immediately

before the period at the end of the sentence.

4. In Sec. 319.40-5, new paragraphs (g) and (h) are added to read

as follows:

Sec. 319.40-5 Importation and entry requirements for specified

articles.

* * * * *

(g) Solid wood packing material from China. Solid wood packing

material

[[Page 50111]]

from China may be imported only in accordance with this paragraph.

(1) Prior to departure from China, the solid wood packing material

must be heat treated, fumigated, or treated with preservatives, using a

treatment schedule contained in Sec. 319.40-7 or in the Plant

Protection and Quarantine Treatment Manual, which is incorporated by

reference at Sec. 300.1 of this chapter. During the entire interval

between treatment and export the solid wood packing material must be

stored, handled, or safeguarded in a manner which excludes any

infestation of the solid wood packing material by plant pests.

(2) At the time of arrival at the port of first arrival, the solid

wood packing material must be accompanied by a certificate signed by an

official of a Chinese government agency authorized by the national

government of China stating that the solid wood packing material, prior

to departure from China, has been heat treated, fumigated, or treated

with preservatives using a treatment schedule contained in Sec. 319.40-

7 or in the Plant Protection and Quarantine Treatment Manual. Exporters

may, at their option in order to expedite release of their shipment at

the port of first arrival, arrange to have each article of solid wood

packing material that has been treated marked at the treatment facility

with a stamp or weatherproof label that reads CHINA TREATED. This type

of marking, however, is not a substitute for the required certificate.

(3) If an inspector determines that a shipment imported from China

contains plant pests, or contains solid wood packing material that was

not heat treated, fumigated, or treated with preservatives, or that was

not accompanied by a certificate documenting heat treatment,

fumigation, or preservative treatment, the inspector may refuse entry

into the United States of the entire shipment (cargo and solid wood

packing material). If the inspector determines that the cargo may be

separated from the solid wood packing material and that the solid wood

packing material may be destroyed or reexported without risk of

spreading plant pests, the inspector may allow the importer to separate

the cargo from the solid wood packing material at a location and within

a time period specified by the inspector and destroy or reexport the

solid wood packing material under supervision of an inspector. The

means used to destroy solid wood packing material under this section

must be incineration, or chipping followed by incineration. The

importer shall be responsible for all costs associated with inspection,

separation, and destruction or reexportation of solid wood packing

material, including costs of the services of an inspector to monitor

such activities, in accordance with Sec. 354.3(j) of this chapter.

(h) Cargo from China that does not contain solid wood packing

material. All commercial shipments imported from China that do not

contain any solid wood packing material must include an exporter

statement on or attached to the commercial invoice and as an attachment

to the bill of lading stating that the shipment contains no solid wood

packing material. Any shipment that is not accompanied by such an

exporter statement shall be subject to inspection for solid wood

packing material, and if such inspection is ordered by an inspector,

the shipment will not be granted entry into the United States prior to

completion of the inspection; the importer shall be responsible for all

costs associated with inspection, separation, and destruction or

reexportation of any solid wood packing material, including costs of

the services of an inspector to monitor such activities in accordance

with Sec. 354.3(j) of this chapter.

Sec. 319.40-10 [Amended]

5. In Sec. 319.40-10, footnote 5 is revised to read as follows:

\5\ Provisions relating to costs for other services of an

inspector, including services related to extra inspection and

separation of cargo from packing material for shipments that arrive

without a complete certificate or exporter statement as required,

are contained in part 354 of this chapter.

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

USER FEES

6. The authority citation for part 354 continues to read as

follows:

Authority: 7 U.S.C. 2260; 21 U.S.C. 136 and 136a; 49 U.S.C.

1741; 7 CFR 2.22, 2.80, and 371.2(c).

7. In Sec. 354.3, a new paragraph (j) is added to read as follows:

Sec. 354.3 User fees for certain international services.

* * * * *

(j) The person for whom the service is provided and the person

requesting the service are jointly and severally liable for payment of

user fees for any import or entry services listed below, of $56.00 per

hour, or $14.00 per quarter hour, with a minimum fee of $14.00, for

each employee required to perform the following services. If the

services must be conducted on a Sunday or holiday or at any other time

outside the normal tour of duty of the employee, then the premium user

fee rate as listed below applies, as well as the 2-hour minimum charge

and a commuted traveltime period required by Sec. 354.1(a)(2). If the

services requested are performed on a Sunday, the hourly user fee rate

will be $74.00, or $18.50 per quarter hour, with a $18.50 minimum. If

the services requested are performed on a day other than Sunday outside

the normal tour of duty of the employee providing the service, the

hourly user fee rate will be $65.00, or $16.25 per quarter hour, with a

$16.25 minimum:

(1) Conducting inspections, on vessels or in storage areas, of

solid wood packing material or cargo when a shipment arrives without a

certificate or exporter statement required under Sec. 319.40-5(g) or

Sec. 319.40-5(h) of this chapter, or with an incomplete certificate or

exporter statement; and

(2) Supervising the separation of cargo from solid wood packing

material denied entry under this subpart and the destruction or

reexportation of the solid wood packing material.

Done in Washington, DC, this 15th day of September 1998.

Craig A. Reed,

Administrator, Animal and Plant Health Inspection Service.

[FR Doc. 98-25058 Filed 9-15-98; 2:53 pm]

BILLING CODE 3410-34-P