User Fees; Agricultural Quarantine and Inspection Services

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. 98-073-1]

RIN 0579-AB05

User Fees; Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the user fee regulations by

adjusting the fees charged for certain agricultural quarantine and

inspection services we provide in connection with certain commercial

vessels, commercial trucks, commercial railroad cars, commercial

aircraft, and international airline passengers arriving at ports in the

customs territory of the United States. The adjusted fees would cover

fiscal years 2000 through 2002. We have determined that the fees must

be adjusted to reflect the anticipated actual cost of providing these

services through FY 2002.

DATES: We invite you to comment. We will consider all comments that we

receive by October 8, 1999.

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

Docket No. 98-073-1, Regulatory Analysis and Development, PPD, APHIS,

suite 3CO3, 4700 River Road Unit 118, Riverdale, MD 20737-1238. Please

state that your comments refer to Docket No. 98-073-1. 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.

FOR FURTHER INFORMATION CONTACT: For information concerning program

Operations, contact Mr. Jim Smith, Operations Officer, Program Support,

PPQ, APHIS, 4700 River Road Unit 60, Riverdale, MD 20737-1236, (301)

734-8295. For information concerning rate development, contact Ms.

Donna Ford, PPQ User Fees Section Head, FSSB, BASE, ABS, APHIS, 4700

River Road Unit 54, Riverdale, MD 20737-1232, (301) 734-8351.

SUPPLEMENTARY INFORMATION:

Background

Section 2509(a) of the Food, Agriculture, Conservation, and Trade

Act of 1990 (21 U.S.C. 136a), referred to below as the FACT Act,

authorizes the Animal and Plant Health Inspection Service (APHIS) to

collect user fees for agricultural quarantine and inspection (AQI)

services. The FACT Act was amended by Sec. 504 of the Federal

Agricultural Improvement and Reform Act of 1996 (Pub. L. 104-127), on

April 4, 1996.

The FACT Act, as amended, authorizes APHIS to collect user fees for

providing AQI services in connection with the arrival, at a port in the

customs territory of the United States, of:

Commercial vessels,

Commercial trucks,

Commercial railroad cars,

Commercial aircraft, and

International airline passengers.

According to the FACT Act, as amended, these user fees should recover

the costs of:

Providing the AQI services listed above,

Providing preclearance or preinspection at a site outside the

customs territory of the United States to such passengers and vehicles,

Administering the user fee program, and

Maintaining a reasonable balance in the Agricultural

Quarantine Inspection User Fee Account (AQI account).

Introduction

On July 24, 1997, we published in the Federal Register (62 FR

39747-39755, Docket No. 96-038-3) a rule amending the user fees and

setting user fees in advance for AQI services for fiscal years 1997

through 2002.

APHIS has had to provide AQI services beyond what we anticipated

when the currently scheduled fees were set in 1997. The increases in

services stem from an increase in international trade and travel,

necessitating more inspections at ports of arrival, changes in our

regulations that result in our having to inspect additional imported

articles, and enhanced efforts to crack down on the smuggling of

agricultural commodities. These increases in service are discussed in

more detail below, under the heading ``New AQI Program Costs.''

In this document, we are proposing to amend those fees for fiscal

years 2000 through 2002 in order to compensate for increased AQI

program costs and to reestablish a reasonable reserve in the AQI

account.

Because rulemaking takes time, we anticipate that the revised user

fees will not take effect until at least the second quarter of FY 2000.

Therefore, some of the calculations on the following pages, which

assume an implementation date of October 1, 1999, will have to be

revised when the final rule is published.

We plan to publish a notice in the Federal Register prior to the

beginning of each fiscal year to remind or notify the public of the

user fees for that particular fiscal year.

We also intend to monitor our fees throughout each year and look

closely at adjustments to fees that may be needed in future years. If

we determine that any fees are too high and are contributing to

unreasonably high reserve levels, we will publish lower fees in the

Federal Register and make them effective as quickly as possible. If it

becomes necessary to increase any fees because reserve levels are being

drawn too low, we will publish, for public comment, proposed fee

increases in the Federal Register.

New AQI Program Costs

APHIS is continually requested to process international airline

passengers faster, although we need to inspect passengers and their

baggage thoroughly to safeguard against the introduction of harmful

pests and diseases of animals and plants. We are committed to

processing passengers as quickly as possible, without jeopardizing the

success of AQI, whose purpose is to prevent the introduction of foreign

plant and animal pests and diseases which are harmful to this country's

agriculture; however, faster processing requires more officers,

additional canine teams, and the purchase of state-of-the-art high

definition x-ray machines at the medium and large ports throughout the

country. The new high definition x-ray machines, estimated to cost

$600,000

[[Page 43104]]

each, will greatly enhance the processing of passengers and reduce

further need for more inspectors. Due to the expense involved, we plan

to purchase these machines for the busiest ports to make optimal use of

the machines.

New and expanding airport terminals are also increasing the demand

for AQI services at areas in airports where we do not currently have

officers located. In the past, we were able to quickly clear

passengers, because most passengers arrived in the same general area of

the airport. Not only is the number of passengers increasing, but

additional international terminals are being built in new locations,

requiring additional officers and canine teams to keep up with demand

for service.

At the same time, we are trying to meet the constant demands from

brokers and shippers to clear cargo faster at various locations. In

many instances, in order to move cargo quickly, we must conduct both

initial and final inspections. Since we cannot hold cargo up at the

port to conduct a full inspection, we inspect a sampling of cargo at

the port of first arrival and conduct a more thorough inspection at the

final destination when the cargo is off-loaded. This requires

additional officers at the port of first arrival to cover the

increasing numbers of inspection locations, and new officers at final

destination points to conduct additional inspection services.

Further, inspection activities have increased as a result of recent

rulemakings. For example, additional inspections are necessary to

implement new regulations intended to prevent the introduction of pests

in imported solid wood packing material (see 63 FR 50100-50111 and 63

FR 69539-69543).

AQI services related to enforcing our regulations have also

expanded. APHIS compliance officers work in teams with local

authorities to detect, investigate, and prosecute violators. Recent

increased efforts include both border blitzes and market surveys.

Border blitzes involve unannounced, targeted inspections, as well

as random searches of cargo containers entering the United States where

no AQI staffing exists, at times when staffing is not usually provided,

or where existing staff must be supplemented. Market surveys consist of

searches in grocery stores, plant stores, and fruit and vegetable

markets for prohibited items.

When prohibited items are detected, follow-up investigations are

conducted to identify the item's origin and the responsible shippers,

importers, and brokers. Previous shipments and their destination points

are researched, located, and investigated for other prohibited items

and infested materials. This information is being used to develop a

violation database to help the teams target specific commodities and

importers who have a history of smuggling prohibited commodities, and

allow legitimate importers and exporters to move their products through

commerce without undue delay.

These activities are supported by many agricultural industries, who

see them as positive steps toward detecting and eliminating plant and

animal pests and diseases before they can become established in the

United States.

Projected AQI Program Costs for Fiscal Years 1999-2002

The following table shows the total projected costs of

administering the AQI program for fiscal years 1999 through 2002. When

we projected costs for fiscal years 1999 through 2002, we began with

the base need of $130,001,000 for Plant Protection and Quarantine

(PPQ), the APHIS unit that administers the AQI program in the United

States. The base need of PPQ is an increase of approximately $3.6

million in PPQ's base need as identified in the July 14, 1997, final

rule, and is due to unanticipated personnel compensation of $1.6

million for additional Civil Service Retirement assessments, higher

overtime costs of approximately $1.4 million, and additional pay cost

increases of $600,000. (The base need of PPQ simply reflects the cost

required for APHIS to be prepared to provide AQI services at all

international ports in the United States, without taking into account

the additional annual costs shown in the following table. The base need

is not affected by projected changes in the volumes of each category of

service.)

We then added new annual costs associated with increased PPQ

activities in the United States to project the total AQI program costs

to PPQ for fiscal years 1999 through 2002.

International Services is the APHIS program that administers the

AQI program in foreign regions. We projected the annual costs to

International Services of providing international preclearance services

for fiscal years 1999 through 2002 based on FY 1998 program costs plus

new costs associated with preclearance activities in Bermuda and the

Bahamas. The projected International Services annual costs were then

added to PPQ's annual costs to arrive at projected AQI annual program

cost subtotals.

We then added agency support costs and departmental charges to the

projected annual costs for PPQ and International Services to arrive at

projected annual AQI program costs.

The projected annual program costs take into account the costs of

providing AQI services only. They do not contain a reserve-building

component. The projected cost for each fiscal year simply reflects the

amount we anticipate it will cost to run the AQI program for that year.

As shown in the following table, we are proposing to phase in new

AQI services over fiscal years 1999 through 2002 in order to supplement

our existing work force at expanding and new ports.

Agricultural Quarantine Inspection (AQI) Program Projected Costs FY 1999-2002

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

FY 1999 FY 2000 FY 2001 FY 2002

Basis for calculating funding need estimate estimate estimate estimate

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Plant Protection and Quarantine (PPQ)

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Base Need (FY 1998 costs + FY 1999 pay costs)... $130,001,000 $130,001,000 $130,001,000 $130,001,000

Personnel Increase:

116 New positions @ 2 months................ 2,779,000 .............. .............. ..............

315 New positions + 116 in FY 99............ .............. 32,149,000 .............. ..............

40 New positions + 116 in FY 99; + 315 in FY .............. .............. 41,003,000 ..............

00.........................................

40 New positions + 116 in FY 99; + 315 in FY .............. .............. .............. 50,027,000

00; + 40 in FY 01..........................

Automation/Maintenance.......................... 1,900,000 4,500,000 4,500,000 1,000,000

Upgrade/Replace X-Ray Equipment:

20 machines................................. 1,540,000 .............. .............. ..............

20 machines................................. .............. 1,540,000 .............. ..............

16 machines................................. .............. .............. 1,232,000 ..............

[[Page 43105]]

New X-Ray Equipment:

5 machines.................................. 3,000,000 .............. .............. ..............

10 machines................................. .............. 6,000,000 .............. ..............

5 machines.................................. .............. .............. 3,000,000 ..............

5 machines.................................. .............. .............. .............. 3,000,000

New and Replacement Vehicles:

50 vehicles................................. 800,000 .............. .............. ..............

50 vehicles................................. .............. 800,000 .............. ..............

50 vehicles................................. .............. .............. 800,000 ..............

32 vehicles................................. .............. .............. .............. 512,000

New and Expanding Facility Costs:

JFK (NY); Laredo IV and Eagle Pass II (TX).. 500,000 .............. .............. ..............

Miami and Sanford (FL); Atlanta (GA), .............. 1,900,000 .............. ..............

Brownsville, El Paso, and Los Tomates (TX);

Santa Teresa (NM)..........................

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PPQ Subtotal.............................. 140,520,000 176,890,000 180,536,000 184,540,000

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International Services (IS)..................... 1,099,072 1,826,112 1,991,918 2,132,275

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Program Subtotal.......................... 141,619,072 178,716,112 182,526,918 186,672,275

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Support Costs:

Agency Overhead & Departmental Charges @ 16,838,508 21,249,346 21,702,451 22,195,333

10.63%.....................................

===============================================================

AQI Program Cost........................ 158,457,580 199,965,458 204,229,369 208,867,608

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Reserve Funds

In order to provide adequate AQI services, we have been forced to

use reserve funds to cover our costs for fiscal years 1997 through

1999. This has reduced our reserve levels at an alarming rate. Since

the current fees do not contain a reserve component, the potential to

run out of reserve funds entirely could become a reality in FY 2001 if

we do not add a reserve component to the fees. The following table

shows our use of reserve funds to recover costs that were higher than

available user fee collections in FY 1998.

FY 1998 Reserve Usage

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

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Total user fee collections.............................. $150,804,661

Unavailable collections \1\......................... -13,829,975

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

Available fee collections........................... 136,974,686

Cost of AQI program administration.................. -140,094,753

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

Funding shortage.................................... -3,120,067

FY 1998 available reserve........................... +17,785,662

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

FY 1999 available reserve........................... 14,665,595

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\1\ These collections were unavailable to pay for services provided in

FY 1998 because they were either not collected until after the close

of FY 1998, or are unavailable for expenditure until FY 2003 under

certain provisions of the FACT Act.

Further, for FY 1999, we are projecting the need to cover $10.2 million

in costs from our reserve. As a result, the reserve would contain a

balance of less than $3.9 million at the start of FY 2000 (2 percent of

the cost of running the program for that year), as shown in the

following table.

AQI User Fee Projected Reserve--Cash Basis Accounting Method

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Fiscal Year

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1998 1999 2000 2001 2002

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Fee Collections................. $150,804,661 $159,727,857 $201,066,541 $214,822,796 $217,421,963

Unavailable collections \1\. 13,829,975 12,000,000 5,000,000 .............. ..............

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Available collections..... 136,974,686 147,727,857 196,066,541 214,822,796 217,421,963

AQI Program Cost................ 140,094,753 158,457,580 199,965,458 204,229,369 208,867,608

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Shortage/surplus............ -3,120,067 -10,729,723 -3,898,917 10,593,427 8,554,355

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Projected available reserve 17,785,662 14,665,595 3,935,872 36,955 10,630,382

BEGIN FY...................

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Projected available reserve 14,665,595 3,935,872 36,955 10,630,382 19,184,737

END FY.....................

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Unavailable until FY 2003 \1\...

FY 1997 carry-over.......... 2,000,000 .............. .............. .............. ..............

Annual...................... 13,829,975 12,000,000 5,000,000 .............. ..............

[[Page 43106]]

Cumulative.................. 15,829,975 27,829,975 32,829,975 32,829,975 32,829,975

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\1\ These collections are unavailable to pay for services provided because they were either not collected until

after the close of the fiscal year in which they were earned, or are unavailable for expenditure until FY 2003

under provisions of the FACT Act.

Rebuilding the Reserve

While our spending authority is on a fiscal year basis, the

accounting method used by the Department of Treasury for user fee

collections is based on the date the funds are received and recorded in

the Treasury (cash basis--see the table above), not when they are

earned (accrual basis). The final amount that is available to us from

the AQI account each year is based on the amount collected and recorded

in the account between October 1 and September 30 of each fiscal year.

Since most of the fourth quarter payments are not due and therefore not

received until after the fiscal year is over, we are not able to use

those funds to pay for providing services in the fiscal year when they

are earned.

In the July 1997 final rule, we explained that it is necessary to

maintain a reasonable reserve balance in the AQI account in order to

account for fees earned for providing AQI services in a given fiscal

year that were not received until after that fiscal year ended. The

reserve also provides us with a means to ensure the continuity of AQI

service in cases of bad debt, carrier insolvency, and fluctuations in

activity volumes.

When we set the current user fees, we did not include a reserve-

building component in them because we believed that the reserve levels

would be maintained with fees we collected in excess of the program

costs. Although our user fees are designed to recover the cost of

providing services, in some instances, due to the fact that fees are

rounded up to the nearest quarter or nickel, we may collect additional

funds that are applied to the individual activity reserve balances. The

reserve levels have been maintained in the past through such additional

collections.

However, due to increasing costs, we cannot maintain our reserve

with the current user fees. Therefore, we are proposing to include a

reserve-building component in the user fees to rebuild the reserve

levels for each activity over fiscal years 2000 through 2002. Under

this proposal, the reserve levels for each category of service have

been calculated to reflect approximately 25 percent of each activity's

annual cost. The proposed reserve component would gradually rebuild the

reserve balance to a reasonable level of approximately 25 percent of

the AQI annual program costs to ensure that the reserve is fully funded

by fiscal year 2002.

The table below shows the final annual cost of the AQI program once

costs to rebuild the reserve are added. The final annual costs are the

figures on which we based our proposed fees. The fees are designed to

recover the full cost of the AQI program.

Total AQI Program Costs

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

FY 2000 FY 2001 FY 2002

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

Cost of AQI program services.................................... 199,965,458 204,229,369 208,867,608

Cost of rebuilding the reserve.................................. 17,125,000 17,550,000 21,480,000

(% of total program cost)................................... (8.56%) (8.59%) (10.28%)

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

Total AQI program costs................................... 217,090,458 221,779,369 230,347,608

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Calculation of Fees

Once we established the total annual costs to administer the AQI

program, including an amount to rebuild the AQI account reserve to a

reasonable level, we began the calculation of our proposed fees.

Volumes

First, we estimated the annual volume for each category of service

that would be subject to inspection. The estimates were based on annual

rates of activity for each service category shown in our FY 1992

through FY 1997 collection history.

In our commercial aircraft, commercial vessel, and commercial truck

service categories, we calculated the percentage of change in volume

between FY 1995 and FY 1996, and FY 1996 and FY 1997. Then we

calculated the average percentage of change for those years. We used

this average percentage of change to project volumes for fiscal years

1999 through 2002. We have collection data for FY 1998 available, but

decided not to use it in our calculations because numerous adjustments

to the FY 1998 collection data could be made through the end of FY 2000

(i.e., we will have to account for funds for overpaid vessels and

adjustments to aircraft fees remittances resulting from audit

findings). Therefore, we will review the FY 1998 collection data prior

to publishing a final rule and make necessary adjustments to the

calculations.

For commercial trucks, however, we had to revise our projected

volume for FY 1998 because the actual volume appeared to be much

higher. The average percentage of change from FY 1995 to FY 1996, and

from FY 1996 to FY 1997, was -1.27 for commercial trucks. The actual

volume for FY 1998 shows a 10.22 percent increase over the volume in FY

1997. Nevertheless, we believe the volume increase for FY 1998 is

misleading. During the first quarter of FY 1998, the wrong fee was

originally assessed for individual border crossings ($2.00 instead of

$4.00). In many cases, the corrected fee was eventually collected, but

was recorded in the system as an individual crossing, thus inflating

the actual volumes for FY 1998. Furthermore, a review of commercial

truck volumes for fiscal years 1993 through 1997 shows that the

percentage of change ranged from 2.59 percent to -2.77 percent. Based

on these relatively stable but slightly negative changes in volume, we

are projecting commercial truck volumes for fiscal

[[Page 43107]]

years 1999 through 2002 based on the percentage of change we calculated

for fiscal years 1995 through 1997 (-1.27 percent). These volumes are

shown in the following table:

Volumes/Percentage of Change from Previous Year

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Commercial aircraft Commercial vessel Commercial truck

Fiscal year -----------------------------------------------------------------------------------------------

Volume Change Volume Change Volume Change

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

1995.................................................... 361,657 .............. 48,098 .............. 612,743 ..............

1996.................................................... 351,989 -2.67% 47,655 -0.92% 614,214 0.24%

1997.................................................... 380,911 8.22% 48,758 2.31% 597,173 -2.77%

1998.................................................... 391,469 2.77% 51,098 4.80% 658,204 10.22%

Average: FY 1996 & FY 1997 percentage of change......... (-2.67% + 8.22%)/2= 2.77%

(-0.92% + 2.31%)/2= 0.70%

(0.24% + (-2.77%))/2= -1.27%

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Projected Projected Projected

Fiscal year volume Change volume Change volume Change

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

1999.................................................... 402,320 2.77% 51,454 0.70% 649,863 -1.27%

2000.................................................... 413,472 2.77% 51,813 0.70% 641,628 -1.27%

2001.................................................... 424,933 2.77% 52,173 0.70% 633,498 -1.27%

2002.................................................... 436,711 2.77% 52,537 0.70% 625,471 -1.27%

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In our commercial truck decal service category, we found that the

volume of users continued to increase, but at a decreasing rate. We

determined that the volume would most likely continue to increase

slightly, but that the increase in the number of decals would most

likely be limited to new or additional growth in trade. The decal

program has been in operation for several years now, and we believe

that the companies interested in buying them are doing so now.

Therefore, we are projecting a modest 5 percent growth increase for

each year, as shown in the following table:

Volumes of Commercial Truck Decals/Percentage of Change from Previous

Year

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

Percentage of

Fiscal year Volume change

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

1992.................................... 9,256 ..............

1993.................................... 12,403 34.00%

1994.................................... 13,476 8.66%

1995.................................... 14,317 6.24%

1996.................................... 15,758 10.07%

1997.................................... 18,003 14.24%

1998.................................... 19,298 7.20%

1999 (projected)........................ 20,263 5.00%

2000 (projected)........................ 21,276 5.00%

2001 (projected)........................ 22,340 5.00%

2002 (projected)........................ 23,457 5.00%

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

In our international air passenger service category, we found that

the volume of users continued to increase each fiscal year 1992 through

1998, but at a decreasing rate. Using the international air passenger

volumes listed below, we estimated percentage of increase in volume for

FY 1999 in the following manner:

1. First, we subtracted the percentage of change in volume from FY

1996 to FY 1997 (4.39%) from the percentage of change in volume from FY

1997 to FY 1998 (3.28%), yielding a rate of decline of -1.11.

2. We then divided this figure by the percentage of change in

volume from FY 1996 to FY 1997 (4.39%) to obtain a rate of decline from

FY 1996 to FY 1997 of -25.28.

3. We then multiplied this rate of decline by the percentage of

change in volume from FY 1997 to FY 1998 (3.28%), yielding a rate of

decline of -0.8293.

4. Finally, we added this result to the percentage of change in

volume from FY 1997 to FY 1998 (3.28%), yielding a projected increase

in volume of 2.45 percent for FY 1999.

This process was repeated to estimate growth for each fiscal year

from 2000 through 2002. These volumes are shown in the table below.

Volumes of International Air Passengers/ Percentage of Change from

Previous Year

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

Fiscal year Volume Percent change

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

1992.................................... 35,442,923 ..............

1993.................................... 39,630,213 11.81%

1994.................................... 41,784,350 5.44%

1995.................................... 44,710,181 7.00%

1996.................................... 48,296,322 8.02%

1997.................................... 50,414,566 4.39%

[[Page 43108]]

1998.................................... 52,068,452 3.28%

1999 (projected)........................ 53,346,102 2.45%

2000 (projected)........................ 54,325,203 1.84%

2001 (projected)........................ 55,070,989 1.37%

2002 (projected)........................ 55,636,477 1.03%

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

The volumes in our loaded railroad car service category increased

from 74,006 in 1994 to 102,265 in 1995 to 147,315 in 1996 as a result

of the North American Free Trade Agreement. The volume decreased in

1997, but for 1998, there was a slight increase in volume over 1996.

However, one of the five railroad companies transiting goods across the

U.S.-Mexican border has ceased operations indefinitely. In addition,

due to recent business consolidations, the number of railroad companies

crossing the border has decreased from five to three. Since our fee is

assessed to loaded railroad cars only, we do not anticipate much

increase in individual loaded railroad cars, but better utilization of

the cars by railroad companies. We believe that future increases above

the FY 1998 level will be minimal, and are projecting a zero percent

increase each fiscal year through 2002. We will watch the railroad car

volumes carefully, and if our volume assumption is incorrect, we will

take steps immediately to adjust the fees accordingly. The volumes are

shown in the following table.

Volumes of Loaded Railroad Car/Percentage of Change from Previous Year

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

Fiscal year Volume Percent change

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

1992.................................... 56,688 ..............

1993.................................... 64,023 12.94%

1994.................................... 74,006 15.59%

1995.................................... 102,265 38.18%

1996.................................... 147,315 44.05%

1997.................................... 141,717 -3.80%

1998.................................... 148,300 4.65%

1999 (projected)........................ 148,300 0.00%

2000 (projected)........................ 148,300 0.00%

2001 (projected)........................ 148,300 0.00%

2002 (projected)........................ 148,300 0.00%

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Distribution of Costs

Next, we projected the direct costs of providing AQI services in

fiscal years 1999 through 2002 for each category of service: Commercial

vessels, commercial trucks, commercial railroad cars, commercial

aircraft, and international airline passengers. The cost of providing

these services in prior fiscal years served as a basis for calculating

our projected costs.

In FY 1992, APHIS established accounting procedures to segregate

AQI user fee program costs. We published a detailed description of

these procedures in the Federal Register on December 31, 1992 (57 FR

62468-62473, Docket No. 92-148-1), as part of a document amending some

of our user fees.

As part of our accounting procedures, we established distinct

accounting codes to record costs that can be directly related to each

inspection activity. At the State level and below, the following costs

are direct-charged to the AQI User Fee Account: Salaries and benefits

for inspectors and canine officers, supervisors (such as port

directors) and clerical staff; equipment used only in connection with

services subject to user fees; contracts; and large supply items such

as x-ray equipment or uniforms.

Other costs that cannot be directly charged to individual accounts

are charged to ``distributable'' accounts established at the State

level. The following types of costs are charged to distributable

accounts: Utilities, rent, telephone, vehicles, office supplies, etc.

The costs in these distributable accounts are prorated (or distributed)

among all the activities that benefit from the expense, based on the

ratio of the costs that are directly charged to each activity divided

by the total costs directly charged to each account at the field level.

For example, if a State office performs work on domestic programs, AQI

user fee programs, and AQI appropriated programs, the costs are

distributed among the programs, based on the percentage of the direct

costs for that activity at the field level that are charged to that

activity. Costs incurred at the regional-, headquarters program staff-,

and agency-level support offices are also prorated to the separate AQI

activities based on the percentage of the costs that were directly

charged to each activity at the field level, as discussed above.

Using these accounting procedures, we calculated the total cost of

providing AQI services in each past fiscal year by determining the

amounts in each direct-charge account, then adding the pro rata share

of the distributable accounts maintained at the State, regional,

headquarters, and agency levels.

We then projected total costs to provide each category of service

during each future fiscal year. Each projection included the costs of

program delivery, which are incurred at the State level and below. Also

included was a pro rata share of the program direction and support

costs, as explained above, which include items at the regional and

headquarters program staff levels. Finally, each projection included a

pro rata share of agency-level support costs, as discussed above, which

includes activities that support the entire agency, such as recruitment

and development, legislative and public affairs, regulations

development, regulatory enforcement, budget and accounting services,

and payroll and purchasing services. Costs for billing and collection

services, legal

[[Page 43109]]

counsel, and rate development services that are directly related to

user fee activities are directly added to the user fee activities they

support and are not included in the proration of agency-level costs.

User Fee Calculation

The following tables show our user fee calculations. To calculate

the user fees, we divided the sum of the costs for each service by the

projected volume subject to inspection for that service, thereby

arriving at ``raw'' fees. We then rounded the raw fees.

As in the past, we rounded raw fees up, rather than down, to ensure

that we collect enough revenue to cover the costs of providing services

and enough revenue to maintain a reasonable reserve. Any excess

collections due to rounding would be added to the reserve balance for

each individual fee category. If an increase in volume results in

additional revenue from user fees, this revenue would not necessarily

increase the reserve because the additional money would be used to

service the increased volume.

We rounded all user fees up to the nearest quarter, except for the

international airline passenger user fee. Given the large volume of

passengers, if we rounded up to the nearest quarter we would recover

far more than is necessary. Therefore, we rounded the passenger user

fee up to the nearest nickel.

AQI User Fee Calculations, FY 2000

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

Estimated Projected Projected

AQI activity total costs volume Raw fee Rounded fee revenue

----------------------------------------\1\---------------------------------------------------------------------

Commercial vessel............... 24,115,749 51,813 465.44 465.50 24,118,952

Commercial truck \2\............ 4,442,247 1,067,156 4.16 4.25 4,535,413

Loaded railroad cars............ 977,907 148,300 6.59 6.75 1,001,025

Commercial aircraft............. 26,397,363 413,472 63.84 64.00 26,462,208

Airline passengers.............. 161,157,192 54,325,203 2.97 3.00 162,975,609

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

Total..................... 217,090,458 .............. .............. .............. 219,093,206

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

\1\ Total program costs include the cost of rebuilding the AQI account available reserve.

\2\ Decals could be purchased at 20 times the individual crossing rate, or $85.00 per decal, and would be valid

from January 1 through December 31, 2000.

AQI User Fee Calculations, FY 2001

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

Estimated Projected Projected

AQI activity total costs volume Raw fee Rounded fee revenue

----------------------------------------\1\---------------------------------------------------------------------

Commercial vessel............... 24,755,100 52,173 474.48 474.50 24,756,089

Commercial truck \2\............ 4,832,670 1,080,302 4.47 4.50 4,861,359

Loaded railroad cars............ 1,018,647 148,300 6.87 7.00 1,038,100

Commercial aircraft............. 27,476,799 424,933 64.66 64.75 27,514,412

Airline passengers.............. 163,696,152 55,070,989 2.97 3.00 165,212,967

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

Total..................... 221,779,368 .............. .............. .............. 223,382,926

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

\1\ Total program costs include the cost of rebuilding the AQI account available reserve.

\2\ Decals could be purchased at 20 times the individual crossing rate, or $90.00 per decal, and would be valid

from January 1 through December 31, 2001.

AQI User Fee Calculations, FY 2002

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

Estimated Projected Projected

AQI activity total costs volume Raw fee Rounded fee revenue

----------------------------------------\1\---------------------------------------------------------------------

Commercial vessel............... 25,242,791 52,537 480.48 480.50 25,244,029

Commercial truck \2\............ 5,046,927 1,094,614 4.61 4.75 5,199,417

Loaded railroad cars............ 1,024,546 148,300 6.91 7.00 1,038,100

Commercial aircraft............. 28,402,958 436,711 6.504 6.525 28,495,393

Airline passengers.............. 170,630,386 55,636,477 3.07 3.10 172,473,079

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

Total..................... 230,347,608 .............. .............. .............. 232,450,016

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

\1\ Total program costs include the cost of rebuilding the AQI account available reserve.

\2\ Decals could be purchased at 20 times the individual crossing rate, or $95.00 per decal, and would be valid

from January 1 through December 31, 2002.

Current and Proposed User Fees

Our current user fees for AQI services for fiscal years 1999

through 2002 and the user fees we are proposing to charge for these

services for FY 2000 through FY 2002 are shown in the table below.

Also, below, we describe each AQI service, and explain additional

activities and costs as they pertain to each service individually.

[[Page 43110]]

Agricultural Quarantine Inspection (AQI) User Fees

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

Currently Currently Currently

Service Current FY scheduled Proposed scheduled Proposed scheduled Proposed

1999 FY 2000 FY 2000 FY 2001 FY 2001 FY 2002 FY 2002

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

Commercial Vessel............................................ 454.50 461.75 465.50 471.25 474.50 480.25 480.50

Commercial Truck............................................. 4.00 4.00 4.25 4.00 4.50 4.25 4.75

Commercial Truck Decal....................................... 80.00 80.00 \1\ 85.00 80.00 \1\ 90.00 85.00 \1\ 95.00

Loaded Railroad Car.......................................... 6.50 6.75 6.75 6.75 7.00 7.00 7.00

Commercial Aircraft.......................................... 59.75 60.25 64.00 61.25 64.75 62.25 65.25

Airline Passenger............................................ 2.00 2.05 3.00 2.10 3.00 2.15 3.10

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

\1\ Commercial truck decals are issued on a calendar year basis. Decal rates would be effective January 1 of each year.

Commercial Vessels

We inspect commercial vessels of 100 net tons or more arriving at

ports of entry into the customs territory of the United States. Vessels

pay a user fee for the first 15 arrivals at ports. The U.S. Customs

Service (Customs) collects this user fee for APHIS.

The proposed fees for fiscal years 2000, 2001, and 2002 are

approximately 0.8, 0.7, and 0.05 percent higher than the respective

currently scheduled fees. The proposed fees would allow us to recover

increased costs attributed to:

Anticipated new hires in fiscal years 1999 and 2000 of at

least 51 inspection personnel at seaports throughout the United States,

including Miami, FL; Elizabeth, NJ; San Juan, PR; and Charleston, SC.

New and replacement vehicles, equipment, and additional x-

ray equipment.

The addition of a reserve component to the fees to

gradually rebuild the vessel reserve to a reasonable level of

approximately 25 percent of annual operating costs by the end of FY

2002.

For fiscal years 2001 and 2002, the proposed fees are less than one

half of one percent higher than the currently scheduled fees. This is

attributed to conducting the increased volume of vessel inspections

with the same number of personnel and new and improved technology.

Commercial Trucks

We inspect commercial trucks arriving at land ports in the customs

territory of the United States from Mexico.\1\ Customs also collects

our truck user fees.

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

\1\ 7 CFR 354.3(c)(2)(i) of the regulations exempts commercial

trucks entering the customs territory of the United States from

Canada from paying this APHIS user fee.

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

The proposed fees for fiscal years 2000, 2001, and 2002 are

approximately 6.25, 12.5, and 11.8 percent higher than the respective

currently scheduled fees. The proposed fees would allow us to recover

increased costs attributed to:

Anticipated new hires in fiscal years 1999 through 2002 of

approximately 39 additional inspection personnel at various land border

ports, including Brownsville and El Paso, TX, and Santa Teresa, NM.

New and replacement vehicles, equipment, and additional x-

ray equipment.

The addition of a reserve component to the fees to

gradually rebuild the depleted truck reserve to a reasonable level of

approximately 25 percent of the annual operating costs by the end of FY

2002.

The regulations currently require that commercial trucks pay the

APHIS user fee each time they enter the customs territory of the United

States from Mexico at the same time they pay the Customs user fee. Our

regulations also allow commercial trucks to prepay the APHIS user fee;

however, this only applies if they are prepaying the Customs user fee.

In that case, the required APHIS user fee is 20 times the user fee for

each arrival, and is valid for an unlimited number of entries during

the calendar year (see 7 CFR 354.3(c)(3)(i) of the regulations). The

truck owner or operator, upon payment of the APHIS and the Customs user

fees, receives a decal to place on the truck windshield. This is a

joint decal, indicating that both the Customs and APHIS user fees for

the truck have been paid for that calendar year.

Commercial Railroad Cars

We inspect loaded commercial railroad cars arriving at land ports

in the customs territory of the United States from Mexico.\2\ The fees

for this service are calculated and remitted by the individual railroad

companies within 60 days after the end of each calendar month.

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

\2\ Section 354.3(c)(2)(i) of the regulations exempts loaded

commercial railroad cars entering the customs territory of the

United States from Canada from paying the APHIS user fee.

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

The proposed fee for fiscal year 2001 is approximately 3.7 percent

higher than the currently scheduled fee. The fees for fiscal years 2000

and 2002 will not change. The proposed fees would allow us to recover

increased costs attributed to:

Anticipated new hires in fiscal years 2000 through 2002 of

approximately 18 additional inspection personnel at various land border

ports, including Los Tomates and Brownsville, TX, and Nogales, AZ.

New and replacement vehicles and equipment.

The addition of a reserve component to the fees to

gradually rebuild the railroad car reserve to a reasonable level of

approximately 25 percent of the annual operating costs by the end of FY

2002.

Commercial Aircraft

We also inspect international commercial aircraft arriving at

airports in the customs territory of the United States. The fees for

this service are calculated and remitted by the individual airline

companies within 31 days after the end of each calendar quarter.

The proposed fees for fiscal years 2000, 2001, and 2002 are

approximately 6.2, 5.7, and 4.8 percent higher than the respective

currently scheduled fees. The proposed fees would allow us to recover

increased costs attributed to:

Anticipated new hires in fiscal years 1999 through 2002 of

approximately 137 additional inspection personnel at various existing

and expanding or new airport facilities, including Miami, Orlando, and

Ft. Lauderdale, FL; Atlanta and Savannah, GA; Chicago, IL; JFK

International Airport, NY; Dallas, San Antonio, and Houston, TX; Los

Angeles and San Francisco, CA; Honolulu, HI; and San Juan, PR.

New and replacement vehicles, equipment, and additional x-

ray equipment.

The addition of a reserve component to the fees to

gradually rebuild the commercial aircraft reserve to a reasonable level

of approximately 25 percent of the annual operating costs by the end of

FY 2002.

[[Page 43111]]

In addition, we are working closely with Customs on the development

and installation at major airports of a joint automated cargo tracking

system, which would greatly improve the paper tracking cargo system

currently used at most airports.

International Airline Passengers

We also inspect international airline passengers arriving at

airports in the customs territory of the United States.

Millions of travelers pass through U.S. airports daily. APHIS'

overall goal is a timely, seamless inspection process, integrated with

clearance processes of other agencies in the Federal Inspection Service

(FIS) that will ensure the fastest passenger clearance time while

safeguarding against the introduction of harmful pests and diseases of

animals and plants. Our joint goal is to improve enforcement and

regulatory processes in order to clear most international air

passengers through the FIS inspection process in 30 minutes or less. In

partnership with the airline industry, advanced information will be

obtained on 80 percent of international air passengers through the use

of the Advance Passenger Information System to expedite the overall

processing of passengers with no loss in enforcement.

To accomplish these goals and to ensure adequate coverage, we

anticipate additional costs that would result from:

Hiring approximately 216 additional inspection personnel

in fiscal years 1999 through 2002 at various new and expanding airport

facilities, including Miami, Sanford, and Tampa, FL; New Orleans, LA;

Atlanta and Savannah, GA; Chicago, IL; JFK International Airport and

Brooklyn, NY; Dallas, Houston, San Antonio, El Paso, Galveston, and

Brownsville, TX; Los Angeles, Fresno, Sacramento, and San Francisco,

CA; Honolulu and Maui, HI; San Juan, PR; Bermuda, and the Bahamas.

Purchasing new and replacement vehicles, equipment, and

additional x-ray equipment.

Purchasing and installing new high definition x-ray

machines with luggage tracking and marking capability at most of the

larger airports throughout the country.

Adding about 50 new canine teams (one officer and one dog

per team) at airports throughout the country, including JFK

International Airport, NY; Newark, NJ; Chicago, IL; Honolulu, HI; Miami

and Ft. Lauderdale, FL; Atlanta, GA; Houston, Dallas, Pharr, Laredo,

and El Paso, TX; Los Angeles, Oakland, and San Francisco, CA.

The addition of a reserve component to the fees to

gradually rebuild the international airline passenger reserve to a

reasonable level of approximately 25 percent of the annual operating

costs by the end of FY 2002.

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been reviewed under Executive Order 12866.

The rule has been determined to be significant for the purposes of

Executive Order 12866 and, therefore, has been reviewed by the Office

of Management and Budget. The economic analysis prepared for this

proposed rule provides a cost-benefit analysis as required by Executive

Order 12866 and an analysis of economic effects on small entities as

required by the Regulatory Flexibility Act. The analysis is summarized

below. Copies of the full analysis are available by contacting Ms.

Donna Ford at the address listed under FOR FURTHER INFORMATION CONTACT.

Introduction

APHIS is proposing to revise existing agricultural quarantine and

inspection (AQI) user fees to recover additional and unanticipated

program costs and to rebuild the AQI reserve. The proposed AQI user fee

revisions would become effective in the first quarter of FY 2000 and

would be in effect through FY 2002.

International air passengers, commercial aircraft, commercial

vessels, commercial trucks, and commercial railroad cars arriving at

ports in the customs territory of the United States would be affected

by the increase in AQI user fees.

The FACT Act, as amended, provides that APHIS may prescribe and

collect fees to cover the cost of providing quarantine and inspection

services in connection with the arrival of international airline

passengers, commercial aircraft, commercial vessels, commercial trucks,

and commercial railroad cars at ports in the customs territory of the

United States. The FACT Act further states that the fees should be

sufficient to cover the cost of administering the program and

sufficient to maintain a reasonable balance (or reserve) in the AQI

User Fee Account.

Need for Regulation

The purpose of AQI inspections at United States ports of entry is

to prevent international travelers and conveyances from introducing

harmful plant and animal pests that could damage U.S. agriculture and

cause substantial economic losses to domestic producers, consumers,

exporters, and to a range of allied agricultural industries. In the

case of AQI user fees, those international travelers or conveyances who

may carry agricultural pests or diseases from abroad are required to

pay for AQI program activities.

Generating revenues to operate public programs by charging users is

widely practiced by Federal, State and local government agencies, and

is based on the premise that the beneficiaries or users of a public

system, and not the public at large, should pay for its operation. User

fees can be an equitable way of matching program costs to program users

or beneficiaries.

Composition of Proposed Fees

Computation of AQI user fees is based on direct program delivery

costs, program support costs, Agency-level support costs, anticipated

user fee administrative costs, and reserve fund costs.

Direct Program Costs

Direct program costs include, but are not limited to: Salary and

benefits for inspectors, canine officers, supervisory and clerical

staff, uniform allowances, local travel expenses, and specialized

equipment purchases.

Program Support Costs

Program support costs include all expenditures necessary to

maintain regional and headquarters support staffs and offices,

including APHIS program staff, detection methods development, plant

risk assessments, and automatic data processing (ADP) support.

Agency-level Costs

In addition to salary and benefit costs, Agency-level support costs

include, but are not limited to: Recruitment and development,

legislative and public affairs, regulatory enforcement, communications,

postage, budget and accounting services, and the cost for USDA's

National Finance Center to provide payroll, purchasing, and other

related financial services.

Administrative Costs

The FACT Act, as amended, allows the Agency to recover

administrative costs that the Agency incurs as a direct result of

developing, collecting, and monitoring AQI user fees.

The Reserve Fund

The FACT Act allows for a reasonable balance in the AQI User Fee

Account. The reserve serves several purposes. The reserve insures that

the Agency has access, through the AQI User Fee Account, to funds for

normal operating expenses. Second, the reserve fund will insure that

the Agency has sufficient

[[Page 43112]]

operating funds in cases of bad debt, carrier insolvency, or

fluctuations in activity volumes. Further, in the July 1997 final rule,

we explained that it is also necessary to maintain a reasonable reserve

balance in the AQI account in order to account for fees earned for

providing AQI services in a given fiscal year that were not received

until after that fiscal year ended.

Regulatory Flexibility Analysis

The effects of increased fees on small entities in each of the

affected industries are discussed separately below. The proposed fee

changes will also affect international airline passengers arriving at

ports in the customs territory of the United States; however,

passengers are not included in this analysis because the Regulatory

Flexibility Act does not cover individuals.

Commercial Vessels

We are proposing to amend the scheduled user fees for inspecting

commercial vessels by increasing the fees by $3.75 in FY 2000, by $3.25

in FY 2001, and by $0.25 in FY 2002. APHIS inspects vessels of 100 net

tons or more arriving from all foreign ports, except Canada. Typically,

APHIS inspects (and charges) dry cargo vessels operating between the

United States and foreign ports. At the beginning of 1996 there were

192 U.S. dry cargo vessels.

Bureau of the Census data compiled by the Small Business

Administration (SBA) in 1995 show that the affected industry, U.S.

commercial vessels engaged in deep sea foreign transportation of

freight, was composed mostly of small firms (less than 500 employees,

according to the SBA definition). In 1995, there were 125 firms

engaging in deep sea transportation of freight and 111 of them, or 89

percent of the affected industry, employed less than 500 employees.

Also in 1995, the average or typical small U.S. firm engaged in deep

sea transportation of freight had roughly 31 employees, a payroll of

less than $1.6 million, and annual receipts of $28 million. Data on

number of dry cargo vessels per firm or firms exclusively operating dry

cargo vessels are not available.

Anecdotal information suggests that many of the companies that are

subject to AQI inspections are not U.S. firms. Further, it is unclear

how many of the 125 U.S. firms would actually be affected by the

increase in AQI user fees, and how many of the affected firms would be

small entities. We do know that total daily operating costs for dry

cargo vessels idle in port average between $23,600 and $26,800. The

proposed user fee increases of $3.75 in FY 2000, $3.25 in FY 2001, and

$0.25 in FY 2002 are very insignificant fractions of daily operating

costs, suggesting that the proposed fee revision will not have a

significant economic impact on small firms operating vessels.

Commercial Trucks

APHIS inspects trucks entering the United States from Mexico. It is

unclear how many of these trucks entering the United States from Mexico

are owned and operated by U.S. firms. According to a recent General

Accounting Office report, roughly 11,000 trucks cross the border each

week day (a total of 3,113,091 in FY 1996) from Mexico into the United

States. The bulk (93 percent) of northbound truck traffic comes through

seven major customs ports: Otay Mesa, California; Calexico, California;

Nogales, Arizona; El Paso, Texas; Laredo, Texas; McAllen, Texas; and

Brownsville, Texas. Many of these trucks are owned and operated by

Mexican firms. At present, trucks from Mexico are limited to commercial

zones along the border and many make multiple daily crossings. Mexican

brokers tend to control much of the truck traffic at some border

locations. Reliable data on future traffic patterns are not available.

It is unclear how many U.S. trucking firms would be affected by the

proposed increase in AQI user fees. Anecdotal evidence from APHIS

employees indicates that many of the AQI truck decals, which are good

for multiple inspections, are being purchased by U.S. trucking firms

operating in Texas, California, and Arizona. 1995 Bureau of the Census

data show that the overwhelming majority of trucking firms in these

States would be considered small firms by SBA standards (less than

$18.5 million in receipts annually). SBA data also show that the

typical small trucking firm in one of these border States had 10

employees and earned a little less than $1 million in receipts

annually.

If we assume that any small U.S. trucking firm that regularly

transports freight from Mexico would purchase an APHIS truck decal,

which is good for an unlimited number of entries during the calendar

year, the proposed increase in user fees could cost a small firm, at

most, an additional $5 per truck or an estimated $55 per firm in FY

2000; and $10 per truck or an estimated $110 per firm in FY 2001 and FY

2002. This estimate is based on the assumption that a small firm owns a

maximum of 11 trucks. There are no official statistics on the fleet

size of small trucking firms either for selected border States, or for

the United States as a whole. This assumption is based on private

sector trucking industry data on 256,223 U.S. trucking firms

representing a combined fleet of over 2.3 million vehicles. This data

shows that 91 percent of firms own 11 or fewer trucks.

SBA data show that the typical small trucking firm in Arizona,

California, or Texas has annual receipts of $932,000. We therefore

believe that the proposed increase in cost, as explained above ($110

for the average small firm), would not result in a significant new

burden on small commercial trucking firms.

Loaded Commercial Railroad Cars

There are four U.S. railroad companies currently transporting goods

across the U.S.-Mexican border. Two of these railroad companies meet

the SBA criteria for small entities (fewer than 1,500 employees). As of

1991, the smaller railroad companies transported between 960 and 2,000

loaded rail cars into the United States from Mexico annually. Data on

operating expenses and profit margins for these companies are not

available; but proposed user fees would not increase in FY 2000 and FY

2002, and would only increase by $0.25 in FY 2001, suggesting that

there would not be a significant economic impact on these two small

U.S. railroad companies.

Commercial Airlines

We are proposing to amend the scheduled user fees for inspecting

commercial aircraft by increasing the fees by $3.75 in FY 2000, $3.50

in FY 2001, and $3.00 in FY 2002. International scheduled and

unscheduled (chartered) air passenger, air cargo, and air courier

carriers arriving at U.S. customs ports are subject to AQI inspections.

Bureau of the Census data compiled by the SBA show that there were a

total of 6107 firms in the U.S. air transportation industry in 1995,

and that more than 5893 (or more than 96.5 percent) would have met the

SBA criteria for small entity (employing fewer than 1500 employees).

The typical small firm in the air transportation industry had 15

employees, an annual payroll of $398 thousand, and estimated annual

receipts of $2.1 million.

APHIS regulations affect international flights, many of which are

operated by foreign-owned firms. Those U.S. air transport firms that do

not operate international flights are not subject to the proposed rule.

Agency records show that, in 1995, only 123 of the 6107 firms in the

air transportation industry were subject to AQI inspections because

they

[[Page 43113]]

operated international flights. This data suggests that the increased

user fees will not affect a substantial number of small air

transportation companies. Even if all 123 U.S. airline firms were small

entities (which they are not), the proposed fee revision would be

applicable to only 2 percent of small firms in the industry. Using

information on the number of firms inspected, the number of projected

inspections, and the assumption that firms subject to inspection are

distributed by size in a fashion consistent with the industry as a

whole, we can develop very rough estimates of impact on small firms.

Each of the 123 U.S. companies would have had an airplane inspected

between 1600 and 1700 times per year if inspections were prorated

equally between large and small firms. In practice, small firms with

fewer aircraft would probably have substantially fewer annual

inspections, so we are overestimating the impact of fee revisions on

small firms. Given the assumptions above, the increased fees listed

above would translate into additional costs per firm of between $5,000

and $6,000 per year, which are less than three tenths of one percent of

estimated annual receipts for the average small air transportation

firm.

Given the data, assumptions, and calculations above, it is

reasonable to conclude that proposed fee revisions will not have

significant economic impact on a substantial number of small air

transportation firms.

Other Costs and Benefits

Additional reporting costs to private airlines associated with

revising user fees are likely to be very small because mechanisms are

already in place for collecting fees. There should be no additional

recordkeeping costs for ticketing agents and tour operators, who are

not involved in remitting fees and are not expected to remit fees in

future. Further there will be no additional reporting burdens on

vessel, aircraft, rail car, and truck operators as a result of the

proposed changes in user fees.

The benefit of user fees is the shift in the payment of services

from taxpayers as a whole to those persons who are receiving the

government services. While taxes may not change by the same amount as

the change in user fee collections, there is a related shift in

appropriations, which allows tax dollars to be applied to other

programs that benefit the public in general.

The administrative cost involved in obtaining these savings would

be minimal. APHIS already has a user fee program and a mechanism for

collecting user fees in place, and since this proposal would simply

update existing user fees, increases in administrative costs would be

small. Because the savings are sufficiently large, and the

administrative costs would be small, it is likely that the net gain in

reducing the burden on taxpayers as a whole would outweigh the cost of

administering the revisions of the user fees.

Under these circumstances, the Administrator of the Animal and

Plant Health Inspection Service has determined that this action would

not have a significant economic impact on a substantial number of small

entities.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic

Assistance under No. 10.025 and is subject to Executive Order 12372,

which requires intergovernmental consultation with State and local

officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,

Civil Justice Reform. If this proposed rule is adopted: (1) All State

and local laws and regulations that are inconsistent with this rule

will be preempted; (2) no retroactive effect will be given to this

rule; and (3) administrative proceedings will not be required before

parties may file suit in court challenging this rule.

Paperwork Reduction Act

This proposed rule contains no new information collection or

recordkeeping requirements under the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.).

List of Subjects in 7 CFR Part 354

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

Quarantine, Reporting and recordkeeping requirements, Travel and

transportation expenses.

Accordingly, we propose to amend 7 CFR part 354 as follows:

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

USER FEES

1. The authority citation for part 354 would continue 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).

2. Section 354.3 would be amended by revising the tables in

paragraphs (b)(1), (c)(1), (d)(1), (e)(1), and (f)(1) to read as

follows:

Sec. 354.3 User fees for certain international services.

* * * * *

(b) * * *

(1) * * *

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

Effective dates Amount

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

October 1, 1998 through September 30, 1999................. 454.50

October 1, 1999 through September 30, 2000................. 465.50

October 1, 2000 through September 30, 2001................. 474.50

October 1, 2001 through September 30, 2002................. 480.50

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

* * * * *

(c) * * *

(1) * * *

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

Effective dates Amount

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

October 1, 1998 through September 30, 1999................. 4.00

October 1, 1999 through September 30, 2000................. 4.25

October 1, 2000 through September 30, 2001................. 4.50

October 1, 2001 through September 30, 2002................. 4.75

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

* * * * *

(d) * * *

(1) * * *

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

Effective dates Amount

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

October 1, 1998 through September 30, 1999................. 6.50

October 1, 1999 through September 30, 2000................. 6.75

October 1, 2000 through September 30, 2001................. 7.00

October 1, 2001 through September 30, 2002................. 7.00

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

* * * * *

(e) * * *

(1) * * *

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

Effective dates Amount

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

October 1, 1998 through September 30, 1999................. 59.75

October 1, 1999 through September 30, 2000................. 64.00

October 1, 2000 through September 30, 2001................. 64.75

October 1, 2001 through September 30, 2002................. 65.25

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

* * * * *

(f) * * *

(1) * * *

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

Effective dates Amount

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

October 1, 1998 through September 30, 1999................. 2.00

October 1, 1999 through September 30, 2000................. 3.00

October 1, 2000 through September 30, 2001................. 3.00

October 1, 2001 through September 30, 2002................. 3.10

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

[[Page 43114]]

* * * * *

3. In Sec. 354.3, paragraph (c)(3)(i) would be amended by removing

the words ``, except, that through September 30, 1997, the amount to be

paid is $40.00''.

Done in Washington, DC, this 30th day of July 1999.

Bobby R. Acord,

Acting Administrator, Animal and Plant Health Inspection Service.

[FR Doc. 99-20113 Filed 8-6-99; 8:45 am]

BILLING CODE 3410-34-P