### Regulatory Impact Analysis and Initial Regulatory Flexibility Analysis Proposed Rule Lacey Act Implementation, De finitions for Exempt and Regulated Articles

APHIS 2009-0018

U.S. Department of Agriculture
Animal and Plant Health Inspection Service

June 2010i 

### Summary
Recent amendments to the Lacey Act expanded it s protections to a broader range of plant species, extended its reach to en compass products, including timber, that derive from illegally harvested plants, and require that importers s ubmit a declaration at the time of importation for certain plants and plant products. Common cultivars and common food crops are among the categorical exemptions to the provisions of th e Act. The Act does not define the terms “common cultivar” or “common food crop,” but instead gi ves authority to the U.S. Department of Agriculture and the U.S. Department of the Inte rior to define these te rms by regulation. This proposed rule provides these definitions. To the extent that the proposed rule defines which products are exempted from the provisions of the Act, it would benef it U.S. importers, large and small. 1 By defining the terms “common cultivar” and “common food crop,” the pr oposed rule would facilitate importer understanding of and compliance wi th the Act’s requirements. “Common cultivar” and “common food crop” are de fined in this proposed rule to ensure that the exemptions do not place at risk plants of conservation c oncern. The definitions are also consistent with the terms’ existing and commonl y understood definitions. Since the terms have not previously been defined, there should be no instances in which an importer would be required because of this rule to make declar ations for commodities that are not now being declared. In other words, the definitions presente d in this rule and the related exemptions should not result in additional costs for importers based on their current activities. On the other hand,

1 Enforcement of the declaration requirements is bein g phased in utilizing categories from the Harmonized Tariff Schedule (HTS) of the United States. Only a limited number of product categories are currently being enforced. Therefore, some products that are not exempted under the Act can currently enter the United States without a declaration. Conversely, a small number of decl arations are currently being filed for commodities that are either common cultivars or common food crops under the proposed definitions.ii the U.S. Department of Agriculture’s Animal a nd Plant Health Inspection Service has estimated that about 5 percent of declarat ions being made under the current stage of phased in enforcement of the Act are either for common cultivars or common food crops that would be exempted under the proposed definitions. The costs incurred in making these declarations are a measure of the expected benefits of the rule. We estimate the total annual cost savings associated with these declarations alone would be between $900,000 and $2.8 million. Note that the full implementation of the declaration requirement would cover far more product categories than currently require a declaration.iii 

### Table of Contents Summary ....................................................................................................................... ....... i Introduction .................................................................................................................. ....... 1 Benefits and Costs of the Rule ............................................................................................ 2 Initial Regulatory Flex ibility Analysis ................................................................................ 4 Reasons Action is Being Considered .............................................................................. 5 Objectives of and Legal Basis for the Rule .................................................................... 5 Potentially Affected Small Entities ................................................................................. 5 Projected Reporting, Recordkeeping, a nd Other Compliance Requirements ................. 8 Duplication, Overlap, or Conflict with Existing Rules and Regulations ........................ 9 Alternatives to Minimize Significan t Economic Impacts of the Rule ............................ 91 

### Introduction
The Lacey Act, as amended, makes it unlawful to import, export, transport, sell, receive, acquire, or purchase in intersta te or foreign commerce any plant, with some limited exceptions, taken in violation of any Federal, State, tribal, or foreign law that protect s plants. The Lacey Act also requires import decl arations for certain plants and pl ant products and makes it unlawful to make or submit any false record, account, or label for, or any false iden tification of, any plant covered by the Act. 2 Common cultivars and common food crops are among the categorical exemptions to the provisions of the Act, but are not defined w ithin the Act. The Department of Agriculture’s Animal a nd Plant Health Inspect ion Service (APHIS) and the Department of the Interior’s Fish a nd Wildlife Service are proposing to establish definitions for the terms “common cultivar” and “common food crop.” 3 These proposed definitions would specify which plants and plan t products are subject to the provisions of the Act, including the decl aration requirement.

2 The declaration must contain, among other things, the scientific name of the plant, value of the importation, quantity of the plant, and name of the country where the plant was harvested. For paper and paperboard products containing recycled cont ent, the declaration also must include the average percent of r ecycled content without regard for species or country of harvest.
3 The proposed definiti ons are as follows: Common cultivar. A plant (except a tree) that: (a) Has been developed through selective breeding or other means for specific morphological or physiological characteristics; and (b) Is a species or hybrid that is cultivated on a commercial scale; and (c) Is not listed: (1) In an appendix to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (27 UST 1087; TIAS 8249); (2) As an endanger ed or threatened species u nder the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq .); or (3) Pursuant to any State law that provides for the cons ervation of species that are indigenous to the State an d are threatened with extinction. Common food crop. A plant that: (a) Has been raised, grown, or cultivated for human or animal consumption; and (b) Is a species or hybrid that is cultivated on a commercial scale; and:(c) Is not listed:(1) In an appendix to the Convention on International Trade in Endangered Species of Wild Fauna and Flora (27 UST 1087; TIAS 8249); (2) As an endangered or threatened species under the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq .); or (3) Pursuant to any State law that provides for the conservation of species that are indigenous to the State and are threatened with extinction.2 Benefits and costs of the rule are exam ined in accordance with Executive Order 12866, and the benefits are expected to exceed the costs overall. Poss ible impacts on small entities are considered in accordance with the Regulatory Flexibility Act. 

### Benefits and Cost s of the Rule
The recent amendments to the Act impose th e declaration requirement on imports of plants and plant products and cr eate three categories of plants that are exempt from the provisions of the Act: (1) Common cultivars, except trees, and common food crops (including roots, seeds, parts, or produc ts thereof); (2) Scientific specimens of plant genetic material (including roots, seeds, germplasm, parts, or pr oducts thereof) that ar e to be used only for laboratory or field research; and (3) Plants that are to remain planted or to be planted or replanted. 4 Since the declaration requirement and the ex emptions were established directly in the 2008 Farm Bill, their existence, per se , is not a matter for consideratio n in the proposed rule or in this analysis. 5 Our analysis is of the exp ected benefits and costs of the proposed definitions of “common cultivar” and “common food crop.” To the extent that the proposed rule defines which products are exempted from the provisions of the Act, it would benefit U.S. importers. By defining “common cultivar” and “common food crop,” the proposed rule would facilitate importer understanding of and compliance with the Act’s requirements.

4 Exclusions 2 and 3 do not apply if the plant is listed: in an appendix to the Convention on International Trade in Endangered Species of Wild Fauna an d Flora (CITES); or as an endanger ed or threatened species under the Endangered Species Act of 1973; or pursuant to any State law that provides for the cons ervation of species that are indigenous to the State and ar e threatened with extinction. 5 The public comments received in response to APHIS’ published notices of Oct ober 8, 2008 and February 3, 2009 in Docket No. 2008-0119 contain little in the way of substantive data on the cost of complying with the declaration requirement. However, those comments indicate that, for some importers, the requirement could be burdensome.3 Enforcement of the declaration requirements is being phased in utilizing categories from the Harmonized Tariff Schedule of the United Stat es (HTS). The phase-in schedule is largely based on the degree of processing and complexity of composition of the affected products. The declaration requirements for products in part s of HTS Chapters 44, 66, 82, 92, 93, 94, 95 and 97, are the only requirements currently being enforced. 6 Therefore, some products that are not exempted under the Act can currently enter th e United States without a declaration. Importers of a small number of products that would be exempt based on the definitions proposed in this rule may currently be filing de clarations upon entry of their products into the United States. Importers of those pro ducts would benefit from this rule. Under the current stage of en forcement of the Lacey Act, 9,200 declarations per week have been filed on average. It is estimated that about 5 percent of these declarations are being filed for commodities that are either comm on cultivars or common food crops under the proposed definitions. The cost incurred in ma king these declarations is one measure of the expected benefits of the rule. Th e costs to those filing these declar ations include the labor cost to collect and maintain the necessary data and to complete and review the paperwork, the cost of postage for paper declaration submissions, and th e cost of the automate d broker interface (ABI) fees for electronic declaration submissions. In addition, there ar e government costs for processing those declarations. We estimate the total annual cost savings would be between

6 Enforcement of the declaration requirement for goods in 4401-fuel wood; 4403-wood in the rough; 4404- hoopwood; poles, piles, stakes; 4406-railway or tramway sleepers; 4407 wood sawn or chipped lengthwise; 4408 sheets for veneering; 4409-wood continuously shaped; 4417-tools, tool handles, broom handles; and 4418-builders’ joinery and carpentry of wood began on April 1, 2009. For 4402-wood charcoal; 4412 plywood, veneered panels except 44129906 and 44129957; 4414-wooden frames; 4419-tableware & kitchenware of wood; and 4420 wood marquetry, caskets, statuettes enforcement began on Oct. 1, 2009. For 4421-other articles of wood; 6602 walking sticks, whips, crops; 8201-hand tools; 9201-pianos; 9202-other stringed instruments; 9302-revolvers and pistols; 93051020-parts and accessories for revol vers and pistols; 940169-seats with wood frames; 950420-articles and accessories for billiards; and 9703-sculpture s enforcement began on April 1, 2010.4 $900,000 and $2.8 million. These estimated cost savings are based on 23,920 7 annual declarations that would not need to be filed, 1.5 hours of management time per declaration for data collection, completion and review of each declaration, 8 postage costs of $0.44 per paper declaration, ABI fees of between $10 and $30 per electronic declaration, 9 and salary and benefits for 2.3 government declaration processing positions. 10 Note that the full implementation of the de claration requirement would cover far more product categories than currently require a declar ation. We cannot predic t the total number of declarations that would o ccur under full implementation. Since the terms “common cultivar” and “co mmon food crop,” while not yet defined by regulation, were previously incl uded in the statute, there shoul d be no instances in which an importer would be required because of this rule to make declarations for commodities that are not now being declared. In other words, the defi nitions presented in this rule and the related exemptions should not result in additional costs fo r importers based on thei r current activities. 

### Initial Regulatory Flexibility Analysis
The Regulatory Flexibility Act requires agencies to evaluate the poten tial effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions. Section 60 3 of the Act requires agencies to pr epare and make available for public comment an initial regulatory flex ibility analysis that describe s expected impacts of a proposed rule on small entities.

7 Five percent of 9,200 total declara tions per week over an entire year. 8 The cost of this management time is based on the range in median hourly compensation for various management occupations, not including chief executives, of between $15.55 and $55.08. Bureau of Labor Statistics, May 2009 National Occupational Employment and Wage Estimates. 9 Based on various industry sources for brokerage service fees. 10 Based on GS-5 step 5 or GS-7 step 5 salaries and benefits, and each empl oyee processing 200 declarations per week.5 Reasons Action is Being Considered Recent amendments to the Lacey Act expanded it s protections to a broader range of plant species, extended its reach to en compass products, including timber, that derive from illegally harvested plants, and require that importers s ubmit a declaration at the time of importation for certain plants and plant products. Common cultivars and common food crops are among the categorical exemptions to the provisions of th e Act. The Act does not define the terms “common cultivar” and “common food crop” but instead gives authority to the U.S. Department of Agriculture (USDA) and the U.S. Department of the Interior (DOI) to define these terms by regulation. This proposed rule is intended to provide these definitions. Objectives of and Legal Basis for the Rule The definitions are designed to ensure that th e exemptions do not plac e at risk plants of conservation concern, while exempting plants th at are grown on a commercial scale. The definition for “common cultivar” is consistent wi th the definition of “cultivar” contained in the CITES regulations promulgated by the DOI’s Fish and Wildlife Service, with additional phrasing added in order to limit the definitions to “co mmon” exemplars. The definition for “common food crop” was developed with consideration of common dictionary definitions and terms in commercial use. In both definitions, the exceptio ns for endangered and threatened species are consistent with the provisions of the Act. Potentially Affected Small Entities The Small Business Administration (SBA) has established guidelines for determining which entities are to be considered small. Plan ts and plant products, such as fruits, vegetables, and nursery stock are imported into this count ry for commercial purposes, for research, for education, and by hobbyists and coll ectors and are covered under th e Act. In addition, many less obvious products, such as cotton shirts and pharm aceuticals, contain plant products and are also6 covered under the Act. Therefore, the importe rs potentially affected by the proposed rule represent a broad cross section of U.S. bus inesses, government and university research institutions, non-profit oper ations, and individuals. Importers of plants and plant products are primarily identified w ithin the wholesaling sector of the U.S. economy. Importers either sell goods on their own acc ount (import merchants) or arrange for the sale of goods owned by others (import agents and brokers). Importers fall into the North American Industrial Classification System (NAICS) sector 42. In particular, fruit and vegetable importers are in sect or 424480, fresh fruit and vegetabl e wholesale. Importers of frozen fruits and vegetables ar e part of NAICS sector 424420, pack aged frozen food wholesale. Importers of flowers and nursery stock are part of NAICS 424930, flower, nursery stock & florists’ supplies wholesale. Importers of seeds are part of NAICS 424910, farm supplies wholesale. In 2007, the average wholesaling establishmen t had revenues of $15 million. Fresh fruit and vegetable wholesalers had average reve nues of $12.4 million, packaged frozen fruit wholesalers had average revenues of $25.1 million, flower, nursery stock and florist supplies wholesalers had average revenues of $2.8 million, and farm supply wholesalers had average revenues of $9.5 million. 11 A firm primarily engaged in wholesaling comm odities is considered small if it employs not more than 100 persons. In 2002, more than 98 percent of all wholesaling establishments were considered small. 12 About 95 percent of fruit and ve getable wholesalers and packaged frozen food wholesalers were considered small. More than 97 percent of flower, nursery stock &

11 U.S Department of Co mmerce, U.S. Census Bu reau, 2007 Economic Census. 12 Data on the employment size of establishments is not yet avai lable in the 2007 Economic Census.7 florists’ supplies wholesalers were considered small and nearly 98 percent of farm supply (seed) wholesalers were considered small. Entities conducting research and experimental development on plants and plant products may also be affected by the proposed rule and are part of NAICS sector 541712, research and development in the physical, engine ering, and life sciences. In 2002, entities in this sector had an average of $6 million in revenues. 13 A business concern primarily engaged in research is considered small by the SBA if it employs no more than 500 persons. Firms involved in research and development in the life sciences comp rise NAICS sector 5417102. About 98 percent of these firms were considered small in 2002. Research and experimental development also occurs at educational institutions and they may also be affected by the proposed definitions . Elementary and secondary schools, junior colleges, Colleges and universities are consider ed small if they have annual revenues of $6.5 million or less. We do not currently have e nough information to determine the number of elementary and secondary schools that would be considered small. However, in 2001-02, the average elementary/secondary school had annual revenues of about $4.4 million. Therefore, the average school would be considered small. According to data from the Department of Education, about 20 percent of colleges and uni versities were considered small in 1996. Zoos and museums also import plants and plan t products. Zoos and botanical gardens are classified in NAICS sector 712130. In 2002, zoos and botanical gardens exempt from Federal income tax had average revenues of $4.7 million, while those institutions subject to Federal income tax had average revenues of $1.6 million. Museums are classified in NAICS sector 712110. In 2002, museums exempt from Federal income tax had average revenues of $1.5

13 Data from the 2007 Economic Census is not yet available for some categories.8 million, while those museums subject to Federal income tax had average revenues of $1.2
million. Museums and zoos are considered small if they have annual revenues of $6.5 million or less. Between 94 and 97 percent of museums and between 83 and 90 percent of zoos and botanical gardens were considered small in 2002. 14 From the above it is clear that the vast majo rity of potentially aff ected entities would be considered small. To the extent that the pr oposed rule defines whic h products are exempted from the provisions of the Act, it would benefit U.S. importers, large and small. 15 By defining the terms “common food crop” and “common cultivar ,” the proposed rule facilitates importer compliance with the Act’s requirements. We invite public comment on the proposed ru le - including any comment on the expected impacts for small entities, and on how the proposed rule could be modified to reduce any costs or burdens for small entities consis tent with the Act. Any comment suggesting changes to the proposed definitions should be supported by a science-based explanati on of why the changes should be considered. Projected Reporting, Recor dkeeping, and Other Compliance Requirements The proposed rule contains, under the heading “Paperwork Reduction Act,” a description of the information collection and recordkeeping requirements associ ated with the proposed rule.

14 Ibid. 15 Enforcement of the declaration requirements is being ph ased in utilizing categories from the Harmonized Tariff Schedule of the United States. Only some product categories are currently being enforced. Therefore, some products that are not exempted under the Act can curr ently enter the United States without a declaration. Conversely, a small number of declarations are curren tly being filed for commodities that are either common cultivars or common food crops under the proposed definitions.9 Duplication, Overlap, or Conflict with Existing Rules and Regulations APHIS has not identified any dup lication, overlap, or conflict of the proposed rule with other Federal rules. Alternatives to Minimize Signifi cant Economic Impacts of the Rule “Common cultivar” and “common food crop” are de fined in this proposed rule to ensure that the exemptions do not place at risk plants of conservation c oncern. The definitions are also consistent with the terms’ existing and commonl y understood definitions. Since the terms were already included in the statute prior to the pr oposed rulemaking, there should be no instances in which an importer would be required because of th is rule to make declarations for commodities that are not now being declared. In other words, the definitions presented in this rule and the related exemptions should not result in additional costs for importers based on their current activities. On the other hand, APHIS has estimate d that about 5 percent of declarations being made under the current stage of phased in en forcement of the Act are either for common cultivars or common food crops that would be exempted under the proposed definitions. The costs incurred in making these decl arations are a measure of the exp ected benefits of the rule. In the absence of significant economic impacts that would harm impor ters, we have not identified alternatives that would minimize such impacts.