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<p class="footer">i</p>
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<p>United States Department of Agriculture</p>
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<p>Animal and Plant Health Inspection Service</p>
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<p>July 2010</p>
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<h1 class="title"><a name="_Toc238895377"></a></h1>
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<h1 class="title"><a name="_Toc238895378"></a>Initial Regulatory Flexibility Analysis</h1>
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<h1 class="title"><a name="_Toc238895379"></a>Proposed Rule</h1>
<h1 class="title">APHIS 10-019-1</h1>
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<h1 class="title">Remove Exemption for Canadian Wood Packing Material (7 CFR part 319.40)</h1>
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<p>Policy & Program Development</p>
<p>Policy Analysis & Development</p>
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<p class="footer">1</p>
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<p class="footer">21</p>
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<h1><a name="_Toc268078680"></a>Summary</h1>
<p>In accordance with the Regulatory Flexibility Act, this analysis is conducted to assess the impact of the proposed rule to lift the exemption and require wood packaging material (WPM) from Canada to meet the requirements of 7 CFR 319.40-3(b), which follow the International Plant Protection Convention (IPPC) standard for WPM.  The IPPC standard provides guidelines on globally accepted measures that may be applied to WPM to reduce the risk of pest entry via this pathway.  The requirements include treatment and ISPM #15 marking.  </p>
<p>The current waiver of the requirement for ISPM #15 treatment of WPM imported from Canada into the United States exposes the United States to increased risk for exotic forest pest infestation.  Wood packaging material is a well-known pathway for the movement of wood pests.  Numerous pests are believed to have been introduced through the WPM pathway, such as the emerald ash borer (EAB) and the Asian longhorned beetle.  Interceptions at the border of wood-inhabiting pests from Canada occur despite the fact that WPM is unregulated and inspections are infrequent.  Canada exports more goods to the United States than any other country in the world.  Goods from Canada are moved primarily on WPM (pallets) via a highly interconnected transportation system.  Similar forests and eco-regions in the two countries allow introduced pests to readily establish.  There are forest pests native to Canada and from elsewhere that can move in WPM.  These pests have the potential to cause significant economic and environmental damage.  The Canadian policy of allowing WPM to enter into Canada without ISPM #15 marking makes it impossible to determine the origin of WPM, the treatment method, or treatment failure.  By requiring ISPM #15 treatment of all WPM from Canada, the risk of forest pest introduction into the United States would be substantially reduced.  The benefits of this rule would be the losses avoided by preventing pest introduction. While the magnitude of the benefits cannot be definitively ascertained, they are likely to be much larger than the associated costs.</p>
<p>As an indicator of the damage wood borers can cause, consider the costs of the EAB introduction.  EAB is an exotic beetle that was discovered in southeastern Michigan near Detroit in the summer of 2002.  The beetle larvae feed on the inner bark of ash trees, disrupting the tree’s ability to transport water and nutrients.  EAB probably arrived in the United States on WPM originating in its native Asia.  EAB is now been found in 12 states, as well as the Canadian provinces of Ontario and Quebec.  Tens of millions of ash trees have been killed, and the cost to governments (Federal, State, and local), property owners, nursery owners, and forest product industries is in the tens of millions of dollars. A simulation of the potential spread of EAB to 25 states through 2019 estimates a discounted cost of $10.7 billion and the treatment or removal and replacement of more than 17 million ash trees.  </p>
<p>This proposed rule would lift the exemption and require WPM from Canada to be heat treated, and the treatment indicated by the mark HT; or treated with methyl bromide fumigation, and the treatment indicated by the mark MB.  The increased treatment cost incurred by foreign manufacturers may add to the cost of packaging and transporting goods which, in turn, could affect U.S. importers of commodities and final consumers of those goods.  Due to the very large number of pallets that are used to import cargo from Canada, the overall treatment cost may be substantial, and the vast majority of U.S. importers are considered small.  However, given the small cost of pallets as compared to the value of trade, increases in pallet prices due to the rule are not expected to have a measurable effect on domestic consumers or on trade.  The extent of the impact on U.S. consumers would also depend on the ability of importers to pass on the additional costs to respective buyers.  </p>
<p>As an example, assuming a treatment cost of one dollar per imported pallet, 300 million pallets used per year to import goods into the United States from Canada, and a total value of the goods imported on those pallets of approximately $110 billion, the $300 million in treatment costs would represent about 0.27 percent of the value of the goods imported.  For every $100 of goods imported, the cost of the pallet treatment would be 27 cents.  Even if producers can pass the full cost increase to consumers, the pallet treatment cost comprises only a small share of the overall value of a bundle of imported goods, and would not likely cause a significant impact on consumers.  </p>
<p>U.S. purchasers of pallets from Canada may also be impacted by the rule, to the extent that the treatment cost may be passed along to them.  Given the availability of substitutable domestic wood pallets, U.S. buyers of imported pallets are not expected to be significantly impacted.</p>
<p>Canada is expected to adopt comparable treatment standards for WPM imports from the United States.  Although such action would be only indirectly related to this proposed rule, we note possible effects for the U.S. WPM industry.  Canada is the leading export market for U.S. pallets, accounting for about 40 percent of the sales value of U.S. pallet exports.  However, the quantity of pallets exported to Canada as a commodity is a very small portion of the pallets produced and used in the United States each year, less than 2.5 percent.  In addition, pallet exports to everywhere except Canada, 60 percent of the market, must already meet the ISPM #15 standard.  It is therefore likely that many firms already have the capability to supply treated pallets for export to Canada.<i>
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<p class="tOC_Heading">Table of Contents</p>
<p class="toc_1">Summary	i</p>
<p class="toc_1">Introduction	1</p>
<p class="toc_1">Initial Regulatory Flexibility Analysis	2</p>
<p class="toc_2">Objectives of and Legal Basis for the Rule	2</p>
<p class="toc_2">Potentially Affected Small Entities	4</p>
<p class="toc_2">Potential Impacts of the Proposed Rule	5</p>
<p class="toc_2">Projected Reporting, Recordkeeping, and Other Compliance Requirements	21</p>
<p class="toc_2">Duplication, Overlap, or Conflict with Existing Rules and Regulations	21</p>
<p class="toc_2">Alternatives to Minimize Significant Economic Impacts of the Rule	21</p>
<p class="toc_1">References	22</p>
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<h1></h1>
<p><a name="_Toc238895386"></a><a name="_Toc238895453"></a>
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<h1><a name="_Toc268078681"></a>Introduction</h1>
<p>The Plant Protection Act of 2000 authorizes the Secretary of Agriculture to prohibit or restrict the importation and entry of any plants and plant products, if the Secretary determines that the prohibition or restriction is necessary to prevent the introduction into or the dissemination within the United States of a plant pest or noxious weed.  </p>
<p>The regulations in 7 CFR 319.40 govern the importation of various logs, lumber and other unmanufactured wood articles into the United States.  The current regulations in 319.40-3(a) allow an exemption for Canadian wood packaging material (WPM) entering the United States.</p>
<p>Effective September 16, 2005, the regulations were revised to adopt the International Standard for Phytosanitary Measures for WPM established by the International Plant Protection Convention (IPPC):  <i>Guidelines for Regulating Wood Packaging Material in International Trade</i> (ISPM #15).  Under these provisions, all regulated WPM from foreign countries, with the exception of Canada, must be appropriately treated and marked under an official program developed and overseen by the National Plant Protection Organization (NPPO) in the country of export.</p>
<p>The current waiver of the requirement for ISPM #15 treatment of WPM imported from Canada into the United States exposes the United States to increased risk of introduction of forest pests.  Canada exports more goods to the United States than any other country in the world.  Goods from Canada are moved primarily on wood packaging material (pallets) via a highly interconnected transportation system.  Similar forests and eco-regions in the two countries allow introduced pests to readily establish.  There are forest pests native to Canada and pests from elsewhere that can move in WPM.  These pests have the potential to cause significant economic and environmental damage.  The Canadian policy of allowing WPM to enter into Canada without ISPM #15 marking makes it impossible to determine the origin of WPM, the treatment method, or treatment failure.  By requiring ISPM #15 treatment of all WPM from Canada, the risk of forest pest introduction into the United States would be substantially reduced.  This proposed action would lift the exemption and require WPM from Canada to meet the requirements of 7 CFR 319.40-3(b), which includes treatment and ISPM #15 markings.  </p>
<h1><a name="_Toc268078682"></a>Initial Regulatory Flexibility Analysis</h1>
<p>	The Regulatory Flexibility Act of 1980 (Public Law 96-354) requires agencies to evaluate the potential effects of proposed and final rules on small businesses, small organizations, and small governmental jurisdictions.  Section 603 of the Act requires an agency to prepare and make available for public comment an initial regulatory flexibility analysis describing the expected impact of a proposed rule on small entities.</p>
<h2><a name="_Toc268078683"></a>Objectives of and Legal Basis for the Rule</h2>
<p>The free trade of goods in international commerce potentially brings the inadvertent transport of exotic plant pests and pathogens that may be harbored in untreated WPM.  Such activities may impact various sectors of society, for example, by altering the diversity and productivity of the forest ecosystem.  The private cost of importing commodities does not account for the full social costs because importers responsible for unintended pest introductions are not charged for potential damages that may be caused by exotic pests.  The market left unconstrained would continue to engage in undesirable commercial practices that could lead to detrimental impacts on agricultural and natural resources of the United States.  Because societal costs could be substantial, Federal intervention is necessary to correct for the market failure as individual importers are unlikely to take sufficient action to prevent the introduction of harmful pests.</p>
<p>The risks associated with the movement and introduction of quarantine pests in WPM, such as pallets, dunnage and wood crating, are well documented (USDA, 2000).  Three important and devastating insect pests, the Asian longhorned beetle (<i>Anoplophora glabripennis</i>), the emerald ash borer (<i>Agrillus planipennis</i>), and a woodwasp, <i>Sirex noctilio</i>,<i> </i>were likely introduced into North America via WPM.  The Asian longhorned beetle, discovered in New York City in 1996 and Chicago in 1998, most likely arrived on WPM from China.  In response, APHIS implemented an emergency interim rule regulating WPM imports from China.  The International Plant Protection Convention (IPPC) standard for WPM (ISPM #15) provides guidelines on globally accepted measures to reduce the risk of pest entry via this pathway.  APHIS has adopted the ISPM #15 guidelines whereby all regulated WPM from foreign countries must be appropriately treated and marked.  A significant exception to this regulation currently exists for the entry of WPM from Canada to the United States.  In general, no treatment is required on WPM that is moved between the two countries.  However, wood used in the manufacture of WPM must meet any quarantine requirements.  For example, WPM made of ash coming from an EAB area of Canada, must meet the EAB requirements to leave the regulated zone.  The ambiguous nature of the WPM's origin is another key reason for removing the ISPM 15 exemption.</p>
<p>The current waiver of the requirement for ISPM #15 treatments on WPM imported from Canada into the United States exposes the United States to risk for exotic forest pest infestation.  Canada exports more goods to the United States than any other country in the world.  Goods from Canada are moved primarily on wood packaging material (pallets) via a highly interconnected transportation system.  Similar forests and eco-regions in the two countries allow pests to readily establish.  There are forest pests in Canada and pests that may become established in Canada that can move in WPM.  These pests have the potential to cause significant economic and environmental damage.  This proposed rule would lift the exemption and require WPM from Canada to meet the requirements of 7 CFR 319.40-3(b) which includes treatment and ISPM #15 markings.  </p>
<p>Under the Plant Protection Act, the Secretary of Agriculture is authorized to regulate the importation of plants, plant products, and other articles to prevent the introduction of plant pests into the United States or the dissemination of plant pests within the United States.</p>
<h2><a name="_Toc268078684"></a>Potentially Affected Small Entities</h2>
<p>The use of WPM, especially pallets, to move goods from Canada into the United States is a common practice due to the relatively short distance of transport and extensive transportation connections between the two countries.  Therefore, the importers potentially affected by the proposed rule represent a broad cross section of U.S. business sectors.</p>
<p>Importers are primarily identified within the wholesaling sector of the U.S. economy.  Importers either sell goods on their own account (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, importers of wood pallets are in sector 4233, wholesale lumber and other construction materials. </p>
<p>The Small Business Administration (SBA) has established guidelines for determining which entities are to be considered small.  A firm primarily engaged in wholesaling commodities is considered small if it employs not more than 100 persons.  More than 98 percent of all wholesaling establishments were considered small in 2002.[footnoteRef:1]  Similarly, more than 97 percent of lumber and construction material wholesalers were considered small in that year.  In 2002, there were more than 309,000 firms in the wholesaling sector, with average revenues of $12.4 million (Table 1).   [1:  Data on the employment or sales size of firms is not yet available in the 2007 Economic Census.] 
</p>
<table><tbody><tr>	<td><p><b>Table 1.  Wholesale Firms, Number and Sales, 2002[footnoteRef:2]</b> [2:  U.S. Department of Commerce. Bureau of the Census. 2002 Economic Census.] 
</p>
</td>	<td><p></p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p><b>Type of Merchant Wholesaler</b></p>
</td>	<td><p><b>Number of Firms</b></p>
</td>	<td><p><b>Sales ($1,000)</b></p>
</td>	<td><p><b>Average Sales ($1,000)</b></p>
</td></tr>
<tr>	<td><p>Motor vehicles, parts & supplies </p>
</td>	<td><p>19,890</p>
</td>	<td><p>598,717,653</p>
</td>	<td><p>30,101</p>
</td></tr>
<tr>	<td><p>Furniture & home furnishing</p>
</td>	<td><p>12,525</p>
</td>	<td><p>71,428,120</p>
</td>	<td><p>5,703</p>
</td></tr>
<tr>	<td><p>Lumber & other construction materials </p>
</td>	<td><p>12,574</p>
</td>	<td><p>115,506,859</p>
</td>	<td><p>9,186</p>
</td></tr>
<tr>	<td><p>Professional & commercial equipment</p>
</td>	<td><p>29,926</p>
</td>	<td><p>406,445,349</p>
</td>	<td><p>13,582</p>
</td></tr>
<tr>	<td><p>Metal & mineral (except petroleum)</p>
</td>	<td><p>8,184</p>
</td>	<td><p>117,454,774</p>
</td>	<td><p>14,352</p>
</td></tr>
<tr>	<td><p>Electrical goods</p>
</td>	<td><p>22,760</p>
</td>	<td><p>322,377,337</p>
</td>	<td><p>14,164</p>
</td></tr>
<tr>	<td><p>Hardware, plumbing & heat equip </p>
</td>	<td><p>12,289</p>
</td>	<td><p>84,577,986</p>
</td>	<td><p>6,882</p>
</td></tr>
<tr>	<td><p>Machinery, equipment, & supplies</p>
</td>	<td><p>48,819</p>
</td>	<td><p>297,936,999</p>
</td>	<td><p>6,103</p>
</td></tr>
<tr>	<td><p>Miscellaneous durable goods</p>
</td>	<td><p>33,334</p>
</td>	<td><p>156,820,514</p>
</td>	<td><p>4,705</p>
</td></tr>
<tr>	<td><p>Paper & paper products</p>
</td>	<td><p>10,793</p>
</td>	<td><p>114,410,461</p>
</td>	<td><p>10,600</p>
</td></tr>
<tr>	<td><p>Drugs & druggists' sundries</p>
</td>	<td><p>6,220</p>
</td>	<td><p>386,857,851</p>
</td>	<td><p>62,196</p>
</td></tr>
<tr>	<td><p>Apparel, piece goods, & notions</p>
</td>	<td><p>16,495</p>
</td>	<td><p>118,346,385</p>
</td>	<td><p>7,175</p>
</td></tr>
<tr>	<td><p>Grocery & related product </p>
</td>	<td><p>29,898</p>
</td>	<td><p>511,438,047</p>
</td>	<td><p>17,106</p>
</td></tr>
<tr>	<td><p>Farm products raw materials</p>
</td>	<td><p>4,874</p>
</td>	<td><p>103,402,280</p>
</td>	<td><p>21,215</p>
</td></tr>
<tr>	<td><p>Chemicals & allied products</p>
</td>	<td><p>9,781</p>
</td>	<td><p>115,554,263</p>
</td>	<td><p>11,814</p>
</td></tr>
<tr>	<td><p>Beer, wine, & alcoholic beverage</p>
</td>	<td><p>3,514</p>
</td>	<td><p>87,559,539</p>
</td>	<td><p>24,917</p>
</td></tr>
<tr>	<td><p>Miscellaneous nondurable goods</p>
</td>	<td><p>27,658</p>
</td>	<td><p>221,514,304</p>
</td>	<td><p>8,009</p>
</td></tr>
</tbody></table>
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<h2><a name="_Toc268078685"></a>Potential Impacts of the Proposed Rule</h2>
<p>It is difficult to estimate the increased risk of long-term damage to the Nation’s resources that would be borne if the Canadian exemption were not removed.  However, given the evidence from current exotic pest infestations, it is expected that additional costs incurred by affected parties due to the rule would likely be small compared to societal gains in terms of avoided pest damage to agricultural and natural resources.</p>
<p>The costs of complying with this rule would largely fall on Canadian manufacturers of pallets.  The increased treatment cost may add to the cost of packaging and transporting goods which, in turn, would affect importers of commodities and final consumers of those goods potentially impacted by this rule if the increased costs were passed through higher prices.  Additionally, we expect U.S. consumers of imported pallets, crates and boxes to be impacted by the requirements of this rule.  The impact of this rule is likely to fall on foreign manufacturers of pallets and not on U.S. firms or consumers.  Canada is expected to adopt comparable treatment standards for WPM imports from the United States.  Although such action would be only indirectly related to this proposed rule, we note possible effects for the U.S. WPM industry. 	</p>
<p><i>Pests Associated with Wood Packaging Material</i></p>
<p>	Forest pests can cause damage to trees, forests, and wooden structures.  In addition to forests, other industries that are potentially at risk from introduced pests associated with WPM include Christmas trees, fruits and nuts, nurseries, and ornamentals.  Economic losses may be due to:</p>
<p class="list_Paragraph">· Tree mortality and timber volume loss</p>
<p class="list_Paragraph">· Wood defects and degradation</p>
<p class="list_Paragraph">· Tree growth loss</p>
<p class="list_Paragraph">· Decreased production of products such as maple syrup, fruits, nuts, seeds</p>
<p class="list_Paragraph">· Reduction in property values</p>
<p class="list_Paragraph">· Damage to property due to tree failures</p>
<p class="list_Paragraph">· Losses in recreation visitor days or tourism</p>
<p class="list_Paragraph">· Higher energy costs (resulting from loss of shade)</p>
<p class="list_Paragraph">· Increased costs for mitigating pest damage or restoring habitat</p>
<p class="list_Paragraph">· Loss of export markets</p>
<p class="list_Paragraph">· Additional cost of meeting requirements of other countries once a pest is found</p>
<p class="list_Paragraph">· Loss of non-market services provided by trees (aesthetics, cooling)</p>
<p>The actual value at risk due to pest damage depends on a variety of factors including the ability of a specific pest to colonize and spread.  Given biological and ecological uncertainty, the potential for economic damage caused by plant pests can be difficult to quantify, especially for those species that are potential threats but have not yet become established in a new environment.  </p>
<p>Some of the best evidence of the potential effect of WPM on forest resources comes from the observed effects of the Asian longhorned beetle (ALB) and the emerald ash borer (EAB).  These two species of wood-boring beetles share the ability to attack and kill seemingly healthy trees of most age classes in both urban and native forest stands.  It was the outbreak of ALB in 1996 that prompted the treatment requirements for WPM-related imports from China, and subsequent adoption of the ISPM #15 guidelines for the importation of WPM from all countries except Canada.  In addition, <i>Sirex noctilio</i>, a woodwasp with considerable destructive potential, was recently introduced into the Northeast United States and Canada, most likely on WPM from western Europe.   </p>
<p>In the absence of this rule, these or other forest pests and pathogens harbored on imports from Canada could establish in new places and potentially cause damages similar in scale to that which have already occurred in affected U.S. cities.  Potential damages could even be greater,  should introduction or spread occur in commercial timberlands.</p>
<p>In addition to their market values, forest resources at risk also have non-market values that can be important.  Non-market services associated with forests include recreation opportunities such as hiking, bird watching, hunting, fishing, wildlife habitat preservation, and tourism related to fall colors.    </p>
<p>In addition to known forest pests, new associations of insects and fungi (such as with Dutch elm disease) can be highly destructive, and are difficult, if not impossible, to predict and prevent.</p>
<p><u>Asian Longhorned Beetle </u></p>
<p>The Asian longhorned beetle (ALB) is an invasive insect that grows and reproduces within healthy and stressed deciduous hardwood tree species, such as maple, birch, horse chestnut, poplar, willow, elm, and ash.  The beetle bores through the tissues that carry water and nutrients throughout the tree, which cause the tree to starve and die.  The ALB most likely came to the United States inside WPM from Asia.</p>
<p>Since its discovery in 1996, the APB has caused tens of thousands of trees to be destroyed in Massachusetts, New York, New Jersey, and Illinois.  Tree resources (preferred hosts) at risk from ALB attack in 9 cities across the United States range from 61% of the trees in Chicago (2.5 million trees) to 12% in Oakland (192,000 trees) (Table 2).  If all preferred hosts were eventually killed, the corresponding percent canopy cover loss would range from 68% in Jersey City to 13% in Oakland.  Estimates of the current value of tree resources at risk ranged from $2.3 billion in New York City to $72 million in Jersey City.  Based on an assumed spread rate of 300 meters per year, ALB could spread throughout these cities in from 12 years in Jersey City to 54 years in New York City (Nowak, et al, 2001). </p>
<p>The actual spread of ALB has been slower than that assumed by Nowak, et al, and therefore the damages in infested areas have been smaller than damages predicted by the authors.  However, this slowing of spread is primarily due to the efforts of APHIS as well as State and local authorities which include tree removal as part of the eradication strategy.  Without these efforts, the spread rate and the amount of damage would likely have been greater.  </p>
<table><tbody><tr>	<td><p><b>Table 2.  Estimated tree Resources at Risk for Infestation by ALB in Nine Cities Based on the Total of all Living Preferred Host Species.[footnoteRef:3]</b> [3:  Source: Nowak, et al. 2001.] 
</p>
</td></tr>
<tr>	<td><p><b>City</b></p>
</td>	<td><p><b>Resources at Risk for Attack in Preferred Host Class</b></p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p><b>% Cover</b></p>
</td>	<td><p><b>No. Trees</b></p>
</td>	<td><p><b>% Trees</b></p>
</td>	<td><p><b>City Area, km2</b></p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p>Jersey City, NJ</p>
</td>	<td><p>68</p>
</td>	<td><p>57,600</p>
</td>	<td><p>44</p>
</td>	<td><p>38</p>
</td></tr>
<tr>	<td><p>Chicago, IL</p>
</td>	<td><p>64</p>
</td>	<td><p>2,509,200</p>
</td>	<td><p>61</p>
</td>	<td><p>588</p>
</td></tr>
<tr>	<td><p>Boston, MA</p>
</td>	<td><p>63</p>
</td>	<td><p>697,300</p>
</td>	<td><p>60</p>
</td>	<td><p>143</p>
</td></tr>
<tr>	<td><p>Syracuse, NY</p>
</td>	<td><p>61</p>
</td>	<td><p>385,900</p>
</td>	<td><p>47</p>
</td>	<td><p>65</p>
</td></tr>
<tr>	<td><p>New York, NY</p>
</td>	<td><p>54</p>
</td>	<td><p>2,246,100</p>
</td>	<td><p>47</p>
</td>	<td><p>800</p>
</td></tr>
<tr>	<td><p>Philadelphia, PA</p>
</td>	<td><p>53</p>
</td>	<td><p>1,098,200</p>
</td>	<td><p>56</p>
</td>	<td><p>342</p>
</td></tr>
<tr>	<td><p>Baltimore, MD</p>
</td>	<td><p>47</p>
</td>	<td><p>1,294,700</p>
</td>	<td><p>50</p>
</td>	<td><p>238</p>
</td></tr>
<tr>	<td><p>Atlanta, GA</p>
</td>	<td><p>19</p>
</td>	<td><p>1,777,900</p>
</td>	<td><p>20</p>
</td>	<td><p>341</p>
</td></tr>
<tr>	<td><p>Oakland, CA</p>
</td>	<td><p>13[footnoteRef:4] [4:  Percentage of total tree cover.] 
</p>
</td>	<td><p>192,100</p>
</td>	<td><p>12</p>
</td>	<td><p>145</p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p></p>
</td></tr>
</tbody></table>
<p>The Illinois infestation has been contained and eradication was declared on April 17, 2008.  During the infestation 1,771 trees were removed.  More than 60,000 trees in Massachusetts, New Jersey, and New York have been identified as infested or at high risk of infestation.  Because of the proximity of the high risk trees to infested trees, one can assume that all of the high risk trees will also be removed in addition to the infested ones.  In all, the currently identified infested or high risk trees have an estimated value of more than $62 million (Table 3).  </p>
<p></p>
<p></p>
<p></p>
<table><tbody><tr>	<td><p><b>Table 3.  Number of Trees Infested or at High Risk of Infestation by <i>A. glabripennis</i>, through 2009.</b></p>
</td></tr>
<tr>	<td><p><b>Quarantine Area</b></p>
</td>	<td><p><b>Infested</b></p>
</td>	<td><p><b>High Risk</b></p>
</td>	<td><p><b>Total</b></p>
</td>	<td><p><b>Estimated Value[footnoteRef:5]</b> [5:  Based on the estimated median dollar value per tree in the various locations from Nowak, et al. 2001.] 
</p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p>Illinois[footnoteRef:6] [6:  All infested and high risk trees in Illinois have been removed.] 
</p>
</td>	<td><p>1,551</p>
</td>	<td><p>220</p>
</td>	<td><p>1,771</p>
</td>	<td><p>$5,419,722</p>
</td></tr>
<tr>	<td><p>Massachusetts</p>
</td>	<td><p>16,836</p>
</td>	<td><p>10,250</p>
</td>	<td><p>27,806</p>
</td>	<td><p>$2,017,169</p>
</td></tr>
<tr>	<td><p>New Jersey</p>
</td>	<td><p>729</p>
</td>	<td><p>21,252</p>
</td>	<td><p>21,981</p>
</td>	<td><p>$27,140,172</p>
</td></tr>
<tr>	<td><p>New York</p>
</td>	<td><p>829</p>
</td>	<td><p>10,902</p>
</td>	<td><p>11,731</p>
</td>	<td><p>$27,564,174</p>
</td></tr>
<tr>	<td><p><b><i>TOTAL</i></b></p>
</td>	<td><p><b>19,945</b></p>
</td>	<td><p><b>42,624</b></p>
</td>	<td><p><b>62,569</b></p>
</td>	<td><p><b>$62,141,237</b></p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p></p>
</td></tr>
</tbody></table>
<p><u>Emerald Ash Borer </u></p>
<p>The emerald ash borer (EAB) is an invasive wood boring beetle that attacks ash trees.  It is native to China and eastern Asia.  It is believed to have arrived in the United States on WPM.  The insect was first found in the United States around Detroit, Michigan in 2002.  Portions of the Michigan’s Upper Peninsula and entire Lower Peninsula,  together with the entire States of Illinois, Indiana, Ohio, and West Virginia. Portions of Kentucky, Maryland, Minnesota, Missouri, New York, Pennsylvania, Virginia, and Wisconsin are under quarantine for EAB.  EAB  is also present in the Canadian Provinces of Ontario and Quebec.  </p>
<p>Although stressed trees may initially be preferred or less resistant to EAB attack, once beetle densities build, even the healthiest ash trees are attacked and killed.  Large ash trees may die within 3 to 4 years of initial infestation and saplings or small trees may die after a single year.  The area infested with EAB now exceeds 230,000 square miles.  The EAB is already thought to be responsible for the death of tens of millions of ash trees.    There are 16 species of ash trees in North America, and all are believed to be vulnerable to the EAB.  Estimates derived from the USDA Forest Service Inventory and Analysis data indicate that nearly 850 million ash trees in forests and riparian areas are at risk in Michigan, 279 million in Ohio, and 147 million in Indiana, not counting those planted in communities, residential yards, or along public rights-of way (Poland, 2007).  The Forest Service estimates that there are about 8 billion ash trees in forests across the country (GAO, 2006).</p>
<p>Kovacs, et al (2009) estimated the discounted cost of ash treatment, removal, and replacement on developed land within communities in a 25-state study area using simulations of EAB spread and infestation over the period 2009-2019.  An estimated 38 million ash trees occur on this land base.  The simulations predicted that an expanding EAB infestation that will likely encompass most of the 25 states and warrant treatment, removal, and replacement of more than 17 million ash trees with a mean discounted cost of $10.7 billion.  Expanding the land base to include developed land outside, as well as within, communities nearly double the estimates of the number of ash trees treated or removed and replaced, and the associated cost.</p>
<p><i><u>Sirex noctilio</u></i></p>
<p><i>Sirex noctilio</i> is a woodwasp native to Europe, Asia and northern Africa.  The pest has recently been introduced into North America, most likely on WPM from western Europe, and is now present in New York, Michigan, Pennsylvania, Vermont and Ontario, CA,.  It has been inadvertently introduced into a number of countries in the southern hemisphere including New Zealand, Australia, Uruguay, Argentina, Brazil, Chile and South Africa.  The insect has caused upwards of 80 percent mortality in plantations of North American pines in the southern hemisphere (Rabaglia and Lewis, 2006).</p>
<p>The USDA Forest Service conducted an economic analysis of the potential impacts of Sirex noctilio.  The analysis was based on a 25 mile/year spread of the pest from its location in New York, taking approximately 55 years for the wood wasp to completely infest the pine growing region of the South.  With 10% mortality and a 4% discount rate, the total present value of lost saw timber and pulpwood in the South[footnoteRef:7] would be more than $1.9 billion over the 55 year infestation period.  At a 50% mortality rate in the South, the value lost would greatly increase to $11 billion.  These losses assume no management or control actions, a constant rate of spread, and no human-aided dispersal.  A faster rate of spread, including new introductions from foreign sources, would affect the timber prices and discounted value used in the calculations, while regulatory measures would reduce the impact and slow the spread rate (Rabaglia and Lewis, 2006).   [7:  AL,AR,FL,GA,KY,LA,MS,NC,OK,SC,TN,TX, and VA.  The simulated spread reaches VA in year 10 and western TX in year 55. ] 
</p>
<p>The discussion above provides an indication of the potential magnitude of damage that can be caused by pests introduced via the WPM pathway if imports are left unchecked.  The adoption of this rule would address the continued pest threat posed to the agricultural and natural resources of the United States.  </p>
<p><i>Benefits of the Rule</i></p>
<p>At least 181 exotic insects that feed on woody plants have become established in Canada affecting valuable softwood and hardwood species (Claudi, 2002).  WPM is a common pathway by which pests are introduced.  It is believed that EAB, ALB, and <i>S. noctilio</i> were all introduced into the United States by way of WPM.  Interceptions of wood inhabiting pests from Canada to the United States have occurred despite the fact that WPM from Canada is unregulated and inspections are infrequent.  Pallets manufactured in Canada and the United States often contain small bark patches and quarantine significant pests have been found in association with bark on pallets from Canada.  An analysis of 2006-2008 data found that the number of actionable pests associated with WPM shipments inspected from Canada was relatively low (0.7%), but actionable pests and bark were found in conjunction with pallets 13 out of 13 times (USDA, 2009).  </p>
<p>The international standard requires WPM to be heat treated or fumigated with methyl bromide.  These two treatments are efficacious in treating target pests named in the IPPC Guidelines, i.e., bark beetles, wood borders, and certain nematodes.  If left unchecked, these pests have the potential to cause significant economic damage to the agricultural and forest resources of the United States, such as the damages associated with the introduction of ALB, EAB and <i>S. noctilio</i>.  </p>
<p>The benefits of this rule are the losses avoided by preventing introductions of exotic wood pests from Canada.  Wood pests that could be introduced on WPM from Canada, including further introductions of ALB, EAB, or<i> S. noctilio</i>, may behave similarly to previous introductions of those pests into the United States.  Therefore, the losses associated with those pest introductions is an indication of the magnitude of the benefits of preventing introductions of wood pests from Canada.</p>
<p><i>Overview of Trade from Canada with Wood Packaging Material</i></p>
<p>The value of international trade has increased greatly over the last decade, with U.S. imports roughly doubling in value between 1999 and 2008.  The recent financial crises and the associated slowdown in trade notwithstanding, there has been an overall upward trend in trade.   Canada is a vitally important component in this trade.  The economies of the United States and Canada are closely linked.  More goods are imported into the United States from Canada than </p>
<p class="caption">Figure 1  U.S. Imports 2005 through 2009.</p>
<p>from any other country except China.  From 2005 through 2009, Canadian imports accounted for </p>
<p>16.1% of the total value of imports into the U.S. (Figure 1).  The United States is also by far Canada’s largest export market.  From 2005 through 2009, more that 77% of the value of</p>
<p>Canadian exports were sent to the U.S. (Figure 2).  Imports into the United States come from all Canadian provinces and are distributed to all 50 states and some territories, through an interconnected system of roads, railways and water ports.  </p>
<p></p>
<p class="caption">Figure 2  Canadian Exports, 2005 through 2009.</p>
<p>WPM is defined as “material other than manufactured wood materials, loose wood packing materials, and wood pieces less than 6 mm thick in any dimension, that are used or for use with cargo to prevent damage, including, but not limited to, dunnage, crating, pallets, packing blocks, drums, cases and skids whether in actual use as packing for regulated or non-regulated articles or imported as cargo.”  (7 CFR 319.40-1).  Loose materials such as excelsior, sawdust, and wood shavings are excluded.  Synthetic or highly processed wood materials such as plywood, oriented strand board, corrugated paperboard, plastic, and resin composites are excluded.</p>
<p>	Wood packaging is essential for trade and the movement and protection of cargo and containerized goods.  The use of WPM, especially pallets, to move goods from Canada into the United States is common practice due to the relatively short distance of transport and extensive transportation connections between the two countries.  An estimated 227 million pallets accompanied Canadian imports to the United States in 2009 (Table 4).  From 2005 through 2009 the estimated annual average was 320 million pallets.</p>
<table><tbody><tr>	<td><p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p></p>
<p><b>Table 4.  Estimated U.S. Palletized Imports from Canada, 2009 </b></p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p><b>Sector Description[footnoteRef:8]</b> [8:  Imports in Harmonized Tariff Schedule chapters 1-97 only. Does not include commodities that are known to never of rarely be palletized, such as bulk agriculture products and petroleum products.] 
</p>
</td>	<td><p><b>$1,000 </b></p>
</td>	<td><p><b> TEUs[footnoteRef:9]</b> [9:  Twenty-foot equivalent units.  Shipping weight divided by 8.055 metric tons per TEU, based on BTS estimates of shipping weights and Maritime Administration estimates of shipping container volumes.] 
</p>
</td>	<td><p><b>Pallets[footnoteRef:10]</b> [10:  TEU multiplied by 20 pallets per TEU.] 
</p>
</td></tr>
<tr>	<td><p>Meats, Fish & Other AG</p>
</td>	<td><p>4,769,959</p>
</td>	<td><p>440,944</p>
</td>	<td><p>8,818,875</p>
</td></tr>
<tr>	<td><p>Fruits & Vegetables</p>
</td>	<td><p>1,222,734</p>
</td>	<td><p>154,301</p>
</td>	<td><p>3,086,027</p>
</td></tr>
<tr>	<td><p>Grains, Oilseeds, fats, oils</p>
</td>	<td><p>1,794,760</p>
</td>	<td><p>304,521</p>
</td>	<td><p>6,090,414</p>
</td></tr>
<tr>	<td><p>Processed Products, Beverages, Tobacco</p>
</td>	<td><p>6,037,555</p>
</td>	<td><p>485,256</p>
</td>	<td><p>9,705,122</p>
</td></tr>
<tr>	<td><p>Salt, Ores, Slags, Fertilizers</p>
</td>	<td><p>6,195,265</p>
</td>	<td><p>4,377,281</p>
</td>	<td><p>87,545,620</p>
</td></tr>
<tr>	<td><p>Chemicals, Plastics</p>
</td>	<td><p>10,895,286</p>
</td>	<td><p>687,978</p>
</td>	<td><p>13,759,563</p>
</td></tr>
<tr>	<td><p>Pharmaceuticals</p>
</td>	<td><p>4,834,338</p>
</td>	<td><p>8,097</p>
</td>	<td><p>161,931</p>
</td></tr>
<tr>	<td><p>Hides, Furskins</p>
</td>	<td><p>167,320</p>
</td>	<td><p>4,310</p>
</td>	<td><p>86,209</p>
</td></tr>
<tr>	<td><p>Wood, Pulp, Paper</p>
</td>	<td><p>14,670,000</p>
</td>	<td><p>2,853,777</p>
</td>	<td><p>57,075,530</p>
</td></tr>
<tr>	<td><p>Textiles, Apparel, Footwear</p>
</td>	<td><p>1,804,349</p>
</td>	<td><p>29,251</p>
</td>	<td><p>585,014</p>
</td></tr>
<tr>	<td><p>Stone, Ceramics</p>
</td>	<td><p>1,085,896</p>
</td>	<td><p>182,076</p>
</td>	<td><p>3,641,516</p>
</td></tr>
<tr>	<td><p>Metals & Articles of Metal</p>
</td>	<td><p>20,560,492</p>
</td>	<td><p>1,430,951</p>
</td>	<td><p>28,619,020</p>
</td></tr>
<tr>	<td><p>Machinery</p>
</td>	<td><p>23,829,833</p>
</td>	<td><p>211,493</p>
</td>	<td><p>4,229,860</p>
</td></tr>
<tr>	<td><p>Transportation</p>
</td>	<td><p>6,571,611</p>
</td>	<td><p>112,701</p>
</td>	<td><p>2,254,016</p>
</td></tr>
<tr>	<td><p>Manufactures</p>
</td>	<td><p>5,934,307</p>
</td>	<td><p>87,942</p>
</td>	<td><p>1,758,841</p>
</td></tr>
<tr>	<td><p><b><i>TOTAL</i></b></p>
</td>	<td><p><b><i>110,373,706</i></b></p>
</td>	<td><p><b><i>11,370,878</i></b></p>
</td>	<td><p><b><i>227,417,559</i></b></p>
</td></tr>
<tr>	<td><p>Source:  Bureau of Transportation Statistics, Department of Commerce and The International Trade Commission</p>
</td></tr>
</tbody></table>
<p></p>
<p>In addition, the United States imports pallets, crates and boxes as commodities in and of themselves.  Between 1995 and 2000 there was a great increase in the number of pallets imported into the United States.  In 1995, fewer than 600,000 pallets were imported into the U.S., but by 2000 that number reached 41 million.  The number of imported pallets has declined since that peak.  Between 2005 and 2009 an average of 27 million pallets valued at $102 million was imported into the United States per year (Table 5).  Canada has consistently been the major source of U.S. imports of pallets, accounting for over 95 percent of those imports from 2005-09. </p>
<p></p>
<p></p>
<table><tbody><tr>	<td><p><b>Table 5. U.S. Imports of Pallets[footnoteRef:11] from Canada and The World, 2005-2009</b> [11:  Pallets, box-pallets, load boards, of wood, not elsewhere specified, HS 4415208000.] 
</p>
</td>	<td><p></p>
</td></tr>
<tr>	<td><p><b>Year</b></p>
</td>	<td><p><b>Canada</b></p>
</td>	<td><p><b>World</b></p>
</td></tr>
<tr>	<td><p></p>
</td>	<td><p><b>Quantity</b></p>
</td>	<td><p><b>Value ($)</b></p>
</td>	<td><p><b>Quantity</b></p>
</td>	<td><p><b>Value ($)</b></p>
</td></tr>
<tr>	<td><p> </p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p></p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p>2005</p>
</td>	<td><p>32,790,074</p>
</td>	<td><p>126,388,869</p>
</td>	<td><p>33,941,655</p>
</td>	<td><p>133,268,775</p>
</td></tr>
<tr>	<td><p>2006</p>
</td>	<td><p>29,324,559</p>
</td>	<td><p>108,890,913</p>
</td>	<td><p>30,501,753</p>
</td>	<td><p>117,887,690</p>
</td></tr>
<tr>	<td><p>2007</p>
</td>	<td><p>29,477,875</p>
</td>	<td><p>94,213,628</p>
</td>	<td><p>30,907,055</p>
</td>	<td><p>103,730,844</p>
</td></tr>
<tr>	<td><p>2008</p>
</td>	<td><p>21,206,196</p>
</td>	<td><p>80,789,700</p>
</td>	<td><p>22,750,060</p>
</td>	<td><p>92,002,597</p>
</td></tr>
<tr>	<td><p>2009</p>
</td>	<td><p>15,870,150</p>
</td>	<td><p>56,521,136</p>
</td>	<td><p>17,097,853</p>
</td>	<td><p>64,675,100</p>
</td></tr>
<tr>	<td><p><b><i> </i></b></p>
</td>	<td><p><b><i> </i></b></p>
</td>	<td><p><b><i> </i></b></p>
</td>	<td><p> </p>
</td>	<td><p> </p>
</td></tr>
<tr>	<td><p></p>
</td></tr>
</tbody></table>
<p><i>Costs and Impacts on Affected Entities</i></p>
<p>This proposed rule would lift the exemption and require WPM from Canada to meet the requirements of 7 CFR 319.40-3(b), which follow the IPPC standard for WPM.  The requirements include treatment and ISPM #15 markings. Treatments are permissible in one of two ways: either by heat treatment that achieves specified minimum wood core temperature over a specified time period, and the treatment indicated by the mark HT; or with methyl bromide fumigation, and the treatment indicated by the mark MB.</p>
<p>The impact of this rule would fall largely on foreign manufacturers of pallets.  The increased treatment cost may add to the cost of packaging and transporting goods which, in turn, could affect the importers of commodities and final consumers of those goods.  Therefore, those importers are potentially impacted by this rule.  The required treatments would add to the cost of packaging and transport of goods.  Due to the very large number of pallets that are used to assist imported Canadian cargo, the overall cost may be substantial.  The extent of the impact on U.S. consumers would depend on the ability of importers to pass on the additional costs to respective buyers.  However, given the small value of pallets as compared to the value of trade, increases in pallet prices are not expected to have a measurable effect on domestic consumers or on trade.  Following the implementation of treatment requirements on imports from China, and subsequently all imports except those from Canada, the volume and value of imports into the United States continued to increase.  It would not appear that foreign manufacturers are able to pass the cost of treatment to U.S. importers or consumers.  The impact of this rule is likely to fall on foreign manufacturers of pallets and not on U.S. firms or consumers.  The simultaneous adoption of the treatment standards by Canada that is directed at U.S. exports would likely create a broader impact on the domestic wood packaging industry than the provisions of this rule.  </p>
<p>The requirements of this rule would most likely be met through heat treatment.  The Canadian government has established a certification system for facilities in Canada wishing to produce WPM in accordance with the provisions of the ISPM #15 standard, but has not established the use of methyl bromide as part of this certification.  There are registration and audit service fees for participation in the program in addition to the cost of the kiln, the cost of energy to operate the kiln, labor costs for loading and unloading pallets into the kiln, and labor costs for stamping the pallets and performing the associated paperwork.  </p>
<p>For the purposes of illustration, let us assume that an operation pays $4,600 per year for registration and audit services,[footnoteRef:12] pays $350 per month to lease a $20,000 kiln, consumes $45 in energy per kiln load, pays $60 for 3 hours of labor for loading and unloading the kiln and stamping the treated pallets, and produces a modest 300 pallets per week.  Under this scenario, the treatment and marking requirements would add $0.90 to the cost of producing a pallet.  Based on an estimate of 300 million untreated pallets being used per year for goods imported into the United States from Canada, a value of imported goods associated with those pallets is of approximately $110 billion, and assuming that each imported pallet is treated at a cost of $1; a total of $300 million would be expended on treatment of those pallets.  This amount represents about 0.27 percent of the value of the goods imported.   Thus, for each $100 of goods imported, the cost of the pallet treatment is 27 cents.  Even if producers can pass the full cost increase to consumers, the pallet treatment cost comprises only a small share of the overall value of a bundle of imported goods, and would not likely cause a significant impact on consumers.   [12:  Based on the CFIA charge of C$400 for registration in the program, and assuming that an average operation spends $350/month on audit services.] 
</p>
<p>Additionally, we expect U.S. consumers of imported pallets, crates and boxes to be impacted by the requirements of this rule.  At approximately $3.65 per piece, imported pallets are considerably less expensive than domestic pallets, less than half the average domestic price.  Canadian pallets are primarily used by industries close to the U.S. and Canadian border.  The wood pallet market is highly competitive and the demand for imported pallets can be characterized as elastic.  While pallets made of alternative materials such as plastic, corrugated fiberboard, or processed wood are imperfect substitutes for wood, one wood pallet can easily substitute for another wood pallet.  </p>
<p>U.S. purchasers of imported pallets may be impacted to the extent that the cost of treating those pallets may be passed along to them.  Assuming a perfectly elastic supply and perfectly inelastic demand for imported pallets, a treatment cost of about $1 per pallet, and that about 27 million pallets are imported annually from Canada, U.S. purchasers of imported pallets could lose a maximum of $27 million in higher costs if the treatment costs are passed on by pallet exporters.  The true extent of this impact would be lower than this amount because demand is likely to be elastic and foreign producers are expected to share a greater burden of the cost increase.  Treatment costs for Canadian pallet producers are not known but given the availability of substitutable domestic wood pallets, U.S. buyers of imported pallets are not expected to be significantly impacted.</p>
<p>The adoption of this rule may indirectly affect U.S. WPM manufacturers who sell to Canadian buyers.  Canada is expected to adopt comparable treatment standards for WPM imports from the United States.  Although such action would be only indirectly related to this proposed rule, we still note possible effects for the U.S. WPM industry. The adoption of treatment standards by Canada directed at U.S. exports would mean that only U.S. exports of treated WPM would likely be in demand for export to Canada.  Canada is the leading export market for U.S. pallets, accounting for about 40 percent of the sales value of U.S. exports of pallets.  From 2005 through 2009 Canada imported on average just under 9 million pallets annually from the United States, valued at about $22 million. The extent of the impact on pallet manufacturers would depend on the ability of individual firms to put in place the necessary infrastructure for conducting treatments as required by the international standard.  Regardless, the impact on the overall WPM industry is expected to be small.  The quantity of pallets exported to Canada as a commodity, fewer than 10 million annually, comprises less than 2.5 percent of the 400 to 500 million pallets produced in the United States each year.  In addition, pallet exports to everywhere except Canada, 60 percent of the market, must already meet the standard.  It is therefore likely that a number of firms already have obtained the capability to supply treated pallets for export.</p>
<p>To summarize, this rule would have a direct effect on Canadian manufacturers of pallets which may affect importers and final consumers of goods transported on pallets imported from Canada.  Because the cost of a pallet is a very small share of the bundle of goods transported on pallets, cost increases due to the treatment requirements are not expected to significantly affect domestic consumers and thus would not have a measurable impact on the flow of trade.  This rule is not expected to reduce the amount of goods shipped from Canada as is evident from observing trends in imports from all other origins since implementation of the treatment standards in 2005.  </p>
<p><a name="_Toc238895391"></a><a name="_Toc238895458"></a>The vast majority of potentially affected entities would be considered small.  However, because the cost of a pallet is a very small share of the bundle of goods transported on pallets, cost increases due to treatment requirements for Canadian producers are not expected to significantly affect domestic consumers, whether large or small. </p>
<p>We invite public comment on the proposed rule -- 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 consistent with its objectives.  Any comment suggesting changes to the proposed definitions should be supported with an explanation of why the changes should be considered.   </p>
<h2><a name="_Toc268078686"></a>Projected Reporting, Recordkeeping, and Other Compliance Requirements</h2>
<p>Reporting and recordkeeping requirements associated with the proposed rule are discussed in the rule under the heading "Paperwork Reduction Act."</p>
<h2><a name="_Toc238895392"></a><a name="_Toc238895459"></a><a name="_Toc268078687"></a>Duplication, Overlap, or Conflict with Existing Rules and Regulations</h2>
<p>APHIS has not identified any duplication, overlap, or conflict of the proposed rule with other Federal rules.</p>
<h2><a name="_Toc238895393"></a><a name="_Toc238895460"></a><a name="_Toc268078688"></a>Alternatives to Minimize Significant Economic Impacts of the Rule</h2>
<p>Based on our review of available information, APHIS does not expect the proposed rule to have a significant economic impact on small entities.  In the absence of significant economic impacts, we have not identified alternatives that would minimize such impacts.</p>
<h1><a name="_Toc268078689"></a>References</h1>
<p>Claudi, R. 2002. Environmental and Economic Costs of Alien Invasive Species in Canada.RNT Consulting Inc., Picton, ON.</p>
<p></p>
<p>Kovacs, K., R. Haight, D. McCullough, R. Mercader, N. Siegert, and A. Liebhold. 2009. Cost of potential emerald ash borer damage in U.S. communities, 2009-2019. Ecological Economics 69 (2010) 569-578.</p>
<p></p>
<p>Nowak, D., J. Pasek, R. Sequeira, D. Crane, and V. Mastro. 2001.  Potential effect of <i>Anoplophora glabripennis</i> (Coleoptera: Carambycidae) on Urban trees in the United States. Journal of Economic Entomology 94(1):116-122.</p>
<p></p>
<p>Poland, T.  2007.  Twenty Million Ash Trees Later:  Current Status of Emerald Ash Borer in Michigan. Newsletter of the Michigan Entomological Society V52(1&2).</p>
<p></p>
<p>U.S. General Accountability Office. 2006. Invasive Forest Pests: Lessons Learned from Three Recent Infestations May Aid in Managing Future Efforts. GAO-06-353.</p>
<p></p>
<p>Rabaglia, B. and J. Lewis. 2006.  Economic Analysis of the Potential Impact of <i>Sirex noctilio</i>, With Emphasis on Pines in the Southeastern United States. USDA Forest Service, Forest Health Protection.</p>
<p></p>
<p>USDA. 2000. Pest Risk Assessment for Importation of Solid Wood Packaging Materials into the United States: APHIS and FS. United States Department of Agriculture.</p>
<p></p>
<p>USDA. 2009. Risk analysis for the movement of wood packaging material (WPM) from Canada into the United States.  APHIS. United States Department of Agriculture.</p>
<p>U.S. Imports, 2005-2009</p>
All Countries 	2005	2006	2007	2008	2009	1662379669	1845053181	1942862938	2090482755	1549163485	Canada	2005	2006	2007	2008	2009	287533544	303033956	312504524	334839564	224584073	Mexico	2005	2006	2007	2008	2009	169216101	197055599	210158774	216328394	176308702	China	2005	2006	2007	2008	2009	242637964	287052416	323085455	337504220	295544510	<p></p>
<p>
$ Billion</p>
<p>Canadian Exports, 2005-2009</p>
All Countries	 2005	 2006	 2007	 2008	 2009	450210	453951	463126.7	489856.8	369559.4	United States	 2005	 2006	 2007	 2008	 2009	368278.9	361442.1	355743	369891.1	271204.5	Japan	 2005	 2006	 2007	 2008	 2009	10172.799999999987	10280.5	10027	11872	8865	United Kingdom	 2005	 2006	 2007	 2008	 2009	9360.5	11284.9	14157.9	14206.9	13036.9	Other EC countries	 2005	 2006	 2007	 2008	 2009	18643.8	20908.8	24380.5	25390.400000000001	19034	<p></p>
<p>$ Billion</p>
<div class="package-entry"><h1>image1.jpeg</h1>
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