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[Federal Register: March 9, 2010 (Volume 75, Number 45)]
[Rules and Regulations]               
[Page 10634-10644]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09mr10-2]                         

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. APHIS-2006-0096]
RIN 0579-AC06

 
Agricultural Inspection and AQI User Fees Along the U.S./Canada 
Border

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are adopting as a final rule, with changes, an interim rule 
that amended the foreign quarantine and user fee regulations by 
removing the exemptions from inspection for imported fruits and 
vegetables grown in Canada and the exemptions from user fees for 
commercial vessels, commercial trucks, commercial railroad cars, 
commercial aircraft, and international air passengers entering the 
United States from Canada. The interim rule was necessary in part 
because we were not recovering the costs of the inspection activities 
we were engaged in at the U.S./Canada border. In addition, our data 
showed an increasing number of interceptions on the U.S./Canada border 
of prohibited material that originated in Canada and countries other 
than Canada that presents a high risk of introducing plant pests or 
animal diseases into the United States. These findings, combined with 
additional Canadian airport preclearance data on interceptions of 
ineligible agricultural products approaching the U.S. border from 
Canada, strongly indicated that we needed to expand and strengthen our 
pest exclusion and smuggling interdiction efforts at that border. As a 
result of the interim rule, all agricultural products imported from 
Canada are subject to inspection, and all commercial conveyances, with 
certain exceptions established by this final rule, as well as airline 
passengers arriving on flights from Canada, are subject to user fees.

DATES: Effective Date: March 9, 2010.

FOR FURTHER INFORMATION CONTACT: Ms. Cynthia Stahl, Senior Staff 
Officer, Quarantine Policy, Analysis and Support, PPQ, APHIS, 4700 
River Road Unit 60, Riverdale, MD 20737; (301) 734-8415.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in 7 CFR part 319 prohibit or restrict the 
importation of certain plants and plant products into the United States 
to prevent the introduction of plant pests. Similarly, the regulations 
in 9 CFR subchapter D prohibit or restrict the importation of certain 
animals and animal products into the United States to prevent the 
introduction of pests or diseases of livestock. The regulations in 7 
CFR part 354 provide rates and requirements for overtime services 
relating to imports and exports and for user fees.
    In an interim rule\1\ effective November 24, 2006, and published in 
the Federal Register on August 25, 2006 (71 FR 50320-50328, Docket 
APHIS-2006-0096), we amended the foreign quarantine regulations in part 
319 and the user fee regulations in part 354 by removing the exemptions 
from inspection for imported fruits and vegetables grown in Canada and 
the exemptions from user fees for commercial vessels, commercial 
trucks,

[[Page 10635]]

commercial railroad cars, commercial aircraft, and international air 
passengers entering the United States from Canada. As a result of the 
interim rule, all agricultural products imported from Canada are 
subject to inspection, and commercial conveyances, as well as airline 
passengers arriving on flights from Canada, are subject to inspection 
and user fees. We took that action in part because we were not 
recovering the costs of our inspection activities at the U.S./Canada 
border. In addition, our data showed an increasing number of 
interceptions on the U.S./Canada border of prohibited material that 
originated in Canada and countries other than Canada that presents a 
high risk of introducing plant pests or animal diseases into the United 
States. These findings, combined with additional Canadian airport 
preclearance data on interceptions of ineligible agricultural products 
approaching the U.S. border from Canada, strongly indicated that we 
needed to expand and strengthen our pest exclusion and smuggling 
interdiction efforts at that border.
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    \1\ To view the interim rule and the comments we received, go to 
http://www.regulations.gov/fdmspublic/component/main?main=DocketDetail&d=APHIS-2006-0096.
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    On November 22, 2006, we published in the Federal Register (71 FR 
67436) a notice delaying the effective date for the changes affecting 
user fees for international air passengers until January 1, 2007, and 
all other user fee-related provisions of the rule until March 1, 2007. 
We published a subsequent notice on February 26, 2007 (72 FR 8261), 
that further delayed the effective date for user fees for commercial 
trucks and loaded railroad cars entering the United States from Canada 
until June 1, 2007. These delays of effective date did not extend the 
comment period for the interim rule.
    We solicited comments on the interim rule for 90 days ending 
November 24, 2006. We received 112 comments by that date. They were 
from private citizens; industry groups; representatives of the Canadian 
Government and Canadian State governments; individual shipping, 
manufacturing, and food processing companies; trade groups; 
representatives of trucking, airline, railroad, and vessel companies; 
State governments; and representatives of Federal and State agencies.
    Eleven commenters supported the interim rule. The remaining 
commenters expressed concerns with the interim rule. The issues raised 
by those commenters are discussed below by topic.

Border Delays

    Many commenters expressed concern that the interim rule would cause 
border delays due to congestion resulting from increased inspections, 
which in turn would heavily tax existing infrastructure. Delays were a 
particular concern for those entities shipping perishable items such as 
food products, and for express carriers and companies with strict 
shipping schedules. Some commenters stated that delays at the U.S./
Canada border could have an effect on products shipped through the 
United States to Mexico or that they could lead to increased fuel costs 
or job losses. One commenter expressed concern regarding delays as a 
result of insufficient numbers of the Animal and Plant Health 
Inspection Service (APHIS) employees to conduct inspections.
    Although APHIS retains the authority to establish and collect 
agricultural quarantine and inspection (AQI) user fees, the Homeland 
Security Act of 2002 (Pub. L. 107-296), which established the 
Department of Homeland Security (DHS), transferred the responsibility 
for inspecting imported agricultural products from APHIS to DHS' Bureau 
of Customs and Border Protection (CBP). Prior to the effective date of 
the interim rule, CBP was already conducting inspections of APHIS-
regulated products at the U.S./Canada border with the exception of 
Canadian-origin fruits and vegetables; the interim rule did not create 
a new inspection function. Among other things, the collection of user 
fees at the Canadian border has already allowed CBP to hire additional 
inspectors to offset any potential staffing shortages as a result of 
the increased inspections of Canadian-grown fruits and vegetables 
required by the interim rule. Since implementation of the interim rule, 
we are not aware of any increase in delays at U.S./Canada border ports 
as a result of the rule.
    Border delays can be affected by a variety of factors; in addition 
to the inspections of fruits and vegetables that are necessary as a 
result of the rule, the past 3 years have seen the implementation of 
new national security initiatives such as the passport requirement for 
all citizens reentering the United States from Canada and the 
commencement of infrastructure improvement projects at several land 
border crossings on the U.S./Canada border. While we cannot 
unequivocally state that there have been no additional delays that can 
be attributed to the interim rule, the fact that CBP was already 
conducting inspections of conveyances at the U.S./Canada border prior 
to the interim rule's implementation makes it unlikely that the interim 
rule has resulted in the delays or other issues cited by the 
commenters. CBP monitors the flow of traffic across the Canadian border 
through ports of entry and will take action to help alleviate future 
border delays.
    Several commenters stated that requiring cash payments at border 
crossings would also increase border delays because rail and truck 
crossings are not set up to handle cash payments and because such 
payments would require having to make change. Many commenters also 
stated that requiring cash payments renders current programs designed 
to reduce wait times by allowing the use of pre-paid decals or other 
means useless.
    Because CBP has been collecting customs user fees all along, the 
user fee collection infrastructure is already in place. AQI user fee 
payments for importers who move their products by rail are submitted 
directly to APHIS after-the-fact, therefore there are no user fee 
collections or resulting delays at rail crossings due to the need to 
handle cash payments. In addition, as stated in the interim rule, 
importers who frequently cross the border by truck will benefit from 
the purchase of a transponder that is good for a calendar year of 
unlimited border crossings. Over 80 percent of all importers who cross 
the border by truck are already benefitting from this provision. The 
remaining importers who must pay the per-entry user fees will be able 
to pay them at the same time they pay CBP fees. However, as noted 
previously, since implementation of the interim rule resulting in the 
collection of AQI user fees and the conducting of additional 
inspections, we are not aware of any delays at the U.S./Canada border.
    Several commenters asked how the 136 new agricultural inspectors 
that we expected to be hired as a result of the interim rule would be 
able to manage all border crossings 7 days a week and all 3 shifts 
during the day. One of those commenters stated that as most CBP 
personnel work from 8 a.m. to 4:30 p.m. and most agricultural products 
arrive in the United States overnight, this suggests that trucks will 
have to sit and wait for inspectors to arrive at work.
    Since most border crossings are staffed by CBP agriculture 
inspectors from 8:30 a.m. to 4:30 p.m. on weekdays, the additional 
inspectors would not be expected to manage all U.S./Canada border 
crossings 7 days a week and 24 hours a day. As noted by one of the 
commenters, trucks arriving after these hours will most likely have to 
wait until the following business day when inspections resume. However, 
most border port offices did not have agriculture inspectors available 
7 days a week and 24 hours a day before the implementation of the 
interim rule. Therefore, waiting at the border already

[[Page 10636]]

occurred for trucks arriving before or after these hours. As stated 
previously, since implementation of the interim rule, we are not aware 
of any delays at the U.S./Canada border as a result of the interim 
rule, including any delays of this nature.
    Two commenters asked over what timeframe the 136 inspectors would 
be hired. One commenter asked what will happen in the interim before 
full staffing is reached.
    The staffing plan in the interim rule was developed in 2001 before 
the transfer of inspection duties from APHIS to CBP. CBP staffs all 
ports according to current and anticipated needs. We are in 
consultation with CBP regarding their staffing plan and are providing 
recommendations to them regarding staffing issues. Training for these 
inspectors commenced in November 2006 and classes continue to be 
conducted. As of August 1, 2009, there were 181 CBP agricultural 
inspectors on the U.S./Canada border. The deployment of inspectors has 
been and will continue to be as quick as possible. In the interim, the 
number of inspections conducted will be dependent on the resources 
available. Inspections will also be conducted randomly. As the number 
of additional staff increases, the number of inspections will increase 
accordingly.
    One commenter cited delays of up to 24 hours due to waiting for 
plant samples to be identified and stated that money from user fee 
collection should go to training inspectors in pest identification or 
should be spent on technology to better help identify samples.
    We are continually working to improve our efficiency and cut costs, 
while carrying out our mission to protect U.S. agriculture from pest 
and disease outbreaks. This includes funding new technologies that may 
help expedite pest identification and hiring and training knowledgeable 
staff to assist with pest identification.

Conducting Inspections

    Several commenters asked how inspections would be carried out and 
where they would be conducted.
    Selective inspections will be conducted at U.S. ports of entry by 
CBP agriculture inspectors. They will be the same type of agriculture 
inspections currently conducted at our other ports of entry. The 
specific means of commercial conveyance to be inspected and the type of 
inspection provided at a port of entry are determined by APHIS and CBP 
risk analyses to target conveyances or host material that may carry 
agricultural pests. Additionally, CBP will conduct random inspections. 
As pathways continue to change, random inspections become increasingly 
necessary to monitor the flow of imports to ensure that agricultural 
pests are not entering the country via previously unknown means. This 
dynamic approach to pest interdiction is critical to the success of our 
programs.

Definition of Commercial Vehicle

    Two commenters asked what the definition of a commercial vehicle is 
in the context of the rule.
    We do not consider the term ``commercial vehicle'' to have any 
specialized meaning beyond its commonly understood meaning. Definitions 
for commercial aircraft, commercial truck, and commercial vessel may be 
found in Sec.  354.3 of the user fee regulations.

Private Vehicle, Train, and Bus Passengers

    Several commenters asked how other pathways not addressed by the 
rule, such as private vehicles and train and bus passengers, would be 
inspected.
    Although the interim rule does not directly address the risk from 
private vehicles or train and bus passengers, these pathways have been 
subject to inspection based upon risk. The full economic analysis for 
this final rule includes a discussion of the inspection of passenger 
vehicles. Those inspections are funded by appropriated funds.

Private Property and Businesses on the Border

    One commenter asked how carriers coming from a place sitting 
exactly on the border between the United States and Canada would be 
treated. Examples given were a pulp or sawmill.
    Our AQI program is in place at designated ports of entry along the 
U.S./Canada border and not private properties along the border. 
Therefore, a carrier coming from a place sitting exactly on the border, 
such as a pulp or sawmill, would be treated like any other carrier and 
could be directed to one of these ports.

Empty Containers and Movement of Nonagricultural Goods

    Many of the commenters stated that particular products that are not 
agricultural goods or conveyances that are not involved in the movement 
of agricultural goods should be exempt from paying agricultural user 
fees because they do not present a risk of introducing plant pests into 
the United States. Other commenters pointed to the hazardous nature of 
some nonagricultural commodities or other difficulties inherent in 
inspecting certain nonagricultural commodities or conveyances. Several 
commenters asked how empty conveyances would be dealt with or stated 
that they should also be exempt from the user fees.
    Risks to agricultural and natural resources can arise from 
shipments of nonagricultural goods and from conveyances moving 
nonagricultural goods. An example given in the interim rule was wood 
packaging material, such as wooden pallets, which is used to ship 
nonagricultural products such as electronic items. Wood packaging 
material can carry pests such as wood-boring insects. Noxious weed 
seeds, gypsy moths, and other hitchhiking pests that can attach 
themselves to nonagricultural items as well as the vehicle itself also 
pose a concern. In addition, prohibited soil may be attached to the 
articles in a shipment or to the conveyance itself. If the conveyance 
has traveled through, or if the conveyance or shipment has originated 
in, an area of Canada quarantined or regulated for plant pests such as 
nematodes, these agricultural pests may be carried into the United 
States in soil. Therefore, it is appropriate that all conveyances be 
subject to the requirements described in the interim rule except as 
otherwise noted. These same requirements have been in place along the 
U.S./Mexico border for the past 18 years. With the publication of the 
interim rule, conveyances entering the United States from all foreign 
countries are subject to the same AQI user fees.

Commercial Trucks and Railroad Cars--Exempt Movement That Originates 
and Ends in Canada

    Several commenters stated that a railroad car or truck that 
originates and terminates in the United States and that does not load 
or unload cargo in Canada or that originates and terminates in Canada 
and that does not load or unload cargo in the United States should be 
exempt from paying the user fees.
    The current regulations already exempt from AQI user fees those 
commercial railroad cars that are part of a train that originates and 
terminates in the United States and no passengers board or disembark 
and no cargo is loaded or unloaded while the train is in a foreign 
country. We recognize that there is a similar risk profile for 
commercial railroad cars that are part of a train that originates and 
terminates in Canada and no passengers board or disembark and no cargo 
is loaded or unloaded while the train is in the United States. 
Therefore, we have

[[Page 10637]]

amended the regulations in this final rule to state that such movements 
are also exempt from the AQI user fee. However, we do not agree that a 
similar exemption from the AQI user fee should be granted to trucks 
that originate and terminate in the United States and do not load or 
unload cargo in Canada or that originate and terminate in Canada and do 
not load or unload cargo in the United States. This is because, unlike 
railroad cars, trucks are not bound to a fixed track where stops and 
loading or unloading may only feasibly occur at designated stations. 
Therefore, the risk is high that cargo may be loaded or unloaded at any 
point.

Vessels That Travel to Canada To Refuel

    One commenter stated that vessels that travel to Canada only to 
refuel should be exempt from paying an AQI user fee upon their return 
to the United States.
    We agree with the commenter. Although U.S.-origin vessels that 
travel to Canada to take on fuel are not currently exempt from paying 
an AQI user fee when they return to the United States, we note that 
Canadian-origin vessels that travel to the United States solely to take 
on fuel are exempt from paying an AQI user fee. Because we recognize 
that there is a similar risk profile for U.S. vessels returning from 
Canada if they have only traveled to Canada to take on fuel, we have 
amended the regulations in this final rule to state that such movements 
are also exempt from the AQI user fee.

Small Aircraft

    Several commenters stated that the user fee exemption should be 
extended to apply to aircraft that are not currently exempt due to 
their size or because they contain more than the maximum number of 
seats to qualify for a user fee exemption, because such planes carry 
little cargo.
    Currently, all passenger aircraft, originating in any country, that 
have 64 or fewer seats and that are not carrying certain regulated 
articles specified in Sec.  354.3(e)(2)(iv) are exempt from paying the 
aircraft AQI user fee. The interim rule and this final rule are focused 
on AQI user fees for conveyances and air passengers from Canada. Any 
new AQI user fee exemptions that could impact passengers or conveyances 
originating from countries around the world, such as the exemption 
suggested by the commenters, would have to be addressed in a separate 
rulemaking.

Barges

    Several commenters stated that the user fee exemption should be 
extended to apply to barges that are not currently exempt due to their 
size, but that carry little cargo.
    We note that ferries, which are not considered to be commercial 
vessels, and commercial vessels weighing less than 100 net tons are 
already exempt from paying AQI user fees. While we do not agree that 
additional exemptions should be given to barges because of their size, 
we do recognize that barges traveling solely between the United States 
and Canada are operating in a lower-risk environment: A limited range 
of waterways between and around the U.S./Canada border such as the 
Puget Sound and the Great Lakes, which means that such barges present a 
much lower risk of carrying cargo or hitchhiking pests from a third 
country. Because of the risk of ocean-going barges traveling to 
countries outside of the United States and Canada, we have restricted 
our definition of barge to a non self-propelled vessel that transports 
cargo that is not contained in shipping containers. This definition 
does not include integrated tug-barge combinations. Further, we are 
limiting the exemption to barges that carry bulk cargo that originates 
only in the United States or Canada and that do not carry any plants or 
plant products or animals or animal products, and that do not carry 
soil or quarry products from areas in Canada listed in Sec.  319.77-3 
as being infested with gypsy moth. Therefore, we are amending the 
regulations to exempt barges that meet the above conditions from paying 
the AQI user fee.

Participation in Trade Security Systems

    Several commenters expressed concern that the interim rule removes 
the benefits of complying with systems such as the Customs-Trade 
Partnership against Terrorism (C-TPAT) and suggested that those in the 
trade community who participate in such programs should be waived from 
having to comply with the provisions of the interim rule.
    C-TPAT does not have an agricultural component that specifically 
addresses sanitary or phytosanitary risks. C-TPAT members' shipments 
are subject to agricultural inspection regardless of the reduced 
inspection benefits granted by membership in the program. Therefore, we 
do not believe it is appropriate to exempt C-TPAT members from being 
required to pay the AQI user fee.

Transition to Full Staffing and Inspection Levels

    Several commenters expressed concern that the collection of user 
fees does not mean any additional inspections will be conducted and 
therefore, stated the user fees are not justified. Some of the 
commenters expressed concern that the fees for one type of conveyance 
would be used to subsidize inspections on another type of conveyance 
because of what the commenters perceived as an apparent disparity in 
user fees charged between different conveyances or an apparent 
disparity in the inspection cost projections between different 
conveyances. Several commenters on the interim rule expressed concern 
regarding the cost projection for the initial staffing plan: 65 airport 
pre-clearance inspectors in Canada, costing $46 million, and 136 
inspectors along the U.S./Canada border, costing $22.45 million.
    As stated previously, the staffing plan in the interim rule was 
developed in 2001 before the transfer of inspection duties from APHIS 
to CBP. We are in consultation with CBP regarding their staffing plan 
and are providing recommendations to them regarding staffing issues. 
Inspections will be fewer and more random until the transition to full 
staffing occurs, but from then on will be conducted on a greater number 
of conveyances and agricultural products. The apparent disparity in 
user fees or the cost of inspections between different conveyance types 
is due to various factors, including the time and staff needed to 
conduct the inspections as well as the costs associated with staffing 
inspectors in Canada versus inspectors in the United States. Any excess 
of collections over costs remains available from year to year in a 
dedicated reserve account to be used only to fund agricultural 
quarantine inspection and related program costs. We take into account 
the balance in this reserve account, along with our current user fees, 
volumes, and collections before increasing or decreasing user fees.

User Fee Costs

    The majority of commenters stated that the cost of the user fees is 
excessive. Several commenters expressed concern regarding how APHIS 
arrived at the current user fees. One commenter asked how APHIS could 
have set user fees in 2004 that will be in effect until 2010 when APHIS 
does not know what costs will be in 2010.

[[Page 10638]]

    As stated previously, the interim rule was designed, in part, to 
recover the costs of our current inspection activities at the U.S./
Canada border. APHIS has the authority to collect user fees to fund 
inspections. Until recently, APHIS had determined that increased 
inspections at the Canadian border were not necessary. However, due to 
evidence of increased pest risk, APHIS believes it is necessary to 
increase its inspection regime at the Canadian border and therefore 
must collect user fees to fund those inspections. Therefore, we are 
requiring that commercial conveyances from Canada and international 
airline passengers arriving on flights from Canada be subject to the 
same agricultural quarantine user fees that are already charged to 
commercial conveyances and international airline passengers arriving in 
the United States from all other foreign countries. To calculate the 
proposed user fees, we projected the direct costs of providing all AQI 
services in fiscal years (FY) 2004 through 2010 (and beyond) for 
international airline passengers and for each category of conveyance: 
Commercial vessels, commercial trucks, commercial railroad cars, and 
commercial aircraft. The cost of providing these services in prior FYs 
served as a basis for calculating our projected costs. We then 
projected our costs using economic factors provided to us in the 
economic schedules in the President's budget. In publishing our user 
fees in advance, we are acting on behalf of affected industries who 
suggested that they would be able to plan for the effects of fee 
changes more effectively if fees were set in advance. To the extent 
that costs of inspections and collections of user fees change, we 
retain the option of increasing or reducing any of the fees.

Taxes Versus User Fees

    Some commenters expressed concern that the user fees will serve as 
a new tax on cross-border commerce or stated that Government funding 
should be obtained to hire additional permanent inspectors and acquire 
other needed resources rather than increasing user fees, or that 
appropriations have already addressed the need for additional 
inspectors.
    A tax is money paid by the general public to support general 
Government operations. A user fee is money paid for a specific 
Government service by the beneficiary of that service and is designed 
to recover the costs of providing that service. The AQI user fees 
covered by the interim rule are intended to recover the costs of 
providing AQI services for commercial vessels, commercial trucks, 
loaded commercial railroad cars, commercial aircraft, and international 
airline passengers and are paid by commercial vessel companies, 
commercial truck drivers, commercial railroad companies, commercial 
airlines, and international airline passengers. As such, our AQI user 
fees are user fees and not taxes. We have congressional authority to 
collect these fees. The Food, Agriculture, Conservation, and Trade 
(FACT) Act of 1990, as amended, authorizes the Secretary of Agriculture 
to prescribe and collect fees to cover the cost of providing the AQI 
services covered by the interim rule. Although appropriations may be 
used to partially fund certain related aspects of the AQI program, the 
FACT Act mandates that the majority of the cost must be borne by the 
beneficiaries of the program's services.

Canadian Costs and Fees

    Two commenters expressed concern that the interim rule would cause 
Canada to retaliate by imposing user fees on all conveyances crossing 
the border into Canada regardless of whether inspections will be 
carried out.
    Although we understand the commenter's concern, Canada's actions 
are not under our control. The interim rule was implemented to address 
the increased pest risk presented by agricultural shipments and 
conveyances from Canada and to provide for full cost recovery of our 
AQI program. The conveyances entering the United States from Canada are 
not only Canadian-owned; all conveyances, including U.S.-owned 
conveyances, are impacted by this rule. Also, we note that the user 
fees have been in effect since 2007. Since that time, there have been 
no signs of retaliation by Canada.

Inspection Costs

    Several commenters stated that APHIS does not know what the costs 
of performing inspections are and, therefore, asked how APHIS can 
comply with the statutory mandate in 21 U.S.C. 136a(a)(2) that fees 
must be commensurate with the costs of inspections. One commenter 
expressed concern that the interim rule did not contain provisions for 
the adjustment of fees if necessary.
    The user fees implemented at the U.S./Canada border as a result of 
the interim rule are the same as those already in place at our other 
border ports. Those user fees were determined by dividing the sum of 
the costs of providing each service by the projected number of users 
subject to inspection, thereby arriving at ``raw'' fees. We then 
rounded the raw fees up to determine the user fees. We consider this 
approach adequate in our identification of the costs of inspection and 
related pest identification and mitigation activities. As APHIS 
assesses its user fees, volumes, collections, and ongoing reserve 
balances, it will initiate rulemaking to increase or decrease the fees 
as necessary. We review our fees on a biennial basis to ensure that the 
fees charged are commensurate with the costs of inspection and 
inspection-related activities and, if necessary, undertake rulemaking 
to amend them. We will adjust a fee up or down, as appropriate, 
depending on the actual cost of providing services. In most cases, we 
propose user fee increases so that the fees will keep up with 
inflationary costs as well as any new costs that must be paid. However, 
we have adjusted user fees downward in the past. In a final rule 
published in the Federal Register on January 19, 1996, (61 FR 2660-2665 
Docket No. 94-074-2) and effective on March 1, 1996, we decreased our 
AQI user fee for commercial aircraft by 13.1 percent after our cost 
analysis revealed that this fee was too high.

Decals

    Several commenters expressed concern regarding the provision for 
annual decals. One commenter stated that if the option to purchase an 
annual decal is available for trucks that it should also be extended to 
all other conveyances. Two commenters questioned the economic 
feasibility of an annual decal for some importers because they do not 
cross the border enough times to justify the cost of the decal or 
because the decal is vehicle-specific.
    Although currently there is not an option to purchase an annual 
decal for loaded railroad car and commercial vessel border crossings, 
the regulations do contain maximum charge provisions. For commercial 
vessels, the maximum user fee is 15 times the AQI user fee per arrival. 
For loaded railroad cars, the maximum user fee is 20 times the AQI user 
fee per arrival. The maximum charge provisions provide the same 
benefits to users as a decal in instances where issuing a decal may not 
be feasible due to difficulty in electronically reading the decal on a 
particular type of conveyance or how user fees are collected for a 
particular conveyance.

Air Industry--Two AQI User Fees

    One commenter asked why air transport is subject to two fees (cargo 
and passenger) when other modes of transport are only subject to cargo 
fees. The commenter also asked why all

[[Page 10639]]

aircraft are subject to the same aircraft fee, regardless of whether 
they are cargo or passenger aircraft.
    Except as otherwise noted, the fees charged to commercial 
conveyances from Canada and international airline passengers arriving 
on flights from Canada are the same fees already charged to commercial 
conveyances and international airline passengers arriving in the United 
States from all other foreign countries. As mentioned previously, all 
passenger aircraft originating in any country with 64 or fewer seats 
and that do not carry certain regulated articles are already exempt 
from paying the aircraft AQI user fee. The passenger fee pays the costs 
of inspecting passengers and passenger baggage, the aircraft galley 
including garbage, the passenger compartment and the baggage hold, 
while the commercial aircraft fee pays the costs of inspecting the 
aircraft, excluding the areas covered under the passenger fee, and the 
crew and cargo.

Legality

    Many commenters stated that the interim rule is contrary to 
bilateral efforts and political commitments between the United States 
and Canada or broader international agreements and serves to undermine 
them.
    APHIS has been in discussions with Canadian officials for many 
years regarding agricultural risk from agricultural products, 
commercial conveyances, and air passengers arriving in the United 
States from Canada. We have also established workgroups with Canada to 
discuss enhancements within their agricultural programs to complement 
the U.S. pest interdiction and prevention programs. When the original 
user fee rules were implemented and the exemption for Canadian 
conveyances made, we considered commercial conveyances and agricultural 
shipments from Canada to have a risk profile similar to that of 
products and conveyances from the United States.\2\ As a result of this 
assumption, few inspections were conducted at the Canadian border, 
However, recent trends have shown that this assumption about risk is no 
longer true and inspections have increased accordingly. Therefore, in 
order to recover the costs of the existing inspection program and to 
implement an expanded inspection program, we determined the removal of 
the inspection and user fee exemption was necessary.
---------------------------------------------------------------------------

    \2\ See the rule published in the Federal Register (56 FR 8148-
8156) on February 27, 1991.
---------------------------------------------------------------------------

Basis of the Rule

    Several commenters questioned the basis of the rule, asking for 
risk assessments, pest survey data, or other information to support the 
rulemaking.
    Our decision to implement the interim rule was based on the fact 
that we were conducting inspections on the U.S./Canada border during 
which we were detecting exotic and dangerous pests, and were not 
recovering the costs of these inspections. For example, U.S. inspectors 
have intercepted fruit flies on mangoes from Mexico and Morocco, 
longans and litchis from various Asian countries, citrus from Spain, 
Spondia spp. from Mexico, Acanthocereus spp. from China, and Musa spp. 
from India that were shipped from those countries to the United States 
via Canada. In each case, the material was from a country other than 
Canada and was re-labeled as a product of Canada and then shipped to 
the United States to take advantage of the exemption from AQI user fees 
for Canadian fruits and vegetables. Therefore, we determined that the 
inspection exemption for fruits and vegetables from Canada needed to be 
removed to allow for regular inspections at the border and that AQI 
user fees were needed to recover the costs of our ongoing inspection 
activities. We provide more examples/data in our Final Regulatory 
Flexibility Analysis that illustrate the risks associated with material 
imported from Canada that originated in Canada and countries other than 
Canada. We reiterate that the interim rule merely subjected users 
entering the United States from Canada to the same user fees that are 
already being charged to users entering from all other countries.

Emergency Rulemaking

    Many commenters expressed concerns regarding the use of emergency 
rulemaking rather than engaging in talks with interested entities and 
that the interim rule's comment period ended on the same day as its 
implementation. Several commenters stated that the delay in 
implementing the rule illustrates that the rule was not justified as an 
emergency action.
    APHIS has been in discussions with Canadian officials for many 
years regarding the risk from agricultural shipments and commercial 
conveyances from Canada. We value our relationship with our Canadian 
partners, and we continue to communicate with our partners regarding 
how best to improve mitigation activities as well as to determine where 
harmonization of regulatory actions between the United States and 
Canada may be appropriate. Because the interim rule removed the 
inspection exemption for imported fruits and vegetables grown in Canada 
and commercial conveyances from Canada in order to prevent the 
introduction of plant pests and animal diseases into the United States 
and removed the user fee exemption for Canada in order to recover the 
costs of the needed inspections, we found good cause to publish the 
rule without a prior proposal. However, affected industries and the 
general public did have an opportunity to comment on the interim rule 
following its publication. The effective date of the interim rule was 
delayed in response to strong industry requests for more time to 
prepare for the implementation of the AQI user fees and to allow time 
to coordinate the additional inspections and collection of fees with 
CBP.
    One of the difficulties in mitigating the risk of plant pests 
entering the United States is ensuring that loaded or unloaded railroad 
cars and trucks that previously carried shipments of non-Canadian 
origin (i.e., third country origin) cargo are not infested with pests 
at the time they enter the United States. After the interim rule was 
published, APHIS met on several occasions with individual companies and 
industry groups that operate across the land border to discuss 
agricultural risks associated with rail and truck supply systems. In 
particular, we hoped to obtain further information regarding the use of 
containers which previously hauled high risk non-Canadian products. 
However, we were unable to obtain such information.

Miscellaneous Comments

    One commenter stated that it is impermissible for the Department of 
Agriculture to charge user fees on behalf of another agency since CBP 
conducts the inspections rather than the Department of Agriculture. 
Another commenter stated that collection of user fees adds an 
additional clerical function on border officers and that not only is it 
time-consuming, but that it requires additional recordkeeping and 
financial controls.
    While the Homeland Security Act of 2002 transferred certain AQI 
activities from APHIS to CBP, including conducting inspections, the 
management of the AQI user fee account, setting fees, and monitoring 
inspection related expenses and collections continues to be APHIS' 
responsibility. Since CBP is currently collecting customs fees, the 
collection of AQI user fees does not present an additional clerical 
function because the AQI user fees are collected at the same

[[Page 10640]]

time as CBP customs fees. In addition, as had been the case prior to 
the interim rule, CBP continues to conduct inspections and collect AQI 
user fees at the Mexican border without any collection-related delays. 
Likewise, we are not aware of any collection-related delays at the 
Canadian border since implementation of the interim rule.

Comments Regarding the Economic Analysis

    Several commenters expressed concerns regarding the economic 
analysis for the rule, particularly the accuracy of user fee collection 
and cost estimates, and asked for a detailed cost-benefit analysis. 
Several commenters stated that because we did not provide a 
quantitative comparison of expected benefits and costs of the rule, 
APHIS failed to satisfy the requirements of Executive Order 12866. One 
commenter cited the information we presented indicating that most motor 
carriers qualify as small businesses and stated that, because of this, 
APHIS should reevaluate the effect of the user fees.
    Our economic analysis included a cost-benefit analysis and 
evaluated the economic impacts on small entities with the best 
information available at that time. In this final rule, we have 
provided an updated final economic analysis. The commenters are correct 
in that we are unable to quantitatively project the benefits that will 
be attributable to the November 2006 interim rule and this final rule 
in terms of the reduced risk of animal and plant pests and diseases 
entering from Canada. It is difficult to determine the animal and plant 
pests and diseases that may be present in Canada or that may travel 
through Canada destined for the United States. It is also difficult to 
trace infestations already established in the United States back to 
their point of origin. However, we do know that these risks are 
genuine. U.S. agriculture and other sectors of the economy are 
unfortunately well acquainted with the costs of pest or disease 
introductions when interception fails, given the large public and 
private expenditures devoted to ongoing animal and plant pest control 
and eradication programs.
    Although we are not able to quantify the benefits of this rule, we 
are confident that the benefits of this rule (costs forgone because the 
resources made available will help prevent pest and disease entry from 
Canada) will outweigh its costs. This conclusion satisfies a principal 
requirement of Executive Order 12866. In addition, Executive Order 
12866 does not require that benefits and costs be quantified, only that 
they be evaluated as completely as possible.

Alternatives Suggested by Commenters

    Many commenters suggested alternatives to the interim rule. One of 
these suggestions was to require permits and phytosanitary certificates 
for agricultural goods from Canada that are imported into the United 
States. Another suggestion was to utilize preclearance systems to 
inform CBP about shipment information before arrival at the border in 
order to target inspections toward shipments of presumed greater risk. 
A third suggestion was to conduct inspections closer to the third-
country source, such as at the production facility, because third-
country products seem to hold the most risk.
    While permits, phytosanitary certificates, and preinspection 
systems are valuable ways to gain information about shipments before 
arrival, they do not prevent plant pest hitchhikers from attaching 
themselves to vehicles or shipments, or prevent importers from 
falsifying information or adding additional items to shipments before 
crossing the border. Therefore, inspection at the border would still be 
necessary to ensure that any such systems are working as intended. In 
addition, because pathways change, it is necessary to continue to 
monitor the flow of imports to ensure that agricultural pests are not 
entering the country via previously unknown means. Therefore, 
inspections at the border would still be necessary to mitigate risk. 
APHIS is continually working with Canadian officials to explore ways to 
lower and control pest risk.
    Therefore, for the reasons given in the interim rule and in this 
document, we are adopting the interim rule as a final rule with the 
changes discussed in this document.

Effective Date

    We are making final, with certain changes, an interim rule 
published in the Federal Register on August 25, 2006, that amended the 
foreign quarantine and user fee regulations by removing the exemption 
from inspection for imported fruits and vegetables grown in Canada and 
the exemptions from user fees for commercial vessels, commercial 
trucks, commercial railroad cars, commercial aircraft, and 
international air passengers entering the United States from Canada. 
Certain provisions of the interim rule became effective on January 1, 
2007, and on March 1, 2007, with the remainder becoming effective on 
June 1, 2007. The changes in this final rule include user fee 
exemptions for railroad cars that are part of a train that originates 
and terminates in Canada where no passengers embark or disembark and no 
cargo is loaded or unloaded while in the United States and vessels 
traveling to Canada only to refuel. In addition, this final rule 
exempts from user fees barges that carry non-containerized cargo that 
originates only in the United States or Canada and that does not carry 
any plants or plant products, animals or animal products, or soil or 
quarry products from areas in Canada regulated for gypsy moth. Because 
this final rule provides specified exemptions from user fees and thus 
relieves restrictions, the Administrator has determined that this rule 
can be made effective less than 30 days after publication in the 
Federal Register.

Executive Order 12866 and Regulatory Flexibility Act

    This 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.
    We have prepared an economic analysis for this final rule. It 
provides a cost-benefit analysis as required by Executive Order 12866, 
as well as a final regulatory flexibility analysis that considers the 
potential economic effects of this final rule on small entities, as 
required by the Regulatory Flexibility Act. The economic analysis is 
summarized below. Copies of the full analysis are available on the 
Regulations.gov Web site (see footnote 1 in this document for a link to 
Regulations.gov) or by contacting the person listed under FOR FURTHER 
INFORMATION CONTACT.
    We are adopting as a final rule, with the changes discussed in this 
document, an interim rule that amended the foreign quarantine and user 
fee regulations by removing the exemptions from inspection for certain 
agricultural products imported from Canada and the exemptions from user 
fees for commercial vessels, commercial trucks, commercial railroad 
cars, commercial aircraft, and international air passengers entering 
the United States from Canada. As a result of that action, all 
agricultural products imported from Canada are subject to inspection, 
and commercial conveyances, except as otherwise noted, as well as 
airline passengers arriving on flights from Canada, are subject to user 
fees.

Expected Benefits

    The objectives of the amended regulations were to expand and

[[Page 10641]]

strengthen our pest exclusion and smuggling interdiction efforts at the 
Canadian border by subjecting all agricultural products and all 
commercial conveyances, with certain exceptions established by this 
rule, to inspection and to enable the Federal Government to recover the 
cost of those inspections through user fees. In 1991, APHIS established 
AQI user fees for inspections of commercial conveyances and 
international air passengers arriving in the United States from all 
foreign countries except Canada. The exemption of Canada from the AQI 
user fees was based on our understanding that conveyances and 
passengers from Canada posed little risk of introducing plant or animal 
pests or diseases into the United States. Since 1991, the nominal value 
of U.S. agricultural imports from Canada has increased over fourfold, 
from $3.3 billion in 1991 to $15.2 billion in 2007. In addition, with 
the globalization of trade, shipments of re-exported agricultural 
products that originate in countries other than Canada but enter from 
Canada into the United States have increased significantly. For 
example, total exports of fruits and vegetables to the United States 
from Canada increased by 167 percent over the 10-year period between 
1998 and 2007, while Canada's re-export of fruits and vegetables to the 
United States increased by 738 percent during this same period. In 
addition to the growing volume of legitimate re-exports, there is 
incentive to commingle third-country goods with Canadian-produced goods 
because of lower U.S. tariffs for goods for Canadian origin. 
Opportunities to smuggle goods across the border also have increased as 
the volume of commercial traffic and number of air passengers have 
grown.
    Emergency Action Notifications (EANs) issued illustrate the 
increasing risks associated with the agricultural products entering 
from Canada. An EAN is an APHIS form used by CBP to communicate to 
importers the sanitary or phytosanitary reasons for an emergency action 
and what the action entails, such as treatment, re-export, or 
destruction of the goods. The EAN records indicate an increasing number 
of emergency actions related to agricultural goods entering from 
Canada. For example, during FY 2007, a total of 1,193 EANs were issued 
for products shipped from Canada to the United States. Nine hundred 
thirty-three of these EANs (or 78 percent) were issued for Canadian 
products and 260 (22 percent) were issued for products of non-Canadian 
origin. As 22 percent is substantially higher than the 5 percent of 
Canada's fruit and vegetable shipments to the United States in 2007 
that were re-exports, this represents a disproportionately high 
quantity of EANs for re-exports in comparison to the total number of 
EANs issued for shipments from Canada.
    Among EANs issued for re-exported products, 126 EANs were for 
products that originated in Asia and 62 EANs were for products that 
originated in regions south of the United States, i.e., Mexico, Central 
America, and South America. In FY 2007, 55 countries other than Canada 
were reported as countries of origin on EANs for products entering from 
Canada. Altogether, over 100 pest species were intercepted in FY 2007 
and FY 2008. Examples of intercepted pests are the Mexican fruit fly 
(Anastrepha ludens Loew (Tephritidae)), found in containers that 
originated in Mexico, and the gypsy moth (Lymantria dispar Linnaeus 
(Lymantriidae)), found in shipments of firewood of Canadian origin.
    Data generated by the Agricultural Quarantine Inspection Monitoring 
(AQIM) program also illustrate a greater sanitary and phytosanitary 
risk associated with agricultural products that enter the United States 
from Canada than anticipated when we first established AQI user fees 
and exempted Canada from those fees. Under the AQIM program, CBP 
agricultural inspectors conduct random inspections within each major 
pathway to assess their relative risk, and APHIS-PPQ monitors the 
collected data. AQIM keeps track of Quarantine Material Interceptions 
(QMIs), which are regulated agricultural materials seized because of 
prohibition, permit denial, pest risk, or abandonment. Approach rates, 
defined as the number of QMIs as a percentage of the number of 
conveyances inspected, for commercial trucks at the U.S./Canada border 
show a substantial 1-year increase in interceptions, from 0.68 percent 
of trucks sampled in FY 2006 to 1.73 percent of trucks sampled in FY 
2007. This increase cannot be explained by an increase in the rate of 
inspection for FY 2007 over FY 2006. Applying the FY 2007 approach rate 
of 1.73 percent to the 6.6 million trucks that CBP reports as having 
entered the United States from Canada that year, implies that over 
100,000 of the trucks may have been carrying quarantine material.
    As an example of the risk of foreign pest introduction, plum pox is 
a disease that was introduced into the United States. It is a 
devastating viral disease of stone fruit, such as peaches, apricots, 
plums, nectarines, almonds, and cherries. It is transmitted within an 
orchard by aphids and over long distances through the movement of 
infected nursery stock, propagative material, and fruit. The plum pox 
virus first appeared in the United States in Pennsylvania in October 
1999. In 2006, it was detected in New York and Michigan. APHIS 
established an eradication program to prevent the spread of plum pox to 
noninfested areas of the United States. Since 2000, APHIS has set aside 
$50.7 million to address plum pox disease. We do not have evidence that 
plum pox was introduced from Canada, where it is also known to exist. 
However, the expenses incurred because of this disease exemplify the 
types of costs that may be avoided or reduced by removing the 
inspection exemption and providing additional resources for AQI 
inspections at the U.S./Canada border.
    We are unable to quantify either the risk that existed prior to 
implementation of the interim rule, nor the reduction in risk following 
its implementation. Our knowledge of the disease and pest threats posed 
by goods entering from Canada and the extent to which the AQI 
inspection activities mitigate those threats is currently imperfect. 
Rarely are we able to precisely trace an established infestation by an 
invasive species to its country of origin. However, we do know that 
these risks are genuine. The disproportionately large number of EANs 
issued for shipments of third-country origin and the approach rates 
shown in the AQIM program point to significant and growing risks of 
disease and pest introduction. The intentional or unintentional 
commingling of products of third-country origin with goods of Canadian 
origin heightens these risks. Outright smuggling of goods across the 
U.S./Canada border is also a growing threat due to the increasing 
volume of commodities and number of travelers that cross the border 
into the United States each year. U.S. agriculture and other sectors of 
the economy are unfortunately well acquainted with the costs associated 
with pest and disease introductions when interception fails. Large 
public and private expenditures have been devoted to animal and plant 
pest and disease control and eradication programs, as exemplified by 
the costs of plum pox. This rulemaking will enable us to increase our 
inspections and targeting activities at the U.S./Canada border. The 
inspections will help safeguard against the risk of pest and disease 
introductions and, therefore, reduce agricultural losses and 
expenditures for pest and disease control and eradication. The 
regulations

[[Page 10642]]

will also allow us to recover the costs of these activities.

Costs of the Rule

    The amended regulations impose a direct fee on all commercial 
conveyances crossing the U.S./Canada border, except in three instances: 
(i) Barges operating solely between U.S. and Canadian ports that carry 
only bulk cargo that does not originate outside of the United States or 
Canada and that do not carry any plants or plant products or animal or 
animal products, and that do not carry soil or quarry products from 
areas in Canada listed in Sec.  319.77-3 as being infested with gypsy 
moth; (ii) railroad cars that are part of a train that originates and 
terminates in Canada and that does not load or unload passengers or 
cargo while in the United States; \3\ and (iii) vessels returning to 
the United States after traveling to Canada solely to take on fuel.
---------------------------------------------------------------------------

    \3\ The railroad cars are required to be part of the same train 
when they return to Canada. The current AQI user fee regulations (7 
CFR 354.3) provide a similar exemption for all U.S. railroad cars 
that transit Canada or Mexico and return to the United States. 
Sanitary and phytosanitary risks are minimal for these types of 
shipments.
---------------------------------------------------------------------------

    In the preliminary economic analysis for the interim rule, we noted 
the possibility of shipping delays because of the AQI inspections. 
Additional cost that might arise due to shipping delays was one of the 
most frequently raised concerns among our stakeholders. CBP inspectors 
are required to inspect commercial trucks while maintaining a steady 
traffic flow. CBP performs inspections based on risk profiles and 
available resources, as well as randomly.

User Fees

    Four modes of conveyance--trucks, railroad cars, maritime vessels, 
and aircraft--and international air passengers are assessed AQI user 
fees, as shown in Table 1.

 Table 1--AQI User Fees for Conveyances and Air Passengers Entering the United States, Fiscal Years 2007, 2008,
                                                    and 2009
----------------------------------------------------------------------------------------------------------------
                                     FY 2007                      FY 2008                      FY 2009
----------------------------------------------------------------------------------------------------------------
Maritime vessels.........  $490 per crossing (max 15    $492 per crossing (max 15    $494 per crossing (max 15
                            payments per year).          payments per year).          payments per year).
Trucks \1\...............  $5.25 per crossing or $105   $5.25 per crossing or $105   $5.25 per crossing or $105
                            per year.                    per year.                    per year.
Railroad cars \2\........  $7.75 crossing.............  $7.75 per crossing.........  $7.75 per crossing.
Aircraft.................  $70.50 per arrival.........  $70.50 per arrival.........  $70.75 per arrival.
Air passengers...........  $5 per passenger...........  $5 per passenger...........  $5 per passenger.
----------------------------------------------------------------------------------------------------------------
\1\ Truck operators have the choice of paying per crossing or purchasing a yearly decal. The cost of the yearly
  decal ($105) is 20 times the fee for an individual crossing ($5.25).
\2\ If the AQI user fee is prepaid for all arrivals of a commercial railroad car during a calendar year, the AQI
  user fee is an amount 20 times the AQI user fee for each arrival.

    Surface conveyances. All trucks and trains transporting goods to 
the United States are subject to inspection. A user fee of $5.25 per 
crossing, or $105 per year, is charged for each truck, and a fee of 
$7.75 per crossing is charged for each loaded railroad car, other than 
for railroad cars in transit, as described above.
    Trucks, trains, and all other commercial surface conveyances 
transported goods valued at approximately $511 billion across the U.S./
Canada border in 2007, with $285 billion in imports into the United 
States from Canada and $226 billion in exports from the United States 
to Canada.\4\ Trucks remain the dominant commercial mode of 
transportation, carrying $150 billion in U.S. imports and $174 billion 
in U.S. exports across the U.S./Canada border in 2007. That same year, 
railroads transported $66 billion in U.S. imports and $25 billion in 
U.S. exports across the U.S./Canada border. While agricultural 
shipments are generally the focus of AQI inspections, all commercial 
surface conveyances crossing the border are subject to inspection.
---------------------------------------------------------------------------

    \4\ Bureau of Transportation Statistics, TransBorder Surface 
Freight dataset, http://www.bts.gov/transborder/.
---------------------------------------------------------------------------

    For commercial trucking, the Small Business Administration (SBA) 
defines a small entity as one having not more than $25.5 million in 
annual receipts. According to the 2002 Economic Census, there were 
29,220 general long-distance freight trucking firms in the United 
States (North American Industry Classification System [NAICS] code 
484121). A total of 371 of these firms, or less than 2 percent, had 
annual receipts of $25 million or more, the largest revenue category 
identified. Thus, not less than 98 percent of trucking firms in the 
United States are small entities. We do not know the number or size of 
trucking firms that transport products across the border from Canada, 
but can reasonably assume that they are also mostly small entities.
    For commercial railroad transportation, the SBA defines a small 
entity as one having not more than 1,500 employees for long-haul 
railroads (NAICS code 482111) and not more than 500 employees for 
short-line railroads (NAICS code 482112). Of the 571 firms operating as 
railroad transportation companies in the United States, 18 firms 
employed more than 500 workers. Therefore, approximately 97 percent of 
commercial railroad companies in the United States are considered small 
entities. We can reasonably assume that this percentage applies to 
railroad companies that transport products into the United States from 
Canada.
    Waterborne conveyances. Commercial vessels transporting goods to 
the United States (100 net tons or more) are subject to inspection. 
Beginning March 1, 2007, waterborne conveyances were charged a user fee 
of $490 per crossing in FY 2007. In FY 2008, the fee was $492 per 
crossing, and increased to $494 per crossing in FY 2009. Total 
waterborne trade with Canada was valued at $18 billion in 2005, $14 
billion in U.S. imports and $4 billion in U.S. exports.\5\ Commodities 
transported by waterborne conveyances comprised 26 percent of total 
tonnage crossing the U.S./Canada border in 2005, with this mode of 
conveyance especially suitable for heavy bulk products such as grain 
and crude petroleum. As with the surface conveyances, we expect the 
focus of inspections of waterborne conveyances to be shipments of 
agricultural commodities.
---------------------------------------------------------------------------

    \5\ Bureau of Transportation Statistics, North American Freight 
Transportation, June 2006.
---------------------------------------------------------------------------

    For commercial water transportation, the SBA defines a small entity 
as one

[[Page 10643]]

having not more than 500 employees. According to the 2002 U.S. Economic 
Census for Transportation and Warehousing, 724 firms operated in the 
United States providing ``deep sea, coastal, and Great Lakes water 
transportation'' (NAICS codes 483111 and 483113). Nine of these firms 
employed 500 to 999 employees and 5 firms employed 1,000 or more 
employees. Thus, over 98 percent of water transportation firms in the 
United States employed fewer than 500 workers and can be considered 
small. Approximately 1,895 vessels were used to move cargo from Canada 
to the United States in 2005. We can assume that most if not all of the 
firms owning these vessels are small entities.
    Aircraft and air passengers. All air cargo and conveyances arriving 
in the United States are subject to inspection. Commercial aircraft 
were charged a user fee of $70.50 per arrival in FY 2008, and the user 
fee was increased to $70.75 in FY 2009. The modal share of air cargo as 
a percentage of total U.S. imports from Canada steadily declined to 4.1 
percent in 2006, from a peak of 6.6 percent in 2000. Preliminary data 
for 2007 indicate a slight increase in air cargo's modal share, to 4.4 
percent.\6\
---------------------------------------------------------------------------

    \6\ Transport Canada, Transportation in Canada 2007 http://www.tc.gc.ca/policy/report/aca/anre2007/pdf/add2007-e.pdf. Exports 
to the U.S. include re-exports and domestic exports.
---------------------------------------------------------------------------

    All air passengers arriving in the United States are charged a user 
fee of $5. In FY 2007, the total number of air passengers traveling 
from Canada to the United States was 11.9 million, an increase over the 
previous year and a return to pre-9/11 levels for the first time.\7\
---------------------------------------------------------------------------

    \7\ CBP. The data include air passengers and crews.
---------------------------------------------------------------------------

    For commercial air transportation, the SBA defines a small entity 
as one having not more than 1,500 employees. According to the 2002 U.S. 
Economic Census for Transportation and Warehousing, there were 513 
firms in the United States classified under ``scheduled freight air 
transportation'' (NAICS code 48111), of which only 12 firms employed 
more than 1,000 employees. Thus, about 98 percent of all air 
transportation firms in the United States are small.
    Clearly, most of the surface, waterborne, and air conveyance 
entities that are directly affected by the rule are small, although we 
do not have precise estimates of their numbers.

Estimated User Fee Collection and Federal Expenditures

    Table 2 shows FY 2008 estimated user fee collections and 
expenditures for the inspection of conveyances and air passengers 
arriving from Canada. Expected AQI expenditures for the U.S./Canada 
border set forth in this final rule differ from those presented in the 
preliminary economic analysis for the interim rule. We projected 
Federal expenditures for a single year for the interim rule that 
totaled about $74.8 million, with about $68.5 million for additional 
CBP staffing and direct support, and about $6.3 million for indirect 
support (agency, departmental, and other administrative costs). In 
Table 2, we explicitly acknowledge the complementary roles that CBP and 
APHIS play in fulfilling the AQI mission at the U.S./Canada border by 
estimating FY 2008 expenditures separately for the two agencies. 
Broadly speaking, CBP is responsible for AQI inspection activities, 
while APHIS is responsible for setting policy, providing training, and 
establishing and collecting user fees to pay for the CBP inspections.
    As shown in table 2, we estimated FY 2008 AQI user fee collection 
to total about $89.3 million and Federal expenditures for the AQI 
activities for conveyances and air passengers from Canada to total 
about $98.7 million (about $78.6 million to fund the CBP program and 
about $20.1 million to fund the APHIS program). The CBP expenditures 
are based on the estimated volume of inbound border crossings from 
Canada for the various modes of conveyance covered by the rule and for 
airline passengers.\8\ Although our estimated figures show a deficit of 
about $9.4 million, a reserve fund is maintained to carry on with AQI 
activities in cases of bad debt, carrier insolvency, or fluctuations in 
activity volumes.
---------------------------------------------------------------------------

    \8\ CBP uses an Activity Based Costing (ABC) methodology, 
whereby data are collected from various CBP sources and compiled for 
a cost-of-operations perspective of the organization. ABC is a means 
of operationally analyzing how an organization consumes its 
resources (direct and indirect). The focus is on activities 
performed within given processes.
---------------------------------------------------------------------------

    APHIS performs a number of functions in support of AQI activities 
at the U.S./Canada border that can be categorized within the following 
areas: Port operations and policy, science and technical support, 
training for CBP agriculture inspectors, import analysis and risk 
management, pest and disease identification, and regulatory enforcement 
and anti-smuggling programs. The overall cost for APHIS is composed of 
expenditures on these various functions. Expenditures for both APHIS 
and CBP also include administrative and other overhead costs.

 Table 2--Estimated User Fee Collection and Federal Expenditures for the
       U.S./Canada Border AQI Services, FY 2008 (Million Dollars)
------------------------------------------------------------------------

------------------------------------------------------------------------
AQI user fee collection.........................................   $89.3
CBP expenditure.................................................    78.6
APHIS expenditure...............................................    20.1
                                                                 -------
  Total Federal expenditures....................................    98.7
------------------------------------------------------------------------
Sources: APHIS-Financial Management Division, CBP-Budget Cost Management
  Division, APHIS-PPQ and APHIS-Budget & Program Analysis.

Alternatives

    Four possible alternatives to the interim rule were identified, 
none of which would accomplish the objectives of the rule or minimize 
effects for small entities.
    One alternative would have been to make no changes to the current 
regulations. However, inspections along the U.S./Canada border have 
resulted in an increasing number of interceptions of prohibited 
material that originated from countries other than Canada. The growth 
in imports and in the number of air passengers arriving from Canada has 
placed increased demands on CBP staff at U.S./Canada border ports and 
airports. This rule is necessary in order to strengthen our AQI 
activities and lessen the risk of introduction of plant and animal 
pests and diseases. Removing the Canadian exemption from AQI user fees 
is necessary to recover the costs of our existing inspection activities 
and to implement an expanded inspection program.
    Another alternative to the interim rule would have been to limit 
our inspections to commercial conveyances and not include international 
passengers entering the United States from Canada in the AQI inspection 
program. However, results of AQI preclearance activities at Canadian 
airports have demonstrated that air passengers from Canada represent an 
important pest pathway. As stated in the full economic analysis, data 
gathered at four airports (Calgary, Toronto, Vancouver, and 
Montr[eacute]al) over a four-year period (FY 2001-FY 2004) showed that 
over 6 percent of all U.S.-bound passengers (Canadian and non-Canadian 
origin) carried prohibited agricultural products. Most of these 
passengers were taking flights to States such as California, Florida, 
Arizona, and Texas, where the prohibited products could place major 
agricultural industries at

[[Page 10644]]

risk.\9\ Air passengers from all foreign countries, not just Canada, 
are considered important pest pathways due to the fact they may travel 
to multiple destinations in one trip and travel great distances over a 
relatively short amount of time. Therefore, it is necessary for all air 
passengers, including Canadian air passengers to be subject to AQI user 
fees. In addition, in surveys and inspection blitzes conducted on 
passenger baggage at destination airports in the United States, 
significant amounts of prohibited agricultural materials were found, 
such as tropical and exotic fruits and vegetables purchased at Canadian 
markets, as well as prohibited animal products. We would not be able to 
prevent or control the movement of such regulated articles into the 
United States if we did not increase our passenger inspection 
activities at Canadian airports, along with our conveyance inspection 
activities, at the U.S/Canada border. We could not recover the costs of 
passenger inspections if we did not charge passengers AQI user fees.
---------------------------------------------------------------------------

    \9\ APHIS-PPQ, AQI Monitoring (AQIM) program. For the AQIM 
program, CBP agricultural inspectors conduct random inspections 
within each major pathway to assess their relative risk, and APHIS-
PPQ monitors the collected data. PPQ and CBP use the AQIM data to 
evaluate the effectiveness of port-of-entry operations, set goals, 
and compare performance after making operational changes. The AQIM 
program was instituted to assist with the mandate of the Government 
Performance and Results Act (GPRA) of 1993. Source: APHIS AQIM 
Handbook.
---------------------------------------------------------------------------

    A third alternative would have been to only charge AQI user fees 
for inspections of commercial conveyances transporting agricultural 
goods. This alternative would eliminate impacts on conveyances that do 
not transport agricultural goods by eliminating the need for them to 
pay user fees. However, animal and plant pests may be found on or in 
conveyances even if they are not carrying agricultural products and 
even if they are empty. For example, solid wood packing material, 
estimated to be present in some 70 percent of all Canadian rail 
containers, can be a pathway for the Asian and citrus longhorned 
beetles, pine shoot beetle, emerald ash borer, and other pests. In 
addition, restricted nonagricultural products, such as Italian tile 
shipments that could be carrying hitchhiking snails, seat cushions 
stuffed with restricted grasses, or wooden handicrafts that could be 
harboring wood-boring insects pose a risk to American agriculture if 
they enter the United States. Therefore, APHIS employees familiar with 
the risks presented by the conveyances themselves and by containers 
importing nonagricultural products determined that it is necessary for 
all conveyances from Canada to be inspected. In order to recover the 
costs of these inspections, AQI user fees would still be necessary, 
except as otherwise noted.
    A fourth alternative would have been to develop new user fees 
specific to Canada that would be different from the user fees charged 
to all other countries. However, we concluded that it was not a valid 
alternative as our intention in the interim rule was to harmonize the 
inspection requirements and the AQI user fees charged for conveyances 
entering the United States from Canada with the inspections and AQI 
user fees for conveyances entering the United States from all other 
countries in the world. In addition, we have determined that charging 
different user fees specific to Canada would result in potential delays 
and increased expenses as a new collection system would have to be 
developed and implemented to collect those fees.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule: (1) has no retroactive effect and (2) does 
not require administrative proceedings before parties may file suit in 
court challenging this rule.

Paperwork Reduction Act

    This final rule contains no 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

    Animal diseases, Exports, Government employees, Imports, Plant 
diseases and pests, Quarantine, Reporting and recordkeeping 
requirements, Travel and transportation expenses.

0
Accordingly, the interim rule amending 7 CFR parts 319 and 354 that was 
published at 71 FR 50320 on August 25, 2006, is adopted as a final rule 
with the following changes:

PART 354--OVERTIME SERVICES RELATING TO IMPORTS AND EXPORTS; AND 
USER FEES

0
1. The authority citation for part 354 continues to read as follows:

    Authority:  7 U.S.C. 7701-7772, 7781-7786, and 8301-8317; 21 
U.S.C. 136 and 136a; 49 U.S.C. 80503; 7 CFR 2.22, 2.80, and 371.3.


0
2. Section 354.3 is amended as follows:
0
a. In paragraph (a), by adding a definition for barge to read as set 
forth below.
0
b. In paragraph (b)(2)(iv), by removing the word ``bunkers'' and adding 
the word ``fuel'' in its place.
0
c. By adding new paragraphs (b)(2)(vi), (b)(2)(vii), and (d)(2)(i) to 
read as set forth below.


Sec.  354.3  User fees for certain international services.

    (a) * * *
    Barge. A non-self-propelled commercial vessel that transports cargo 
that is not contained in shipping containers. This does not include 
integrated tug barge combinations.
* * * * *
    (b) * * *
    (2) * * *
    (vi) Barges traveling solely between the United States and Canada 
that do not carry cargo originating from countries other than the 
United States or Canada and do not carry plants or plant products, or 
animals or animal products, and that do not carry soil or quarry 
products from areas in Canada listed in Sec.  319.77-3 of this chapter 
as being infested with gypsy moth.
    (vii) Vessels returning to the United States after traveling to 
Canada solely to take on fuel.
* * * * *
    (d) * * *
    (2) * * *
    (i) Any commercial railroad car that is part of a train whose 
journey originates and terminates in Canada if--
    (A) The commercial railroad car is part of the train when the train 
departs Canada; and
    (B) No passengers board or disembark from the commercial railroad 
car, and no cargo is loaded or unloaded from the commercial railroad 
car, while the train is within the United States.
* * * * *

    Done in Washington, DC, this 3rd day of March 2010.
Edward Avalos,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2010-4949 Filed 3-8-10; 8:45 am]
BILLING CODE 3410-34-P
```