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<h1 class="title">Initial Regulatory Flexibility Analysis</h1>
<h1 class="title">Interim Rule
</h1>
<h1 class="title">Emerald Ash Borer, Additional Counties in Kentucky, Michigan, Minnesota, New York, Pennsylvania, and Wisconsin; the entire State of West Virginia</h1>
<h1 class="title">09-098-1</h1>
<h2 class="subtitle">U.S. Department of Agriculture
</h2>
<h2 class="subtitle">Animal and Plant Health Inspection Service
</h2>
<h2 class="subtitle">April 2010
</h2>
<h1>Summary
</h1>
<p>This interim rule amends the current Emerald Ash Borer (EAB) regulations to expand the quarantine area to include an additional 21 counties in Kentucky, 3 counties in Michigan, 2 counties in Minnesota, 2 counties in New York, 5 counties in Pennsylvania, 5 counties in Wisconsin, and the entire State of West Virginia.  Prior to this regulation, one county in Minnesota, six counties in Pennsylvania, six counties in Wisconsin and one county in West Virginia were under quarantine.  This interim rule will help to protect uninfested areas from further spread of EAB.</p>
<p>If left unregulated, the spread of EAB could negatively impact several industries including nurseries, timber operations, and landscaping.  These potential economic impacts would likely be much greater than government program costs and any additional costs incurred from the expansion of the quarantine area.  While some firms may be negatively affected by this rule, those effects will be limited to those firms that ship regulated products interstate or from quarantined areas to areas that are not under quarantine.  Such firms will be required to obtain a certificate or limited permit from an APHIS inspector in order to comply with the regulation or enter into a compliance agreement with APHIS for the inspection and certification of the articles to be moved.  Additional restrictions on movement during adult fly season (roughly May – September) may result in additional impacts on entities in some quarantined counties.  Limited information was available on the extent to which firms in the potentially affected industries deal in ash products, and we welcome any information from the public that would better allow us to assess the impact of this rule on small entities in the affected areas.  </p>
<p class="tOC_Heading"><b>Table of Contents
</b></p>
<p class="tOC_1">i<u>Summary</u>

</p>
<p class="tOC_1">3<a href="_Toc245870671"><u>Introduction</u>
</a>
</p>
<p class="tOC_1">3<a href="_Toc245870672"><u>Initial Regulatory Flexibility Analysis</u>
</a>
</p>
<p class="tOC_2">2<a href="_Toc245870673"><u>Reasons Action is Being Considered</u>
</a>
</p>
<p class="tOC_2">3<a href="_Toc245870674"><u>Objectives of and Legal Basis for the Rule</u>
</a>
</p>
<p class="tOC_2">3<a href="_Toc245870675"><u>Potentially Affected Small Entities</u>
</a>
</p>
<p class="tOC_2">8<a href="_Toc245870676"><u>Projected Reporting, Recordkeeping, and Other Compliance Requirements</u>
</a>
</p>
<p class="tOC_2">10<a href="_Toc245870677"><u>Duplication, Overlap, or Conflict with Existing Rules and Regulations</u>
</a>
</p>
<p class="tOC_2">10<a href="_Toc245870678"><u>Alternatives to minimize Significant Economic Impacts of the Rule</u>
</a>
</p>
<p>
</p>
<h1>Introduction
</h1>
<p>The Emerald Ash Borer (EAB) (<i>Agrilus planipennis</i>) is a destructive wood boring insect that attacks ash trees (<i>Fraxinus </i>spp., including green ash, white ash, black ash and several horticultural varieties).  The EAB is native to China and eastern Asia and was officially identified in the United States in the summer of 2002, although it is believed that it may have been present for up to 12 years before the initial detection.  To date, the EAB has been responsible for the death or decline of tens of millions of ash trees throughout the United States.  </p>
<p>The USDA has previously established quarantines in several States to prohibit the movement of ash materials and firewood out of States or areas of States where EAB has been found to exist.  This interim rule will expand the quarantined area to include the additional areas of: Boone, Bourbon, Campbell, Carroll, Fayette, Franklin, Gallatin, Grant, Greenup, Harrison, Henry, Jefferson, Jessamine, Kenton, Oldham, Owen, Pendleton, Scott, Shelby, Trimble, and Woodford counties in Kentucky; Alger, Chippewa, and Luce counties in Michigan; Hennepin and Ramsey counties in Minnesota; Cattaraugus and Chatauqua counties in New York; Armstrong, Indiana, Juniata, Washington, and Westmoreland counties in Pennsylvania; the entire State of West Virginia; and Brown, Kenosha, Milwaukee, Racine, and Waukesha counties in Wisconsin.  This analysis examines the economic impact of the regulation on small entities in the affected counties. 
</p>
<h1>Initial Regulatory Flexibility Analysis
</h1>
<p>The Regulatory Flexibility Act requires agencies to evaluate the potential effects of their proposed and final rules on small businesses, small organizations and small governmental jurisdictions.  Section 603 of the Act requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis that describes expected impacts of a proposed rule on small entities.  </p>
<h2>Reasons Action is Being Considered</h2>
<p>The current regulations are being amended to prevent the further spread of EAB from infested areas to currently noninfested areas.  EAB adults can spread via natural means, by flying as much as one-half mile from one tree to the next, or by human-assisted means when infested nursery trees, logs, or firewood are transported from one region to the next.  Expanding the quarantined area to include newly infested areas can help to reduce human-assisted spread of the EAB.  
</p>
<p>Further spread of EAB could lead to significant economic impacts.  If left unregulated, EAB’s spread could negatively impact nursery, landscaping, and timber industries involving ash trees, as well as forest-based recreation and urban forestry.  The unrestricted spread of this pest would also cause extensive environmental and aesthetic damage.  Federal and State costs related to eradication and compensation would also be expected to increase with additional spread of EAB. 
</p>
<p>Many cities in the United States have planted a large number of ash trees over the years, so the spread of EAB to these areas could lead to significant damage of the urban forest resource and related economic costs.  The discounted cost of the treatment, removal and replacement of ash trees on developed land based on projected EAB expansion in a 25-State area centered around Detroit has been estimated at $10.7 billion for the 10 year period from 2009 to 2019.
  </p>
<h2>Objectives of and Legal Basis for the Rule</h2>
<p>The Plant Protection Act (7 U.S.C. 7701-7772) authorizes the Secretary of Agriculture to take measures to prevent the spread of plant pests within the United States, including the regulation of interstate movement of plant products.  This rule will amend 7 CFR 301.53 to add 21 counties in Kentucky, 3 counties in Michigan, 2 counties in Minnesota, 2 counties in New York, 5 counties in Pennsylvania, 5 counties in Wisconsin, and the entire State of West Virginia to the list of quarantined areas (the specific counties to be added are listed in the introduction to this document).  The objective of expanding the list of quarantined areas is to control the spread of EAB and thus reduce the economic costs that would be inflicted from the spread of the pest.  Affected industries may include sawmills, logging operations, nurseries, firms engaged in the gathering of forest products, and commercial hardwood firewood dealers.</p>
<h2>Potentially Affected Small Entities</h2>
<p>This interim rule will affect firms in the expanded quarantined areas that wish to transport ash trees or products into or through areas not under quarantine.  The primary industries likely to be affected by this rule include nurseries, sawmills, logging operations and commercial firewood dealers.  Although individuals that sell timber or firewood from their private property may also be affected by this rule, they are not considered in this analysis.  
</p>
<p>Based on the standards set by the Small Business Administration (SBA), most firms in the affected industries are likely to be small.  According to the SBA standards, nursery and tree production (NAICS 111421) firms are considered small if annual receipts are not more than $750,000; forest nurseries and firms engaged in the gathering of forest products (NAICS 113210) are considered small if annual receipts are not more than $7 million; logging operations (NAICS 113310) are considered small if they have fewer than 500 employees; sawmills (NAICS 321113) are considered small if they have fewer than 500 employees; and other fuel dealers (NAICS 454319) are considered small if they have annual receipts of $7 million or less.  Information related to the number of entities in each of these categories for the newly quarantined counties is presented below.  Information on the size of these entities and the extent to which they deal in ash species was limited but is presented in cases where it was available.  Additional information from the public related to the size of affected entities or the extent to which they sell ash products is welcome.</p>
<p>The 21 newly quarantined counties in Kentucky had 3 sawmills (NAICS 321113) in 2002 that were considered small using the SBA guidelines, although it is not clear what, if any, percentage of their receipts were from the sale of ash species.
  There were no firms in these counties that were listed under NAICS code 454319 (other fuel dealers) and met the SBA guidelines.  Firms listed under NAICS code 1114 (greenhouse, nursery, and floriculture production) totaled 349 in the 21 newly quarantined Kentucky counties as of 2007, although information on the size of these firms was not readily available.
  Additional information about the proportion of nursery sales that will be affected by the rule was not available.  We welcome any information from the public regarding the number of small entities and the proportion of their sales that will be affected by the rule.  As of 2006, these counties had a total of 660,794 acres of ash trees, 684,210 acres of which are privately owned.
</p>
<p>There were seven sawmills (NAICS 321113) in the three newly quarantined Michigan counties in 2002 that were considered small according to the SBA guidelines.  There were no firms listed under NAICS code 454319 (other fuel dealers).
  As of 2007, there were 23 entities involved in greenhouse, nursery, and floriculture production (NAICS 1114), although the size of these businesses is unknown.
  Information on the percentage of ash sales for any of these businesses was unavailable.  We welcome public comment providing additional information on the number of small entities and the percentage of their sales that will be affected by this rule.  According to 2008 data, 253,000 acres of ash trees are planted in the newly quarantined counties, 162,867 acres of which are privately owned.
</p>
<p>The two newly quarantined counties in Minnesota had a total of four sawmills (NAICS 321113) in 2002 that were considered small under SBA guidelines.
  According to the Minnesota Department of Natural Resources, three entities are currently selling primary wood products of green or white ash in Hennepin and Ramsey Counties.
  No firms involved in the sale of firewood (NAICS 454319) were listed for these counties.  There were 55 firms classified under NAICS code 1114 (greenhouse, nursery, and floriculture production) in the two Minnesota counties in 2007.
  Information on the size of these firms and the extent to which they deal in ash trees is not readily available.  These counties had a total of 23,190 acres of ash trees in 2008, 5,659 acres of which are privately owned.
</p>
<p>In the two newly added New York counties, there were 33 sawmills that saw ash and move their product to areas that are not quarantined for EAB. 
  All of those firms are categorized as small according to SBA guidelines.  There were 24 logging establishments in the 2-county area that were engaged in cutting and selling ash timber that transported that timber out of the quarantine area, all of which were considered small according to the SBA guidelines. 
  Thirty-eight hardwood firewood dealers located in the two counties were transporting their product to areas not quarantined for EAB. 
  All of those firewood dealers were considered small by SBA standards.  Three establishments that sell ash nursery stock and transport it to an area not under quarantine were located in the two New York counties, all of which were small by SBA standards. 
  Additional information about the percentage of these firms business that was related to ash products was not available.  A total of 538,046 acres of ash trees existed in these counties in 2008, 441,448 acres of which are privately owned.
</p>
<p>The five newly quarantined Pennsylvania counties had 22 sawmills that meet the SBA guidelines for small businesses in 2002.
  One firm classified under NAICS 454319 (other fuel dealers) was located in the expanded quarantine area, although size information is not available for this firm due to disclosure concerns.  There were 276 firms classified under greenhouses, nurseries and floriculture production (NAICS 1114) in the five-county area, although we do not have size information on these firms nor do we have information on their sales of ash trees.
  The counties had 618,626 acres of ash trees in 2008, 577,956 acres of which were privately owned.
</p>
<p>The State of West Virginia had 127 sawmills (NAICS 321113) in 2002.  Most of these entities were considered small, with only 45 having more than 20 employees.  Three entities were categorized under NAICS 454319 (other fuel dealers), all of which were small (the total value of sales for all three entities was $407,000).
  The State had 403 entities categorized under NAICS 1114 (greenhouses, nurseries and floriculture production) in 2007, although information on the size of these entities was not available.
  Information about the proportion of total sales made up of ash trees was not available for any of the industry groups listed above.  West Virginia had 3.61 million acres of ash trees in 2008, 3.29 million of which were privately owned.
</p>
<p>One entity classified under the category other fuel dealer (NAICS 454319) was located in the newly quarantined counties in Wisconsin.  Although specific information about this firm is not available due to disclosure concerns, it can be assumed that it is a small entity since sales for the entire State of Wisconsin are below the $7 million SBA requirement.
  The five newly quarantined counties include 244 greenhouse, nursery and floriculture operations (NACIS 1114), although information about the size of these operations was not available.
  A total of 95,338 acres of ash trees were located in the newly quarantined counties in 2006, 71,768 acres of which were privately owned.
</p>
<p>We welcome information from the public regarding the number of small entities and the percentage of sales affected by the rule for any of the expanded quarantine areas discussed above.
</p>
<h2>Projected Reporting, Recordkeeping, and Other Compliance Requirements</h2>
<p>Movement of regulated articles is subject to restrictions in the EAB regulations in 7 CFR 301.53-1 through 301.53-9.  This rule will affect those entities in the expanded quarantine areas that deal in ash products or hardwood firewood.  Regulated articles include firewood of all hardwood species, and nursery stock, green lumber, and other material (living, dead, cut or fallen) of the genus <i>Fraxinus</i>.  </p>
<p>During the winter months (roughly October – April depending on local climatic conditions), businesses wishing to move regulated articles interstate from a quarantined area must present regulated articles for inspection and obtain a certificate or limited permit for movement issued by the inspector, or enter into a compliance agreement with APHIS for the inspection and certification of the articles to be moved.  The services of an inspector to obtain a certificate or limited permit are provided by APHIS without cost during normal business hours.  Alternatively, firms can enter into a compliance agreement which allows for the self-inspection of articles intended for interstate movement.  During adult fly season (roughly May – September depending upon local climatic conditions) interstate movement of regulated articles is prohibited.  
</p>
<p>While firms do not incur charges for entering into a compliance agreement with APHIS, under certain conditions, firms must treat products at their own expense.  Compliance agreements for the movement of hardwood firewood as well as ash logs, lumber, stumps, branches and chips from quarantined areas require that one of four treatments be completed at the firm’s expense: 1) removal of bark and an additional 1⁄2 inch of wood, 2) kiln sterilization treatment, 3) fumigation, or 4) heat treatment.  Ash mulch products must be processed to one inch or less in two dimensions in order to be transported outside of a quarantined area, or the mulch must be composted in accordance with the process described in the compliance agreement. Some industry estimates indicate that fuel costs for kiln treatment of firewood range from $10 to $30 per cord.
</p>
<p>Hardwood firewood distributed from an area under quarantine must also be certified under an appropriate USDA compliance agreement.  Labels showing USDA approved status (or State of origin if originating from a non-quarantined area) are required for the transport of hardwood firewood bundles.  Firewood must also be completely covered or transported in a closed vehicle and may not be stored outside of the distribution center.  </p>
<p>This rule will restrict interstate movement of regulated articles in the newly quarantined areas.  In the cases of Kentucky, Michigan, Minnesota, New York, Pennsylvania, and Wisconsin, an intrastate quarantine is already in effect for the affected counties at the State level.  The State of West Virginia has rescinded its intrastate quarantine, which led APHIS to regulate the entire State.  Firms wishing to move regulated articles out of State will require firms to adhere to the additional compliance requirements described above.  Most firms are expected to be able to continue to move their products after adhering to the appropriate inspection procedures or compliance agreement.  In addition, firms that move a small portion of their product out of State or primarily move regulated articles within an intrastate quarantine area (between contiguous regulated counties) will be affected to a lesser degree.  The prohibition of interstate movement during adult fly season may result in additional impacts on entities during this part of the year.  These restrictions may pose a particular burden in quarantine counties located near State borders that are generally involved in significant interstate commerce.  For example, during adult fly season quarantined counties in Kentucky and Pennsylvania located near State borders will be restricted from moving regulated articles to neighboring States under Federal quarantine or intrastate to non-quarantined counties. </p>
<h2>Duplication, Overlap, or Conflict with Existing Rules and Regulations</h2>
<p>APHIS has not identified any duplication, overlap, or conflict of the interim rule with other Federal rules.</p>
<h2>Alternatives to Minimize Significant Economic Impacts of the Rule</h2>
<p>Based on our review of available information, APHIS does not expect the interim 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>
<p>� Kovacs, Kent F., Robert G. Haight, Deborah G. McCullough, Rodrigo J. Mercader, Nathan W. Seigert, and Andrew M. Liebhold.  2010.  Cost of potential emerald ash borer damage in U.S. communities, 2009-2019.  Ecological Economics, 69(2010): 569-578.
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</p>
<p>� Personal communication, USDA-APHIS, Office of the State Plant Health Director - NY (1/28/2009).
</p>
<p>� Personal communication, USDA-APHIS, Office of the State Plant Health Director - NY (1/28/2009).
</p>
<p>� Personal communication, USDA-APHIS, Office of the State Plant Health Director - NY (1/28/2009).
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<p>� U.S. Department of Agriculture.  2007 Census of Agriculture.  Data available at: http://www.agcensus.usda.gov/Publications/2007/index.asp
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<p>� USDA Forest Service.  Forest Inventory Data Online 2.0.  Forest Inventory and Analysis Databases.  Standard Reports 2008.  Data available at: http://199.128.173.26/fido/index.html
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<p>� U.S. Department of Agriculture.  2007 Census of Agriculture.  Data available at: http://www.agcensus.usda.gov/Publications/2007/index.asp
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<p>� U.S. Census Bureau.  2002 Economic Census.  Data available at: http://factfinder.census.gov/servlet/DatasetMainPageServlet?_program=ECN&_tabId=ECN2&_submenuId=datasets_4&_lang=en&_ts=287057455451
</p>
<p>� U.S. Department of Agriculture.  2007 Census of Agriculture.  Data available at: http://www.agcensus.usda.gov/Publications/2007/index.asp
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<p>� USDA Forest Service.  Forest Inventory Data Online 2.0.  Forest Inventory and Analysis Databases.  Standard Reports 2006.  Data available at: http://199.128.173.26/fido/index.html
</p>
<p>
</p>
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