User Fees for Agricultural Quarantine and Inspection Services, 49984-49986 [E6-14041]

Download as PDF 49984 Federal Register / Vol. 71, No. 164 / Thursday, August 24, 2006 / Rules and Regulations DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 354 [Docket No. 04–042–2] RIN 0579–AB88 User Fees for Agricultural Quarantine and Inspection Services Animal and Plant Health Inspection Service, USDA. ACTION: Affirmation of interim rule as final rule. AGENCY: rmajette on PROD1PC67 with RULES1 SUMMARY: We are adopting as a final rule, without change, an interim rule that amended the user fee regulations by adjusting the fees charged for certain agricultural quarantine and inspection (AQI) services that are provided in connection with certain commercial vessels, commercial trucks, commercial railroad cars, commercial aircraft, and international airline passengers arriving at ports in the customs territory of the United States. Prior to the interim rule, user fees had not been adjusted since October 1, 2001. Due to the events of September 11, 2001, and the resulting increased security concerns, a greater volume and variety of cargo entering the United States is being inspected. We determined that the fee adjustments were needed to recover the costs of this increased inspection activity and to account for routine inflationary increases in the cost of doing business. The adjusted AQI user fees cover fiscal years 2005 through 2010. DATES: Effective on August 24, 2006, we are adopting as a final rule the interim rule that became effective on January 1, 2005. FOR FURTHER INFORMATION CONTACT: For information concerning program operations, contact Mr. William E. Thomas, Director, Quarantine Policy, Analysis and Support Staff, PPQ, APHIS, 4700 River Road Unit 60, Riverdale, MD 20737–1236; 301–734– 8295. For information concerning rate development, contact Ms. Donna Ford, Branch Chief, Financial Services Branch, FMD, MRPBS, APHIS, 4700 River Road Unit 55, Riverdale, MD 20737–1232, (301) 734–5901. SUPPLEMENTARY INFORMATION: Background In an interim rule published in the Federal Register on December 9, 2004 (69 FR 71660–71683, Docket No. 04– 042–1), and effective on January 1, 2005, we amended the user fee regulations in 7 CFR part 354 by adjusting the fees VerDate Aug<31>2005 15:14 Aug 23, 2006 Jkt 208001 charged for certain agricultural quarantine and inspection (AQI) services that are provided by the Animal and Plant Health Inspection Service (APHIS) and the Customs and Border Protection (CBP) Bureau of the Department of Homeland Security in connection with certain commercial vessels, commercial trucks, commercial railroad cars, commercial aircraft, and international airline passengers arriving at ports in the customs territory of the United States. Prior to the interim rule, user fees had not been adjusted since October 1, 2001. Due to the events of September 11, 2001, and the resulting increased security concerns, a greater volume and variety of cargo entering the United States is being inspected. We determined that the fee adjustments were needed to recover the costs of this increased inspection activity and to account for routine inflationary increases in the cost of doing business. The adjusted AQI user fees cover fiscal years 2005 through 2010. We solicited comments on the interim rule for 60 days ending on February 7, 2005. We received 315 comments by that date. The comments were from individuals, an air courier, trade associations representing airlines and air couriers, and State governments. The comments are discussed below by topic. A number of commenters argued that instead of raising user fees, we should cut costs by increasing efficiency, outsourcing, or employing new technologies. We are constantly working to improve our efficiency and cut costs. Since border inspection is a core Federal Government responsibility, we do not view outsourcing inspectors’ functions as a viable way of accomplishing either goal. We have taken steps to reduce our personnel-related expenditures, however, thereby reducing the costs of inspection. These steps have included using lower-grade employees to perform certain tasks when doing so would not compromise effectiveness, and implementing shift work to reduce our overtime costs. The use of X-ray technology, the Internet, online databases, and specially trained detector dogs has helped make our inspection and clearance processes more efficient. Nevertheless, the costs of providing AQI services do rise from year to year due to inflation, and, as we noted in the supplementary information section of the December 2004 interim rule, increased security concerns have resulted in inspectors having to inspect a greater volume of cargo entering the United States and a greater variety of types of cargo than they did before September 11, 2001. The user fee PO 00000 Frm 00006 Fmt 4700 Sfmt 4700 increases that were provided for in the interim rule were necessary to enable us to recover the full costs of maintaining the AQI program. Many commenters argued that by increasing our AQI user fees, we were actually imposing a ‘‘stealth tax increase.’’ It was further argued by some of these commenters that since only Congress has the right to raise taxes, our fee increases were thus unconstitutional. We do not agree with this comment. 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, commercial railroad cars, commercial aircraft, and 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 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. A commenter suggested that APHIS should have engaged in a public deliberative process prior to the rulemaking, consulting the aviation industry and the general public. The commenter also recommended that we create a user fee advisory committee to deliberate on future user fee changes and AQI expenditures. We welcome the submission of information at any time that would help us contain costs or enhance our efficiency. We published the December 2004 rule as an interim rather than a proposed rule in response to an emergency funding situation. The aviation industry and the general public did have an opportunity to comment on the interim rule following its publication. The fees in effect previously were not sufficient to allow us to recover our costs fully, and without immediate fee adjustments, the AQI accounts would have gone into deficit status, which could have resulted in an interruption of services. The interim rule ensured the adequate funding and continued operation at necessary levels of CBP and APHIS activities vital to preventing the E:\FR\FM\24AUR1.SGM 24AUR1 rmajette on PROD1PC67 with RULES1 Federal Register / Vol. 71, No. 164 / Thursday, August 24, 2006 / Rules and Regulations introduction of plant and animal pests and diseases into the United States. Some commenters expressed the view that a 25-percent reserve in each AQI account was excessive. It was suggested that 10 to 15 percent might be a more reasonable figure. We have determined that a reasonable reserve is one quarter of the annual costs of providing an AQI service. A 25percent reserve is needed to ensure continuity of AQI services in cases of fluctuations in activity volumes. For example, following the September 11, 2001, terrorist attacks, there was a significant drop in international passenger travel, and several airlines filed for bankruptcy protection. The volume decrease in air travel led to a significant drop in AQI user fee collections for commercial aircraft and international air passengers. In order for us to continue the AQI programs for commercial aircraft and international air passengers through that uncertain time, we relied heavily on our 25-percent reserve. Without a sufficient reserve balance in place, experienced full-time personnel would have been furloughed and services reduced. As volumes returned to normal levels, the AQI program would have needed to recruit, replace, and/or rehire these furloughed employees. This disruptive and costly process would have increased the cost of AQI services and, consequently, would have necessitated higher user fees than those provided for in the interim rule. There would also have been an increased risk of the introduction of harmful plant pests and the possible establishment of those pest populations in the United States, potentially resulting in additional costs related to containing and/or eradicating such pests. The 25-percent reserve also allows for some growth in the AQI program should APHIS find it necessary to increase its inspection workforce and the number of inspections conducted due to an increase in the demand for service. An adequate reserve enables us to enhance inspection technology in order to better protect the United States from agricultural pests and diseases. A 25-percent reserve is also needed should it become necessary to shut down an AQI program completely, in which case we would need to have funding available to cover 3 months of operating expenses while the program is being shut down. A final reason for maintaining a 25-percent reserve, though not applicable to all AQI services, is the lag in AQI user fee collections. Payments are made into AQI user fee accounts for commercial aircraft and international airline passengers on a quarterly basis, with VerDate Aug<31>2005 15:14 Aug 23, 2006 Jkt 208001 monies not remitted to APHIS until 1 month after the end of the quarter in which they were collected. Since the fourth-quarter fees are not due, and therefore not received, until after the fiscal year is over, we are not able to use those funds to pay for providing AQI services for commercial airlines and international air passengers in the fiscal year in which they are earned. Therefore, we need to maintain the reserve fund at the 25-percent level in order to continue to cover the costs of administering those AQI services for the remainder of the fiscal year while waiting for the fourth-quarter revenues. A commenter claimed that it was difficult to evaluate the justifications for the increases in fees presented in the supplementary information section of the December 2004 interim rule because there was an insufficient level of detail regarding direct and distributable costs and their allocation. The commenter requested information on the number of airport inspector positions paid for by the preexisting and the adjusted user fees, citing the lack of such a comparison in the interim rule as an example of the insufficient level of detail presented therein. The supplementary information section of the interim rule did, in fact, include an extensive discussion of AQI program costs and the methods by which they are calculated. The section also included a presentation, in tabular form, of our projected costs for fiscal years 2005 through 2010. As explained in the interim rule, AQI staffing increased by approximately one-third between September 11, 2001, and the publication of that rule in December 2004. The user fee increases contained in the interim rule covered the positions added during that period, but did not provide funding for the hiring of any additional airport inspectors or other AQI staff. One commenter argued that the interim rule did not take into account the increased productivity and cost savings that should have resulted from the consolidation of AQI functions formerly carried out by APHIS into CBP. The commenter also stated that the information provided in the interim rule did not demonstrate that actual benefits from consolidation, information sharing, cross training, and increased staff would justify the fee increases. As noted above, we are constantly working to improve our efficiency and cut costs, while carrying out our mission to protect U.S. agriculture from pest and disease outbreaks. The consolidation of AQI functions into CBP is one example of this ongoing effort; we cited others earlier in this document. As PO 00000 Frm 00007 Fmt 4700 Sfmt 4700 49985 noted in the supplementary information section of the interim rule, we review our fees annually and adjust them when appropriate. If the APHIS-CBP consolidation results in future cost savings, the user fees will be adjusted to take this into account. AQI user fees are based on the actual costs of providing the specified AQI services and maintaining a 25-percent reserve in the AQI account for each service category, as explained above. The cost of providing AQI services rises from year to year due to inflation. Prior to the December 2004 interim rule, our last user fee adjustment had come in October 2001. Since our costs had risen substantially in the interim, as a result of inflation and staffing increases, we were not recovering the full costs of administering our AQI services and were being forced to draw from our reserve funds. Had we continued to do so, we would have exhausted the reserve funds. The AQI accounts would then have gone into deficit status, which would have forced APHIS and CBP to lay off significant numbers of employees and cut back on services. The user fee increases contained in the December 2004 interim rule prevented any possible interruption of AQI services. It was suggested by two commenters that a consolidated fee, reflecting the consolidation of agriculture, customs, and immigration functions into CBP, be adopted as a means of providing more streamlined and transparent accounting. While we will not be making any changes to the final rule as a result of this comment, we would note that consolidated APHIS-CBP fees already exist for purchasers of yearly truck decals. We will pursue further consolidation of fees if we determine that doing so would yield the benefits that the commenters suggest. Two commenters argued that the authority to collect the AQI user fees should be transferred from APHIS to CBP. The statute establishing the Department of Homeland Security (The Homeland Security Act of 2002, Pub. L. 107–296), which transferred many responsibilities from APHIS to CBP, did not transfer the authority to establish and collect AQI user fees. One commenter suggested that we did not discuss the benefits of AQI services to the general public. The benefits of AQI services were discussed in a number of places in the interim rule. It may be that the benefits are not immediately apparent to the general public because the chief benefit is the harm prevented by having these inspection services in place. The primary mission of our AQI personnel is to prevent animal and plant pests and E:\FR\FM\24AUR1.SGM 24AUR1 rmajette on PROD1PC67 with RULES1 49986 Federal Register / Vol. 71, No. 164 / Thursday, August 24, 2006 / Rules and Regulations diseases from entering the United States. Such disease and pest introductions could lead to reductions in agricultural yield and productivity, costs to governmental and private entities for pest or disease control and eradication, losses in export revenues due to trade embargoes, and environmental degradation, resulting in immense harm to U.S. agriculture. Another benefit of AQI services is that AQI inspectors prevent trade disruptions by inspecting and clearing cargo on a timely basis. Consumers and taxpayers would certainly feel the negative effects if AQI services were disrupted or reduced. A commenter stated that the interim rule contained no suggestion that AQI user fees could ever be decreased due to lower traffic volume and less workload. As we noted in the interim rule and earlier in this document, we review our fees annually 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. 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. One commenter argued that the AQI user fee increases contained in the interim rule placed a disproportionate economic burden on the U.S. airline industry, undermining its attempts at financial recovery. We do not agree with this comment. The December 2004 interim rule included user fee adjustments for the inspection of commercial vessels, commercial trucks, and commercial railroad cars, as well as commercial aircraft, reflecting the increased costs of administering AQI services for all these types of conveyances. Had we exempted airlines from the fee increases, we would have placed an unfair burden on operators of other conveyances by forcing them to pay the airlines’ share of the increased costs. One commenter argued that clarification is needed regarding operational and revenue sharing agreements between CBP and APHIS so that air couriers can understand which agency is responsible for providing specific AQI services under particular circumstances and which agency is responsible for billing for those services. APHIS continues to establish the animal and plant health policies and procedures for the AQI programs, under VerDate Aug<31>2005 15:14 Aug 23, 2006 Jkt 208001 the authority of the Plant Protection Act, while CBP staff carry out most of these policies and procedures. CBP’s agriculture specialists perform the primary inspections. APHIS personnel are still responsible for such functions as pest identification, agricultural product disposal, and fumigations, and are most likely to become involved in the inspection process subsequent to the primary inspection when a treatment is required or a violation of the regulations has occurred. The regulations in § 354.3 contain information on billing and requirements for the remittance of user fees, as well as the tables that list the fees. The December 2004 interim rule included only minor, nonsubstantive changes to the provisions concerning billing and remittances. CBP’s regulations pertaining to user fee billing and remittances are located in title 24 of the Code of Federal Regulations. APHIS and CBP do have a revenue-sharing agreement. Finally, a commenter inquired as to how AQI user fee revenues are distributed between CBP and APHIS. The distribution is based on the cost to each agency of performing the AQI functions covered by a particular fee. APHIS and CBP have a signed memorandum of understanding that specifies how AQI user fee revenues are to be distributed. Therefore, for the reasons given in the interim rule and in this document, we are adopting the interim rule as a final rule without change. This action also affirms the information contained in the interim rule concerning Executive Order 12866 and the Regulatory Flexibility Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act. Further, this action 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. 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. PART 354—OVERTIME SERVICES RELATING TO IMPORTS AND EXPORTS; AND USER FEES Accordingly, we are adopting as a final rule, without change, the interim rule that amended 7 CFR part 354 and that was published at 69 FR 71660– 71683 on December 9, 2004. I PO 00000 Frm 00008 Fmt 4700 Sfmt 4700 Done in Washington, DC, this 18th day of August 2006. Bruce Knight, Under Secretary for Marketing and Regulatory Programs. [FR Doc. E6–14041 Filed 8–23–06; 8:45 am] BILLING CODE 3410–34–P DEPARTMENT OF AGRICULTURE Farm Service Agency 7 CFR Part 717 RIN 0560–AH64 Removal of Obsolete Regulations; Holding of Referenda Farm Service Agency, USDA. Final rule. AGENCY: ACTION: SUMMARY: This action removes regulations that have been rendered obsolete by expiration of their statutory authority and the ending of the programs they governed. There are no impacts on past or current program operations. EFFECTIVE DATE: August 24, 2006. FOR FURTHER INFORMATION CONTACT: Phillip Elder, Regulatory Review Group, Farm Service Agency, USDA, STOP 0540, 1400 Independence Avenue, SW., Washington, DC 20250–0540; Telephone: (202) 205–5851; e-mail: Phillip.Elder@usda.gov. SUPPLEMENTARY INFORMATION: Discussion of Final Rule This rule removes regulations at 7 CFR Part 717, Holding of Referenda. That regulation has been rendered obsolete by repeal of its statutory authority and the ending of it applicable programs. Part 717 was authorized by the Agricultural Adjustment Act of 1938 (1938 Act), as amended, and was applicable to all referenda held pursuant to that Act. This Act required the Secretary of Agriculture to establish national marketing quotas for fluecured, burley and other types of tobacco in years where producers of such tobacco approved of having a national marketing quota (see 7 U.S.C. 1312 et seq. (2000)). The quotas for the respective crops were approved or disapproved by such producers in a referendum conducted as provided in part 717. Sections 611 through 613 of the American Jobs Creation Act of 2004 (Pub. L. 108–357; the 2004 Act) repealed the tobacco marketing quota and related price support programs authorized by Title III of the 1938 Act and the Agricultural Act of 1949. Thus, the Farm Service Agency has no authority E:\FR\FM\24AUR1.SGM 24AUR1

Agencies

[Federal Register Volume 71, Number 164 (Thursday, August 24, 2006)]
[Rules and Regulations]
[Pages 49984-49986]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14041]



[[Page 49984]]

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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. 04-042-2]
RIN 0579-AB88


User Fees for Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Affirmation of interim rule as final rule.

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

SUMMARY: We are adopting as a final rule, without change, an interim 
rule that amended the user fee regulations by adjusting the fees 
charged for certain agricultural quarantine and inspection (AQI) 
services that are provided in connection with certain commercial 
vessels, commercial trucks, commercial railroad cars, commercial 
aircraft, and international airline passengers arriving at ports in the 
customs territory of the United States. Prior to the interim rule, user 
fees had not been adjusted since October 1, 2001. Due to the events of 
September 11, 2001, and the resulting increased security concerns, a 
greater volume and variety of cargo entering the United States is being 
inspected. We determined that the fee adjustments were needed to 
recover the costs of this increased inspection activity and to account 
for routine inflationary increases in the cost of doing business. The 
adjusted AQI user fees cover fiscal years 2005 through 2010.

DATES: Effective on August 24, 2006, we are adopting as a final rule 
the interim rule that became effective on January 1, 2005.

FOR FURTHER INFORMATION CONTACT: For information concerning program 
operations, contact Mr. William E. Thomas, Director, Quarantine Policy, 
Analysis and Support Staff, PPQ, APHIS, 4700 River Road Unit 60, 
Riverdale, MD 20737-1236; 301-734-8295. For information concerning rate 
development, contact Ms. Donna Ford, Branch Chief, Financial Services 
Branch, FMD, MRPBS, APHIS, 4700 River Road Unit 55, Riverdale, MD 
20737-1232, (301) 734-5901.

SUPPLEMENTARY INFORMATION:

Background

    In an interim rule published in the Federal Register on December 9, 
2004 (69 FR 71660-71683, Docket No. 04-042-1), and effective on January 
1, 2005, we amended the user fee regulations in 7 CFR part 354 by 
adjusting the fees charged for certain agricultural quarantine and 
inspection (AQI) services that are provided by the Animal and Plant 
Health Inspection Service (APHIS) and the Customs and Border Protection 
(CBP) Bureau of the Department of Homeland Security in connection with 
certain commercial vessels, commercial trucks, commercial railroad 
cars, commercial aircraft, and international airline passengers 
arriving at ports in the customs territory of the United States. Prior 
to the interim rule, user fees had not been adjusted since October 1, 
2001. Due to the events of September 11, 2001, and the resulting 
increased security concerns, a greater volume and variety of cargo 
entering the United States is being inspected. We determined that the 
fee adjustments were needed to recover the costs of this increased 
inspection activity and to account for routine inflationary increases 
in the cost of doing business. The adjusted AQI user fees cover fiscal 
years 2005 through 2010.
    We solicited comments on the interim rule for 60 days ending on 
February 7, 2005. We received 315 comments by that date. The comments 
were from individuals, an air courier, trade associations representing 
airlines and air couriers, and State governments. The comments are 
discussed below by topic.
    A number of commenters argued that instead of raising user fees, we 
should cut costs by increasing efficiency, outsourcing, or employing 
new technologies.
    We are constantly working to improve our efficiency and cut costs. 
Since border inspection is a core Federal Government responsibility, we 
do not view outsourcing inspectors' functions as a viable way of 
accomplishing either goal. We have taken steps to reduce our personnel-
related expenditures, however, thereby reducing the costs of 
inspection. These steps have included using lower-grade employees to 
perform certain tasks when doing so would not compromise effectiveness, 
and implementing shift work to reduce our overtime costs. The use of X-
ray technology, the Internet, online databases, and specially trained 
detector dogs has helped make our inspection and clearance processes 
more efficient. Nevertheless, the costs of providing AQI services do 
rise from year to year due to inflation, and, as we noted in the 
supplementary information section of the December 2004 interim rule, 
increased security concerns have resulted in inspectors having to 
inspect a greater volume of cargo entering the United States and a 
greater variety of types of cargo than they did before September 11, 
2001. The user fee increases that were provided for in the interim rule 
were necessary to enable us to recover the full costs of maintaining 
the AQI program.
    Many commenters argued that by increasing our AQI user fees, we 
were actually imposing a ``stealth tax increase.'' It was further 
argued by some of these commenters that since only Congress has the 
right to raise taxes, our fee increases were thus unconstitutional.
    We do not agree with this comment. 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, commercial railroad cars, commercial aircraft, and 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 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.
    A commenter suggested that APHIS should have engaged in a public 
deliberative process prior to the rulemaking, consulting the aviation 
industry and the general public. The commenter also recommended that we 
create a user fee advisory committee to deliberate on future user fee 
changes and AQI expenditures.
    We welcome the submission of information at any time that would 
help us contain costs or enhance our efficiency. We published the 
December 2004 rule as an interim rather than a proposed rule in 
response to an emergency funding situation. The aviation industry and 
the general public did have an opportunity to comment on the interim 
rule following its publication. The fees in effect previously were not 
sufficient to allow us to recover our costs fully, and without 
immediate fee adjustments, the AQI accounts would have gone into 
deficit status, which could have resulted in an interruption of 
services. The interim rule ensured the adequate funding and continued 
operation at necessary levels of CBP and APHIS activities vital to 
preventing the

[[Page 49985]]

introduction of plant and animal pests and diseases into the United 
States.
    Some commenters expressed the view that a 25-percent reserve in 
each AQI account was excessive. It was suggested that 10 to 15 percent 
might be a more reasonable figure.
    We have determined that a reasonable reserve is one quarter of the 
annual costs of providing an AQI service. A 25-percent reserve is 
needed to ensure continuity of AQI services in cases of fluctuations in 
activity volumes. For example, following the September 11, 2001, 
terrorist attacks, there was a significant drop in international 
passenger travel, and several airlines filed for bankruptcy protection. 
The volume decrease in air travel led to a significant drop in AQI user 
fee collections for commercial aircraft and international air 
passengers. In order for us to continue the AQI programs for commercial 
aircraft and international air passengers through that uncertain time, 
we relied heavily on our 25-percent reserve. Without a sufficient 
reserve balance in place, experienced full-time personnel would have 
been furloughed and services reduced. As volumes returned to normal 
levels, the AQI program would have needed to recruit, replace, and/or 
rehire these furloughed employees. This disruptive and costly process 
would have increased the cost of AQI services and, consequently, would 
have necessitated higher user fees than those provided for in the 
interim rule. There would also have been an increased risk of the 
introduction of harmful plant pests and the possible establishment of 
those pest populations in the United States, potentially resulting in 
additional costs related to containing and/or eradicating such pests. 
The 25-percent reserve also allows for some growth in the AQI program 
should APHIS find it necessary to increase its inspection workforce and 
the number of inspections conducted due to an increase in the demand 
for service. An adequate reserve enables us to enhance inspection 
technology in order to better protect the United States from 
agricultural pests and diseases. A 25-percent reserve is also needed 
should it become necessary to shut down an AQI program completely, in 
which case we would need to have funding available to cover 3 months of 
operating expenses while the program is being shut down. A final reason 
for maintaining a 25-percent reserve, though not applicable to all AQI 
services, is the lag in AQI user fee collections. Payments are made 
into AQI user fee accounts for commercial aircraft and international 
airline passengers on a quarterly basis, with monies not remitted to 
APHIS until 1 month after the end of the quarter in which they were 
collected. Since the fourth-quarter fees are not due, and therefore not 
received, until after the fiscal year is over, we are not able to use 
those funds to pay for providing AQI services for commercial airlines 
and international air passengers in the fiscal year in which they are 
earned. Therefore, we need to maintain the reserve fund at the 25-
percent level in order to continue to cover the costs of administering 
those AQI services for the remainder of the fiscal year while waiting 
for the fourth-quarter revenues.
    A commenter claimed that it was difficult to evaluate the 
justifications for the increases in fees presented in the supplementary 
information section of the December 2004 interim rule because there was 
an insufficient level of detail regarding direct and distributable 
costs and their allocation. The commenter requested information on the 
number of airport inspector positions paid for by the preexisting and 
the adjusted user fees, citing the lack of such a comparison in the 
interim rule as an example of the insufficient level of detail 
presented therein.
    The supplementary information section of the interim rule did, in 
fact, include an extensive discussion of AQI program costs and the 
methods by which they are calculated. The section also included a 
presentation, in tabular form, of our projected costs for fiscal years 
2005 through 2010. As explained in the interim rule, AQI staffing 
increased by approximately one-third between September 11, 2001, and 
the publication of that rule in December 2004. The user fee increases 
contained in the interim rule covered the positions added during that 
period, but did not provide funding for the hiring of any additional 
airport inspectors or other AQI staff.
    One commenter argued that the interim rule did not take into 
account the increased productivity and cost savings that should have 
resulted from the consolidation of AQI functions formerly carried out 
by APHIS into CBP. The commenter also stated that the information 
provided in the interim rule did not demonstrate that actual benefits 
from consolidation, information sharing, cross training, and increased 
staff would justify the fee increases.
    As noted above, we are constantly working to improve our efficiency 
and cut costs, while carrying out our mission to protect U.S. 
agriculture from pest and disease outbreaks. The consolidation of AQI 
functions into CBP is one example of this ongoing effort; we cited 
others earlier in this document. As noted in the supplementary 
information section of the interim rule, we review our fees annually 
and adjust them when appropriate. If the APHIS-CBP consolidation 
results in future cost savings, the user fees will be adjusted to take 
this into account.
    AQI user fees are based on the actual costs of providing the 
specified AQI services and maintaining a 25-percent reserve in the AQI 
account for each service category, as explained above. The cost of 
providing AQI services rises from year to year due to inflation. Prior 
to the December 2004 interim rule, our last user fee adjustment had 
come in October 2001. Since our costs had risen substantially in the 
interim, as a result of inflation and staffing increases, we were not 
recovering the full costs of administering our AQI services and were 
being forced to draw from our reserve funds. Had we continued to do so, 
we would have exhausted the reserve funds. The AQI accounts would then 
have gone into deficit status, which would have forced APHIS and CBP to 
lay off significant numbers of employees and cut back on services. The 
user fee increases contained in the December 2004 interim rule 
prevented any possible interruption of AQI services.
    It was suggested by two commenters that a consolidated fee, 
reflecting the consolidation of agriculture, customs, and immigration 
functions into CBP, be adopted as a means of providing more streamlined 
and transparent accounting.
    While we will not be making any changes to the final rule as a 
result of this comment, we would note that consolidated APHIS-CBP fees 
already exist for purchasers of yearly truck decals. We will pursue 
further consolidation of fees if we determine that doing so would yield 
the benefits that the commenters suggest.
    Two commenters argued that the authority to collect the AQI user 
fees should be transferred from APHIS to CBP. The statute establishing 
the Department of Homeland Security (The Homeland Security Act of 2002, 
Pub. L. 107-296), which transferred many responsibilities from APHIS to 
CBP, did not transfer the authority to establish and collect AQI user 
fees.
    One commenter suggested that we did not discuss the benefits of AQI 
services to the general public.
    The benefits of AQI services were discussed in a number of places 
in the interim rule. It may be that the benefits are not immediately 
apparent to the general public because the chief benefit is the harm 
prevented by having these inspection services in place. The primary 
mission of our AQI personnel is to prevent animal and plant pests and

[[Page 49986]]

diseases from entering the United States. Such disease and pest 
introductions could lead to reductions in agricultural yield and 
productivity, costs to governmental and private entities for pest or 
disease control and eradication, losses in export revenues due to trade 
embargoes, and environmental degradation, resulting in immense harm to 
U.S. agriculture. Another benefit of AQI services is that AQI 
inspectors prevent trade disruptions by inspecting and clearing cargo 
on a timely basis. Consumers and taxpayers would certainly feel the 
negative effects if AQI services were disrupted or reduced.
    A commenter stated that the interim rule contained no suggestion 
that AQI user fees could ever be decreased due to lower traffic volume 
and less workload.
    As we noted in the interim rule and earlier in this document, we 
review our fees annually 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. 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.
    One commenter argued that the AQI user fee increases contained in 
the interim rule placed a disproportionate economic burden on the U.S. 
airline industry, undermining its attempts at financial recovery.
    We do not agree with this comment. The December 2004 interim rule 
included user fee adjustments for the inspection of commercial vessels, 
commercial trucks, and commercial railroad cars, as well as commercial 
aircraft, reflecting the increased costs of administering AQI services 
for all these types of conveyances. Had we exempted airlines from the 
fee increases, we would have placed an unfair burden on operators of 
other conveyances by forcing them to pay the airlines' share of the 
increased costs.
    One commenter argued that clarification is needed regarding 
operational and revenue sharing agreements between CBP and APHIS so 
that air couriers can understand which agency is responsible for 
providing specific AQI services under particular circumstances and 
which agency is responsible for billing for those services.
    APHIS continues to establish the animal and plant health policies 
and procedures for the AQI programs, under the authority of the Plant 
Protection Act, while CBP staff carry out most of these policies and 
procedures. CBP's agriculture specialists perform the primary 
inspections. APHIS personnel are still responsible for such functions 
as pest identification, agricultural product disposal, and fumigations, 
and are most likely to become involved in the inspection process 
subsequent to the primary inspection when a treatment is required or a 
violation of the regulations has occurred. The regulations in Sec.  
354.3 contain information on billing and requirements for the 
remittance of user fees, as well as the tables that list the fees. The 
December 2004 interim rule included only minor, nonsubstantive changes 
to the provisions concerning billing and remittances. CBP's regulations 
pertaining to user fee billing and remittances are located in title 24 
of the Code of Federal Regulations. APHIS and CBP do have a revenue-
sharing agreement.
    Finally, a commenter inquired as to how AQI user fee revenues are 
distributed between CBP and APHIS.
    The distribution is based on the cost to each agency of performing 
the AQI functions covered by a particular fee. APHIS and CBP have a 
signed memorandum of understanding that specifies how AQI user fee 
revenues are to be distributed.
    Therefore, for the reasons given in the interim rule and in this 
document, we are adopting the interim rule as a final rule without 
change.
    This action also affirms the information contained in the interim 
rule concerning Executive Order 12866 and the Regulatory Flexibility 
Act, Executive Orders 12372 and 12988, and the Paperwork Reduction Act.
    Further, this action 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.

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.

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

0
Accordingly, we are adopting as a final rule, without change, the 
interim rule that amended 7 CFR part 354 and that was published at 69 
FR 71660-71683 on December 9, 2004.

    Done in Washington, DC, this 18th day of August 2006.
Bruce Knight,
Under Secretary for Marketing and Regulatory Programs.
 [FR Doc. E6-14041 Filed 8-23-06; 8:45 am]
BILLING CODE 3410-34-P
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