User Fees for Agricultural Quarantine and Inspection Services, 66747-66779 [2015-27363]

Agencies

• DEPARTMENT OF AGRICULTURE
• Animal and Plant Health Inspection Service

[Federal Register Volume 80, Number 209 (Thursday, October 29, 2015)]
[Rules and Regulations]
[Pages 66747-66779]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27363]



[[Page 66747]]

Vol. 80

Thursday,

No. 209

October 29, 2015

Part IV





Department of Agriculture





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Animal and Plant Health Inspection Service





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7 CFR Part 354





 User Fees for Agricultural Quarantine and Inspection Services; Final 
Rule

Federal Register / Vol. 80 , No. 209 / Thursday, October 29, 2015 / 
Rules and Regulations

[[Page 66748]]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. APHIS-2013-0021]
RIN 0579-AD77


User Fees for Agricultural Quarantine and Inspection Services

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are amending the user fee regulations by adding new fee 
categories and adjusting current fees charged for certain agricultural 
quarantine and inspection services that are provided in connection with 
certain commercial vessels, commercial trucks, commercial railroad 
cars, commercial aircraft, and international passengers arriving at 
ports in the customs territory of the United States. We are also 
adjusting or removing the fee caps associated with commercial trucks, 
commercial vessels, and commercial railcars. We have determined that 
revised user fee categories and revised user fees are necessary to 
recover the costs of the current level of activity, to account for 
actual increases in the cost of doing business, and to more accurately 
align fees with the costs associated with each fee service.

DATES: Effective December 28, 2015.

FOR FURTHER INFORMATION CONTACT: Ms. Diane L. Schuble, AQI User Fee 
Coordinator, Office of the Executive Director-Policy Management, PPQ, 
APHIS, 4700 River Road, Unit 131, Riverdale, MD 20737 1231; (301) 851-
2338; Email: AQI.User.Fees@aphis.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

    Section 2509(a) of the Food, Agriculture, Conservation, and Trade 
(FACT) Act of 1990 (21 U.S.C. 136a) authorizes the Animal and Plant 
Health Inspection Service (APHIS) to collect user fees for certain 
agricultural quarantine and inspection (AQI) services. The FACT Act was 
amended on April 4, 1996, and May 13, 2002.
    The FACT Act, as amended, authorizes APHIS to collect user fees for 
AQI services provided in connection with the arrival, at a port in the 
customs territory of the United States, of commercial vessels, 
commercial trucks, commercial railroad cars, commercial aircraft, and 
international passengers. According to the FACT Act, these user fees 
should recover the costs of:
     Providing the AQI services for the conveyances and the 
passengers listed above;
     Providing preclearance or preinspection at a site outside 
the customs territory of the United States to international passengers, 
commercial vessels, commercial trucks, commercial railroad cars, and 
commercial aircraft;
     Administering the user fee program; and
     Maintaining a reasonable balance, also referred to by 
APHIS as a ``reserve,'' to ensure that funding is available in the 
event that there are temporary reductions in the demand for AQI 
services leading to reduced fee collections, as was experienced in 2008 
(Pub. L. 101-624, Section 2509). As there are fixed costs related to 
providing AQI services (i.e., costs that do not fluctuate with demand 
for AQI services) that the program incurs, a reasonable balance/reserve 
is needed to ensure continuity of service in times of reduced fee 
collection. This provides certainty to importers regarding the 
availability of inspection services. Specifically, the Act states, 
``The Secretary shall adjust the amount of the fees to be assessed 
under this subsection to reflect the cost to the Secretary in 
administering such subsection, in carrying out the activities at ports 
in customs territory of the United States and preclearance and 
preinspection sites outside the customs territory of the United States 
in connection with the provision of agricultural quarantine inspection 
services, and in maintaining a reasonable balance in the Account.'' The 
level of the reserve is determined by the Secretary.
    In addition, the FACT Act, as amended contains the following 
requirements:
     The fees should be commensurate with the costs with 
respect to the class of persons or entities paying the fees. This is 
intended to avoid cross-subsidization of AQI services.
     The cost of AQI services with respect to passengers as a 
class should include the cost of related inspections of the aircraft or 
other conveyance.
    APHIS' regulations regarding overtime services and user fees 
relating to imports and exports are found in 7 CFR part 354. The user 
fees for the AQI activities described above are contained in Sec.  
354.3, ``User fees for certain international services.''
    The AQI program is a Federal program that is designed to identify 
and address threats to U.S. agriculture and to facilitate safe 
agricultural trade, such as the accidental or intentional introduction 
of animal diseases and plant pests. Direct animal agriculture hazards 
include, but are not limited to, foot and mouth disease, avian 
influenza, and classical swine fever. Plant pests include foreign 
noxious weeds such as hogweed and insects such as long-horned beetles 
related to the Asian long-horned beetle that has caused millions of 
dollars in losses in numerous communities in the United States. Fruit 
flies, such as the Mediterranean fruit fly, if introduced, would cause 
significant direct damage to U.S. fruit crops and have major impacts on 
export markets. Diseases such as powdery mildews on corn and its 
relatives, wheat blast on wheat and its related grains, and exotic rice 
diseases could cause major impacts on staple food supplies and create 
trade barriers. The fees that pay for the AQI program help protect our 
country from these threats at a very small cost in relation to the 
economic harm that would be caused by any new introduction of pests and 
diseases.
    Under the FACT Act, the Secretary of Agriculture has the authority 
to prescribe and collect user fees sufficient to cover the cost of 
providing AQI services. By U.S. law, APHIS is designated as the Agency 
with the authority to establish and collect fees related to work 
undertaken in the AQI program. Other Federal agencies undertake 
activities that support the AQI program mission. APHIS followed Federal 
guidance, including the Office of Management and Budget (OMB) Circular 
A-25 and Federal Accounting Standards Advisory Board Statement of 
Accounting Standards Number 4, to appropriately account for these costs 
in order to determine the appropriate fees. Those costs not recovered 
through the AQI fees are paid for through appropriated funding. The use 
of activity based costing (ABC) methodology in establishing fees 
ensures that no cost is double counted. AQI program costs incurred by 
APHIS include:
     Program costs directly attributable to the delivery of AQI 
services;
     Program delivery-related costs (known as distributable 
costs) at the State level and below, at the regional and headquarters 
levels, the APHIS Agency level, and the U.S. Department of Agriculture 
(USDA) Departmental level. These costs are necessary to support the 
direct delivery of AQI services; and
     Depreciation of various equipment and facilities that 
directly support, in whole or in part, APHIS' delivery of AQI services 
and other imputed costs that other Federal agencies incur in providing 
services to APHIS and the

[[Page 66749]]

AQI program. Imputed costs are the costs of goods or services incurred 
on behalf of an agency that are paid by another Federal entity, such as 
certain retirement benefits paid to retirees by the Office of Personnel 
Management.
    The AQI fees have not been adjusted since FY 2010 and do not 
reflect the current cost of providing AQI services. As a result, U.S. 
Customs and Border Protection (CBP) of the Department of Homeland 
Security, which collaborates with APHIS in providing the AQI services 
referred to above, has relied more heavily on its appropriated funds to 
provide AQI services that are not paid for by AQI revenue or to cover 
the cost of services for which the current fee revenue is insufficient. 
The FACT Act provides that USDA may prescribe and collect fees that are 
sufficient to cover the cost of providing AQI services, and Federal 
guidance for fee setting states that, where possible, a user fee should 
recover the full cost to the government.
    On April 25, 2014, we published in the Federal Register (79 FR 
22895-22908, Docket No. APHIS-2013-0021) a proposal \1\ to amend the 
regulations by adjusting existing fees and adding some new ones in 
order to enable us to recover the costs of providing AQI services and 
to allow us to maintain the AQI reserve account. Specifically, we 
proposed to:
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    \1\ To view the proposed rule, supporting documents, and the 
comments we received, go to https://www.regulations.gov/#!docketDetail;D=APHIS-2013-0021.
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     Adjust the fees charged for the following conveyances or 
persons to whom AQI services are provided: Commercial vessels, 
commercial trucks, commercial railroad cars, commercial aircraft, and 
international air passengers. (Because commercial truck inspections 
have separate fees for trucks with and without decals (transponders), 
we actually proposed to adjust a total of six current fees.)
     Add a new fee to be charged for international commercial 
vessel (cruise) passengers.
     Add a new fee for conducting and monitoring treatments.
     Remove the caps (limits on the number of times a specific 
conveyance must pay the AQI fee in a given year) for vessels and 
railcars.
     Adjust the caps on fees for trucks with transponders. 
APHIS and CBP determined that there was a benefit to the use of 
transponders in speeding truck traffic through inspection at the border 
and thereby reducing the cost to the Federal Government for providing 
AQI services. The intent of a cap for truck transponders is to create 
an incentive for trucking firms to use a transponder. The difference 
between the cost of providing inspections for trucks with transponders 
and the revenue collected from trucks with transponders will be covered 
by appropriations. This ensures that there will be no cross-
subsidization of AQI services.
    There are other AQI program costs for which APHIS did not propose 
to establish user fees in the April 2014 document and never has done 
so. The costs of providing these AQI services are paid for through the 
CBP appropriation. These AQI services are:

 Private vehicle inspections at border crossings,
 Pedestrian inspections at border crossings,
 Bus inspections,
 Private vessel inspections,
 Private aircraft inspections,
 Military inspections, and
 Rail passenger inspections.

    APHIS follows Federal guidance in determining the appropriateness 
of charging AQI user fees, specifically the guidance from OMB's 
Circular A-25. Factors influencing our decisions not to charge user 
fees for the above-listed services include lack of authority (e.g. to 
collect fees for bus-passenger inspections); conflict with other 
Federal regulations (e.g. such as those that affect private aircraft); 
and the potential for the costs of collecting fees for services to 
exceed the revenues generated by the fees (e.g. such as inspecting 
private vessels and pedestrians); and the costs of putting in place the 
infrastructure required to collect fees.
    We base the fees on cost data from FYs 2010, 2011, and 2012, and 
use inflationary factors to project our costs through FY 2017.
    We solicited comments concerning our proposal for 60 days ending 
June 24, 2014. We reopened and extended the deadline for comments until 
July 24, 2014, in a document published in the Federal Register on July 
1, 2014 (79 FR 37231, Docket No. APHIS-2013-0021). We received 234 
comments by that date. They were from trucking companies, maritime 
shipping companies, commercial cruise lines, airlines, and associations 
representing all of those industries; producers of flowers, fruits, and 
vegetables and importers and shippers of those commodities; companies 
providing fumigation treatments; port officials; Federal, State, and 
foreign government representatives; and individuals. They are discussed 
below by topic.

Calculation of Fees

    Many commenters requested greater transparency regarding our 
calculation and/or allocation of the proposed user fee adjustments and 
new user fees. Commenters sought more documentation and detailed 
information on how we calculated AQI costs and fees. A more detailed 
explanation of our ABC methodology was requested by some commenters. 
Commenters also requested more specific information on, among other 
topics, how our costs correlated with the AQI services performed, how 
we determined our support costs, and our justification for including 
those costs in our calculation of our fees. These issues are discussed 
individually in the paragraphs that follow.
    One commenter asked that we provide all final reports, 
presentations, or other decisional material from each of the fiscal 
years (FY) 2010 to the present regarding AQI inspection costs and 
revenue prepared by APHIS, by contractor Grant Thornton, or by any 
other contractor or other internal or external party.
    AQI User Fee analysis reports used to calculate the new user fees, 
stakeholder outreach documents, and the proposed rule are available for 
public review on the APHIS Web site at: https://www.aphis.usda.gov/plant-health/aqi-userfee-review. The fee analysis reports were also 
made available on Regulations.gov along with the proposed rule as part 
of the rule's supporting documents and will remain posted there when 
this final rule is published.
    Commenters stated that, because the cost data provided by APHIS did 
not provide specifics regarding the calculation of the individual user 
class fees, the validity of the cost calculations overall is 
questionable. The commenter stated further that the lack of 
transparency unfairly inhibits industry's ability to respond 
knowledgeably to the proposal.
    APHIS provided the rationale, data, and calculations for the 
preferred alternative fee schedule in the proposed rule. However, to 
provide additional clarification on how the individual user fees were 
determined, we are providing a breakdown of the costs that went into 
calculating each new user fee in Tables 2, 5, 7, 8, 9, 10, and 11 
below.
    One commenter expressed concern that the proposed rule does not 
provide sufficient background information on how the burden of the new 
AQI user fee costs should be shared by all parties concerned or how the 
new fees will be applied and/or charged to shipments, or batches of 
agricultural products of different sizes.
    As stated in the proposed rule, we used the ABC methodology to 
determine

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the cost of AQI activities and their associated outputs and services. 
APHIS incorporated ABC methodologies to ensure that the full cost of 
providing AQI services can be appropriately assigned to AQI user fees. 
The AQI expenses are captured in the USDA and CBP financial accounting 
systems. These systems conform to generally accepted accounting 
principles, and each system is subject to accounting audits to ensure 
its correctness in support of statements of financial positions. The 
ABC methodology incorporates industry standards to ensure correctness, 
transparency, and repeatability in the assignment of costs from the 
APHIS and CBP financial systems to activities directly related to the 
delivery of AQI services. The costs of our AQI activities are 
contingent upon the time and effort required of APHIS and CBP staff to 
perform those activities. Those activities must be performed regardless 
of the size or volume of the shipment.
    CBP's agricultural inspection and safeguarding activities generate 
the majority of AQI costs. We used information from the CBP ABC model, 
which has been in existence for more than 10 years, to determine the 
safeguarding activities' costs. The CBP activity set includes 
inspection of shipments, monitoring compliance, and performing many 
other related activities. The costs ascribed to these activities 
contain the personnel and related non-personnel costs associated with 
the performance of them. The CBP model identifies activities by certain 
programs or operational areas, and we used AQI-related activities from 
the CBP model and certain activities that support the direct delivery 
of AQI services to the fee payer. The CBP model also provides some 
activity cost information by mode, so we were able to associate some 
costs with specific fee schedule services. For example, the CBP model 
has separate activities for air passenger inspection, air cargo 
inspection, truck inspection, etc., so we assigned those activity costs 
directly to the appropriate fee schedule items. However, some CBP and 
APHIS activities are performed across multiple modes and fee services. 
Those activity costs were assigned to the appropriate fee services 
based on AQI workload data. For example, APHIS performs pest 
identification for shipments across all modes (air cargo, maritime 
cargo, truck cargo, etc.), and the pest identification costs were 
assigned to each mode based on the number of pest identifications 
performed for each mode.
    Once all costs, including support costs that are necessary to 
support the operation of the centralized AQI system as a whole, were 
assigned to the appropriate fee services and modes, the fees were 
calculated based on the projected number of conveyances subject to 
inspection within each mode, using standard units such as a truck or 
airplane, as has been done in the past. The analysis did not further 
break down the conveyance classes into large and small shipments. 
Because of the volume of conveyances and people crossing the U.S. 
borders, the Government cannot inspect each piece of baggage, package, 
or conveyance. To deploy its limited resources most effectively, APHIS 
uses scientific data to target shipments associated with the highest 
risks of introducing pests or diseases into the United States. 
Importers and other parties pay the fees for all conveyances subject to 
inspection under the AQI program, whether or not we inspect the 
shipment or vessel. Several factors, including number of conveyances, 
risk targeting, and other criteria, drive inspection costs, but all 
conveyances subject to inspection contribute to the cost of, and 
benefit from, the AQI program.
    Whether a fee should be set based on the marginal cost or average 
cost of the service provided is also a consideration. A fee equal to 
the marginal cost of providing the service would maximize efficiency. 
Marginal cost is equal to the cost of providing an additional unit of 
the good or service. Under perfect competition, the marginal cost and 
average cost of a product are equal to each other and to its price. 
Given that AQI services are not provided in a perfectly competitive 
environment, the fee assessed on each class is based on the average 
cost of the AQI services for that class. Based on historical data, we 
projected AQI program costs for the various fee classes (e.g., air 
passenger, commercial aircraft, commercial cargo vessel, treatment, 
etc.). We then divided each class' total cost by the projected number 
of times that are expected to be provided to that class based on 
historical data.
    One commenter stated that ABC is not required by Federal accounting 
guidance. The commenter stated further that there is no evidence that 
APHIS considered other methods of cost accounting. One commenter 
expressed concern that the economic model used to determine the new 
user fees was based on the findings of a single consultant and 
expressed doubt regarding the level of scrutiny the model received. The 
commenter also stated that a review of the AQI program should consider 
whether the ABC methodology is the most appropriate model for this type 
of operation as well as whether the data entered into the ABC model is 
consistent not only with current operations but also with international 
trade agreements.
    While the ABC methodology is not required by Federal accounting 
guidance, it is a preferred cost accounting methodology within the 
manufacturing and service sectors, as noted by the Federal Accounting 
Standards Advisory Board in its Statement of Financial Accounting 
Standards (SFAS) No. 4: Managerial Cost Accounting Concepts and 
Standards for the Federal Government. SFAS No. 4 specifically directs 
the Federal Government to use managerial cost accounting identification 
methods to identify costs. The ABC methodology incorporates industry 
standards to ensure correctness, transparency, and repeatability in the 
assignment of costs from the APHIS and CBP financial systems to 
activities directly related to the delivery of AQI services. Due to the 
usefulness of ABC analysis in tracing costs through activities, it 
provides accurate product and service costs, which allows managers to 
evaluate the efficiency and cost-effectiveness of activities.
    In 2009, APHIS set out to determine best practices in the Federal 
Government for fee setting. We published a statement of work seeking a 
competitive bid to provide assistance in AQI fee setting. Three major 
accounting firms proposed approaches to the work. Each firm included 
ABC as a best practice. The contract allowed a third party to analyze 
and make recommendations to APHIS and CBP on fee setting using 
applicable Federal guidance on fee setting. It was determined that 
managerial accounting was the appropriate approach based on Federal 
guidance and the use of ABC methods was the best approach to achieve a 
reasonable, reproducible, and transparent rule for fee setting. One 
commenter stated that APHIS should provide additional information about 
the methodology used to calculate the fees because there is reason to 
question whether costs have been properly calculated or appropriately 
allocated to specific activities for which user fees are paid. The 
commenter cited as an example the FY 2011 cost figures cited in the 
March 2013 Government Accountability Office (GAO) report (GAO-13-268 
March 2013), which differs from the FY 2011 costs outlined in the 
proposed rule.
    The commenter also stated that the ABC methodology can result in 
the over-absorption of overhead costs, and that there is no meaningful 
method of assigning ``headquarters-level'' overhead

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costs to services. The commenters further stated that such 
``headquarters-level'' costs, among others listed in the proposed rule, 
are properly considered ``business sustaining'' and should not be 
considered AQI program costs at all.
    A second commenter, representing the trucking industry, echoed the 
latter point, stating that AQI fees should apply only when related to 
the direct inspection of incoming conveyances. The commenter opposed 
charging carriers for activities not directly related to the costs and 
activities of inspecting commercial conveyances, such as administrative 
or headquarters-level costs, as well as costs incurred for pest 
identification, scientific research, and policy development.
    The difference in FY 2011 costs between the proposed rule and the 
GAO report resulted from the fact that the GAO report used preliminary 
results from the AQI user fee model, i.e., the model developed by Grant 
Thornton to calculate costs used to run the AQI program.
    In addition, the costs in the proposed rule separately show the 
cost of treatments, whereas the GAO cost numbers include the cost of 
treatments in each service or pathway. We followed Federal guidance 
related to fee setting and managerial cost accounting in determining 
AQI program costs. Specifically, we followed OMB Circular A-25: User 
Charges, which provides guidance on setting fees in the Federal 
government, and SFAS No. 4, which includes, among other things, a 
definition of full cost. OMB Circular A-25, which may be viewed at 
https://www.whitehouse.gov/omb/circulars_default, establishes the 
requirement that fees be set at full cost to the government, and 
provides a definition and examples for full cost. OMB Circular A-25 
specifically defines full cost to include the support costs referred to 
by both commenters above, as well as the other costs listed by the 
second commenter. Certain Agency-level centralized services support 
APHIS' programs, including the AQI program. Centralizing these services 
at the Agency level, rather than having each program area maintain 
these services individually, increases government efficiency while 
reducing costs through elimination of redundancy. In the paragraphs 
that follow, we provide a breakdown of the services that support the 
AQI program and also discuss the included imputed costs. There are 
fewer support costs than were included in the April 2014 proposed rule.
    The Environmental and Risk Analysis Services staff performs 
environmental assessments for the AQI program. This staff supports 
APHIS' mission of protecting and promoting American agriculture and 
natural resources by developing methodologies and providing 
documentation, training, advice, and technology for environmental 
compliance and risk-informed decisionmaking. This is accomplished by 
using the best available science and analytical methods to enable the 
Agency to make and implement decisions that are compliant with the U.S. 
environmental laws, other statutory obligations and policies, and 
international standards. These assessments are resources that are 
generally applicable to the AQI process. For example, this could 
include environmental impacts of methods used for the containment of 
pests introduced through the imports of goods. The AQI portion of these 
costs is assigned by the ratio of AQI full-time equivalents (FTEs) as a 
portion of APHIS' FTEs. (An FTE is the equivalent of the number of 
hours worked by one employee who works on a full-time basis.)
    The Human Resources staff provides central services for human 
resource services for all APHIS employees. Only the AQI portion of 
these costs is included in the fees, and is assigned by the ratio of 
AQI FTEs as a portion of APHIS FTEs. Human Resources' primary services 
are to help employees accomplish their AQI work by:

 Recruiting and hiring
 Providing insurance and retirements benefits information
 Processing salaries, promotions, recognition, and benefits
 Providing policy guidance on performance and labor management
 Providing supervisors the training and tools they need to 
carry out their mission
 Promoting the health, safety, and security of employees
 Planning for workforce and succession needs
 Offering seminars on employee and leadership development
 Providing coaching, mentoring, and leadership transition 
services for managers
 Supporting employee development through USDA's on-line 
training system, AgLearn

    The Information technology (IT) staff supports and maintains, or 
manages contracts for the various IT systems that are used by the AQI 
program. These systems include those that gather and analyze data 
related to threats from various pathways around the world, those that 
collect data used to support proper fee setting efforts, and those used 
to support permitting (especially used by importers). The AQI portion 
of these costs is assigned by the ratio of AQI FTEs as a portion of 
APHIS FTEs.
    Central and shared services include the costs of utilities and 
telecommunication. Shared services are used by many programs. The 
shared services include copy services and machines and printing 
services. Programs such as AQI use these shared services regularly as 
part of their mission. These are centralized services which increase 
efficiency and reduce operational cost. Each program pays a portion of 
the total cost. The AQI portion of these costs is assigned by the ratio 
of AQI FTEs as a portion of APHIS FTEs.
    APHIS depreciation costs are imputed costs and are associated with 
the square footage of facilities associated with AQI activities, e.g., 
plant inspection stations. The facilities depreciation is assigned to 
AQI based upon the square footage of facilities associated with the AQI 
program. The equipment costs, such as those attributable to equipment 
used in identification of pests and diseases, are associated with AQI 
FTEs so that the costs can be distributed to AQI activities.
    CBP also captures depreciation expenses, as opposed to the actual 
purchase price of property, plant and equipment, which is considered a 
capital expenditure (not an expense). Thus, the purchase is recorded as 
an asset and is then depreciated. Depreciation expense is the 
accounting process for capturing the cost of an asset by expensing it 
periodically throughout its useful life. While CBP frontline personnel/
FTEs perform a wide array of activities in addition to agriculture 
inspections, including border security between the ports, air and 
marine interdiction, and immigration and customs inspections, CBP 
distributes depreciation expenses of facilities and equipment across 
all mission area activities proportionally based on FTEs so that no 
activity is overcharged.
    USDA agencies and CBP also incur a series of costs, as required by 
law, related to their employees, including those employees who provide 
services to importers as part of the AQI programs. For example, USDA 
agencies are responsible for recognizing an imputed cost equal to the 
difference between the cost of providing retirement, health, and life 
insurance benefits to foreign employees and the contributions agencies 
currently remit to the State Department for them. The AQI portion of 
these costs is assigned by the ratio of AQI FTEs as a portion of APHIS 
FTEs.

[[Page 66752]]

    Office of Personnel Management imputed costs include costs for 
pensions, Federal employee health benefits, and Federal employee life 
insurance costs. These costs are directly associated with AQI FTEs. 
These costs are distributed to the AQI program based upon the ratio of 
AQI FTEs to Agency FTEs. CBP also incurs this expense and distributes 
this cost across all mission areas proportionally based on FTEs within 
the CBP ABC model.
    The Department allocates part of its imputed costs to each Agency. 
The AQI portion of these costs is assigned by the ratio of AQI FTEs as 
a portion of APHIS FTEs. These costs can be found in the USDA fiscal 
year 2015 Budget Explanatory Notes (Departmental Administration, found 
at https://www.obpa.usda.gov/04da2015notes.pdf).
    Unemployment compensation is a financial liability that must be 
accounted for (all organizations that follow generally accepted 
accounting principles account for this). These are costs that are 
associated with FTEs, and, as such, the liability is distributed to AQI 
based upon the ratio of AQI FTEs as a portion of APHIS FTEs. CBP also 
incurs this expense and distributes this cost across all mission areas 
proportionally based on FTEs.
    The Federal Employees' Compensation Act (FECA; 5 U.S.C. Chapter 81) 
provides compensation benefits to Federal employees for work-related 
injuries or illness and to their surviving dependents if a work-related 
injury or illness results in the employee's death. The FECA is 
administered by the Department of Labor (DOL), Office of Workers' 
Compensation Programs (OWCP). OWCP district offices adjudicate the 
claims and pay benefits, and the costs of those benefits are charged 
back to the employing agency. We have two unfunded liability-type 
costs: FECA unfunded accrual balance and FECA actuarial liability 
balance.
    The FECA unfunded accrual balance is the current year's actual FECA 
expense paid by the DOL during the current year on APHIS' behalf. The 
FECA Special Benefits Fund pays benefits on behalf of Federal entities 
as costs are incurred and bills the Federal entity annually for the 
costs. The liabilities due to the FECA Special Benefits Fund are 
considered as unfunded at the time of receipt of the bill. Each Federal 
entity must record its portion of the FECA unfunded liability based on 
amounts provided by S. DOL. The entity's unfunded liability balance 
must equal the amount provided by DOL.
    The FECA actuarial liability balance is DOL's estimate of FECA 
payments that will be made by DOL on behalf of APHIS in the future. The 
balance is periodically adjusted to reflect the current liability 
estimate. The actuarial estimate for the FECA unfunded liability is 
determined by the DOL using a method that utilizes historical benefit 
payment patterns related to a specific incurred period to predict the 
ultimate payments related to that period. The projected annual benefit 
payments are discounted to present value using OMB's economic 
assumptions for 10-year Treasury notes and bonds, and the amount is 
further adjusted for inflation. The projected number of years of 
benefit payments is about 35 years. Each federal entity must record its 
portion of the FECA actuarial liability based on amounts provided by 
the DOL. The agencies' actuarial liability balance must equal the 
amounts provided by DOL. The AQI portion of these costs is assigned by 
the ratio of AQI FTEs as a portion of APHIS FTEs. CBP also incurs this 
expense and distributes this cost across all mission areas 
proportionally based on FTEs.
    USDA agencies are responsible for recording the unfunded liability 
for credit hours, annual leave, and compensatory leave. As employees 
expend credit hours, annual leave, and compensatory leave, these costs 
are expensed in the account(s) where those employees' salaries are 
ordinarily charged. Annual expenses of these amounts are thus already 
included as costs in those accounts. To identify the additional costs 
we have annually for unfunded leave, APHIS is required to capture the 
change in the unfunded leave balance from the end of the prior fiscal 
year. The difference between the 2 years is the amount of leave 
liability that must be accounted for. APHIS pro-rates this amount based 
upon the number of AQI FTEs as a portion of the total Agency FTEs. CBP 
also incurs this expense and distributes this cost across all mission 
areas proportionally based on FTEs.
    Two commenters stated that indirect employee costs, such as 
workers' compensation expenses, are being incorporated into the new 
rate structure, but APHIS did not provide sufficient details on those 
costs. The commenters asked that APHIS provide this information as well 
as a concise accounting of related expenses associated with any 
cooperative agreements which utilize other Agency resources to perform 
AQI functions.
    A detailed breakdown of the costs to which the commenters refer has 
been provided above. OMB Circular A-25, referred to earlier in this 
document, establishes Federal policy regarding fees assessed for 
government services. The Circular describes ``full cost'' as including 
all direct, support, and imputed costs to any part of the Federal 
Government of providing a good, resource, or service. This includes all 
direct and imputed personnel costs, such as worker's compensation 
costs. Indirect personnel costs are listed under imputed costs in 
Tables 1, 4, 6, 7, 8, 9, and 10 below. Cooperative agreement costs are 
completely separate from the AQI user fees. No cooperative agreement 
costs are included in the user fees and no user fee costs are included 
in cooperative agreement charges.
    One commenter asked that APHIS provide additional data to 
demonstrate that the user fees charged for one user fee category would 
not be used to subsidize inspections of another type of user fee 
category. The commenter asked that we provide the dollar amount, if 
any, under the proposed rule that each user is projected to pay in AQI 
costs for a different class or classes of user for FYs 2015 through 
2020.
    User fees charged to one class of users will not be used to 
subsidize inspections of another class of users. As noted throughout 
this document, the use of cost accounting principles ensures that costs 
are aligned with activities that generate those costs and that costs 
can only be counted once.
    One commenter asked that we provide all inputs into the cost base 
for the proposed AQI user fees that arise from non-AQI activities.
    The AQI costs model calculations for the user fees did not include 
non-AQI costs. The model captured the non-AQI costs, but did not 
include them in the fee calculations.
    Two commenters asked APHIS to provide the dollar amount of costs 
included in the AQI cost base for any and all types of users that are 
incurred at locations outside of U.S. customs territory.
    Costs for offshore activities, i.e., those performed outside the 
customs territory of the United States, are not directly related to the 
AQI program and are not included in the AQI cost base.
    APHIS has provided summary tables by fee class (see Tables 1, 4, 6, 
7, 8, 9, and 10 below), that identify the costs to the Federal 
Government of providing AQI services. These costs, including support 
and imputed costs, are accounted for in the APHIS and CBP financial 
systems of record. APHIS and CBP use the ABC methodology to align these 
costs with the activities of each fee class.

[[Page 66753]]

    ABC is a two-step approach. First, financial costs are associated 
with program activities by the level of effort employed for each 
activity as determined by labor surveys, time and attendance data, and 
other available data. Second, the activity costs are then aligned with 
the fee classes to determine the fee class costs. A unit cost is 
calculated by dividing the total cost of the AQI fee class by the 
number of passengers or conveyances subject to inspection or other 
action in a given year, based on historical data. This `raw fee' is 
rounded up to ensure that revenue is sufficient to maintain the reserve 
balance. APHIS used data from 3 years of expenditures, FYs 2010 through 
2012, to derive the new fee rates.
    APHIS and CBP rely on the reserve account in years where program 
costs are greater than the revenue collected. While these funds can 
carry over from year to year, they are used for one-time costs 
associated with the AQI program, such as capital improvements and to 
cover the program costs when the revenue generated is less than the 
cost of the program. It is important not to include one-time costs in 
the calculation of the fees because doing so would overinflate the true 
cost of providing services. The ABC methodology ensures that the 
revenue collected will cover program costs and reserve requirements 
over the period the fees are in effect. While the reserve account is a 
single fund, the projected reserve amounts that each fee class would 
contribute to the AQI program reserve are included separately in the 
summary tables, to transparently show the total revenue generated by 
each fee class.
    In response to concerns expressed by numerous commenters, we have 
made some changes to our methodology for calculating the AQI reserve 
amounts. As noted above, in calculating the fees for the April 2014 
proposed rule, we relied upon a rounding method for generating the 
revenue to fund the reserve account. We rounded the fee up to the 
nearest $1 for fees less than $100 and to the nearest $25 for fees over 
$100. The use of this rounding method would have enabled us to achieve 
our reserve funding targets for the AQI program in 3 years. In this 
final rule, however, the fees by class are based on a 3-year average of 
the AQI costs, FYs 2010-2012, that have been inflated to FY 2016 
dollars. To fund the reserve, these base fees are increased by 3.5 
percent. Our use of this method has resulted in the reduction of all 
the fees contained in the April 2014 proposed rule except the 
commercial aircraft fee, the commercial cargo vessel fee, and the 
commercial cargo railcar fee. Under the 3.5 percent funding approach, a 
greater portion of these fees would have been used for funding the 
reserve than with the original rounding approach. The 3.5 percent 
reserve funding approach would have raised these three fees above their 
proposed levels. In order to ensure sufficient notice for affected 
entities, however, APHIS has decided not to raise any fees above those 
contained in the April 2014 proposed rule.

Commercial Air Passenger and Commercial Aircraft User Fees

    One commenter asked that APHIS provide data underlying the proposed 
$4 AQI air passenger user fee.
    Using our revised model for calculating the reserve resulted in a 
reduction of the air passenger fee to $3.96 in this final rule. Further 
breakdown of the calculations leading to the new air passenger AQI user 
fee is shown below in Table 1.

                 Table 1--Air Passenger Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                         Air Passenger Fee $3.96
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................             223
  APHIS Total Cost......................................     $21,711,724
  APHIS Imputed Cost....................................      $1,593,447
  APHIS and USDA Support Cost...........................       1,910,180
  CBP Total Cost........................................     266,497,469
  CBP Imputed Cost......................................      21,951,183
  CBP and DHS Support Cost..............................      87,468,279
  Reserve Amount........................................     $14,527,679
  Number of Passengers..................................      76,448,705
  Calculated Unit Cost..................................           $3.77
FY 2011 data:
  APHIS AQI FTEs........................................             224
  APHIS Total Cost......................................     $20,829,319
  APHIS Imputed Cost....................................      $1,566,108
  APHIS and USDA Support Cost...........................         391,307
  CBP Total Cost........................................     270,317,238
  CBP Imputed Cost......................................      20,470,874
  CBP and DHS Support Cost..............................      84,458,217
  Reserve Amount........................................     $21,082,947
  Number of Passengers..................................      78,901,506
  Calculated Unit Cost..................................           $3.69
FY 2012 data:
  APHIS AQI FTEs........................................             225
  APHIS Total Cost......................................     $22,604,086
  APHIS Imputed Cost....................................      $2,051,921
  APHIS and USDA Support Cost...........................       1,779,664
  CBP Total Cost........................................     287,962,928
  CBP Imputed Cost......................................      20,471,708
  CBP and DHS Support Cost..............................      85,405,303
  Reserve Amount........................................     $-4,491,747
  Number of Passengers..................................      77,255,476
------------------------------------------------------------------------

    One commenter expressed concern that APHIS may be charging the 
aircraft fee for passenger flights and suggested working together to 
secure refunds for those parties who were incorrectly charged.
    The international air passenger user fee covers the costs for 
services related to the inspection of selected passenger baggage and 
the oversight of the handling of regulated garbage generated on 
airplanes carrying passengers entering the customs territory of the 
United States. Our mission is to prevent the entry of foreign 
agricultural plant pests and diseases into the United States. APHIS can 
include the cost of inspecting commercial aircraft that carry 
passengers in the international air passenger user fee if those costs 
directly relate to passenger baggage or regulated garbage. APHIS does 
not include the cost of inspecting cargo or the cargo hold area of the 
plane in the passenger fees.
    The commercial aircraft user fee pays the costs of inspecting the 
aircraft itself, cargo inspection, the cargo hold, and the costs of 
monitoring aircraft disinfection if: (1) Such services occur during the 
regular hours of service (8 a.m. to 4:30 p.m. Monday through Friday) or 
(2) inspection of the cargo is concurrent with inspection of the 
aircraft.\2\ Cargo owners may request inspection outside of regular 
business hours, but would be subject to reimbursable overtime costs 
under 7 CFR 354.1 in addition to the applicable AQI user fee. Airlines 
send their payments to our lockbox quarterly, no more than 31 days 
after the close of each quarter along with a written statement with 
required information as detailed in Sec.  354.3(e)(3). The system is 
based on self-reporting; however, regular audits are conducted to make 
sure payment is received for all aircraft covered by this fee. If an 
entity is incorrectly charged a commercial aircraft fee, the entity can 
direct its refund inquiry to the Supervisor of the Financial Management 
Division's Debt Management Team. The type of proof or documentation the 
airline sends to the team to support its refund request depends on the 
exemption in Sec.  354.3(e)(2) that the airline believes itself 
entitled to, and the documentation thus varies.
---------------------------------------------------------------------------

    \2\ Even if a plane carries no cargo, it is subject to 
inspection because it could carry insect pests, weed seeds, waste 
material from garbage, or other waste that is capable of harboring 
animal disease.
---------------------------------------------------------------------------

    One commenter asked that we provide CBP's costs, from each FY from 
2010 to the present, for providing preclearance or pre-inspection 
services to commercial air passengers at locations outside the customs 
territory of the United States.

[[Page 66754]]

    Table 2 below contains CBP's preclearance costs for FY 2012 through 
FY 2014. CBP charges costs appropriately based on activity whether it 
is immigration, customs, or agriculture.

                                  Table 2--Air Passenger Preclearance Expenses
----------------------------------------------------------------------------------------------------------------
                Data in whole dollars                       FY 2012             FY 2013             FY 2014
----------------------------------------------------------------------------------------------------------------
Preclearance Expenses...............................        $86,600,433         $93,537,883        $105,495,491
----------------------------------------------------------------------------------------------------------------

    Several commenters expressed concern regarding the impact of the 
rule on express consignment carriers. (As defined in 19 CFR part 128, 
an express consignment carrier is ``an entity . . . moving cargo by 
special express commercial service under closely integrated 
administrative control. Its services are offered to the public under 
advertised reliable, timely delivery on a door-to-door basis. An 
express consignment operator assumes liability to Customs for the 
articles in the same manner as if it is the sole carrier.'') One 
commenter stated that the commercial aircraft user fee is not 
commensurate with the cost of providing AQI services to express 
consignment carriers. Several commenters expressed concern that the 
costs for use of office space, equipment, and supplies, which express 
consignment carriers are required to provide to CBP under 19 U.S.C. 
58c(b)(9)(B)(ii) and 19 CFR. 128.11(b)(7)(iii) in Express Consignment 
Clearance Facilities (ECCFs), which are essentially bonded warehouses 
that are able to handle express high volume parcel flows into the 
United States, have been included in the calculation for the AQI 
commercial aircraft fee, resulting in duplicate fee assessments.
    The Trade Act of 2002 (Pub. L. 107-210) section 337, codified as 19 
U.S.C. 58c (b)(9)(A)(ii) and (b)(9)(B), authorized the establishment of 
the ECCF fee to reimburse CBP for the customs processing costs incurred 
at those facilities. The original fee was set at 66 cents per 
individual airway bill or bill of lading and was later increased to $1 
effective July 2008. Congress also mandated that 50 percent of the ECCF 
fee collection be paid to the Secretary of the Treasury. Because the 
other half of the ECCF fees are deposited in the Customs User Fee 
Account, for budgetary purposes, they are reported as part of the 
Consolidated Omnibus Budget Reconciliation Act (COBRA) user fees. 
Together, the COBRA and ECCF User Fees financially support certain, 
statutorily-enumerated costs related to customs inspection functions. 
These user fees support the customs inspection functions performed by 
CBP and the Customs Broker Program. These user fees support CBP's 
mission of facilitating legitimate trade and travel while keeping the 
United States secure. CBP collects Express Consignment Fees to help 
recover the costs of providing customs cargo processing services to 
express consignment carriers or centralized hub facilities. The fee is 
not for agricultural inspection services.
    AQI user fees reimburse agriculture inspections in ECCFs because 
these activities are separate from the customs processing costs 
incurred at those facilities. The ABC model uses a series of financial 
and workload data to derive CBP program costs. The ECCF fees under 
COBRA only support the customs inspections and the AQI user fees only 
support the agriculture inspections. CBP charges, tracks, and reports 
this activity using its ABC systems and analyses.
    The user fee does not differ based on the class of aircraft 
inspected because the risks we are seeking to address and nature of the 
AQI services provided do not differ based on the class of aircraft 
inspected. The costs associated with the inspection of commercial 
aircraft are averaged, and all flights pay the same user fee. CBP also 
does not differentiate between types of commercial aircraft carrying 
cargo. There is no duplication of costs in the fees. The ABC model 
gathers costs by activity type and drives those costs to the cost pools 
by fee type. The costs from the financial systems of APHIS and CBP are 
entered into the ABC model, and the output of the model must equal 
those costs entered into the model, thereby ensuring that all costs are 
accounted for and that no cost was duplicated. Therefore, the costs for 
use of office space, equipment, and supplies, which express consignment 
carriers are required to provide to CBP under 19 U.S.C. 
58c(b)(9)(B)(ii) and 19 CFR 128.11(b)(7)(iii) in ECCFs, have not been 
included in the calculation for the AQI commercial aircraft fee.
    Several commenters asked APHIS to explain its claimed cost 
differentials between private and commercial aircraft inspections. The 
commenters stated that exempting private aircraft from paying user fees 
creates a competitive distortion because private aircraft compete with 
commercial aircraft to some extent. The commenters also stated that 
exempting private aircraft from the user fees is contrary to the FACT 
Act.
    The Airport and Airway Development Act of 1970 limits charges to 
private aircraft to $25.00. Private aircraft are defined by the Act as 
not being used to transport passengers or property for compensation. 
Currently, no AQI fees are collected for the inspection of private 
aircraft and their passengers. The cost is less than $13 million, and 
the additional cost of creating and operating fee collections led us to 
recommend that private aircraft and their passengers continue not to be 
subject to an AQI user fee. APHIS is not required to charge fees to any 
specific group of service users. The FACT Act authorizes APHIS to 
establish fees in a reasonable manner to recover funds spent on 
safeguarding activities. As stated previously, those costs not 
recovered through a user fee are paid for through appropriated funding.
    One commenter asked that APHIS provide information concerning the 
penalty collections and how they may offset our AQI costs.
    Penalty collections do not offset the costs we incur in 
administering the AQI program. Penalties are assessed separately under 
a different authority than the authority under which APHIS conducts its 
AQI user fee program. Any amounts the Federal Government assesses in 
fines to individuals or parties whom we catch attempting to smuggle 
prohibited items, such as fruits, vegetables, plant pests or flower 
bulbs, into the United States are sent to a general fund at the U.S. 
Treasury Department. The fines are not deposited into any AQI account 
or used to pay for AQI services.
    The same commenter requested more information on how the Agency 
projects the pool of users from which it proposes to recover costs. 
Specifically, the commenter asked that APHIS provide the source of data 
and any assumptions made regarding the annual number of both 
international airline passenger arrivals and international aircraft 
arrivals in the United States that APHIS anticipates will be subject to 
AQI fees. The commenter also asked for a description of any internal or 
external review of this data or quality control of this data.
    A second commenter also asked that APHIS identify the base numbers 
used

[[Page 66755]]

for airline passenger and aircraft arrivals in the Grant Thornton study 
and the regulatory impact analysis (RIA) that accompanied the proposed 
rule and compare them to industry-standard sources such as the U.S. 
Department of Transportation's T-100 data. The commenter also asked 
that APHIS verify the reliability of data derived from the workload 
projections listed in Table 6 of the proposed rule and asked for the 
number of users of AQI services that do not pay AQI fees.
    We used data provided by the International Air Transport 
Association (IATA) regarding the annual number of international 
aircraft and international airline passenger arrivals in the United 
States. The T-100 data includes data provided by IATA. The Grant 
Thornton study used preliminary results from the AQI model in order to 
provide information for APHIS decisionmaking for the proposed user fee 
rates. The study had many fee structure options for AQI cost recovery. 
Once the decisions on fees were made, Grant Thornton finalized the ABC 
model that provided the figures found in the proposed rule based on the 
user fee setting guidance provided by GAO. Based on the data we 
received, APHIS determined that the actual and estimated volumes of 
passengers and conveyances provided in Table 6 of the proposed rule are 
accurate and the amount of service users that do not pay user fees can 
be readily calculated.
    One commenter asked for a description and the number of any and all 
types of aircraft not subject to AQI fees. The commenter also asked 
what the costs were of inspecting types of aircraft not subject to AQI 
fees.
    Under Sec.  354.3(e)(2)(iv), all passenger aircraft originating in 
any country that have 64 or fewer seats and that do not carry certain 
regulated articles are exempt from paying the aircraft AQI user fee. 
APHIS maintains the 64-seat plane size distinction in harmony with CBP 
and other U.S. Government agencies with jurisdiction over civil 
aviation. APHIS does not maintain data on the number of exempted 
arrivals because the airlines do not report those flights. In FY 2012, 
the most recent year for which we have data, the cost of inspecting 
aircraft not subject to AQI fees was $12,361,173.16. Those costs not 
recovered through a user fee are paid for through appropriated funding.
    Commenters requested information regarding the number of penalties 
and the dollar amount of any and all penalties assessed or paid for AQI 
violations for: (1) Commercial aircraft carrying only passengers and 
passenger baggage (no cargo), (2) commercial aircraft engaged solely in 
the transportation of cargo, (3) commercial aircraft carrying 
passengers and passenger baggage and cargo, and (4) private aircraft 
for each year between FY 2010 and the present. It was requested that we 
provide the number of pest interceptions for each of these types of AQI 
aircraft inspection for each year between FY 2010 and the present.
    The collection of civil penalties and assessments is authorized 
under 31 U.S.C. 3806. Under this authority, APHIS and CBP assess 
penalties for AQI violations and remit the funds as miscellaneous 
receipts in the Treasury of the United States. The dollar amount of 
penalties assessed for AQI violations between FY 2010 and FY 2013 are 
shown below in Table 3. Please note that this data is not limited to 
aircraft. Because APHIS does not track penalties in accordance with the 
categories the commenters provided (commercial airline, noncommercial 
airline, etc.), we are not able to provide that level of specificity.

                                 Table 3--Penalties Assessed for AQI Violations
                                           [Figures in whole dollars]
----------------------------------------------------------------------------------------------------------------
                                                               Dept. of Agriculture
                                 -------------------------------------------------------------------------------
                                        FY 2010             FY 2011             FY 2012             FY 2013
----------------------------------------------------------------------------------------------------------------
Fines, Fees, and Forfeitures....         $3,881,627          $3,466,238          $2,860,793          $2,857,019
----------------------------------------------------------------------------------------------------------------

    All arriving international commercial flights are subject to the 
commercial airline clearance fee and inspection. APHIS does not collect 
pest interception data in a manner that allows distinction based upon 
the airline flight categorization model. For example, we do not 
distinguish carriers carrying special express items from others. We 
maintain pest interception data only to make risk decisions using 
applicable risk data such as country of origin, transit country, host 
material, etc. Collecting pest interception data for the categories 
suggested by the commenter would be administratively burdensome to 
maintain and would not improve our ability to make risk-based 
decisions.
    Two commenters asked for specific information related to commercial 
aircraft and airline passenger AQI user fees. The commenters asked that 
APHIS provide, for each FY from 2010 to the present, the total cost of 
AQI inspections for each type of aircraft operation, the number of AQI 
inspections performed, broken out by type of inspection if there are 
different types, and the time spent on AQI inspections performed for 
each type of aircraft operation. The commenters asked that the aircraft 
operation types be quantified and broken down into the following 
categories: Commercial aircraft carrying only passengers and passenger 
baggage (no cargo), commercial aircraft engaged solely in the 
transportation of cargo, commercial aircraft carrying passengers and 
passenger baggage and cargo (``combination'' services), private 
aircraft, and any other categories of aircraft not included elsewhere.
    APHIS designed its AQI user fee structure to be simple and easily 
understood. This allows our stakeholders to save on effort and cost for 
determining fee costs and what would be payable to APHIS under a 
complex fee structure. APHIS and CBP save resources and costs by not 
having to design a process for administering a complex fee structure. 
This helps to keep the fee costs to the payer as low as possible. A 
simple fee structure benefits both the stakeholders and the Federal 
Government. As mentioned above, it would be administratively burdensome 
to charge and audit a multitude of fees for the many different types of 
commercial aircraft and their cargo that enter the United States. 
Federal guidance states that costs should be estimated from the best 
available records and that new systems need not be established solely 
for the purpose of fee setting. Further breakdown of the cost 
calculations for the commercial aircraft AQI user fee is shown below in 
Table 4. This fee did not change as a result of the modification in our 
method of calculating the reserve.

[[Page 66756]]



              Table 4--Commercial Aircraft Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                     Commercial Aircraft Fee $225.00
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................          295.38
  APHIS Total Cost......................................     $56,315,442
  APHIS Imputed Cost....................................      $4,217,943
  APHIS and USDA Support Cost...........................      $5,427,502
  CBP Total Cost........................................     $98,929,370
  CBP Imputed Cost......................................      $8,089,831
  CBP and DHS Support Cost..............................     $32,682,288
  Reserve Amount........................................     $-7,323,737
  Number of Aircraft....................................         657,427
  Calculated Unit Cost..................................         $236.14
FY 2011 data:
  APHIS AQI FTEs........................................          290.68
  APHIS Total Cost......................................     $55,601,929
  APHIS Imputed Cost....................................      $4,203,426
  APHIS and USDA Support Cost...........................      $2,266,408
  CBP Total Cost........................................    $105,721,353
  CBP Imputed Cost......................................      $7,783,047
  CBP and DHS Support Cost..............................     $32,007,936
  Reserve Amount........................................     $-3,678,381
  Number of Aircraft....................................         700,644
  Calculated Unit Cost..................................         $230.25
FY 2012 data:
  APHIS AQI FTEs........................................             290
  APHIS Total Cost......................................     $54,520,540
  APHIS Imputed Cost....................................      $4,153,439
  APHIS and USDA Support Cost...........................      $2,554,914
  CBP Total Cost........................................    $103,225,589
  CBP Imputed Cost......................................      $7,340,236
  CBP and DHS Support Cost..............................     $30,530,745
  Reserve Amount........................................      $4,085,346
  Number of Aircraft....................................         719,251
  Calculated Unit Cost..................................         $219.32
------------------------------------------------------------------------

    Several commenters asked for a detailed description of the 
categories of costs that are covered by the aircraft AQI fee applicable 
to commercial passenger aircraft (cargo inspections, inspections of 
cargo hold area, passenger baggage, etc.).
    The commercial passenger aircraft AQI fee covers the following 
categories of costs:

     Table 5--APHIS and CBP AQI Activities Related to Commercial Air
                               Passengers
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
APHIS AQI Activities Related to Commercial Air Passengers:
  --Asian Gypsy Moth Offshore (AGM) Mitigation Program Coordination and
   Operations.
  --AQI Outreach.
  --CITES program and enforcement.
  --Containment Facilities.
  --Database Management Operations.
  --Design, present, receive non AQI-related training (Department
   required training).
  --Develop Quarantine Policy for the Ports of Entry.
  --Develop Regulations, Manuals and Standards.
  --Emergency Action Notifications.
  --Manage Agency Quality Assurance Program.
  --Manage the Import Permitting Process.
  --Manage the Pest Permitting Process.
  --National Clean Plant Network (import).
  --Offshore Pest Information Program (OPIP) operations.
  --Perform pest and disease identification.
  --Perform Trend Analysis.
  --Policy Development and Implementation.
  --Port Environs Survey.
  --Post-entry Quarantine Operations (PEQ).
  --Propagative Plants and Plant Materials Inspection Operations.
  --Provide Investigative Enforcement Services.
  --Safeguarding.
  --Smuggling, Interdiction, & Trade Compliance (SITC) Operations.
  --Support overseas programs.
  --Trade.
  --Verification of Compliance Agreements, Accreditation and
   Certification Programs.
------------------------------------------------------------------------
CBP AQI Activities Related to Commercial Air Passengers:
  --Cargo--Air.
  --Compliance Checks--Air.
  --Non-Intrusive Technology--Passenger--Air.
  --Examine--Compliant Passengers--Air.
  --Interception Process--Air.
  --Individual Mail.
  --Interception Process--Mail.
  --Safeguarding.
  --Antiterrorism--Trade.
  --NTC (National Targeting Center).
  --Courier Mail.
  --Compliance Checks--Misc.
  --Cut Flower Release--Air.
  --Informed Compliance--Air.
  --Antiterrorism--Passenger--Air.
  --Identify--Air.
  --Examine--Noncompliant Passengers--Air.
  --Personnel Management & Development.
------------------------------------------------------------------------

    Several commenters asked for an explanation and data supporting the 
manner in which the proposed rule allocates AQI user fees between air 
passenger and aircraft operators in the case of expenses listed twice 
(once for each type of user) in the proposed rule, namely monitoring 
and storage of regulated garbage and removal of regulated garbage from 
the aircraft and inspection of the aircraft hold, as well as any other 
AQI cost categories that are attributed to more than one payer.
    Both the structure of the official financial accounting system of 
record, which follows Federal accounting standards, and the ABC 
analysis software do not allow the counting of costs more than once. 
The use of the ABC model as well as the software program used ensures 
that costs are not counted twice. The ABC methodology uses a causal 
relation between resources (general ledger costs) and activities and 
activities and user fees. We used workload data associated with each 
activity, based on a causal relationship, to ``drive'' the costs to the 
appropriate fee area. In addition, the modeling software ensures that 
the cost coming into the model (data from the official financial 
accounting system of record) is equal to the costs that are assigned to 
each ``layer'' of the model (activities and fees/services).
    APHIS does not track the action of removing and disposing of 
regulated garbage, but rather captures those costs through various 
activities. There is no need or requirement within the cost model to 
use such information because the actions relative to regulated garbage 
are included within the existing activities, and therefore, do not 
provide information for decisionmaking in fee setting. Compliance 
checks and verification of compliance agreements are two key activities 
related to regulated garbage. ABC analysis captures the cost of 
compliance checks for various conveyance modes in separate activities 
and assigns the costs to the appropriate fees. Compliance checks 
performed by CBP cost approximately $15 million, and this activity cost 
was assigned to the calculation of the fee for passenger aircraft and 
cargo aircraft based on the number of compliance inspections performed 
for each type of aircraft. Verification of compliance agreements, 
performed by APHIS, costs approximately $4.5 million, and is assigned 
to all cargo outputs (modes) because this cost is not initially 
captured by mode. Another example of an activity that is not explicitly 
counted and tracked is pest identification performed by APHIS 
employees. This activity is performed for all modes, and the cost of 
the activity is assigned to each mode based on the number of pest 
identifications performed for each mode using workload data recorded by 
APHIS.
    Several commenters asked for an explanation of the types of 
aircraft operations subject to the fee variously referred to in the 
proposed rule, RIA, and supporting documents as ``Commercial Air (Cargo 
only),'' ``Commercial Aircraft,'' and ``air cargo fee.''
    The regulations in 7 CFR 354.3 define a ``commercial aircraft'' as 
any aircraft used to transport persons or property for compensation or 
hire. This term may refer to aircraft carrying either passengers or 
cargo or a mixture of both

[[Page 66757]]

passengers and cargo. The term ``commercial air (cargo only)'' refers 
to those commercial aircraft carrying only cargo. The term ``air cargo 
fee'' may be used interchangeably with ``commercial aircraft user 
fee,'' and applies to aircraft carrying passengers (and cargo).

Commercial Vessel (Cruise) Passenger and Commercial Vessel User Fees

    One commenter asked that APHIS provide data underlying the proposed 
$2 AQI commercial vessel (cruise) passenger user fee.
    As a result of the change in our method for calculating the reserve 
amount, this fee has been reduced to $1.75 in this final rule, while 
the vessel fee remains unchanged from that contained in the proposed 
rule. Further breakdown of the calculations leading to the new sea 
passenger and commercial vessel AQI user fees are shown below in Tables 
6 and 7.

      Table 6--Commercial Vessel (Cruise) Passenger Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
             Commercial Vessel (Cruise) Passenger Fee $1.75
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................               7
  APHIS Total Cost......................................      $2,011,416
  APHIS Imputed Cost....................................        $149,332
  APHIS and USDA Support Cost...........................        $175,193
  CBP Total Cost........................................     $16,315,113
  CBP Imputed Cost......................................      $1,348,650
  CBP and DHS Support Cost..............................      $4,892,097
  Reserve Amount........................................      $1,971,842
  Number of Passengers..................................      11,599,069
  Calculated Unit Cost..................................           $1.58
FY 2011 data:
  APHIS AQI FTEs........................................               9
  APHIS Total Cost......................................      $2,352,414
  APHIS Imputed Cost....................................        $179,034
  APHIS and USDA Support Cost...........................         $94,061
  CBP Total Cost........................................     $21,322,812
  CBP Imputed Cost......................................      $1,405,434
  CBP and DHS Support Cost..............................      $5,269,074
  Reserve Amount........................................     $-1,034,502
  Number of Passengers..................................      12,931,271
  Calculated Unit Cost..................................           $1.83
FY 2012 data:
  APHIS AQI FTEs........................................               9
  APHIS Total Cost......................................      $2,301,838
  APHIS Imputed Cost....................................        $171,207
  APHIS and USDA Support Cost...........................         $95,235
  CBP Total Cost........................................     $19,891,404
  CBP Imputed Cost......................................      $1,405,065
  CBP and DHS Support Cost..............................      $5,326,912
  Reserve Amount........................................      $1,488,571
  Number of Passengers..................................      13,532,465
  Calculated Unit Cost..................................           $1.64
------------------------------------------------------------------------


               Table 7--Commercial Vessel Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                      Commercial Vessel Fee $825.00
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................             188
  APHIS Total Cost......................................     $34,609,899
  APHIS Imputed Cost....................................      $2,552,290
  APHIS and USDA Support Cost...........................      $3,502,650
  CBP Total Cost........................................     $54,959,507
  CBP Imputed Cost......................................      $4,522,814
  CBP and DHS Support Cost..............................     $17,740,837
  Reserve Amount........................................      $7,171,744
  Number of Vessels.....................................         117,262
  Calculated Unit Cost..................................         $763.84
FY 2011 data:
  APHIS AQI FTEs........................................             183
  APHIS Total Cost......................................     $31,795,471
  APHIS Imputed Cost....................................      $2,383,368
  APHIS and USDA Support Cost...........................      $1,392,632
  CBP Total Cost........................................     $62,330,388
  CBP Imputed Cost......................................      $4,490,189
  CBP and DHS Support Cost..............................     $17,602,759
  Reserve Amount........................................    $-10,145,808
  Number of Vessels.....................................         101,794
  Calculated Unit Cost..................................         $924.67
FY 2012 data:
  APHIS AQI FTEs........................................             182
  APHIS Total Cost......................................     $30,714,122
  APHIS Imputed Cost....................................      $2,320,790
  APHIS and USDA Support Cost...........................      $1,730,986
  CBP Total Cost........................................     $62,745,589
  CBP Imputed Cost......................................      $4,440,037
  CBP and DHS Support...................................     $17,605,694
  Reserve Amount........................................        $365,064
  Number of Vessels.....................................         113,727
  Calculated Unit Cost..................................         $821.79
------------------------------------------------------------------------

    The current regulations provide an exemption from the payment of 
user fees for the crew members on duty on an arriving aircraft. In the 
proposed rule, we proposed to allow the same exemption for crew members 
on duty aboard an arriving cruise ship. One commenter asked for 
clarification as to the definition of a crew member on duty, since 
ships have operations, maintenance and inspection requirements, and 
schedules that are radically different than the air industry. 
Therefore, migrating the exemption for airlines to the shipping 
industry may not be the most precise and effective way to address this 
matter. The commenter asked that this exemption be reworded or 
clarified, for example, to apply to ``all persons onboard for purposes 
related to the operation of the ship.''
    We agree with the commenter that clarification is necessary 
regarding the definition of a crew member on duty. Therefore, we are 
amending the regulations to exempt from the sea passenger AQI user fee 
``all vessel crew members onboard for purposes related to the operation 
of the vessel.'' Such crew members include those that provide support 
for dining and entertainment.

Commercial Truck User Fees

    APHIS used CBP data associated with truck crossings at the border 
to determine the appropriate fee. We found that 91 percent of truck 
crossings at the border use transponders, and the remaining 9 percent 
of trucks pay the per-crossing commercial truck inspection fee. We are 
able to associate the total cost of commercial truck inspections with 
the transponder and per- crossing inspection fee based upon these 
percentages. Based upon the data CBP provided to Grant Thornton, it was 
determined that 9 percent of the total cost associated with the per-
crossing fee equated to the proposed fee of $8. As a result of the 
change in our methodology for calculating the reserve, however, the 
per-crossing fee has been reduced to $7.55 in this final rule. The 
transponder fee has undergone a corresponding reduction from $320 in 
the April 2014 proposed rule to $301.67 in this final rule. 
Approximately 64 percent of the cost of inspecting trucks with 
transponders will be covered by CBP's annual appropriation. Further 
breakdown of the calculations leading to the new commercial truck AQI 
user fee is shown below in Table 8.

                Table 8--Commercial Truck Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                          Commercial Truck Fee
------------------------------------------------------------------------
FY 2010 data:
  Per crossing @ $7.55:
      APHIS AQI FTEs....................................             8.9
      APHIS Total Cost..................................      $1,333,487
      APHIS Imputed Cost................................         $98,765
      APHIS and USDA Support Cost.......................        $124,512
      CBP Total Cost....................................      $5,075,771
      CBP Imputed Cost..................................        $417,721
      CBP and DHS Support Cost..........................      $1,258,435
      Reserve Amount....................................        $656,425
      Number of Trucks..................................         911,701
      Calculated Unit Cost..............................           $7.03
  Transponder @ $301.67
      APHIS AQI FTEs....................................            80.1
      APHIS Total Cost..................................     $13,483,031
      APHIS Imputed Cost................................        $998,620
      APHIS and USDA Support Cost.......................      $1.258,950
      CBP Total Cost....................................     $51,236,081
      CBP Imputed Cost..................................      $4,223,618
      CBP and DHS Support Cost..........................     $18,153,846
      Amount Paid through Appropriation.................     $31,838,590
      Number of Transponders Sold.......................         108,995
      Calculated Unit Cost..............................             N/A

[[Page 66758]]

 
FY 2011 data:
  Per crossing @ $7.55:
      APHIS AQI FTEs....................................             8.3
      APHIS Total Cost..................................      $1,204,362
      APHIS Imputed Cost................................         $91,087
      APHIS and USDA Support Cost.......................        $488,231
      CBP Total Cost....................................      $5,510,967
      CBP Imputed Cost..................................        $398,917
      CBP and DHS Support Cost..........................      $1,742,792
      Reserve Amount....................................        $276,673
      Number of Trucks..................................         931,391
      Calculated Unit Cost..............................           $7.21
  Transponder @ $301.67
      APHIS AQI FTEs....................................            74.7
      APHIS Total Cost..................................     $12,177,737
      APHIS Imputed Cost................................        $920,996
      APHIS and USDA Support Cost.......................        $488,231
      CBP Total Cost....................................     $55,709,551
      CBP Imputed Cost..................................      $4,033,489
      CBP and DHS Support Cost..........................     $17,621,560
      Amount Paid through Appropriation.................     $35,006,766
      Number of Transponders sold.......................         108,995
      Calculated Unit Cost..............................             N/A
FY 2012 data:
  Per crossing @ $7.55:
      APHIS AQI FTEs....................................             8.3
      APHIS Total Cost..................................      $1,291,233
      APHIS Imputed Cost................................         $95,921
      APHIS and USDA Support Cost.......................         $64,961
      CBP Total Cost....................................      $6,029,614
      CBP Imputed Cost..................................        $430,024
      CBP and DHS Support Cost..........................      $1,891,285
      Reserve Amount....................................      $8,051,901
      Number of Trucks..................................       1,066,477
      Calculated Unit Cost..............................           $7.63
Transponder @ $301.67:
      APHIS AQI FTEs....................................            74.7
      APHIS Total Cost..................................     $13,055,804
      APHIS Imputed Cost................................        $969,871
      APHIS and USDA Support Cost.......................        $654,099
      CBP Total Cost....................................     $60,966,102
      CBP Imputed Cost..................................      $4,348,022
      CBP and DHS Support Cost..........................     $19,122,988
      Amount Paid through Appropriation.................     $40,684,656
      Number of Transponders Sold.......................         110,509
      Calculated Unit Cost..............................             N/A
------------------------------------------------------------------------

    One commenter asked for further clarification of wording in the 
final rule to make it clear that inspections of commodities that are 
imported under existing phytosanitary agreements would be considered 
commercial truck inspections and would be subject to the commercial 
truck fee rather than the proposed new treatment fee.
    Any inspection undertaken after the new AQI user fees become 
effective would be subject to all applicable fees. Commercial trucks 
crossing the border are subject to inspection of both the trucks and 
their contents, and therefore subject to the commercial truck fees. If 
the contents of the shipment are required to undergo treatment to be 
eligible for U.S. entry, then the treatment fee would apply as well.

Commercial Rail User Fees

    Although we did not receive any comments regarding the new 
commercial rail AQI user fee, we are providing a further breakdown of 
the calculations leading to that user fee below in Table 9. That 
commercial rail fee remains the same as we proposed in the April 2014 
proposed rule.

                Table 9--Commercial Rail Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                        Commercial Rail Fee $2.00
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................               5
  APHIS Total Cost......................................      $2,745,539
  APHIS Imputed Cost....................................        $204,796
  APHIS and USDA Support Cost...........................        $281,810
  CBP Total Cost........................................      $3,860,112
  CBP Imputed Cost......................................        $317,174
  CBP and DHS Support Cost..............................      $1,380,312
  Reserve Amount........................................     $-1,168,901
  Number of Rail Cars...................................       2,718,375
  Calculated Unit Cost..................................           $2.43
FY 2011 data:
  APHIS AQI FTEs........................................               5
  APHIS Total Cost......................................      $1,122,289
  APHIS Imputed Cost....................................         $85,461
  APHIS and USDA Support Cost...........................         $45,039
  CBP Total Cost........................................      $5,983,503
  CBP Imputed Cost......................................        $317,650
  CBP and DHS Support Cost..............................      $1,402,576
  Reserve Amount........................................     $-1,281,372
  Number of Rail Cars...................................       2,912,210
  Calculated Unit Cost..................................           $2.44
FY 2012 data:
  APHIS AQI FTEs........................................               5
  APHIS Total Cost......................................      $1,147,199
  APHIS Imputed Cost....................................         $85,432
  APHIS and USDA Support Cost...........................         $57,455
  CBP Total Cost........................................      $5,765,358
  CBP Imputed Cost......................................        $412,247
  CBP and DHS Support Cost..............................      $1,810,754
  Reserve Amount........................................       $-452,233
  Number of Rail Cars...................................       3,230,167
  Calculated Unit Cost..................................           $2.14
------------------------------------------------------------------------

Treatment User Fees

    Many commenters expressed concern regarding a perceived lack of 
transparency in how APHIS calculated the new cost category for 
treatments and lack of rationale for establishing the $375 treatment 
fee level.
    As discussed in greater detail below, we have decided to lower the 
treatment fee from the $375 that we originally proposed to $237 and 
phase it in over a 5-year period. The fee will be set initially at $47 
and then rise to $95 in the second year, $142 in the third, $190 in the 
fourth, and $237 in the fifth. APHIS recognizes that there are 
additional costs for providing treatment services during non-business 
hours. APHIS has determined that an equitable fee would provide a flat 
fee for services rendered during normal business hours, and the normal 
fee plus overtime costs for services rendered after hours. A breakdown 
of the calculations leading to the new treatment AQI user fee is shown 
below in Table 10.

                   Table 10--Treatment Fee Calculation
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                         Treatment Fee $47.00 *
------------------------------------------------------------------------
FY 2010 data:
  APHIS AQI FTEs........................................              82
  APHIS Total Cost......................................      $8,596,204
  APHIS Imputed Cost....................................        $605,763
  APHIS and USDA Support Cost...........................        $918,924
  CBP Total Cost........................................             N/A
  CBP Imputed Cost......................................             N/A
  CBP and DHS Support Cost..............................             N/A
  Reserve Amount........................................     $-6,815,750
  Number of Treatments..................................          37,882
  Calculated Unit Cost..................................         $226.92
------------------------------------------------------------------------
                         Treatment Fee $95.00 *
------------------------------------------------------------------------
FY 2011 data:
  APHIS AQI FTEs........................................              80
  APHIS Total Cost......................................      $6,657,765
  APHIS Imputed Cost....................................        $479,722
  APHIS and USDA Support Cost...........................        $306,391
  CBP Total Cost........................................             N/A
  CBP Imputed Cost......................................             N/A
  CBP and DHS Support Cost..............................             N/A
  Reserve Amount........................................     $-3,058,975
  Number of Treatments..................................          29,713
  Calculated Unit Cost..................................        $ 226.92
------------------------------------------------------------------------
                         Treatment Fee $142.00 *
------------------------------------------------------------------------
FY 2012 data:
  APHIS AQI FTEs........................................           79.61
  APHIS Total Cost......................................      $5,915,416
  APHIS Imputed Cost....................................        $512,688
  APHIS and USDA Support Cost...........................        $344,521
  CBP Total Cost........................................             N/A
  CBP Imputed Cost......................................             N/A
  CBP and DHS Support Cost..............................             N/A
  Reserve Amount........................................       $-536,172
  Number of Treatments..................................          38,517
  Calculated Unit Cost..................................         $285.92
------------------------------------------------------------------------
* Table 10 shows how APHIS derived the treatment user fee for the first
  3 years of the 5-year implementation period.

    APHIS used the actual data to analyze the potential fee rates. We 
then applied

[[Page 66759]]

inflationary factors for those years that would be impacted by the fees 
in order to determine the correct fee amount, initially using the 
rounding method to ensure proper reserve funding. As noted above, in 
this final rule, APHIS has used a different method to calculate the 
reserve amounts, applying a flat 3.5 percent increase above the unit 
cost of providing AQI services to fund the AQI reserve.
    Stakeholders can use the methodology present in these tables by 
referring the projected total activity cost and projected counts of 
activities to replicate the data found in this table.
    One commenter stated that while APHIS indicates that there are 
certain activities related to the proposed new treatment fee, the exact 
components of conducting and monitoring treatments that warrant a $375 
fee are unclear. The commenter asked that APHIS clarify specific 
elements incorporated into the calculation of the treatment fee level 
and the costs associated with each component.
    As we have noted, in this final rule, we are lowering the treatment 
fee to $237. APHIS will phase this fee in over a 5-year period. APHIS 
prescribes different types of treatments for pests of quarantine 
significance when found upon inspection or for commodities that present 
high risk. There are various approved chemical treatments: Fumigants, 
dips, and sprays. The fumigants include methyl bromide, phosphine, and 
sulfuryl fluoride. Non-chemical treatments include cold treatment, hot 
water immersion, vapor heat treatment, steam sterilization, and 
irradiation. All the treatment types require specific methods and 
monitoring by APHIS personnel. APHIS determines the necessary resources 
(FTEs) put forth toward the treatment fee activity. This enables the 
ABC model to accurately assign costs to the treatments. This cost is 
then divided by the number of treatments that the APHIS personnel 
conduct or monitor.
    One commenter stated that some commodities require treatment, such 
as cold treatment or fumigation, as a condition of entry into the 
United States. The commenter suggested that, rather than assessing an 
additional fee for those commodities already treated prior to arrival 
at the U.S. port of entry, such commodities should only be subject to 
the treatment fee if a quarantine pest is found at the port of entry 
necessitating additional treatment and direct supervision by APHIS.
    The fee will be charged as the commenter suggests. Entities will be 
assessed the fee only if treatment is required and is performed in the 
United States and monitored by an APHIS inspector.
    One commenter asked whether the treatment fees also apply to 
oversight provided by APHIS for fumigations on commodities exported 
from the United States that require a phytosanitary certificate.
    Treatment services provided to facilitate export of U.S. 
commodities to foreign countries are not part of the calculated fee 
schedules. Exporters of U.S. commodities are charged a separate fee for 
export certification.

Stakeholder Input and Peer Review

    Several commenters stated that the process to develop the proposed 
rule was not transparent because APHIS failed to provide and share data 
and information used in developing the proposed rule with affected 
stakeholders prior to the proposal's publication. The commenters 
referred to Executive Order 13563, which requires regulatory agencies 
to seek out public participation in rulemaking, including affected 
stakeholders.
    Executive Order 13563 requires that regulatory agencies adopt 
regulations through a process involving public participation. To this 
end, APHIS held several stakeholder briefings to keep stakeholders 
informed during the evaluation of our user fee program and the 
development of the new user fees:
     September 9, 2011--Stakeholder Briefing: APHIS/Grant 
Thornton presented the preliminary findings from the AQI user fee 
review;
     May 1, 2013--Stakeholder Briefing: APHIS/Grant Thornton 
presented costs to deliver AQI services and factors that drive costs;
     April 22, 2014--APHIS announced proposed adjustments to 
AQI user fees;
     May 29, 2014--Stakeholder Briefing (two webinars): APHIS 
presented proposed adjustments to AQI user fees; and
     July 9, 2014--Stakeholder Briefing (webinar): APHIS 
presented proposed adjustments to AQI user fees.
    Invitations to all of the 2014 events were distributed via the 
APHIS stakeholder registry and via direct email. The last email 
invitation was sent on June 27, 2014, to 11,164 unique subscribers.
    In addition, APHIS provided the opportunity for comment on the 
proposed rule for 60 days, which was then extended another 30 days to 
allow for additional public comment.
    APHIS provided two documents, ``Fee Setting Process Documentation 
and Recommendation'' (dated October 25, 2011), and ``AQI Fee Schedule 
Assessments and Alternatives, Revised'' (dated May 21, 2012), along 
with the proposed rule to help clarify APHIS' costing methodology. Two 
commenters expressed concern that the documents were not peer reviewed 
or reviewed by the USDA's Chief Economist and that APHIS failed to seek 
public comment on either the documents or the models that form the 
basis of the change in implementation of the AQI user fee program.
    The documents provided by Grant Thornton, which were made available 
along with the proposed rule for public review and comment, were to 
advise APHIS and CBP on decisionmaking only. These were information-
gathering documents used to help inform APHIS' decisionmaking and, as 
such, were not required to be peer-reviewed. The documents led to 
detailed policy discussions that took place at the Agency and 
Department levels with both APHIS and CBP. USDA and the OMB reviewed 
the proposed rule and the RIA. Several meetings and briefings that 
included Department and OMB personnel took place on several occasions, 
and discussions included issues such as fee alternatives, methodologies 
employed by Grant Thornton, and work the contractor did to support the 
economic analysis. The final decisions were well-informed, including 
reviews that included GAO.

Overtime

    Several commenters requested that detailed information be provided 
on how much revenue overtime services generate and how CBP determines 
which officers fall into the overtime category. The commenters asked 
why Sundays have a higher overtime rate than other days.
    CBP revenue overtime services generated through the end of the 
month of July (for 2014) totaled $379,506.82 for the Agriculture 
Reimbursable Overtime and $19,525.50 for the Wood Inspection 
Reimbursable Overtime. CBP utilizes the National Treasury Employees 
Union (NTEU)/CBP collective bargaining agreement contract for employees 
in determining employee eligibility and overtime assignment. In 
general, overtime assignments are based on the lowest earner and 
availability of personnel. CBP officers are paid under the authority of 
the Customs Officer Pay Reform Act (19 U.S.C. 267, as amended). Under 
that authority, customs officers are entitled to 1.5 times the rate of 
their base pay for Sunday work if Sunday is one of their regularly 
scheduled work days. Customs officers whose regular work days are 
Sundays who work in excess of 8 hours on a Sunday are entitled to 2 
times their base pay for that

[[Page 66760]]

day's work, but are not eligible to receive Sunday premium pay 
differentials. The Sunday overtime rate is higher for APHIS officers 
than for other days of the week because our officers are paid a higher 
rate for their work time on Sundays. Because our fees were developed to 
cover the full cost of inspections, including employee salaries, the 
Sunday fees are correspondingly higher. APHIS and CBP do not factor 
reimbursable overtime fees into the costs of the AQI user fees. 
Reimbursable costs are charged separately from the user fee.
    As stated in the proposed rule, we used the ABC methodology to 
determine the cost of AQI activities and their associated outputs and 
services. One commenter expressed concern regarding a perceived lack of 
clarity regarding the alignment of the proposed fee schedule with the 
increase in overtime rates that was concurrently proposed. The 
commenter stated that, before either proposal moves forward, APHIS must 
document, for public review, the cumulative effect of these increases.
    In calculating the flat treatment fee for the proposed rule, we did 
initially factor in the overtime component to arrive at the figure of 
$375. We did not anticipate charging overtime fees in addition to that 
flat fee. Because the required RIA accompanying the proposed rule was 
based on that original proposed fee of $375, the analysis did examine 
the full economic impact of the new fee, including the overtime 
component.
    In this final rule, we are removing the overtime component from the 
flat fee, thus lowering the flat fee to $237. This fee will be phased 
in over a 5-year period. The difference between the proposed fee and 
the final $237 fee is $138. This difference represents the costs that 
are projected to be recovered through charging for reimbursable 
overtime. When treatment-related AQI services are applied outside of 
normal business hours, both the flat fee and overtime charges will 
apply. This manner of assessing these fees is consistent with the way 
we assess our other AQI user fees. APHIS can identify the amount of 
reimbursable overtime attributed to AQI treatments based upon the 
accounting attributes in the financial system. We will also continually 
review our business practices in relation to our treatment operations 
with the goal of reducing our costs and thereby reducing the fees.

APHIS/CBP Partnership

    One commenter expressed concern regarding how much AQI user fees 
would go to APHIS compared to the amount kept by CBP.
    APHIS and CBP maintain ABC models that accurately assign costs for 
activities related to each fee area. The basis for distribution of AQI 
user fees between APHIS and CBP is the cost to each agency of 
performing the AQI functions covered by a particular fee. Section 
421(f) of the Homeland Security Act of 2002 mandates that CBP and USDA 
agree on a periodic transfer of funds from the latter to the former. In 
FY 2013, CBP received $366 million from AQI user fees. APHIS collects 
fees to recover the costs of providing inspection activities for 
international arrivals of passengers, conveyances, animals, plants, and 
agricultural goods at ports of entry. AQI fees reimburse the costs of 
CBP Agriculture Specialists, CBP officers performing agriculture 
inspection services, and support costs. In FY 2013, the revenues from 
the current fee levels covered 80 percent of CBP's costs incurred 
providing inspection activities associated with the passengers and 
conveyances that are subject to fees.
    CBP will receive the collections provided by the rate adjustments 
for maintaining the existing operations of agricultural inspection 
functions. A small portion of the collections will fund treatment 
functions performed by APHIS. In addition, APHIS will maintain a small 
balance, i.e., ``reserve,'' of user fee funds to cover costs during 
collection lag periods and for unanticipated changes in volumes and 
potential bad debt costs. As stated previously, the FACT Act authorizes 
APHIS to maintain a reasonable balance in the AQI account.
    One commenter pointed out that the ``AQI Cost Analysis'' section of 
the proposed rule lists the National Targeting Center (NTC) as a CBP 
initiative, implemented since 2011, that is contributing to the 
necessity to raise user fees. However, the commenter stated that, since 
the NTC has been in existence for over 10 years, it is not a new 
initiative and asked why the costs of the NTC have led to the need to 
raise AQI fees now. The commenter stated that Table 3 of the proposed 
rule lists over $7 million in 2014 NTC costs that were factored into 
the AQI Cost Analysis and asked whether this amount represents the 
entire cost of the NTC or if it is only for some portion related to AQI 
activities.
    To expedite the processing of travelers and cargo, CBP officers 
deploy pre-departure screening through a variety of programs and 
activities. The NTC, in particular, screens relevant traveler and cargo 
information, including the examination of manifest data, prior to their 
admission into the United States. This approach is a key part of CBP's 
layered security strategy to protect the homeland by extending U.S. 
borders outward to identify and mitigate threats, interdict possible 
terrorists, criminals, and suspect cargo before they can board or be 
loaded on a conveyance destined for the United States. Through use of 
targeting, CBP decreases costs, including AQI user fee costs, by 
identifying low-risk and high-risk travelers and shipments prior to 
their presentation at a U.S. port of entry for admission.
    Since 2009, we have seen growth in both trade and travel leading to 
an increase in passenger and cargo volumes. Total passenger volume in 
FY 2013 was 6.4 percent higher than in FY 2011, and non-immigrant 
arrivals during the same period increased by nearly 9 percent. Total 
import value in FY 2013 was nearly 5 percent higher than FY 2011. Based 
on available industry and government data, we expect these trends to 
continue and estimate that total air passenger volume for FY 2015 will 
increase 4 percent (approximately 3.7 million air passengers) at the 
top 10 U.S. airports when compared to FY 2012 data. Because the 
conveyance fees cover the inspection costs of the cargo during the 
normal tour of duty of our employees, increases in cargo volumes 
necessitate increases in the conveyance fees to recover these expanded 
cargo inspection costs. Note that the costs of inspection of cargo 
occurring outside the normal tour of duty of our employees are 
recovered separately through reimbursable overtime collections, costs 
not included in the AQI fees. The $7 million listed as 2014 NTC costs 
represent that portion of NTC that relates specifically to AQI 
activities on imports.
    Two commenters stated that APHIS should address several issues 
identified during review of the AQI program, such as inconsistent data 
between APHIS and CBP. One commenter stated that it is not acceptable 
for APHIS to raise user fees without addressing its own internal issues 
and communication with CBP. A second commenter stated that, with 
additional funds generated by the user fees, APHIS should have the 
resources necessary to address these issues.
    APHIS and CBP identified the correct data to use in the model and 
eliminated the identified inconsistencies. Issues such as these in a 
very large operation are continuous in nature as the activities change, 
new systems become available, priorities change, or new demands for 
information arise. The data is relevant and it is part of official 
government systems. APHIS and CBP are

[[Page 66761]]

continually working together to enhance data collection. In addition, 
CBP will continue the implementation of the business transformation 
initiative of the International Trade Data System (ITDS). CBP will use 
ITDS to report data for the importation and disposition of arriving and 
transiting fresh fruits and vegetables cleared at ports of entry. The 
source-verifiable data provided by the trade prior to arrival will 
result in increased accuracy and simplified data entry. ITDS will allow 
for the elimination of duplicative data entry and will significantly 
reduce the overall amount of time currently spent by CBP agriculture 
specialists or CBP officers entering data. The agencies will not fund 
through AQI user fees those activities that are not associated with AQI 
services.

Cost Savings Measures

    One commenter requested that APHIS provide an analysis of the cost 
savings achieved when one agent, typically a CBP officer, provides 
inspection services for AQI, customs clearance, and immigration 
processing. The commenter stated that such a review should be 
undertaken to ensure that cost savings achieved by sharing employee 
resources are passed along to the fee-paying users in the form of fee 
reductions or exemptions.
    The ABC analysis relied on actual personnel expenses to identify 
the staffing cost for border stations of all sizes. CBP costs in 
support of the AQI mission include training and technical advice to CBP 
officers and other CBP personnel on regulatory requirements pertaining 
to compliance with agricultural regulations and the processing of 
passengers with regard to compliance with agriculture regulations, 
primarily at low volume ports of entry in the passenger environment. In 
the absence of a CBP Agriculture Specialist, CBP and APHIS have 
consistently committed to ensuring that CBP officers have been provided 
with the knowledge and information needed to identify possible pest 
risks and to make the appropriate decision to mitigate that pest risk. 
Therefore, the cost savings realized by lower staffing levels at some 
border crossings is somewhat offset by the expense of additional 
training needed by those officers.
    One commenter stated that no analysis was made to see if cost 
savings could be achieved through more efficient operations.
    We are constantly working to improve our efficiency and cut costs. 
For example, we have taken steps to reduce our personnel-related 
expenditures, thereby reducing the costs of inspection, by using lower-
salary-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 staffing increases. The proposed user fee increases will 
enable us to recover the full costs of maintaining the AQI program. We 
welcome the submission of information at any time that would help us 
contain costs or enhance our efficiency.
    One commenter asked to see the computations that show how APHIS 
initiatives to increase efficiencies and overall effectiveness to save 
cost and time work to offset any increase in costs as a result of 
increased AQI expenditures. As an example, the commenter pointed out 
that the proposed rule states that the development of new treatment 
techniques will save time and costs, but Table 3 within the proposal 
appears to show a continued annual increase in costs. The commenter 
asked for an explanation of this apparent disparity.
    APHIS PPQ has recently realigned its core functional areas into 
three components: Policy Management, Field Operations, and Science and 
Technology. By realigning this way, we were able to eliminate many 
redundancies within different units and keep our AQI budget static 
while doing more AQI work. For example, plant inspection station 
management is handled by Field Operations. By having Field Operations 
handle management of what is essentially an operational program, we are 
better able to collect data via a risk-based sampling method, which 
will help inform future inspection rates of commodity-country 
combinations. In Policy Management, we were able to better centralize 
management structures of AQI policy, enabling us to get information to 
CBP more quickly than before our reorganization.
    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 expenses, and propose user fee 
decreases when efficiencies are implemented.
    One commenter stated that APHIS should develop specific accounting 
processes in order to ensure that the increased fees are properly 
collected and that such fees remain appropriate related to 
modifications in agency activity. The commenter further stated that 
specific details should be provided regarding the anticipated 
improvements in clearance and efficiency at the borders related to the 
fee increase so that overall effectiveness can be easily monitored.
    APHIS and CBP continue to invest in resources that will improve our 
customer services and ability to safeguard American agriculture. 
However, we have determined that revised user fees are necessary to 
recover the costs of the current level of activity, to account for 
increases in the cost of doing business, and to improve how fees align 
with the costs associated with each fee service. In FY 1992, APHIS 
established accounting procedures to segregate AQI user fee program 
costs from all other costs. We published a detailed description of 
these procedures in the Federal Register on December 31, 1992 (57 FR 
62469-62471, Docket No. 92-148-1), as part of an interim rule amending 
some of our user fees. APHIS maintains all AQI fees we collect in 
distinct accounts, carefully monitors the balances in these accounts, 
and only uses these funds to pay for our actual costs for providing 
these distinct services. In addition to the ABC analysis to develop the 
proposed user fee schedule, one of the objectives of the Grant Thornton 
contract was to create a method that was repeatable. We are currently 
updating the ABC model annually with cost and activity data so that we 
can monitor, measure, and model for management and decisionmaking.

Additional Comments

    Three commenters asked APHIS to make public its current and 
historic reserve levels by user class.
    The AQI reserve levels by user fee category for FY 2010 through 
2012 are provided in Tables 1, 4, 6, 7, 8, 9, and 10. Grant Thornton 
used the ABC method to develop fees and inform APHIS decisionmaking. 
Grant Thornton developed the ABC data through time-sensitive surveys to 
determine current and forecast future program costs and revenue 
recovery potential of fee schedules. Prior to Grant Thornton's

[[Page 66762]]

ABC model, APHIS did not use the fee classes to track historical 
reserve levels.
    The fees established in this final rule will align funds collected 
through user fees and the AQI reserve with the actual cost of 
safeguarding activities performed by the agencies.
    Two commenters asked for a description of how APHIS ensures that 
reserve funds collected from commercial aircraft passengers and for 
commercial aircraft inspections are spent only on inspections of 
passengers and aircraft, respectively, in subsequent years.
    As noted above, Grant Thornton developed the ABC data through time-
sensitive surveys to determine current and forecast future program 
costs and revenue recovery potential of fee schedules. This forecasting 
will ensure that reserve funds are collected and spent only on 
inspections related to the relevant class of user. APHIS did not use 
the fee classes to track historical reserve levels, and the retroactive 
application of the ABC method analysis is not a valid use of the data.
    Several commenters stated that APHIS should justify the timing of 
apparent salary increases that increase proposed fees. Specifically, 
one commenter noted that anticipated salary increases for the CBP 
journeyman officers would add $40 million to baseline costs.
    Salary increases are set by law, Department leadership, or 
collective bargaining agreements. When provided, cost of living 
increases for government employees take effect at the beginning of each 
calendar year. The timing of salary increases is in no way related to 
the proposed rates. APHIS and CBP forecast known increases based upon 
Federal Government forecast guidance issued by OMB, and by known salary 
increases that would be in place at the time that the user fee rule was 
finalized.
    Further, APHIS and CBP do not coordinate employee compensation 
levels and the agencies did not increase salaries to inflate AQI user 
fee costs. OPM issued a revised GS-1800 Inspections, Investigation, 
Enforcement and Compliance Standard for CBP officers and Border Patrol 
agents during April 2011. The new standard provides detailed 
descriptions based on the audits and interviews that the OPM position 
classifiers learned from on-site visits to field locations and 
operational and human resources staffs. CBP also conducted a rigorous 
review of the work responsibilities and expectations of frontline 
personnel that have continuously increased since CBP became the 
principal border control agency. OPM and CBP found that the officer's 
daily work is consistent with that of individuals working at the GS-12 
level. The work factors that merit the salary increase include the wide 
variety of laws that are enforced, a shift to proactive, intelligence-
driven work using sophisticated technology and infrastructure, 
increased violence at the borders and focus on terrorist activities, 
and work with other law enforcement agencies and enforcement-related 
activities.
    One commenter asked APHIS to list, by AQI user fee category, any 
costs paid by AQI user fees that are also paid through appropriations.
    No costs that are paid for by user fees are also paid for using 
APHIS appropriations, nor will they be as a result of this rule.
    On May 1, 2013, APHIS held a stakeholder meeting to discuss AQI 
program costs. Two commenters asked that APHIS describe the data 
sources underlying the 2010 AQI program study, including defining the 
following terms referred to in the stakeholder meeting: AQI program 
costs, APHIS support, cost by activity from the CBP cost model, APHIS 
workforce labor survey, and workload data for outputs and drivers 
(Operations Management Recording (OMR), Pest ID, Work Accomplishment 
Data System (WADS)). The commenters asked that the briefing document 
discussed during the meeting be included in the docket.
    AQI program costs are the costs incurred by APHIS and CBP to 
provide inspection and other services that prevent the introduction of 
harmful plant pests and animal diseases.
    APHIS support costs encompass both Agency administrative support 
and program support functions. The ABC model used by CBP has costs by 
activities tracked by expenditures. APHIS used a workforce labor survey 
to generate data comparable to the CBP ABC model. A workforce labor 
survey is a method of collecting information on the level of effort 
that an organization expends in a set of activities such that labor 
costs found in a financial system can be allocated to the activities of 
an organization. The ABC model collects costs into cost pools and uses 
workload data to drive the costs to the fee classes. Workload data for 
outputs and cost drivers are data used to establish a cause and effect 
relationship between an organization's activities and what it produces. 
The workload data enables an organization to allocate the costs of its 
activities to what it produces. The document referred to by the 
commenter was made available alongside the proposed rule and therefore 
is already included as part of the official docket. It can be viewed by 
visiting the link listed in footnote 1.
    Several commenters noted in the proposed rule that APHIS ``rounds 
up'' projected costs by user by either $1 or $25 in setting AQI fee 
levels. The commenters stated that the legal justifications for this 
rounding-up are not evident and needs to be explained fully.
    As previously mentioned, the FACT Act authorizes the Secretary of 
Agriculture to prescribe and collect fees to cover the cost of 
providing the AQI services covered in the proposed rule. This authority 
provides that the funds collected will be available until expended. GAO 
states in its Federal User Fee Design guide that ``with permanent 
authority, funds are available until expended, which enables agencies 
to carry forward unexpended collections to subsequent years and match 
fee collections to average program costs over more than 1 year.'' This 
enables agencies to carry forward unexpended collections to subsequent 
years in a reserve fund and match fee collections to average program 
costs over more than 1 year. AQI policy is to maintain a 3- to 5-month 
reserve, but when the AQI fee study was conducted, that reserve had 
been significantly diminished due to the economic downturn. As a 
result, one of the requirements of the fee study was to allow for the 
replenishment of the AQI fund reserve. To do so, we rounded the 
projected unit cost to collect additional revenue for the reserve. 
While there is no specific guidance regarding rounding up for fees, it 
is a common practice when setting fees, especially for programs that 
maintain a reserve, but also for administrative simplicity.
    In this final rule, however, we did not use the rounding method 
described above to fund the reserve. APHIS has applied a 3.5 percent 
increase above the unit cost of providing AQI services in order to fund 
the AQI reserve. The new fees, other than those for commercial 
aircraft, commercial cargo vessels, and commercial cargo railcars, 
include a 3.5 percent increase for replenishment of the reserve. For 
these three fee classes, a 3.5 percent increase would raise the new 
fees above their proposed levels. In this final rule, these three fees 
are kept at their proposed levels, and therefore will provide smaller 
shares of their revenue to the reserve replenishment.
    APHIS' analysis of methods of providing sufficient revenue to 
include a reasonable reserve identified 3.5 percent as a level that 
provides for funding the reserve while minimizing the impact on the 
payers of the fees to the greatest extent possible. APHIS further 
believes that using a flat rate of

[[Page 66763]]

3.5 percent without raising any fees above those originally proposed 
meets the needs and expectations of both the Federal Government and of 
those who pay the AQI fee.
    Several commenters asked for the number of FTEs, for both APHIS and 
CBP, committed to each class of user for FY 2010 to the present.
    The number of APHIS FTEs for FYs 2010 through 2012 can be found in 
Tables 1, 4, 6, 7, 8, 9, and 10. The numbers of APHIS FTEs dedicated to 
each class of user for FY 2013 are listed below in Table 11. The number 
of CBP FTEs dedicated to each class of user for FYs 2010 through 2013 
is listed below in Table 12. The number of CBP FTEs dedicated to sea 
passengers is not available as those user fee classes were not tracked 
prior to the proposed rule. CBP is not involved in treatment activities 
that are covered under the treatment fee. CBP does oversee disinfection 
activities for conveyances or equipment. However, disinfection activity 
costs are not included in the calculation of the treatment fee.

    Table 11--APHIS Full-Time Equivalent Employees (FTE) for FY 2013
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Commercial Aircraft........................................       289.96
Commercial Rail............................................         5.42
Commercial Truck...........................................        83.18
Commercial Vessel..........................................       181.76
Commercial Vessel Passenger................................         9.01
Treatments.................................................        79.61
------------------------------------------------------------------------


                   Table 12--CBP Full-Time Equivalent Employees (FTE) for FY 2010 Through 2013
----------------------------------------------------------------------------------------------------------------
                 User fee class                        2010            2011            2012            2013
----------------------------------------------------------------------------------------------------------------
Air Passenger...................................           1,412           1,403           1,433           1,276
Commercial Aircraft.............................             265             276             267             254
Commercial Rail.................................              21              25              23              19
Commercial Truck................................             330             314             340             301
Commercial Vessel...............................             304             314             269             284
----------------------------------------------------------------------------------------------------------------

    On September 28, 2009, we published in the Federal Register (74 FR 
49311-49315, Docket No. APHIS-2009-0048), an interim rule that amended 
the user fee regulations by adjusting the fees charged for certain 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. The rule was published to help 
recover the costs of inspections and related support services, in 
response to the economic downturn, as well as to maintain a reasonable 
reserve balance. On November 4, 2009, we published in the Federal 
Register (74 FR 57057, Docket No. APHIS-2009-0048) a document 
withdrawing the interim rule prior to its effective date in order to 
explore other regulatory alternatives. One commenter asked what the 
results were of that exploration, specifically whether the results were 
published and whether viable alternatives were available.
    The regulatory alternatives we considered for revising the AQI user 
fees were described in the proposed rule as well as the supporting 
analysis published along with the proposed rule entitled ``AQI Fee 
Schedule Assessment and Alternatives (May 21, 2012).'' These 
alternatives included several that were rejected because they either 
would not meet the objective of better ensuring that the fees paid by 
users in the various fee classes are commensurate with the costs of the 
AQI services provided for each class or because the transaction costs 
of creating and operating fee collection systems would be overly 
burdensome. The proposed rule represented our preferred alternative.
    Three commenters stated that APHIS and CBP must provide more timely 
invoices for all fees. The commenters stated that, when invoices are 
delayed, there is no guarantee that the local contact, such as a vessel 
agent, will be able to collect the funds from the carrier, which means 
these agents can be held liable for those costs. The commenters 
suggested that the regulations be amended to stipulate that invoices 
will be provided within 30 days of performing AQI services.
    APHIS does not provide invoices. Customers pay at the time of entry 
into the United States or when they purchase an airline ticket or 
transponder. CBP provides a CBP Form 368 Collection Receipt at the time 
of the entrance of the vessel with payment of the AQI user fee. Vessels 
are required to submit payment receipts covering the current calendar 
year at each port of call, with the cycle recommencing the next 
calendar year. We do not provide invoices for aircraft clearance or 
arriving international air passenger fee collections either. Air 
carriers remit theses collections on an honor basis in accordance with 
our current regulations.
    Several commenters asked whether APHIS can demonstrate that it is 
currently collecting all the revenues it is entitled to receive through 
the AQI program. The commenters stated that, if there are shortcomings 
in internal processes which result in lost revenues from some sources, 
other program fees should not be increased to compensate.
    As mentioned in the proposed rule, APHIS recently conducted a 
comprehensive fee review to determine the current cost of specific AQI 
services supported by user fees. That review determined that the AQI 
program was not recovering the full cost of its fee services, including 
costs of administering the user fee program and maintaining a 
reasonable reserve in the fee accounts. Some of this non-recovery is 
due to the fact that most of the current fees do not accurately reflect 
the current full cost of the services related to those fees. However, 
some of this non-recovery is also due to prior APHIS policy that capped 
fee collection for certain classes of commercial conveyances within a 
calendar year and that exempted certain classes of users from fee 
collection. The adjustments to the current AQI user fees are designed 
to recover the full cost of providing AQI services, commensurate with 
the class of persons or entities paying the fees, and are based on an 
analysis of our costs for providing services in FYs 2010 through 2012, 
as well as our best projections of what it will cost to provide these 
services in FYs 2015 through 2017. The adjustments will also allow us 
to maintain the AQI reserve account. These user fee adjustments are 
necessary to recover the costs of the current level of activity, to 
account for actual and projected increases in the cost of doing 
business, and to more accurately align fees with the costs associated 
with each fee service.
    Two commenters asked for confirmation that the reserves will be 
kept within the AQI user fee program and not used for any other APHIS 
program. One commenter asked for additional information regarding how 
AQI user fee reserves are dispersed. The commenter noted that the AQI 
reserve is

[[Page 66764]]

intended for use during periods of low import flow, but asked for 
clarification of what specifically constitutes a lower flow of imported 
products. One commenter asked if there is a way for stakeholders to 
have input on when and how the reserves are used and asked whether the 
reserves will be carried over from each fiscal year and be allowed to 
accumulate.
    By law APHIS collects AQI fees to fund the AQI program. These funds 
may not be used to supplement or pay for any program in APHIS or CBP 
that is not directly related to the AQI program. Any excess of user fee 
collections over costs remains available from year to year in a 
dedicated reserve account to be used only to fund AQI and related 
program costs. OMB actively monitors AQI reserve levels keeping in mind 
our goal of maintaining a 90- to 150-day operating reserve. OMB 
provides oversight of the AQI funds and the funded reserve. Low import 
flow occurs when the number of imports diminishes enough that we are 
unable to meet the 3- to 5-month reserve. As we have noted, we have 
sought stakeholder input throughout this rulemaking process and would 
do so again in any future rulemaking involving AQI user fees.

Economic Impacts

    Numerous commenters stated their opposition to the proposed AQI 
user fee increases on the grounds that they would create economic 
burdens on U.S. small businesses.
    The increases in AQI user fees have been methodically derived using 
activity-based costing. With the rule, AQI service recipients will pay 
fees that more closely match the costs of providing those services. We 
do not expect the AQI fee increases to create significant economic 
burdens for a substantial number of U.S. small businesses. The 
additional burden will vary by user fee class (mode of transportation) 
because the cost of providing the AQI services varies by class and each 
user fee class has its own current fee deficit (or in the case of air 
passengers and cargo railcars, fee surplus). By user fee class, the 
burden will be proportional to the extent to which an entity is engaged 
in transporting goods to the United States, that is, the cost to 
businesses that make fewer entries at ports will be proportionally less 
than the cost to businesses that make a greater number of entries. 
Small businesses within each class will not be disproportionately 
impacted. We discuss the potential impacts of the rule on small 
businesses later in this document, beneath the heading ``Executive 
Orders 12866 and 13563 and Regulatory Flexibility Act.''
    A few commenters stated that the imposition of new user fees could 
set back the maritime industry's slow recovery from the recession, 
particularly small and medium firms involved in the trade of perishable 
goods throughout southern Florida. In particular, several of these 
commenters stated that the fees we proposed could cause economic 
hardship on flower producers and the cut flower industry.
    A few commenters acknowledged that user fee increases were 
necessary, but opposed the magnitude of the increases we proposed, 
citing concerns to small businesses involved in importation and 
transportation.
    Also, several commenters stated that the fees we proposed will have 
a negative effect on trade relations between Peru and the United 
States. They stated that the proposed fees affect jobs and consumers in 
the United States as well as in Peru and specifically noted that the 
Peruvian asparagus industry is connected with American consumers 
through a large chain of importers, carriers, organizations, and 
retailers.
    In addition, the Government of Chile expressed concern that the 
compounding effect of our proposed fee increases for overtime services 
(contained in a separate proposed rule published in the Federal 
Register on April 25, 2014 (79 FR 22887-22895, Docket No. APHIS-2009-
0047)), for conveyances and for treatment will have a negative effect 
on trade between Chile and the United States. Particular concern was 
expressed about how the new treatment fee proposed in this rulemaking 
could disproportionately affect Chile's agricultural exports, because 
shipments of fresh fruits from Chile are subject to fumigation 
requirements.
    As noted above, we are lowering the treatment fee in this final 
rule from the $375 originally proposed to $237 while we attempt to 
develop additional cost-cutting measures in our treatment operations. 
APHIS will phase this fee in over a period of 5 years. This change will 
reduce the burden caused by the introduction of the treatment fee on 
affected entities, including Chilean exporters. As we have already 
noted, overtime fees will only apply to treatments conducted outside 
normal business hours. Under the FACT Act, the Secretary of Agriculture 
has the discretionary authority to prescribe and collect user fees 
sufficient to cover the cost of providing AQI services. As amended, the 
Act stipulates that the fees be commensurate with the costs of AQI 
services, with respect to the class of persons or entities paying the 
fees. With the exception of the treatment fee and cruise passenger fee, 
the fees in the proposed rule are long-established fees, and, as 
explained in the rules that established them, the fees are necessary 
for us to recover the costs of providing AQI services to the 
conveyances and passengers to which they apply. Similarly, for the 
reasons explained in the preamble to the April 2014 proposed rule and 
in this document, we have determined that the new cruise passenger and 
treatment fees are necessary to recover the costs we incur in 
connection with providing AQI services to such passengers and cargo.
    Several commenters stated that the proposed fee for AQI treatment 
services and the proposed increases in fees for cargo vessel and 
aircraft inspections will result in significant trade barriers for 
importers of perishable products such as cut flowers and fresh produce.
    We have statutory obligations under the Animal Health Protection 
Act and Plant Protection Act to prevent the introduction or 
dissemination of animal and plant pests and diseases into the United 
States. When we consider a shipment of plants or plant products to pose 
an unacceptable plant pest risk, whether because of a pest discovery at 
the port of arrival or otherwise, phytosanitary treatment can allow the 
shipment to enter the United States. If the shipment is not considered 
to pose an unacceptable plant pest risk, no treatment is required and 
no fee for AQI treatment services will be incurred. AQI services, 
including those for overseeing treatments, enable trade that would not 
be able to otherwise take place. The fee for AQI treatment services and 
the increases in user fees for truck, cargo vessel, and aircraft 
inspections have been calculated using the ABC methodology to ensure 
that the fees collected, by class, are commensurate with the costs of 
the AQI services provided.
    One commenter stated that APHIS should quantify benefits of 
inspections with results and workload projections.
    The collection and analysis of data on pest interceptions and 
workload trends are mainstays of the AQI program. CBP and APHIS use the 
data in numerous ways to inform operational and staffing decisions and 
planning. As noted elsewhere in this rule, workload projections were 
used in setting the AQI user fees. While that data is indispensable for 
those purposes, our RIA for this rule did not quantify, in an economic 
sense, the benefits associated with pest detections (as the avoided 
costs of a pest outbreak would be speculative) or workload projections.

[[Page 66765]]

    A number of commenters pointed out that, in the preamble of the 
proposed rule, we cited the impact of the 2010 economic recession on 
AQI user fees collected. The commenters stated that levels of imports 
and exports have increased significantly since 2010, and asked whether 
there was still a basis for the rule given this increase in trade. 
Similarly, another commenter stated that the proposed fee raises are 
based on dated information, and that since the time of the study, many 
inspection costs have gone down.
    The 2010 recession decreased our AQI fee reserve account. The 
account has been used to ensure the AQI program continued to fully 
operate when there were instances in which the fees we assessed did not 
provide revenue sufficient to support the AQI services rendered. The 
recession underscored the inefficiency of using the reserve to recover 
ongoing AQI-related costs in such a manner, and highlighted the need to 
charge user fees that ensure full cost recovery for those services, 
especially in times of economic downturn. It also highlighted the need 
to ensure that all user fee schedules are set using a methodology that 
will result in cost recovery for those services. The ABC method used to 
inform the fee schedules in the proposed rule is such a methodology. It 
is important to note that AQI services increase when imports increase. 
We have set our fees based upon the activity cost of the services 
delivered. Revenue generated from the fees will reflect the change in 
services delivered. In the economic short run, the reserve may be used 
to support temporary increased AQI program levels so that fees would 
not require an emergency adjustment.
    In addition, we note that an increase in trade, in and of itself, 
would not increase our user fee reserve. In fact, insofar as we would 
have to provide AQI-related services more frequently, an increase in 
trade could accelerate depletion of the reserve if fees do not recover 
the costs per service rendered.
    A commenter stated that the fee for AQI treatment services will not 
be neutral, that it will cause importers to alter shipping choices in 
order to minimize the fee cost rather than maximizing their commercial 
efficiency.
    Phytosanitary treatments and their AQI oversight are integral 
activities when it is determined that a shipment is considered to pose 
a plant pest risk. Currently, AQI treatment monitoring is provided to 
importers at no direct cost. The rule will bring that cost into the 
importer's decisionmaking process. One outcome of that process may in 
fact be importers undertaking activities, where possible, to ensure 
shipments are more likely to be free of actionable pests before arrival 
at the U.S. port of entry. We would also note that the downward 
adjustment of the treatment fee in this final rule will make the cost 
to importers lower and less burdensome.
    Some commenters stated that a phase-in period would allow affected 
entities to adjust to the new fees and prevent disruption of trade. One 
such commenter noted that the proposed fees for commercial aircraft, 
maritime vessels, and trucks with and without transponders include 
adjustments up to three times current fees, which will likely disrupt 
the movement of agricultural products because many smaller companies 
that ship agricultural products may have difficulty adjusting to such 
drastic fee increases. Many of these commenters suggested a phase-in 
period of 3 to 5 years.
    While we recognize that for several of the classes of service 
users, the percentage increase in fees are sizable, we emphasize that 
the proposed fee levels have been methodically determined through the 
ABC methodology to be the amounts needed, by class, to cover the costs 
of the services provided. The changes in fees are based on projected 
levels of AQI services required and projected resource costs of 
providing those services. APHIS will phase in the new treatment fee in 
order to reduce the impact on those firms that provide the service, and 
allow those firms receiving the treatment fee to adjust their price 
structure accordingly. A phase-in of all other proposed changes would 
delay achieving the rule's objectives: Increased user fee funding of 
AQI services; reduced reliance upon appropriated funding of AQI 
services; making AQI fees by class more commensurate with the services 
provided; and replenishment of the reserve. Moreover, this is the first 
major adjustment to AQI user fees in nearly 10 years. Other than minor 
adjustments for inflation from FY 2000-FY 2010, the fee rates have not 
changed even though the AQI program has hired several hundred 
additional inspectors and incurred other costs to meet the increasing 
need caused by a large increase in arriving international passenger and 
cargo traffic.
    Several commenters specifically opposed the proposed treatment fee 
and cited potentially negative economic impacts, including job losses, 
increased prices for U.S. consumers, and loss of trade. Several of 
these commenters stated that because importers would have to pay this 
fee to individually fumigate small batches of flowers, the fee could 
increase the total price per-box of flowers by 200 percent, and that 
the fee would have a severe economic impact on perishables imported 
through South Florida.
    The objective of fumigation and other AQI treatments is to ensure 
that agricultural goods and commodities entering the United States are 
free from viable plant pests and noxious weeds that would pose a risk 
to the health of the U.S. domestic agriculture and natural resources. 
The AQI treatment fee is designed primarily to recover the costs of 
APHIS services for monitoring fumigation and other types of treatment 
for pests to ensure it is conducted properly. As we noted in the 
proposed rule, no fees are currently collected by APHIS for these 
services. Importers have been receiving, and benefitting from, these 
services without paying a fee until now. Further, we have attempted in 
this final rule to increase the equitability of the fee by charging a 
flat fee for services rendered during normal business hours, and the 
flat fee plus an overtime charge for services rendered after normal 
business hours, thereby adjusting the fee downward from that which we 
originally proposed. APHIS will phase this new fee in over a period of 
5 years.
    A commenter suggested that rather than charging a flat fee per 
treatment, APHIS could assess user fees more equitably based on the 
number of pallets in a shipment. By charging the flat treatment fee, 
while charging considerably less for the inspection of trucks and 
railroad cars, APHIS, according to the commenter, would be making 
importers and exporters pay a disproportionate amount of APHIS' costs.
    We note that user fees based on the quantity or the value of a 
shipment do not necessarily correspond to the actual cost of providing 
the AQI service. For example, the cost of monitoring a fumigation 
treatment for a large number of pallets is about the same as the cost 
for a few pallets, since an APHIS inspector would be required to be 
present for most of the treatment and always at the beginning and the 
end of the procedure regardless of the quantity of pallets being 
treated.
    A few commenters asked whether the same cost should apply to 
verifying that a treatment occurred as the cost of actually conducting 
a treatment. The commenters cited treatment verification for Peruvian 
asparagus, which they stated involves reviewing a set of charts to 
ensure that the treatment was conducted according to the requirements. 
The commenters stated that the fee for verifying that a treatment

[[Page 66766]]

was conducted satisfactorily should not be equal to the fee for 
conducting a treatment.
    We disagree with the commenters' characterization of APHIS' 
involvement in verifying treatments of Peruvian asparagus. APHIS 
officials do not simply verify documentation to establish that a 
treatment, such as a fumigation, took place. APHIS pressure tests the 
containers, prescribes the amount of gas, and verifies the amount of 
gas that has been used. APHIS also conducts readings of gas 
concentrations at set intervals during treatment. These readings are 
used to determine whether the proper amount of gas is being used during 
treatment and to certify the treatment once it is adequately completed.
    Some commenters stated that the proposed user fee for AQI treatment 
services will lead foreign exporters to seek markets with easier access 
and thereby create potential shortages and higher prices for cut 
flowers and off-season fresh produce. Commenters also stated that many 
times when there is a pest discovered in a shipment of cut flowers, for 
example, the number of boxes requiring treatment is minimal. In such 
instances, given the proposed AQI treatment fee in addition to 
fumigation costs, importers may decide to return the shipment to the 
country of origin rather than have it treated for entry.
    We expect any diversion of trade away from the United States in 
response to the fee for AQI treatment services will be minor and not 
affect the U.S. economy significantly. Possible economic effects will 
be further diminished by the downward adjustment of the fee in this 
final rule. The size and breadth of U.S. demand for imported cut 
flowers and off-season fresh produce are large. The growth in these 
markets in recent years reflects U.S. consumers' willingness to pay for 
these commodities. The return of an infested shipment to the country of 
origin rather than its treatment will be a case-by-case decision of the 
individual importer based on costs and expected returns. In the case of 
imported cut flowers and fresh produce, we expect that the fee for AQI 
treatment services may in fact prompt increased marketing efficiencies 
if potential plant pest risks can be addressed prior to the U.S. port 
arrival. These commodities are treated at the port of entry if they are 
considered to pose a plant pest risk. If not, no treatment is required 
and the fee for AQI treatment services will not be incurred.
    Several commenters stated that the proposed user fees generally run 
counter to the cross-border initiative between Canada and the United 
States to facilitate trade. Another commenter stated that increasing 
AQI fees that directly impact cross-border North American Free Trade 
Agreement (NAFTA) trade does not support a policy for reducing 
regulatory and trade burdens. These cooperative initiatives should 
review whether fees, such as the AQI user fees, should be required 
among the three NAFTA countries covered.
    CBP and APHIS have conducted inspections and collected AQI user 
fees at the Canadian border since 2007 without any major collection-
related issues inhibiting trade at the border. In addition, several 
initiatives established between the United States and Canada focus on 
regulatory cooperation and development of a perimeter approach to 
reduce risks to North America and to facilitate cross-border trade. The 
goal of these initiatives is to establish mechanisms for ongoing 
regulatory cooperation for issues of mutual concern. The Regulatory 
Cooperation Council (RCC) was established to facilitate closer 
cooperation between our two countries to develop smarter and more 
effective approaches to regulation. The AQI cost analysis is not 
counter to the commitments the United States has made to Canada under 
the RCC initiative, and is consistent with the goals and history of 
this and other initiatives.
    Several commenters from the transportation sector opposed the 
proposed increases to AQI user fees, citing the increased cost of 
inspection and shipment of agricultural items across borders. Many of 
these commenters referred specifically to the proposed increase in the 
truck transponder fee. A few commenters stated that increasing 
transponder fees will slow down the flow of traffic at border crossings 
with Canada by reducing the number of transponders purchased, thereby 
increasing the number of cash collections at the port of entry. The 
commenters stated that this is not only time-consuming for border 
officials, but that other scarce CBP resources must also be assigned to 
completing reports on these activities and ensuring all financial 
documentation is completed.
    One commenter stated that the biggest barrier to increased use of 
transponders has been the initial one-time payment, because owners/
operators of long-haul trucks that do cross the border are often 
reluctant to purchase the transponder if they are not certain about 
their number of border crossings in a given year. The commenter stated 
that a 205 percent proposed fee increase will only create more 
difficulties in increasing transponder usage and recommended that APHIS 
should offer the transponder for sale on a payment program. Similarly, 
another commenter stated that the proposed fee increases will 
significantly extend the number of border crossings carriers will need 
to undertake to justify the use of transponders, thereby discouraging 
more carriers from using this technology.
    Another commenter also noted that the commercial transponder fee 
would increase from $105 to $320 annually, for a 200 percent increase. 
The commenter stated that such a large increase may be unaffordable for 
small carriers to pay on an annual basis. The commenter also stated 
that it may be more feasible to provide payment options and explore a 
tiered approach over a time period rather than the entire amount all at 
once. The commenter stated that similarly, the proposed per-truck fee 
increase from $5.25 to $8.50 would seem to disproportionally hit small 
truckers, who tend to operate on a more transactional basis. The 
commenter stated that, incentives to apply the per-truck fee toward 
consolidation for securing the transponder might be appropriate.
    As noted earlier, due to the change in the methodology we are using 
to calculate the reserve amounts, both the individual crossing and 
transponder fees are lower in this final rule than those we originally 
proposed. With the rule, the cost of the transponder will be equivalent 
to approximately 40 times the single-crossing fee, as opposed to the 
current 20 times the single-crossing fee. Despite its higher cost, 
purchase of a transponder will still provide cost savings for most 
cross-border trucking firms (the average number of crossings per firm 
is 97 per year) and will also reduce their paperwork and wait times. 
Because for most cross-border trucking firms the cost of the 
transponder will still be more economical than paying the single 
crossing fee for each crossing, we disagree with commenters that the 
firms are unlikely to pay the increased transponder fee, and do not 
anticipate a significant increase in the collection of single-crossing 
fees at the U.S./Canada border as a result of this rule.
    We also note a number of ancillary benefits associated with 
transponder use that should encourage continued use. Small businesses, 
as well as large ones, develop their annual business models based on 
projected levels of revenue and expenditure, for which there is always 
an element of uncertainty. Use of a transponder not only effectively 
reduces

[[Page 66767]]

the AQI fees, but importantly, reduces the time spent crossing the 
border.
    In short, we do not expect the increase in the AQI fees for 
trucking firms, with or without transponders, to significantly harm a 
substantial number of small businesses. We believe many if not most 
small businesses will continue to accrue benefits gained through the 
use of transponders. A system whereby payment for a transponder could 
be distributed over the year cannot be efficiently administered at 
present and would increase the annual cost of a transponder. Moreover, 
such a system would not reduce the level of uncertainty businesses face 
when planning for the future, including when deciding whether or not to 
purchase a transponder.
    Commenters stated that the proposed increase in the commercial 
aircraft user fee would be extraordinarily burdensome for smaller-
capacity passenger flights commonly deployed in flights from Mexico, 
Canada, and the Caribbean, and the new fee is not commensurate with the 
inspection time required for these flights.
    Aircraft with 64 or fewer passenger seats are in fact exempt from 
the AQI commercial aircraft inspection fee if they serve only beverages 
and snacks that do not contain fresh fruits; fresh vegetables; or meats 
from ruminants, swine, or poultry; and carry cargo other than fresh 
fruits, fresh vegetables, plants, unprocessed plant products, cotton or 
covers, sugarcane, or fresh or processed meats. Arriving aircraft that 
do not meet these conditions pose a sanitary or phytosanitary risk. We 
have a statutory obligation under the Animal Health Protection Act and 
the Plant Protection Act and to prevent the introduction or 
dissemination of animal and plant pests and diseases into the United 
States.
    One commenter stated that the proposal to introduce a commercial 
vessel (cruise) passenger fee of $2 could negatively impact Florida's 
tourist industry if cruise lines see advantages to taking their ships 
to less expensive foreign ports.
    The FACT Act gives APHIS authority to charge a fee for all 
international passengers. Moreover, we note that the average cost of a 
cruise ticket is substantially more than the $1.75 passenger fee. 
Further, the cruise passenger fee will be assessed on a per-ticket 
basis, as is the case for international air passengers, so that cruise 
passengers will have to pay it only once per voyage. The commercial 
vessel (cruise) passenger fee will apply only to tickets purchased on 
or after the effective date of this final rule. For these reasons, we 
do not expect that the new fee will require the cruise industry to make 
significant adjustments to port calls or other business practices.
    In addition, several commenters were concerned about the impact of 
the proposed commercial vessel (cruise) passenger AQI fee for 
international cruise ships. One commenter suggested that a 3-month time 
frame for implementing the proposed fees is insufficient for the 
maritime transport industry and suggested a minimum of 9 months for 
implementation. The commenter added that costs will be difficult to 
bear in the short-term when factored against multiple conveyances 
within a company.
    We do not agree with these commenters. As noted above, we do not 
expect that the increased fee will require the cruise industry to make 
significant adjustments to port calls or other business practices. 
Phasing in the new fee, as the commenters recommend, would not allow us 
to recover the costs we incur for screening cruise ship passengers.
    A commenter stated that the new commercial vessel (cruise) 
passenger fees could mean an overall increase from $7,440 to over 
$600,000 in fees for a single ship for 1 year. The commenter also asked 
for confirmation that the per-passenger fee would only be assessed one 
time per voyage as opposed to each U.S. port call during a voyage.
    As there is currently no AQI fee for commercial vessel (cruise) 
passengers, we are uncertain of how the commenter arrived at the 
numbers cited. Regarding the question about assessment of the passenger 
fee, it would only be assessed one time per voyage (i.e., upon arrival 
in the United States) as opposed to each U.S. port call during a 
voyage.
    A few commenters stated that the proposed treatment user fee adds 
costs that could derail the cold treatment pilot program in south 
Florida and negatively impact the economy in other regions where cold 
treatment programs are established.
    As with cold treatment completed in transit on certified vessels, 
treatment performed at U.S. facilities requires oversight and will be 
subject to the fee for AQI treatment services. Approval of cold 
treatment equipment and checking of records helps to ensure that pest 
risks are kept at an acceptable level. APHIS has been working to 
automate this process, which is expected to eventually result in lower 
costs and a corresponding reduction in the fee for AQI cold treatment 
services. In the near term, the reduction in the treatment fee in this 
final rule will lessen the burden on entities importing commodities 
that require cold treatment. Cold treatment programs that operate under 
a trust fund agreement will be exempt from paying the fee.
    Several commenters stated that the proposed fee increases are 
exorbitant and may not be representative of the service provided. The 
commenters noted that some services, such as fumigation, are performed 
almost exclusively during overtime hours, but APHIS gives the 
impression in Federal Register notices and the related documents that 
the costs for this work are not covered.
    As has been described, APHIS employed ABC methodology to ensure 
that the new AQI user fees are commensurate by class with the costs of 
providing AQI services. For some classes, such as bus passengers, 
private vehicles, and pedestrians, transaction costs of creating and 
operating fee collection systems would be overly burdensome. As we have 
already noted, in this final rule, we have removed the overtime 
component from the flat user fee, thus lowering that fee to $237, 
phased in over 5 years; however, in order to recover our costs, we will 
need to charge overtime fees as appropriate.
    A commenter stated that the treatment user fee will mean organic 
fruits and vegetables cannot be sold as organic.
    Our proposal to recover AQI service fees for treatments against 
plant pests has no direct effect on whether fruits and vegetables can 
be sold as organic. While we propose a service fee for such treatments, 
the proposal makes no changes to existing treatment requirements. 
Shipments that are free of quarantine pests, or that do not require 
irradiation, methyl bromide, or other chemical treatments are able to 
keep their organic designation.

Fairness Issues

    Many commenters expressed concerns about what they perceived as 
inequities in our proposed AQI user fee structure. Commenters 
representing, among others, pest-treatment providers, cargo and 
passenger conveyance industries, and importers and exporters, viewed 
the proposed fee increases and/or the imposition of new fees as 
unfairly burdensome to the entities on whose behalf they advocated. 
Some also suggested that the proposed fees were not commensurate with 
the actual costs of the AQI services provided. These issues are 
discussed in detail in the sections that follow.

Treatment Fee

    Some commenters stated that having to pay not only the new 
treatment fee but also overtime fees for treatments

[[Page 66768]]

conducted outside of regular business hours would place an undue 
financial burden on smaller importers and the fumigators that treat 
their cargo. In addition, some of these commenters viewed the 
requirement to pay both fees as unfair because they felt that the fees 
were duplicative to some extent, i.e., that the affected entities would 
be charged twice for the same services.
    As noted above, overtime fees will only apply when treatments are 
conducted outside normal business hours. The $237 treatment fee 
contained in this final rule only covers the costs we incur in 
providing treatment-related AQI services during normal business hours. 
This approach is more equitable in that those requesting services after 
hours are causing the government to incur a greater cost. This cost 
should not be subsidized by firms that transact business within the 
normal hours. Since APHIS charges the firm providing the fumigation 
services, there should be opportunities for the smaller importing firms 
to work with the fumigator to consolidate several fumigations so that 
the single AQI charge is divided between the firms accordingly.
    Commenters stated that the proposed flat fee of $375 per enclosure 
or treatment seemed to be disproportionately high for those treatment 
providers with small enclosures or treatments and disproportionately 
low for those with large enclosures or treatments. It was suggested 
that in the latter case, the fee collected by the fumigator from the 
importer could fall far short of the expenses incurred in providing the 
treatment. It was stated further that the main and the only direct 
treatment cost to be captured is the inspectors' time. It was suggested 
that a better way to charge the user for the actual costs APHIS and CBP 
incur would be to charge a fee as a dollar per hour of inspector time 
instead of an arbitrary fee per enclosure or treatment. This method, it 
was stated, would be more equitable, especially to small business or 
businesses bringing in small shipments.
    Contrary to the commenters' assertion, there is not a significant 
difference between the time required for the monitoring of smaller 
enclosures and that required for the monitoring of larger ones. The 
level of effort required by APHIS personnel is the same regardless of 
the amount of product that is undergoing a fumigation treatment. Our 
costs, therefore, are the same, and the fees accurately reflect those 
costs. The reduction and phasing in of the treatment fee in this final 
rule will lessen the burden on both large and small entities that are 
subject to the fee.
    A large number of commenters stated that imposing the same flat fee 
for different types of treatments was inequitable because some types of 
treatments are more labor-intensive than others and require more 
personnel and more time. It was recommended that APHIS reevaluate the 
fees. According to the commenters, such a reevaluation would likely 
result in our assessing different fees for different treatments, e.g., 
for cold treatment versus fumigation.
    APHIS uses a labor survey to determine the level of effort required 
by AQI personnel to conduct various AQI activities, including those 
associated with treatments. Thus, for example, the monitoring of cold 
treatments requires work by APHIS unseen by the payer of the fee. This 
includes the analysis of the transmitted data. This is a direct service 
delivery and should not be confused with support costs, since the cost 
is incurred for each cold treatment monitored. The data we collected 
using our ABC methodology did not reveal a significant enough 
difference in the amount of labor associated with different treatments 
to warrant a more complex fee structure.
    The April 2014 proposed rule contained a provision requiring 
treatment companies to be responsible for collecting the treatment fees 
from importers and remitting them to APHIS. Many commenters objected to 
this provision. It was stated that the requirement would impose 
substantial financial and administrative burdens on treatment 
providers, especially smaller entities. Among other things, treatment 
providers would have to hire additional administrative staff and 
establish dedicated bank accounts to prevent the remittances from being 
commingled with other company funds. It was suggested that the billing 
systems and infrastructure already exist for APHIS to bill treatment 
companies for the inspectors' time and labor. One commenter stated that 
a more equitable means of collecting the fee would be for APHIS to bill 
the shipping line or agent directly.
    We do not agree with these comments. A large number of treatment 
providers do in fact already have mechanisms in place to collect and 
remit fees. The majority of fumigators are already collecting and 
remitting fees for overtime services that are currently being incurred. 
APHIS provides the treatment oversight service directly to the party 
that provides the fumigation service. While the imported commodity is 
owned by others, the treatment responsibility lies with the fumigator, 
who is ultimately responsible for the success or failure of the 
treatment; therefore, the fumigator should remit the fees. If APHIS 
were to bill importers for the cost of AQI treatment services, the 
fumigator would still be responsible for providing APHIS with necessary 
information on the commodities being fumigated, including the identity 
of the importers and each one's percentage share of a particular 
treatment, for APHIS billing purposes.

Aircraft and Air Passenger Fees

    Commenters expressed a number of concerns regarding the equity of 
the proposed air transport and air passenger fees, with many objecting 
to the magnitude of the increase in the former.
    Some commenters recommended that APHIS create a fee schedule for 
aircraft that would distinguish between categories of users. It was 
stated that the proposed rise in the commercial aircraft inspection fee 
was not warranted for smaller aircraft and would besides be 
extraordinarily burdensome for smaller-capacity passenger flights 
commonly deployed in flights from Mexico, Canada, and the Caribbean. 
Some commenters stated that APHIS should expand its small aircraft 
exemption to include aircraft with 100 or fewer seats. Other commenters 
stated that the April 2014 proposed rule does not provide reasoned 
justification for the increase in the commercial aircraft inspection 
fee specific to small commercial jet aircraft with 20 or fewer seats. 
According to the commenters, inspecting smaller aircraft, such as 
commuter planes, imposes less of a cost burden on APHIS than does 
inspecting larger airliners. Some smaller aircraft may carry only 
passengers' luggage and not cargo and therefore impose a minimal cost 
burden on APHIS. Smaller aircraft, it was asserted, should therefore be 
charged a lower fee, commensurate with that lower cost burden, if not 
exempted from the fee altogether
    We do not agree with these commenters. As noted earlier, aircraft 
with 64 or fewer passenger seats are, in fact, exempt from the AQI 
commercial aircraft inspection fee if they are: (1) Not carrying the 
following cargo: Fresh fruits, fresh vegetables, plants, unprocessed 
plant products, cotton or covers, sugarcane, or fresh or processed 
meats; and (2) do not offer meal service other than beverages and 
prepackaged snacks that do not contain meats derived from ruminants, 
swine, or poultry or fresh fruits and fresh vegetables. Additionally, 
because they are usually short in duration, they usually offer only 
drink service and

[[Page 66769]]

light, prepackaged snacks such as peanuts. They thus would be exempt 
from paying the fee. Any arriving aircraft, regardless of size, that do 
not meet these conditions may pose a sanitary or phytosanitary risk and 
need to be inspected. We have a statutory obligation under the Animal 
Health Protection Act and the Plant Protection Act to prevent the 
introduction or dissemination of animal and plant pests and diseases 
into the United States. As noted elsewhere, the size of a particular 
means of conveyance does not necessarily correspond to the amount of 
time it takes to conduct inspections of the conveyance.
    A commenter representing a Canadian airline stated that APHIS' 
imposition of the aircraft inspection user fee on passenger aircraft 
operating U.S./Canada trans-border service violates U.S. and 
international law. According to the commenter, the fee violates the 
FACT Act by being applied without regard to the class of aircraft, 
despite the difference in cost burdens associated with the different 
classes. In relation specifically to Canada, the proposed fees were 
said by the commenter to violate Article 9 of the 2007 U.S.-Canada Open 
Skies Agreement, which requires that fees be ``just, reasonable, not 
unjustly discriminatory, and equally apportioned among categories of 
users.'' The commenter urged us to reinstate the exemption provided to 
carriers operating U.S./Canada services that existed prior to 2007, 
since there has been no evident enhancement of inspection services to 
justify the removal of that exemption.
    We do not agree with these comments. The FACT Act requires that AQI 
user fees be commensurate with the costs we incur in performing our AQI 
activities with respect to the class of persons or entities paying the 
fees. The adjusted fees are necessary for us to better ensure that we 
recover our costs of providing AQI services, and, as noted above, the 
costs we incur for inspecting commercial aircraft do not differ 
significantly due to the size of the aircraft. Further, the fees do not 
in any way discriminate against Canadian air traffic. Aircraft from any 
country arriving in the United States are subject to the same fees. We 
do not agree with the recommendation by the commenter to restore the 
user fee exemption for air carriers operating between the United States 
and Canada. When the exemption was in effect, we were not recovering 
the costs of conducting those inspections, and shortages of funding and 
personnel hampered our inspection efforts.
    Some commenters objected to our levying both commercial aircraft 
and commercial air passenger user fees. It was stated that, while the 
FACT Act permits the use of passenger fees to pay for inspections of 
the aircraft, by charging both passengers and operators inspection 
fees, we are, in effect, collecting double payments. Such double 
charging, it was stated, is not permissible under the provisions of the 
FACT Act and cannot be justified on the basis of cost data. It was 
noted that in the preamble to the April 2014 proposed rule, we stated 
that the costs of inspecting cruise ships would be covered by the 
proposed commercial vessel (cruise) passenger fee alone. One commenter 
asked the following question: If the international air passenger user 
fee must by law fully cover the AQI costs associated with inspecting 
the aircraft on which the passenger arrived, what costs, then, does an 
aircraft fee applicable to commercial passenger aircraft cover? Other 
commenters recommended that we exclude commercial passenger aircraft 
from aircraft inspection fees, since the costs of conducting such 
inspections is paid for by the passenger fees.
    We do not agree with the suggestion by the commenters that we are 
double charging or violating the FACT Act by imposing both an aircraft 
fee and an air passenger fee, since the respective fees cover different 
costs. As noted in the preamble to the April 2014 proposed rule, the 
air passenger fee covers our costs for, among other related things, 
screening passengers upon arrival for agricultural products by CBP 
Agriculture Specialists and CBP officers; inspecting baggage using CBP 
agriculture canines and specialized non-intrusive inspection equipment; 
inspecting the interior of the passenger aircraft; monitoring the 
storage and removal of regulated international garbage from the 
aircraft; safeguarding and disposing of any seized or abandoned 
prohibited agricultural products; and identifying pests found on 
prohibited agricultural products brought into the country by air 
passengers. The commercial aircraft fee covers, among other related 
things, costs we incur in reviewing manifests and documentation 
accompanying incoming cargo; targeting higher-risk cargo for inspection 
or clearance; inspecting agricultural and agricultural-related 
commodities, international mail, expedited courier packages, 
containers, wood packaging and other packing materials and determining 
entry status; inspecting the aircraft hold or exterior for 
contaminants, pests, or invasive species; identifying pests found 
during those inspections; and safeguarding shipments pending PPQ 
determination for treatment or final disposition. Based on our ABC 
analysis, we determined that the air passenger fee is not adequate to 
recover all the costs we incur in inspecting both passengers and 
aircraft, while the sea passenger fee is adequate to recover the costs 
we incur in inspecting both passengers and cruise ships.
    In the April 2014 proposed rule, we proposed to reduce the air 
passenger inspection fee from $5 to $4. One commenter objected to 
lowering that fee on the grounds that most quarantine material is 
seized from air passengers and that, therefore, the lower fee would not 
be commensurate with the labor required for inspection of such 
passengers.
    We do not agree with this comment. As we noted in the preamble to 
the April 2014 proposed rule, our ABC data indicated that, if not 
adjusted, the air passenger fee was going to generate revenues in 
excess of that required to support anticipated costs. As a result, we 
proposed a 20 percent decrease in this fee (from $5 to $4) to better 
align the fee with the cost of activities related to air passengers. We 
have since lowered this fee further, to $3.96, due to the change in our 
methodology for calculating the reserve. The commenter did not present 
data that would support the position that the adjusted fee was too low.

Commercial Truck Fees

    Some commenters stated that the proposed fee increase for 
commercial trucks, from $5.25 to $8 ($7.55 in this final rule), could 
put Canadian and Mexican products at a competitive disadvantage in 
comparison with products from other foreign countries that are subject 
to the same international trade obligations. It was claimed that the 
fees for commercial truck shipments are effectively higher than the 
fees for the other transportation modes by means of which most other 
countries ship their goods to the United States.
    We do not agree that fees for commercial truck shipments are 
effectively higher than the fees for other transportation modes. As we 
have noted, our AQI user fees are intended to recover the costs we 
incur in providing AQI services and are set on that basis. These fees 
are based on the cost of services provided, using the ABC methodology 
referred to above. Fees for various conveyances are calculated based on 
the projected number of conveyances subject to inspection

[[Page 66770]]

within each transportation mode, using standard units such as a truck 
or airplane. Inspection costs are driven by a number of factors, 
including number of conveyances, risk targeting, and other criteria, 
but costs are spread among all conveyances subject to inspection.
    Other commenters expressed the view that the proposed commercial 
truck fee was inequitable because while the majority of trucks crossing 
the bridges between the United States and Canada do not carry food or 
agricultural items, the fee would be applied to all trucks. Commenters 
stated that the universal application of the truck fees contradicts the 
premise of the ABC approach and results in an unfair application of the 
user fee to those trucks that do not use the service because they do 
not carry agricultural products.
    We do not agree with this comment. Any cargo, whether agricultural 
or non-agricultural, or conveyance could potentially carry hitchhiking 
pests, seeds, or contaminants. For example, wood packaging material, 
such as wooden pallets, which are used to ship such nonagricultural 
products as electronic items, can carry wood-boring insects, noxious 
weed seeds, gypsy moths, and other hitchhiking pests that can attach 
themselves not only to nonagricultural items but also to the vehicles 
conveying them, thus posing an additional concern. In addition, 
prohibited soil may be attached to the articles in a shipment or to the 
conveyance itself. To allow us to mitigate these risks adequately, any 
commodities and the conveyances that carry them may be subject to 
inspection. Additionally, we note that, under the scenario proposed by 
the commenters, we would still need to inspect commercial trucks in 
order to determine that they were not carrying agricultural products.
    Commenters stated that commercial conveyances operating under CBP's 
Customs-Trade Partnership Against Terrorism (C-TPAT) program pose a 
much smaller threat of importing items of concern to APHIS than do 
buses or private vehicles, which are exempt from AQI user fees. It was 
suggested that, at a minimum, therefore, APHIS, in coordination with 
CBP, should consider a reduced AQI fee for C-TPAT-certified motor 
carriers.
    The C-TPAT program seeks to prevent the disruption of international 
trade via terrorism. While C-TPAT members may be considered low-risk in 
terms of terrorism, this program does not have an agricultural 
phytosanitary component and does not eliminate the need for conducting 
agricultural inspections.
    Some commenters stated that the commercial truck fees violated 
Executive Order 13563, which requires Federal agencies to integrate 
their regulatory efforts when there are overlapping regulatory 
requirements. Charging a separate AQI fee for inspecting commercial 
vehicles when CBP is already performing and charging for those services 
is redundant and unnecessary, according to the commenters.
    We do not agree with this comment. APHIS and CBP do not have 
overlapping authorities that would result in charging for the same 
services. CBP collects Customs user fees to defray certain costs 
related to the provision of services that ensure that carriers, 
passengers, crew members and their personal effects comply with customs 
laws. CBP also collects immigration user fees to defray certain costs 
related to the provision of services that ensure compliance with 
immigration laws. APHIS charges AQI user fees for work conducted by CBP 
under APHIS' statutory and regulatory authority.

Commercial Vessel and Commercial Vessel (Cruise) Passenger Fees

    Many commenters representing the commercial vessel industry viewed 
our proposed fee increases and the proposed imposition of a commercial 
vessel (cruise) passenger fee as disproportionate, claiming that they 
unfairly targeted the maritime industry. Commenters stated that the 
fees were excessively burdensome for the industry and did not in all 
cases correspond with the cost of the AQI services provided.
    As we explained in the preamble to the April 2014 proposed rule, we 
employed the ABC methodology to determine the costs of AQI services, 
and this information, along with other factors, was used to define an 
appropriate fee structure and set fee rates. Entities that are assessed 
AQI fees are paying to cover the costs that we incur in performing the 
services that we are required to perform for those entities.
    Commenters noted that vessels that transit exclusively on the Great 
Lakes move mostly dry bulk cargos and not agricultural commodities. 
Such vessels, the commenters stated, do not pose a risk of spreading 
agricultural pests or diseases, and often, there is no boarding or AQI 
inspection of the vessels and their cargo by APHIS personnel. 
Therefore, according to the commenters, there is no basis in such cases 
for APHIS to levy AQI fees, since APHIS or CBP personnel are not 
providing AQI services. It was recommended that the fees for vessels 
transporting goods exclusively on the Great Lakes not be raised and, 
further, that such fees be collected only from vessels carrying 
agricultural commodities.
    We do not agree with this comment. As we noted above, any cargo or 
conveyance may carry hitchhiking pests, seeds, or contaminants. In 
addition, there could be risk associated with storage of regulated 
international garbage, plant pest concerns associated with the origin 
of the vessel (e.g., Asian gypsy moth or khapra beetle), a previous 
history of carrier contamination, or compliance-related wood packaging 
material concerns. Therefore, such vessels are subject to AQI 
inspection conducted by CBP officers. We would also note that the 
vessel fees cover not only the costs of the AQI inspections themselves, 
but those we incur in performing, among other things, targeting 
activities, manifest review, and general oversight.
    Prior to this rulemaking, the regulations in 7 CFR 354.3(b)(1) 
capped the number of payments of AQI fees for individual vessels at 15 
per calendar year. In order to recover the costs of administering AQI 
services to commercial maritime vessels, we proposed to eliminate that 
cap. Some commenters recommended that we reinstate that cap in the 
final rule. It was suggested that the elimination of the cap would be 
burdensome for the commercial maritime industry and extremely so for 
international flag vessels operating on the Great Lakes. Such vessels, 
commenters stated, make several port calls per single voyage into the 
Great Lakes, while other commercial vessels in the same fee class tend 
to make single voyages with often only one port call and a complete 
discharge of cargo at that port. Vessels operating on the Great Lakes 
would therefore be subject to the fees much more often per calendar 
year than those making less frequent port calls.
    We do not agree with the commenters. As we noted in the preamble to 
the April 2014 proposed rule, our ABC data indicated that by retaining 
the cap, we would not be able to recover fully the costs of providing 
AQI services to maritime vessels. Further, the tasks of collecting and 
administering user fees are less personnel-intensive, and therefore 
more cost-effective and efficient when the fees are uniform, rather 
than when there are different fee structures for conveyances or 
geographic locations that fall within the same general categories. It 
is true, as the commenters pointed out, that because vessels that make 
several port calls per voyage into the Great Lakes would be subject to 
the applicable AQI fees at

[[Page 66771]]

each port of call, they would be charged more per year than vessels 
making less frequent port calls. Vessels in the former category, 
however, would also be making more frequent use of AQI services; 
therefore, the cost of providing those services to such vessels would 
be higher for APHIS and CBP.
    A commenter stated that the proposed new treatment fee was unfair 
to the commercial maritime industry because customers of the industry 
would be heavily impacted while those in other sectors would not. 
According to the commenter, bus passengers, privately owned vehicle 
passengers, and pedestrians, all of whom are exempted from the fees, 
require more of APHIS' resources than do customers shipping or 
receiving cargo via private maritime vessels. The commenter stated that 
imposing a new fee structure on a use activity that is currently paying 
its share through hourly charges, while charging no fees for multiple 
use activities that are collectively responsible for $223 million in 
costs to APHIS, goes against the directives of the FACT Act in regard 
to cross-subsidizing AQI services.
    As we noted in the preamble to the April 2014 proposed rule, we are 
retaining the previously established exemptions for bus passengers, 
privately owned vehicle passengers, and pedestrians because the 
collection of such fees would not be cost-effective for APHIS and CBP 
and could cause backups at ports of entry that could affect 
international trade. Regarding the cross-subsidization issue, the 
proposed rule was reviewed for consistency in adhering to the FACT Act. 
Additionally, GAO has reviewed APHIS' work in AQI fee setting. Based on 
the findings of those reviews, and our own internal review and 
assessment, we confirmed that there is no cross-subsidization of AQI 
programs through user fees occurring.
    A commenter expressed the view that the proposed maritime vessel 
fee increase was unfair to carriers operating in the short-sea-shipping 
dry bulk markets. Such carriers do not own the cargo they carry, and 
compensation for its carriage is not directly dependent on the value of 
the commodity delivered. The carriers operate with very small profit 
margins to ensure competitiveness, and the proposed fee increase would 
have an inordinate impact on them. It was claimed that the methodology 
we used in setting the proposed fees led us to underestimate the impact 
of the fee increase on such entities. Further, it was stated that the 
fee increase is not justified where the vessels are not shipping 
agricultural products and there is no risk of spreading pests or 
diseases.
    In accordance with the FACT Act, which states that the Secretary 
may prescribe and collect fees sufficient to cover the cost of 
providing AQI services, and policy of the Executive Branch of the 
Federal Government, we set our fees at levels that enable us to recover 
the costs of providing AQI services for each person or entity receiving 
those services. Regarding the assertion that the increased fees are not 
justified when vessels are not carrying agricultural products, as noted 
above, any cargo or conveyance may harbor hitchhiking pests or 
contaminants.
    A commenter stated that the proposed $2 commercial vessel (cruise) 
passenger fee is a one-size-fits-all mechanism that contradicts APHIS' 
stated principle of reducing risk by targeting inspections. According 
to the commenter, by applying the fee uniformly to all passengers, 
APHIS recognizes neither the principle of risk analysis and reduction 
nor the extensive differences among cruise operations in general and 
between individual cruise ship operations that are careful to mitigate 
the risk of pest or contaminant transmission and those that are not.
    We do recognize that risk levels differ among pathways, and the 
nature of our AQI activities for all commercial vessels, including 
cruise vessels reflect those differences. To that end, we do employ and 
will continue to employ targeting of commercial cruise vessels that we 
consider to pose a higher-than-average pest risk.
    However, the pest risk associated with a particular vessel or class 
of vessels is not static and can change significantly over time. For 
example, a port of call visited by the vessel may be higher risk for 
pest introductions during certain months of the year than others. For 
this reason, it would be untenable for us to attempt to establish and 
administer a fee system for cruise passengers that was based on levels 
of risk when we know those levels of risk will fluctuate.

Additional Comments on Fairness Issues

    Some commenters stated that the proposed fee adjustments and new 
fees would disproportionately punish importers with smaller volumes. 
Others expressed the view that importers and exporters were already 
paying a disproportionate share of APHIS' costs and should not be 
subject to additional burdens.
    In collecting the fees, APHIS is recovering the costs incurred from 
both APHIS' and CBP's AQI-related activities. Entities paying the fees 
are those that use the AQI services that the two agencies provide. The 
ABC methodology that we employ in calculating our costs and setting our 
fees associates the cost we incur with the level of staff effort 
applied. APHIS and CBP staff have to be present at the ports and 
conduct AQI activities regardless of the size and volume of the cargo 
or conveyance requiring inspection. Importers and exporters pay only 
those costs that they incur by using APHIS services.
    A commenter stated that the proposed rule favored break bulk 
shipments over container and air shipments, subjecting the latter two 
to disproportionate charges because of lot sizes. The commenter further 
stated that the disparity in charges relative to shipment size would be 
crippling to smaller companies and those that ship by container. It was 
suggested that the final rule be revised to prorate the cost of the 
inspections across all exporters in a way that affects each exporter 
uniformly and offsets the real costs to perform the necessary 
inspections, perhaps on a per pound basis. The commenter stated that 
such revisions were necessary to ensure that each exporter and importer 
is treated the same, regardless of the size of the shipment.
    As noted above, the methodology used to determine the costs of our 
AQI activities is based upon the time required of APHIS and CBP staff 
to perform those activities. Those activities must be performed 
regardless of the size or volume of the shipment or whether or not it 
is in a container.
    Some commenters representing various sectors of the transport 
industry expressed the view that rather than charging user fees to 
carriers, APHIS should charge shippers or receivers only for 
agricultural cargo that requires inspection or certification.
    As we have noted above, the cost of inspecting and clearing the 
carrier itself is considered an AQI activity. Such inspection and 
clearance are needed even when a conveyance may not be carrying 
agricultural products because of the possible presence of hitchhiking 
pests and contaminants.
    In contrast to some of the commenters referred to above, who 
favored exemptions for certain classes of conveyances, other commenters 
objected to our allowing any such exemptions. It was stated that AQI 
user fees should be applied equally to all modes of transportation 
inspected, without complete waivers for select classes.
    As we noted above, this rulemaking leaves intact previously 
established exemptions from user fees for certain

[[Page 66772]]

categories of conveyances and individuals, including some relatively 
small commercial aircraft that are not carrying certain regulated 
cargo, bus passengers, privately owned vehicle passengers, and 
pedestrians. We determined that collecting user fees for these 
categories of conveyances and passengers would not be cost-effective 
for APHIS and CBP. As stated previously, any cost not recovered through 
a fee is paid through appropriated funding. When the Federal Government 
cannot fully recover the costs of providing a service, the excess costs 
are ultimately borne by U.S. taxpayers rather than by the direct 
beneficiaries of that service. The rationale for collecting user fees 
is to have those who benefit from a service cover its costs rather than 
have the general public cover them.
    One commenter representing the seed industry stated that industry 
would prefer to have a system whereby seed cleaning and treatment 
facilities in the private sector are accredited by APHIS to perform 
those services without the need for direct supervision or oversight 
from APHIS or the State designee(s). It was stated that most seed 
shipments are much smaller and more manageable than bulk commodities 
and therefore should be treated differently in regard to fees and 
inspections.
    This is comment is outside the scope of the present rulemaking. 
APHIS will consider the comment, however, as it continues to explore 
alternate ways to safeguard American agriculture while facilitating 
international trade.
    Commenters suggested that some of the costs of the AQI program 
should be borne by the general public rather than the users of the AQI 
services. It was claimed that because, in addition to AQI services, a 
significant part of the CBP mission is security, the public benefits 
from services provided at ports of entry. The commenter further stated 
that APHIS and CBP need to determine how much of their inspection 
activity is directed toward the public good and how much toward 
providing services for industry. It was recommended that once that 
determination was made, the agencies should re-evaluate their proposed 
fees and adjust them accordingly. Services that benefit the general 
public, according to the commenter, should be funded by Congressional 
appropriations or means other than charging user fees to industry.
    We do not agree with the comments. While U.S. producers and 
consumers are indirect beneficiaries of AQI treatment services, 
importers and operators of the means of conveyance used to import a 
commodity benefit directly by being able to engage in their respective 
businesses. AQI user fees charged to commercial trucks, rail, aircraft, 
and cargo vessels cover the costs of ensuring that sanitary and 
phytosanitary risks posed by the means of conveyance and the 
commodities they carry are at an acceptable level. Industry 
organization and market structure largely determine how the fees or 
some portions thereof may be passed forwards or backwards. Lastly, we 
note that the general public does directly pay in part for AQI services 
from which they benefit indirectly to the degree that appropriated 
funds are used to support those services not covered by the fees.

Miscellaneous Comments

    One commenter stated that the fees were based on the assumption 
that AQI-related services would be rendered by personnel at the general 
schedule (GS) grade 10, step 1 level. The commenter stated that AQI 
services provided by APHIS and CBP tend to be rendered by personnel at 
the GS grade 11 or 12 levels, and that APHIS may have therefore 
underestimated the direct cost of services rendered when computing the 
fees that we proposed.
    We agree with the commenter that AQI services are often rendered by 
personnel at higher GS levels than grade 10, step 1. However, in order 
to compute the fees, we took into consideration the actual GS grade 
level of the personnel currently performing the services. We also took 
into consideration the possibility that personnel rendering the 
services will be promoted to a higher GS grade level before the fee 
schedule is revised.
    Several commenters stated that any changes to user fees assessed 
for overtime services provided at ports of arrival would have 
significant negative effects on the economy, including job loss and 
increased prices for agricultural products. Several other commenters 
suggested we include revisions to the overtime user fee schedules in 
this final rule.
    We did not propose to adjust the overtime services fees in this 
proposed rule. However, in a proposed rule published in the Federal 
Register on April 25, 2014 \3\ (79 FR 22887-22895, Docket No. APHIS-
2009-0047), we proposed to revise those schedules.
---------------------------------------------------------------------------

    \3\ To view the proposed rule, its supporting documents, or the 
comments that we received, go to https://www.regulations.gov/#!docketDetail;D=APHIS-2009-0047.
---------------------------------------------------------------------------

    One commenter suggested that we eliminate overtime fees entirely 
and consider those overtime costs in setting AQI user fee schedules.
    If we were to eliminate overtime fees, importers who operate during 
normal business hours would substantially subsidize importers who use 
these overtime services. We do not consider that to be equitable.
    Several commenters suggested that, in lieu of user fees, APHIS 
should request Congressional appropriations for the AQI services we 
provide. Other commenters pointed out that APHIS has discretionary 
authority under the FACT Act to charge AQI user fees, but that the Act 
does not mandate that we do so.
    We believe the intent of the FACT Act was for APHIS to charge user 
fees, commensurate with the costs of services, for certain AQI-related 
services that were, up to that point, funded through Congressional 
appropriations. The amendments to the Act clarified that this was to 
ensure that APHIS recovers the actual costs associated with AQI-related 
services that we provide; annual appropriations do not guarantee such 
cost recovery. Making the services contingent on Congressional 
appropriations once more would be inconsistent with what we understand 
to be the intent of the FACT Act, and could result in instances in 
which we do not recover the costs for services rendered. This could, in 
turn, result in us decreasing the nature or scope of AQI-related 
services we provide.
    One commenter asked that we develop a concrete plan and methodology 
for setting user fee levels and evaluating their appropriateness.
    As documented in the proposed rule and its supporting documents, we 
have developed such a methodology: The ABC accounting methodology.
    One commenter pointed out that we proposed a number of new user 
fees in the proposed rule. The commenter assumed that this meant that 
we were also proposing new AQI-related services and initiatives, and 
proposing a user fee for these new services and initiatives in order to 
recover costs. The commenter questioned the appropriateness of a 
proposed rule as a vehicle for expanding the scope of Agency actions in 
such a manner.
    We did not propose to conduct any new AQI-related services. Rather, 
we proposed to charge an AQI user fee for services that to that point 
had been provided without a fee. Proposing a new fee schedule through 
rulemaking is authorized by Sec.  136a(a)(1) of the FACT Act, and is 
consistent with our obligation under the Administrative Procedure Act 
to conduct rulemaking for any requirements of general applicability and 
future effect.
    One commenter, an importer, stated that his products are always 
infested

[[Page 66773]]

with plant pests, and thus subject to treatment at the port of arrival. 
He requested that, if he can demonstrate pest freedom for his products 
at least once, we waive the treatment user fee, contingent on the 
continual pest-freedom of the products.
    The treatment referenced by the commenter is for commodities 
determined to be infested with a plant pest. If, in the future, the 
commenter's shipments are determined to be free of plant pests, they 
will not be treated, and he will not incur the user fee.
    Several commenters recommended that we consider certifying third 
parties to provide AQI-related services.
    In recent years, we contemplated initiating rulemaking to establish 
such an accreditation system for inspection and clearance services of 
imported commodities. However, we identified several issues that 
precluded us from issuing such a rule. First, there could in certain 
instances be a significant financial incentive for the third party to 
clear products for entry, even if they are infested or present a known 
plant pest risk. Under this scenario, those under accreditation could 
realize a financial benefit by clearing products that do not meet U.S. 
phytosanitary requirements. Second, in order for this not to occur, 
APHIS would need to exercise ongoing oversight of the third party's 
services. This would, in turn, minimize the benefits of such third 
party accreditation. That being said, consistent with OMB Circular A-
76, we continue to explore ways to use third parties in order to 
provide AQI-related services.\4\
---------------------------------------------------------------------------

    \4\ To view the circular, go to https://www.whitehouse.gov/omb/Circulars_a076_a76_incl_tech_correction.
---------------------------------------------------------------------------

    One commenter stated that, if the rule were finalized, APHIS should 
coordinate with CBP in order to ensure that they receive cost recovery 
for the AQI services they render.
    APHIS agrees with the commenter. We have worked closely with CBP to 
ensure that costs are recovered for AQI services and will continue to 
do so.
    One commenter stated that, because fumigators currently charge 
importers for their services, the proposed treatment fee was redundant 
and should not be finalized.
    We disagree that the fee is redundant. Fumigators charge for the 
fumigant used and their services in applying the treatment. The 
treatment fee that we proposed was for our oversight of the treatment 
to ensure that it was applied accurately and the treated commodities do 
not present a plant pest risk. The fumigation fee is charged to the 
fumigator, since APHIS is providing oversight of the process to ensure 
efficacy. It is a business decision of the fumigator to pass this cost 
on to its customers.
    Several commenters stated that, instead of revising the fee 
schedules to ensure full cost recovery for AQI services that we 
provide, APHIS and CBP should explore cost-cutting measures for those 
services.
    APHIS and CBP are committed to the Federal Cost Cutting Campaign 
and the principles of Executive Order 13589, ``Promoting Efficient 
Spending.'' To that end, we continually evaluate our AQI program in 
order to reduce costs and identify more efficient means to deliver our 
services. For example, APHIS is establishing a new Analysis and 
Information Management Program. The goal of this program will be to 
coordinate analyses that will inform program delivery in the areas of 
AQI targeting, domestic surveys, and phytosanitary and trade 
management. APHIS has also committed resources to expand the Agency's 
involvement with CBP's Commercial Targeting and Analysis Center (CTAC), 
a facility designed to streamline and enhance Federal efforts to 
address import safety issues. The CTAC combines the resources and 
manpower of CBP and other government agencies to protect the American 
public from harm caused by unsafe imported products by improving 
communication and information-sharing and reducing redundant inspection 
activities.
    The fee schedule increases that we proposed do not supplant these 
efforts. However, under Federal policy, when we charge AQI user fees, 
we do so in a manner to recover the cost of the services rendered. The 
fee schedules that we proposed would move us closer to such full cost 
recovery.
    If, at a future time, our ongoing efforts to promote efficiencies 
and reduce costs in our AQI program result in significant cost savings, 
we will revise the fee schedules accordingly.
    One commenter stated that GAO had instructed us to reduce the fee 
reserve, and we should implement this recommendation.
    The commenter is mistaken. Reduction of the fee reserve was not 
among GAO's recommendations.
    Several commenters stated that the rule contradicted the policies 
set forth in Executive Order 13659, ``Streamlining the Export/Import 
Process for America's Businesses.''
    That Executive Order directs Federal agencies to develop and 
implement the International Trade Data System (ITDS). ITDS would 
provide a single portal for businesses to enter data in order to comply 
with the regulatory and policy requirements of multiple Federal 
agencies regarding imports and exports. The Order also instructs 
agencies to ``improve the broader trade development of innovative 
policies and operational processes that promote effective application 
of regulatory controls, collaborative arrangements with stakeholders, 
and a reduction of unnecessary procedural requirements.''
    APHIS is committed to expeditious deployment of ITDS. Additionally, 
as noted above, we are engaged in several initiatives to identify more 
efficient means of delivering AQI services. However, we disagree with 
the commenters that the proposed rule contradicts the policies set 
forth in the Order. Nothing in the Order explicitly or implicitly 
prohibits agencies from charging user fees for import or export-related 
services. Additionally, Section 8 of the Order specifically states that 
it does not affect the authority granted by law to an agency. As noted 
above, discretionary authority has been granted to APHIS under the FACT 
Act to charge user fees for AQI-related services, and to set fees at a 
level that leads to full cost recovery for those services.
    The same commenters stated that full deployment of ITDS would 
eliminate the need for user fees.
    We disagree. While full deployment of ITDS will facilitate certain 
AQI-related services and could, over time, reduce costs, certain of the 
services for which we charge fees, such as inspection of regulated 
articles and means of conveyance and oversight of treatments, cannot be 
fully automated and must be performed by authorized personnel.
    One commenter stated that the rule appeared to target the 
commercial aircraft industry. The commenter stated that the industry is 
subject to frequent ``holds'' in which inspectors detain and inspect 
commodities destined for inland hubs, and questioned the manner in 
which APHIS or CBP determines to select a commodity for inspection. As 
evidence, the commenter cited an audit in which an express consignment 
carrier was subject to 1,879 inspections during a 1-week period in 
2013, with only 12 shipments being determined to be infested with plant 
pests. The commenter stated that this indicates inefficiencies in the 
manner in which APHIS and CBP conduct AQI-related inspections, and that 
a thorough reevaluation of our criteria for selecting a commodity for 
inspection could reduce Agency costs and reduce or eliminate the need 
to increase AQI user

[[Page 66774]]

fees for the commercial aircraft industry.
    The number of times that the express consignment carrier was 
subject to inspection and the relatively low number of pest detections 
is not necessarily indicative of inefficiencies in our inspection 
processes. The commenter is using CBP enforcement metrics to determine 
efficiencies, that is, seizures resulting in shipments being removed 
from the shipping continuum. However, these metrics are not appropriate 
for assessing the effectiveness of AQI inspections. Furthermore, AQI 
strategies allow for shipments to be reconditioned, e.g., by means of 
fumigation and cleaning to mitigate risk of infestation and 
contamination. Such strategies ensure that most shipments are allowed 
to continue to the consignee. Both APHIS and CBP employ risk-based 
modeling to determine which shipments to target for inspection. Factors 
that may lead to an inspection include: The nature of the commodity; 
the region from which it is imported; the compliance history of the 
importer; and incomplete, vague, erroneous, or illegible information on 
accompanying documentation. That being said, we are evaluating the 
manner in which we conduct inspections of shipments destined to ECCFs 
in order to determine whether we can make our processes simpler and 
more efficient, and have engaged the Express Association of America in 
this evaluation.
    One commenter stated that we should have reduced the airline 
passenger fee via an interim rule, rather than a proposed rule.
    We did not do so because we believe that it is important for 
affected parties to be afforded an opportunity to comment on 
significant proposed revisions to user fee schedules before they are 
finalized, even if these revisions would reduce burden on affected 
entities.
    Some commenters stated that an argument could be made that the 
imposition of the APHIS fees may contravene Article 310 of the North 
American Free Trade Agreement (NAFTA), which prohibits the adoption of 
any customs user fees, and Article VIII:1(a) of the General Agreement 
on Tariffs and Trade 1994 (the GATT), which says that all fees and 
charges shall not represent an indirect protection to domestic products 
or a taxation of imports or exports for fiscal purposes. Another 
commenter stated that APHIS fees may also contravene Article 3.12 of 
the United States-Chile Free Trade Agreement (FTA), which requires 
that, in accordance with Article VIII:1 of the GATT, all fees and 
charges shall not represent an indirect protection to domestic products 
or a taxation of imports or exports for fiscal purposes.
    We disagree with the commenters' assertion that the AQI user fees 
contravene NAFTA, the GATT, or the United States-Chile FTA. Article 310 
of NAFTA states that ``No Party may adopt any customs user fee of the 
type referred to in Annex 310.1 for originating goods,'' and Annex 
310.1 refers to a specific fee--the merchandise processing fee--that 
has since been eliminated for goods of Canada and Mexico. Thus, Article 
310 of NAFTA does not speak to, let alone preclude, APHIS' AQI user 
fees.
    Similarly, Article VIII:1(a) of the GATT states, in its entirety, 
that ``All fees and charges of whatever character (other than import 
and export duties and other than taxes within the purview of Article 
III) imposed by contracting parties on or in connection with 
importation or exportation shall be limited in amount to the 
approximate cost of services rendered and shall not represent an 
indirect protection to domestic products or a taxation of imports or 
exports for fiscal purposes.'' Article 3.12(a) of the United States-
Chile FTA uses language directly from Article VIII:1(a) of the GATT. 
Because the AQI user fees are charged in connection with services 
rendered by CBP and APHIS personnel and reflect the approximate costs 
to the agencies of providing those services, they are entirely 
permissible under Article VIII:1(a) of the GATT and Article 3.12(a) of 
the United States-Chile FTA.
    Several commenters stated that APHIS should make more use of risk 
assessments in conducting AQI-related services.
    We agree with the commenters that risk assessments are valuable 
tools that can enhance targeting, effectiveness, and efficiency when 
conducting AQI-related activities. APHIS routinely analyzes pest risk 
posed by numerous potential pest pathways to the United States to 
update and increase the effectiveness of its inspection targeting and 
quarantine action policies. For example, APHIS recently worked with 
South American and New Zealand cut flower exporters to characterize the 
risk of immature, unidentifiable life stages of Tetranychus mites which 
are often intercepted on certain flowers. APHIS analyzed results from 
comprehensive surveys of export growing areas and determined that the 
common two-spotted spider mite was the only Tetranychus mite likely to 
be found on those flowers. As a result of that risk analysis, APHIS 
ceased requiring fumigation on import shipments of those specific 
flowers from the surveyed areas when unidentifiable Tetranychus life 
stages are intercepted.
    The same commenters stated that we should consider implementing 
``trusted trader'' practices into our AQI-related services. They stated 
that this could allow us to devote personnel and resources to those 
shipments most likely to present a plant pest risk.
    Many exporters broker products from numerous growers. Even very 
large exporters who grow their export product may periodically augment 
shipments with auxiliary growers' material to make expected volumes on 
deadline. These exporters cannot control conditions in various growers' 
fields that may raise or lower pest risk associated with the export 
crop (e.g. if pesticides were applied properly, weeds are controlled, 
or crops are rotated to reduce pest and disease occurrence). This means 
that an exporter's currently low risk commodity could pose a 
considerably higher pest risk next month. And, consequently, exporters 
cannot ensure that all pests are adequately excluded from their 
shipments.
    Therefore, for the reasons given in the proposed rule and in this 
document, we are adopting the proposed rule as a final rule, with the 
changes discussed in this document.

Executive Orders 12866 and 13563 and Regulatory Flexibility Act

    This final rule has been determined to be economically 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 rule. The economic 
analysis provides a cost-benefit analysis, as required by Executive 
Orders 12866 and 13563, which direct agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. The economic analysis 
also provides a final regulatory flexibility analysis that examines the 
potential economic effects of this 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

[[Page 66775]]

a link to Regulations.gov) or by contacting the person listed under FOR 
FURTHER INFORMATION CONTACT.
    APHIS was given authority by the FACT Act, as amended, to prescribe 
and collect cost-based fees for providing AQI services for inbound 
passengers, conveyances, and cargo at U.S. ports of entry. AQI 
activities include inspection of incoming conveyances, passengers, and 
cargo; pest identification; monitoring and, at times, conducting of 
treatments; and administering the program's finances, scientific 
research, and policy development. In addition to such activities, the 
FACT Act, as amended, allows for the maintenance of a reasonable 
balance (reserve) in the AQI user fee account.
    APHIS is amending the user fee regulations by adding new fee 
categories and adjusting current fees charged for certain AQI services. 
We are also altering or removing certain fee caps. We have determined 
that revised user fee categories and revised user fees are necessary to 
recover the costs of the current level of activity, to account for 
actual and projected increases in the cost of doing business, and to 
more accurately align fees with the costs associated with each fee 
service.
    AQI fees are mandated to be cost-based and paid by the users of the 
AQI services. In the RIA, benefits and costs of the changes to the AQI 
user fee schedule are evaluated in accordance with Executive Orders 
12866 and 13563. Expected effects for small entities are evaluated as 
required by the Regulatory Flexibility Act.
    AQI services protect U.S. agricultural and natural resources from 
the inadvertent introduction of foreign pests and diseases that may 
enter the country and the threat of intentional introduction of pests 
or pathogens. The changes in user fees will more closely align, by 
class, the cost of AQI services provided and user fee revenue received. 
The new fee schedule will better reflect the costs of AQI services 
provided to commercial cargo vessels, commercial trucks, commercial 
cargo railcars, commercial aircraft, and international air passengers 
arriving at U.S. ports; newly include fees for additional classes of 
recipients of AQI services; remove user fee caps for commercial cargo 
vessels and commercial cargo railcars; and increase the fee cap for 
commercial trucks. Fee caps refer to limits on the number of times a 
fee must be paid for a specific truck (with transponder), cargo vessel, 
or cargo railcar in a calendar year. The current and new AQI user fee 
rates are shown in Table 13.

              Table 13--Current and New AQI User Fee Rates
                                [Dollars]
------------------------------------------------------------------------
             User fee class                   Current           New
------------------------------------------------------------------------
Air passenger...........................           $5.00           $3.96
Commercial aircraft.....................           70.75          225.00
Commercial cargo vessel.................          496.00          825.00
Commercial truck........................            5.25            7.55
Commercial truck with transponder (one            105.00          301.67
 annual payment)........................
Commercial cargo railcar................            7.75            2.00
Commercial vessel (cruise) passenger....          no fee            1.75
Treatment \1\...........................          no fee          237.00
------------------------------------------------------------------------
\1\ The fee for AQI treatment services will be phased in over 5 years:
  First year, $47, second year, $95, third year, $142, fourth year,
  $190, and fifth year, $237.

    APHIS used the ABC methodology to determine the rate adjustments 
for classes that currently pay user fees and the rates for newly 
charged classes. The two classes that will be newly charged user fees 
under the rule are commercial vessel (cruise) passengers and recipients 
of AQI treatment services. Currently, the cost of AQI services received 
by these entities is borne by other user fee classes and/or taxpayers 
through appropriated funding. Elimination of the user fee caps for 
commercial cargo railcars and commercial cargo vessels will more 
closely align the user fee revenue received with the cost of providing 
AQI services for these conveyances and rail and vessel cargo. We retain 
the cap for commercial trucks with transponders because of the 
increased efficiency gained through the use of transponders at border 
inspections. The cap for commercial trucks will be increased, however, 
and these businesses will pay in fees a larger share of the cost of the 
AQI services they receive.
    Changes under the new user fee schedule to AQI revenue and the AQI 
reserve and modeled economic effects of the rule are illustrated for 3 
years, FYs 2015-2017.\5\ Under the new fee structure, it is estimated 
that AQI user fee revenue for FY 2015 would have been about $701.4 
million, as compared to about $593.1 million under the current fee 
schedule, an increase of $108.3 million (Table 14). Given the effective 
date of the final rule, USDA will not collect revenues in FY 2015 under 
the new fee schedule, but this comparison is included to show the 
difference in the most recent year. If USDA collected revenues in FY 
2015 under the new fee schedule, reliance on appropriated funds to 
finance certain AQI services in FY 2015 would have been reduced by 
$31.7 million, assuming that the cost of AQI services, $957.6 million, 
would be the same with or without adoption of the new fee schedule 
since the level of AQI services provided would not change. An estimated 
AQI program deficit of $54.2 million under the current fee schedule 
would not be incurred.
---------------------------------------------------------------------------

    \5\ The 3-year period, FYs 2015-2017, is used to show the likely 
magnitude of the changes to AQI user fee and appropriated funding 
revenues.
---------------------------------------------------------------------------

    The reserve fund ensures that AQI program operations can continue 
without interruption when service volumes fluctuate due to economic 
conditions or other circumstances, and APHIS and CBP can adjust their 
activities to account for the changed economic conditions. As there are 
fixed costs related to providing AQI services that the program incurs, 
a reasonable reserve is needed to ensure continuity of service.

[[Page 66776]]



 Table 14--Illustrative Example of AQI User Fee Revenue, Appropriated AQI Funding Under the Current and New User
                        Fee Schedules, and Cost of AQI Services, FY 2015, Million Dollars
----------------------------------------------------------------------------------------------------------------
                                                                    Current fee       New fee
                                                                     schedule        schedule         Change
----------------------------------------------------------------------------------------------------------------
AQI revenue:
    User fees...................................................          $593.1          $701.4          $108.3
    Appropriated funding........................................           310.3           278.6           -31.7
AQI total revenue...............................................           903.4           980.1            76.7
AQI costs.......................................................           957.6           957.6             0.0
AQI revenue minus costs.........................................           -54.2            22.5            76.7
----------------------------------------------------------------------------------------------------------------
Note: The AQI user fee revenue and costs shown exclude overtime charges incurred in conjunction with AQI
  treatment services that are paid for separately. The AQI user fee revenue and costs shown for the current fee
  schedule are reduced from what were reported in the preliminary RIA for the proposed rule by $6.2 million, the
  estimated reimbursable overtime costs of AQI treatment services in FY 2015. Given the effective date of the
  final rule, USDA will not collect revenues in FY 2015 under the new fee schedule, but this comparison is
  included to show the difference in the most recent year.

    Respectively for FYs 2016 and 2017, in comparison to current fee 
schedule projections, AQI user fee revenue is expected to be larger by 
$113.3 million and $118.6 million, and appropriated funding of AQI 
services is expected to be smaller by $68.3 million and $65.3 million. 
Net revenue of $27.9 million in FY 2016 and $53.9 million in FY 2017 is 
expected to be available to maintain the AQI reserve fund.\6\ Estimated 
AQI revenue and costs summed over the 3 years are shown in Table 15.
---------------------------------------------------------------------------

    \6\ All values in this RIA are nominal, that is, they include 
projected inflation.

Table 15--Estimated AQI User Fee Revenue, Appropriated AQI Funding Under the Current and New User Fee Schedules,
                              and Cost of AQI Services, FY 2015-17, Million Dollars
----------------------------------------------------------------------------------------------------------------
                                                                    Current fee       New fee
                                                                     schedule        schedule         Change
----------------------------------------------------------------------------------------------------------------
AQI revenue:
    User fees...................................................        $1,842.3        $2,182.5          $340.2
    Appropriated funding........................................         1,039.7           874.4          -165.3
AQI total revenue...............................................         2,881.9         3,057.1           175.2
AQI costs.......................................................         2,952.8         2,952.8             0.0
AQI revenue minus costs.........................................           -70.9           104.3           175.2
----------------------------------------------------------------------------------------------------------------
Note: The AQI user fee revenue and costs shown exclude overtime charges incurred in conjunction with AQI
  treatment services that are paid for separately. USDA will not collect revenues in FY 2015 under the new fee
  schedule.

    We considered a number of alternatives for revising the AQI user 
fees. Some of the alternatives, such as increasing all current fees by 
the same percentage, were rejected because they clearly would not meet 
the objective of better ensuring that the fees paid by users in the 
various fee classes are commensurate with the costs of the AQI services 
provided for each class. Other alternatives were rejected because the 
transaction costs of creating and operating fee collection systems for 
certain classes, such as bus passengers, private vehicles, and 
pedestrians, would be overly burdensome.
    We then focused on three remaining alternatives composed of 
different combinations of paying classes. The first or preferred 
alternative is the rule, with user fee classes as shown in Table 13. 
The second alternative differs from the first by not including user 
fees for recipients of AQI treatment services. Under the third 
alternative, recipients of commodity import permits and pest import 
permits would pay user fees, in addition to the classes that will pay 
fees under the rule.
    Under all three alternatives, commercial vessel (cruise) passengers 
pay a user fee for services they receive that are currently funded by 
other AQI service recipients and/or through appropriated funding. In 
addition, the preferred alternative newly includes payment of fees by 
users of AQI treatment services. Under alternative 2, there would be no 
fee for AQI treatment services and the cost of providing these services 
would continue to be covered by user fees paid by other classes. For 
this reason, alternative 2 was rejected because AQI costs and revenues 
would be less commensurate by class than under the preferred 
alternative.
    Alternative 3 would include user fees for recipients of commodity 
import permits and pest import permits, classes not charged fees under 
the preferred alternative. In these instances, APHIS found that there 
are overriding concerns. Charging a user fee for commodity import 
permits would be difficult to administer, at this time as our system is 
not designed to allow for this. Pest import permits are normally 
requested for research purposes. Charging a fee for pest import 
permits, which ABC analysis indicates would need to be set at more than 
$2,000, could have the unintended consequence of discouraging research 
that directly benefits U.S. agriculture. For these reasons, APHIS 
decided against the selection of alternative 3.
    In Table 16, we compare the cumulative estimated revenue changes 
over the 3 years for the alternatives. Differences among the 
alternatives in user fee and appropriated funding revenue are 
attributable to variations in the user fee rates. In all cases, the 
baseline for comparison is continuation of the current AQI user fee 
schedule. AQI services performed and the total cost of providing those 
services are the same under each alternative. All three alternatives 
ensure that the costs of providing AQI services are covered and the 
reserve fund is maintained.

[[Page 66777]]



   Table 16--Changes in Estimated AQI User Fee Revenue, Appropriated AQI Funding, and Net Revenue Under the 3
                   Alternative User Fee Schedules, Summed Over FYs 2015-2017, Million Dollars
----------------------------------------------------------------------------------------------------------------
                                                                  Preferred
                                                                 alternative     Alternative 2    Alternative 3
                                                                    (rule)
----------------------------------------------------------------------------------------------------------------
AQI revenue                                                                   --Million dollars--
                                                              --------------------------------------------------
    User fees................................................           $340.2           $208.1           $175.0
    Appropriated funding.....................................           -165.3            -84.9           -152.4
AQI total revenue............................................            175.2            123.2             22.7
AQI costs....................................................              0.0              0.0              0.0
AQI revenue minus costs......................................            175.2            123.2             22.7
----------------------------------------------------------------------------------------------------------------
Note: Columns may not sum due to rounding.

    Economic effects under each of the three alternatives derive from 
the increase or reduction in costs borne by affected importers and 
international passengers because of the changes in AQI user fees and 
concurrent reduced reliance on appropriated funding of AQI services. 
Impacts depend on the magnitude of the changes, and for importers, on 
the ability of suppliers to pass along or absorb the costs, and for 
inbound international passengers, on the ability of airlines and 
vessels to do likewise. In theory, higher user fees increase the cost 
of imports and the supplier may have incentive to send fewer goods to 
the United States or international passengers may have less incentive 
to travel to the United States. Lower user fees, in theory, create the 
opposite incentives.
    The changes in user fees are very small in comparison to the 
overall value of the commodities imported or the price of an 
international ticket, and therefore are expected to have negligible 
impact on imports or on the number of international passengers. 
Estimated changes in user fee revenue relative to the output of the 
affected sectors represent, in total, a decline of about two-hundredths 
of one percent, and range from a decline of about six-thousandths of 
one percent in the trucking industry to a decline of about one-tenth of 
one percent in the airline industry.\7\ We cannot determine what will 
be the effect of the projected reductions in appropriated funding of 
AQI services, but observe that the reductions may counterbalance the 
negligible impacts of the user fee increases to some extent.
---------------------------------------------------------------------------

    \7\ Short-run impacts of the proposed fee changes are estimated 
to represent the following percentage changes from current output, 
by affected industry: Trucking industry, -0.006 percent; rail 
industry, 0.035 percent; vessel cargo industry, -0.005 percent; 
cruise ship industry, 0.003 percent; and air cargo and passenger 
industry, -0.102 percent.
---------------------------------------------------------------------------

    Illustrative output and employment impacts for FY 2015 under the 
three alternatives, shown in Table 17, were modeled for APHIS by a 
contracted consultancy.\8\ The impacts shown can be considered 
estimated upper-bound effects because the AQI fees for air passengers, 
commercial trucks (with and without transponders), commercial vessel 
(cruise) passengers, and treatment services are lower than those that 
were set forth in the proposed rule and used to model the output and 
employment effects. In addition, the AQI treatment fee will be phased 
in over 5 years.
---------------------------------------------------------------------------

    \8\ ABS Consulting, ABS Group Consulting, Inc., ABS Plaza, 16855 
Northchase Drive, Houston, TX 77060. Appendix A of the RIA explains 
the methodology and data sources used by ABS Consulting in modeling 
expected economic effects of the rule and alternatives. Appendix B 
reports updated modeling results prepared by ABS Consulting in July 
2013 that are used in the RIA.
---------------------------------------------------------------------------

    The model results indicate that U.S. output and employment would 
have declined under all three alternatives, with the smallest declines 
occurring under the preferred alternative. Modeled output and 
employment effects for FYs 2015-2017 are shown in the body of the RIA. 
We expect the economic effects of the user fee revisions for several of 
the classes, if they occur at all, to be extremely small.

  Table 17--Modeled Illustrative Short-Run Effects for U.S. Output and
         Employment of the 3 AQI User Fee Alternatives, FY 2015
------------------------------------------------------------------------
                                   Change in output        Change in
                                   (million dollars)  employment  (jobs)
------------------------------------------------------------------------
Preferred alternative (rule)....               -$113              -1,312
Alternative 2...................                -119              -1,337
Alternative 3...................                -127              -1,419
------------------------------------------------------------------------

    The fee increases themselves and the newly charged fees for 
commercial vessel passengers and treatment services are not costs to 
the economy as a whole, but rather transfer payments. Transfer payments 
are monetary payments from one group to another that do not affect 
total resources available to society.
    The increase in user fee funding of AQI services, reduced reliance 
on appropriated funding, and closer alignment, by class, of user fee 
revenues and costs will be the principal outcomes of the rule. For the 
3 years, FYs 2015-2017, user fee funding of AQI services under the rule 
is estimated to be $340.2 million more and appropriated funding of AQI 
services is estimated to be $165.3 million less than would occur with 
continuation of the current fee schedule.
    Increased reliance on user fee funding means that APHIS will more 
fully prescribe and collect cost-based fees for providing AQI services, 
including maintaining a reasonable reserve, as provided for under the 
statute. It also means that a portion of appropriated funds that would 
be used to pay for AQI services under the existing user fee schedule 
will no longer be needed for that purpose, resulting in a reduced 
demand for directly appropriately funding or the availability of 
additional funds for other Federal uses. In the latter case, we are 
unable to determine

[[Page 66778]]

how those appropriated funds that will no longer be needed to pay for 
AQI services under the rule may otherwise be used. We are, however, 
fully confident in our application of the ABC methodology in deriving 
the new AQI user fees; this methodology has enabled us to better ensure 
the fees are commensurate with the costs of the AQI services provided, 
as provided in the FACT Act.
    Firms most likely to be impacted by this rule are transportation 
businesses within the truck, rail, sea, and air cargo sectors that 
import goods into the United States and providers of treatment 
services. While the Small Business Administration has set small-entity 
standards for the transportation sectors, the size data do not 
distinguish between transportation firms that operate internationally 
and those firms that only operate within the United States. Most 
businesses that will be affected by the rule are likely to be small. We 
respond in the RIA and final regulatory flexibility analysis to 
comments received from small-entity stakeholders and other businesses 
on possible effects of the rule on their operations.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal governments.'' Executive Order 13175 requires Federal agencies 
to consult and coordinate with tribes on a government-to-government 
basis on policies that have Tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes. APHIS has assessed 
the impact of this rule on Indian Tribes and determined that this rule 
does not, to our knowledge, have Tribal implications that require 
Tribal consultation under EO 13175. If a Tribe requests consultation, 
APHIS will work with the Office of Tribal Relations to ensure 
meaningful consultation is provided where changes, additions, and 
modifications identified herein are not expressly mandated by Congress.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule: (1) Preempts all State and local laws 
and regulations that are inconsistent with this rule; (2) has no 
retroactive effect; and (3) does not require administrative proceedings 
before parties may file suit in court challenging this rule.

Paperwork Reduction Act

    This final rule contains no new 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.

    Accordingly, we are amending 7 CFR part 354 as follows:

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 (b)(1), by removing the words ``, not to exceed 15 
payments in a calendar year (i.e., no additional fee will be charged 
for a 16th or subsequent arrival in a calendar year),''.
0
b. By revising the tables in paragraphs (b)(1) and (c)(1).
0
c. In paragraph (c)(3)(i) introductory text, by removing the words ``20 
times'' and adding the words ``40 times'' in their place.
0
d. By revising the tables in paragraphs (d)(1) and (e)(1).
0
e. By revising paragraph (f)(1), including the table.
0
f. By adding paragraph (f)(2)(i).
0
g. By revising paragraph (f)(8).
0
h. By adding paragraph (h).
    The revisions and addition read as follows:


Sec.  354.3  User fees for certain international services.

* * * * *
    (b) * * * (1) * * *

------------------------------------------------------------------------
                        Effective date                           Amount
------------------------------------------------------------------------
Beginning December 28, 2015..................................      $825
------------------------------------------------------------------------

* * * * *
    (c) * * * (1) * * *

------------------------------------------------------------------------
                        Effective date                           Amount
------------------------------------------------------------------------
Beginning December 28, 2015..................................     $7.55
------------------------------------------------------------------------

* * * * *
    (d) * * * (1) * * *

------------------------------------------------------------------------
                        Effective date                           Amount
------------------------------------------------------------------------
Beginning December 28, 2015..................................        $2
------------------------------------------------------------------------

* * * * *
    (e) * * * (1) * * *

------------------------------------------------------------------------
                        Effective date                           Amount
------------------------------------------------------------------------
Beginning December 28, 2015..................................      $225
------------------------------------------------------------------------

* * * * *
    (f) Fee for inspection of international passengers. (1) Except as 
specified in paragraph (f)(2) of this section, each passenger aboard a 
commercial aircraft or cruise ship who is subject to inspection under 
part 330 of this chapter or 9 CFR, chapter I, subchapter D, upon 
arrival from a place outside of the customs territory of the United 
States, must pay an AQI user fee. The AQI user fee will apply to 
tickets purchased beginning December 28, 2015. The fees are shown in 
the following table:

------------------------------------------------------------------------
         Effective dates \1\                Passenger type       Amount
------------------------------------------------------------------------
Beginning December 28, 2015..........  Commercial aircraft....     $3.96
Beginning December 28, 2015..........  Cruise ship............      1.75
------------------------------------------------------------------------
\1\ Persons who issue international airline and cruise line tickets or
  travel documents are responsible for collecting the AQI international
  airline passenger user fee and the international cruise ship passenger
  user fee from ticket purchasers. Issuers must collect the fee
  applicable at the time tickets are sold. In the event that ticket
  sellers do not collect the AQI user fee when tickets are sold, the air
  carrier or cruise line must collect the user fee that is applicable at
  the time of departure from the passenger upon departure.

    (2) * * *
    (i) Crew members onboard for purposes related to the operation of 
the vessel;
* * * * *
    (8) Limitation on charges. Airlines and cruise lines will not be 
charged reimbursable overtime for passenger inspection services 
required for any aircraft or cruise ship on which a passenger arrived 
who has paid the international passenger AQI user fee for that flight 
or cruise.
* * * * *
    (h) Fee for conducting and monitoring treatments. (1) Each importer 
of a consignment of articles that require treatment upon arrival from a 
place outside of the customs territory of the United States, either as 
a preassigned condition of entry or as a remedial

[[Page 66779]]

measure ordered following the inspection of the consignment, must pay 
an AQI user fee. The AQI user fee is charged on a per-treatment basis, 
i.e., if two or more consignments are treated together, only a single 
fee will be charged, and if a single consignment is split or must be 
retreated, a fee will be charged for each separate treatment conducted. 
The AQI user fee for each treatment is shown in the following table:

------------------------------------------------------------------------
                        Effective dates                          Amount
------------------------------------------------------------------------
Beginning December 28, 2015...................................       $47
Beginning December 28, 2016...................................        95
Beginning December 28, 2017...................................       142
Beginning December 28, 2018...................................       190
Beginning December 28, 2019...................................       237
------------------------------------------------------------------------

    (2) Treatment provider. (i) Private entities that provide AQI 
treatment services to importers are responsible for collecting the AQI 
treatment user fee from the importer for whom the service is provided. 
Treatment providers must collect the AQI treatment fee applicable at 
the time the treatment is applied.
    (ii) When AQI treatment services are provided by APHIS, APHIS will 
collect the AQI treatment fee applicable at the time the treatment is 
applied from the person receiving the services. Remittances must be 
made by check or money order, payable in United States dollars, through 
a United States bank, to ``The Animal and Plant Health Inspection 
Service.''
    (3) Collection of fees. (i) In cases where APHIS is not providing 
the AQI treatment and collecting the associated fee, AQI user fees 
collected from importers pursuant to this paragraph shall be held in 
trust for the United States by the person collecting such fees, by any 
person holding such fees, or by the person who is ultimately 
responsible for remittance of such fees to APHIS. AQI user fees 
collected from importers shall be accounted for separately and shall be 
regarded as trust funds held by the person possessing such fees as 
agents, for the beneficial interest of the United States. All such user 
fees held by any person shall be property in which the person holds 
only a possessory interest and not an equitable interest. As 
compensation for collecting, handling, and remitting the AQI treatment 
user fees, the person holding such user fees shall be entitled to any 
interest or other investment return earned on the user fees between the 
time of collection and the time the user fees are due to be remitted to 
APHIS under this section. Nothing in this section shall affect APHIS' 
right to collect interest from the person holding such user fees for 
late remittance.
    (4) Remittance and statement procedures. (i) The treatment provider 
that collects the AQI treatment user fee must remit the fee to USDA, 
APHIS, AQI, PO Box 979044, St. Louis, MO 63197-9000.
    (ii) AQI treatment user fees must be remitted to [address to be 
added in final rule] for receipt no later than 31 days after the close 
of the calendar quarter in which the AQI user fees were collected. Late 
payments will be subject to interest, penalty, and handling charges as 
provided in the Debt Collection Act of 1982, as amended by the Debt 
Collection Improvement Act of 1996 (31 U.S.C. 3717).
    (iii) The remitter must mail with the remittance a written 
statement to USDA, APHIS, AQI, PO Box 979044, St. Louis, MO 63197-9000. 
The statement must include the following information:
    (A) Name and address of the person remitting payment;
    (B) Taxpayer identification number of the person remitting payment;
    (C) Calendar quarter covered by the payment; and
    (D) Amount collected and remitted.
    (iv) Remittances must be made by check or money order, payable in 
United States dollars, through a United States bank, to ``The Animal 
and Plant Health Inspection Service.''
* * * * *

    Done in Washington, DC, this 21st day of October 2015.
Gary Woodward,
Deputy Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2015-27363 Filed 10-28-15; 8:45 am]
BILLING CODE 3410-34-P