Veterinary Services User Fees, 1941-1945 [2025-00421]

Agencies

• DEPARTMENT OF AGRICULTURE
• Animal and Plant Health Inspection Service

[Federal Register Volume 90, Number 6 (Friday, January 10, 2025)]
[Notices]
[Pages 1941-1945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-00421]


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DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

[Docket No. APHIS-2023-0058]


Veterinary Services User Fees

AGENCY: Animal and Plant Health Inspection Service, U.S. Department of 
Agriculture (USDA).

ACTION: Final notice.

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SUMMARY: The Animal and Plant Health Inspection Service (APHIS) is 
announcing adjusted user fee rates for the costs of providing certain 
goods and services, including veterinary diagnostic goods and services 
and veterinary services for imports and exports of live animals and 
animal products. This action is necessary because the regulations 
provide that APHIS will issue such a notice. This action ensures that 
the fees charged more closely align with the costs of providing the 
goods or services, thus ensuring program solvency.

DATES: The fee rates in this notice go into effect January 10, 2025.

FOR FURTHER INFORMATION CONTACT:  For information on the user fee 
activities covered by this notice, contact Ms. Lisa Slimmer, User Fee 
Financial Team Manager, Veterinary Services Money Management, 920 Main 
Campus Drive, Raleigh, NC 27606; (919) 414-7205.

SUPPLEMENTARY INFORMATION:

Background

    The regulations in 9 CFR part 130 (referred to below as the 
regulations or the user fee regulations), cover user fees to reimburse 
the U.S. Department of Agriculture's (USDA's) Animal and Plant Health 
Inspection Service (APHIS) for the costs of providing veterinary 
diagnostic services and import/export related services for live 
animals, animal products and byproducts, poultry, birds, germplasm, 
organisms, and vectors. These user fees are authorized by section 
2509(c) of the Food, Agriculture, Conservation, and Trade Act (FACT 
Act) of 1990, as amended (21 U.S.C. 136a(c)), which provides that the 
Secretary of Agriculture may, among other things, prescribe regulations 
and collect fees to recover the costs of providing import/export 
related services for animals, animal products and byproducts, birds, 
germplasm, organisms, and vectors, and for veterinary diagnostics 
relating to the control and eradication of communicable diseases of 
livestock or poultry within the United States.
    Since fiscal year 1992, APHIS has received no directly appropriated 
funds to cover the cost of certain veterinary diagnostics or to provide 
import/export related services for animals, animal products and 
byproducts, birds, germplasm, organisms, and vectors. Our ability to 
provide these services depends on user fees. User fees are associated 
with providing services for live animal, animal product, bird, and 
germplasm imports and exports and the user fees fund, among other 
things, quarantine services, the processing of import permit 
applications, port of entry inspections, inspections and approvals of 
import/export facilities and establishments, endorsements of export 
certificates, and services related to emergency situations that arise 
during the export or import process.
    On August 1, 2023, APHIS published a final rule in the Federal 
Register that revised the regulations (88 FR 49994-50002, Docket No. 
APHIS-2021-0052, referred to below as the August 2023 final rule).\1\ 
This final rule removed tables providing the individual fees from the 
regulations and instead indicated that they are posted on the following 
website: www.aphis.usda.gov/business-services/vs-fees. It also provided 
that, on an annual basis, APHIS would propose changes to the fee rates 
through publication of a notice in the Federal Register.
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    \1\ To view the final rule, go to https://www.regulations.gov/document/APHIS-2021-0052-0014.
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    On November 8, 2024, we published the first such notice in the 
Federal Register (89 FR 88697, Docket No. APHIS-2023-0058, referred to 
below as the November 2024 notice).\2\
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    \2\ To view the notice or the comments that we received, go to 
https://www.regulations.gov/docket/APHIS-2023-0058. Additionally, 
please note that on November 22, 2024, we issued a correction to the 
notice to provide a proposed fee that was inadvertently omitted from 
table 21 in the initial notice.
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    We solicited comments on the notice for 30 days, ending on December 
9, 2024. We received 33 comments by that date from industry groups and 
private citizens.

General Comment

    Four of the commenters supported the fee increases articulated in 
the notice. One of these commenters asked if the revenue generated by 
the fee increases would be used to reopen an USDA APHIS office in 
Conyers, Georgia.
    We are uncertain what office the commenter is referring to because 
the USDA APHIS office in Conyers, Georgia is currently open.
    Similarly, a commenter asked us if the additional revenue generated 
by the fees would go to additional staffing of

[[Page 1942]]

personnel at ports of entry, particularly those along the southern 
border.
    The fees collected are allocated, in part, to staffing port 
environs. However, due to the nature of fee remittance and the Federal 
hiring process, it may take time before additional personnel are hired 
and stakeholders experience the benefits associated with the additional 
staffing.
    Twenty-nine commenters disagreed with the proposed user fees for 
various reasons. We discuss these comments below, by topic.
    Several commenters stated that they would either have to assume the 
financial burden associated with the fee increases as part of their 
business model, or pass them off to other parties in their supply 
chain. The commenters stated that these impacts could adversely impact 
international trade.
    We acknowledge that the parties subject to the user fees will have 
to assume the costs of the increased fees, and could pass this cost 
differential through to other parties in their supply chain. However, 
the commenters did not state that the fees had been miscalculated. 
Additionally, as we stated in the August 2023 final rule, the November 
2024 notice, and this document, APHIS has received no directly 
appropriated funds to cover the cost of certain veterinary diagnostics 
or to provide import/export related services for animals, animal 
products and byproducts, birds, germplasm, organisms, and vectors. Our 
ability to provide these services depends on user fees. In addition, as 
discussed later in this notice, the fees must be changed in order to 
ensure that the program remains solvent and there are no disruptions of 
the services provided.
    A number of commenters stated that the customer service associated 
with some of the services funded by the fees was suboptimal and/or non-
standardized. Of these, several commenters recommended that APHIS' 
Veterinary Services (VS) provide service standards and guidelines for 
user fee activities to ensure consistency of services provided. In a 
similar vein, several commenters stated that import/export-related 
services were often technically difficult and inexperienced APHIS 
personnel could take longer to do the task, leading to disparate and 
potentially inflated levels of effort, and, in turn, higher fees.
    The fees are based on average level of effort associated with the 
service. This helps ensure that the fees are not set against outlying 
scenarios that may not be indicative of usual level of effort. With 
that being said, APHIS exercises multiple controls to ensure that work 
is done in an efficient and standardized manner. This includes 
requiring specialized experience or its equivalent as a condition of 
hiring, and standard operating procedures for employees in the form of 
VS guidance documents (VSGs). While some of these VSGs are internal-
facing, APHIS has made many of them publicly available for the sake of 
transparency and as a service to the general public. For example, VSGs 
related to the import and export of equines are found here: https://www.aphis.usda.gov/live-animal-import/equine/vs-guidance. Finally, 
because commenters did not provide information regarding the services 
they claimed were occurring suboptimally or in a non-standard manner, 
APHIS is unable to evaluate these claims further.
    One commenter who stated that they were currently dissatisfied with 
the service provided by APHIS stated that the fees should not be raised 
until customer satisfaction increases.
    Such a delay runs the risk of disruption of the services provided 
or, in a worst-case scenario, program insolvency due to insufficient 
funds, which would run counter to the commenter's request for increased 
customer service. Based on current and projected revenue, the program 
runs the risk of such disruptions if the fees are not increased by 
early spring 2025.
    Several commenters stated that advance notification was necessary 
regarding any regulatory changes to the fee structure or possible 
increases in fees. One commenter requested at least 12 months advance 
notification, while others stated that this should be at least 12 to 24 
months before the fees are raised. The commenter asking for at least 12 
months advance notification characterized the fee increases in the 
November 2024 notice as an abrupt policy change and without prior 
notice.
    On October 3, 2022, we issued the proposed rule on which the August 
2023 final rule revising the regulations was based (87 FR 59731-59740, 
Docket No. APHIS-2021-0052, referred to below as the October 2022 
proposed rule). In it, we indicated the nature of the regulatory 
revisions contemplated, and stated ``we anticipate that, since APHIS' 
import/export and veterinary diagnostic user fees have not been updated 
for more than 10 years, there will be a change in the fees when APHIS 
applies this new approach.'' (87 FR 59732). We also stated that we 
intended to issue a notice annually proposing actual fee rates. In the 
August 2023 final rule, we again indicated that we would publish an 
annual notice, and stated that it was the Agency's intent to issue 
initial and second notices adjusting the fees on an annual basis. (88 
FR 49995). Finally, our November 2024 notice proposing the updated fee 
rates itself had a public comment period. In light of the foregoing, we 
believe that there was adequate notification provided of the changes to 
the regulations, the likelihood of fee increases, and the specific 
nature of the increases; we therefore disagree that the proposed fee 
increases were an abrupt policy change. Moreover, as noted above, 
further delay of issuance of the adjusted fees runs the risk of 
disruption of the services provided or, in a worst-case scenario, 
program insolvency due to insufficient funds. Based on current and 
projected revenue, the program runs the risk of such disruptions if the 
fees are not increased by early spring 2025.
    Several commenters stated that APHIS should have engaged 
stakeholders prior to proposing to revise the fees.
    APHIS has consistently apprised stakeholders of the need to revise 
the current fees. Additionally, we note that both the October 2022 
proposed rule and the November 2024 notice referenced above provided an 
opportunity for stakeholder feedback in the form of public comment. 
Finally, APHIS issued notifications of the availability of both the 
October 2022 proposed rule and the November 2024 notice using our 
Stakeholder Registry. To subscribe to the Stakeholder Registry, please 
visit https://public.govdelivery.com/accounts/USDAAPHIS/subscriber/new. 
APHIS strives to ensure that any changes in our policies/regulations 
are communicated early and robustly through the Stakeholder Registry 
and other outreach mechanisms.
    One commenter suggested that an advisory group be established 
relative to the user fee regulations.
    While outside the scope of this notice, we will take this 
suggestion into consideration.
    Several commenters suggested that APHIS consider phased 
implementation with an altered fee structure that would allot 
additional time for industries to adapt to the new fees. One commenter 
stated we should consider implementation a year after publishing, and 
another commenter suggested implementation over several years.
    The costs of providing veterinary diagnostic and import/export 
related services is unsustainable at the current fee rates, and the 
program runs the risk of disruption of the services provided or, in a 
worst-case scenario, program insolvency due to insufficient funds. 
Based on current and projected revenue, the program runs the risk of 
such

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disruptions if the fees are not increased by early spring 2025. This 
precludes prolonged phased implementation of the fees.
    Several commenters recommended that we tier services. Tiering 
suggestions included lower fees for smaller businesses, high-volume 
consumers of the service for which the fee is assessed, the species in 
question, or biosecurity compliance history.
    As noted in the November 2024 notice, APHIS sets user fees based on 
the average level of effort identified to complete each service, for 
which a user fee is assessed, referred to as the direct time factor in 
minutes. To determine the direct time factor in minutes for each 
service, we conducted labor surveys for each of the organizations 
providing the services. APHIS does not charge different fees based on 
the size of an organization receiving the service, or the volume of 
times the organization receives the services. One of the primary 
reasons for this is to ensure that cross-subsidization of differing fee 
areas does not occur; cross-subsidization is prohibited by the FACT 
Act.
    APHIS does charge different fees for different species of animals 
when the service provided for one species of animal is disaggregated 
from services provided to other species of animals. For example, we 
charge different user fees for different species of animals and birds 
receiving standard housing, care, feed, and handling while quarantined 
in an APHIS-owned or operated animal import center or quarantine 
facility. However, disaggregation is not always possible depending on 
the service in question. We discuss this at greater length later in 
this notice.
    Several commenters suggested that some of the services for which 
fees are currently assessed could be subdivided into further fee 
classes based on level of effort. For example, one commenter suggested 
that export health certificates could be assessed different fees based 
on whether or not the certificates require additional attestations, 
test results, or other certifications.
    With regard to the commenter's example, APHIS currently does 
subdivide the user fee for export health certificates based on whether 
or not the certificate requires additional endorsements, certificates, 
or verification of tests or vaccinations. This was previously set forth 
in the regulations themselves, and was presented in tables 24 and 25 of 
the November 2024 notice.
    If a fee is not currently subdivided, it is because the fee was not 
subdivided previously in the regulations. APHIS did not amend the fee 
categories in the August 2023 final rule. Rather, as noted previously, 
we moved the current fee categories from the regulations to a website. 
However, APHIS is open to the consolidation or subdivision of fee 
categories when aggregation or disaggregation of the services provided 
is possible. These would be announced as part of the annual notice to 
adjust the fees in future notices.
    Conversely, several commenters noted that we divided several user 
fee services into simple versus complex based on the number of hours 
needed to complete them. The commenters appeared to assume that these 
were new subcategories that the Agency would use in order to 
artificially increase level of effort and charge more fees.
    The terms existed in the regulations prior to the August 2023 final 
rule and were simply ported from the regulations as a result of that 
final rule. The terms still have the meaning that they had while part 
of the regulations, and APHIS has no intent to change its practices to 
artificially render the services complex. Additionally, as noted 
elsewhere, fees were set based on average level of effort, in order to 
control for outlying scenarios.
    Several commenters asked why fees for services provided for their 
class of animals or products were greater than the same service 
provided for other classes of animals or products.
    As noted in the November 2024 notice, the differing proposed 
adjusted fees are the result of differing average levels of effort 
needed to complete each service. The same service can take different 
average levels of effort to complete for different classes of animal or 
products. For example, the average level of effort associated with the 
inspection of imported cattle differs from that associated with horses. 
This can be the result of many factors, including, but not limited to 
increased technical complexity associated with the task for a certain 
class of animals or products, specialized requirements that must be met 
and/or evaluated that are not applicable to other classes of animals or 
products, and, particularly in the case of endorsement of export 
certificates, extensive and non-standardized documentation and 
attestations.
    A commenter asked how the cost-of-living adjustment (COLA) and 
consumer price index (CPI) percentages referenced in the November 2024 
notice were calculated and stated that this was not explained 
thoroughly in the notice. The manner in which COLA and CPI are 
calculated for purposes of the user fee regulations was discussed at 
length in October 2022 proposed rule to revise the regulations, and the 
terms cost of living and Consumer price index are defined in the 
regulations themselves.
    The same commenter asserted that we needed to provide justification 
in the November 2024 notice that COLA and CPI adjustments directly 
impact direct and indirect costs to the Agency.
    We disagree. The relationship was discussed in the October 2022 
proposed rule to revise the regulations.
    Although many commenters stated they understood the need for fee 
increases in general, several commenters raised concerns regarding the 
increase in user fees for their respective industries. Several 
commenters noted that the notice provided cost calculation tables for 
certain fees, but not for others, and asked that the final notice 
provide the relevant cost calculations that led to each fee. Other 
commenters stated that the data provided in the November 2024 notice 
was insufficient to assess whether the proposed fee was justified and 
asked for additional source data to evaluate the fee. Specific fee 
classes that were flagged as needing additional information included 
those for new and amended import permits, those for disease tests for 
imported equines, those for inspection of horses intended for export, 
those for export health certificates for bovine germplasm, and those 
for endorsement of export health certificates.
    We believe that the October 2022 proposed rule and the August 2023 
final rule provided the cost components used to calculate each fee, as 
well as the nature of the underlying Agency costs in each component. 
The examples in the November 2024 notice were illustrative to show the 
real costs in each component for various fee types.
    However, in response to these requests and in the interest of full 
transparency, we are making all cost data on which the fees were based 
available at www.aphis.usda.gov/business-services/vs-fees. Please note 
that, due to the size of the files, they must be downloaded before 
viewing.
    A commenter noted that the notice did not address reimbursable 
overtime rates, and provided comment on these rates. However, we stated 
in the October 2022 proposed rule that reimbursable overtime would not 
be part of the notice-based process under which the November 2024 
notice was issued, but rather would be adjusted periodically through a 
separate rulemaking process.
    A commenter suggested that we amend the duration for which import 
permits are valid. This is outside the scope of both this notice and 
the user

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fee regulations under which this notice was issued.
    A commenter suggested that APHIS not require permit amendments, 
which are assessed a user fee, for import permits for equines when a 
change of expected itinerary occurs. This likewise is outside the scope 
of both this notice, and the user fee regulations under which this 
notice was issued.
    A commenter suggested that all export health certificates should be 
electronically generated and filed.
    To the extent that our trading partners allow this practice, we 
will pursue it. However, we note that foreign nations are sovereign to 
set their own import requirements for agricultural products, including 
the form of export health certificates that they will accept.
    A commenter referenced a 2024 United States Animal Health 
Association (USAHA) resolution related to equine imports, and asked for 
a comprehensive review report to be supplied to the industry related to 
the Agency's use of personnel resources in order for the industry to be 
able to evaluate the merits of the November 2024 notice.
    The commenter is referring to Resolution 7 passed at the 2024 
Annual USAHA conference, found here: https://usaha.org/wp-content/uploads/2024/12/2024-USAHA-Resolutions-7.pdf. The resolution called for 
``a comprehensive formal official review of all programs and units 
involved in the international movement of equine and equid products,'' 
including a review of personnel resources, management protocols, policy 
and procedure documents and protocols, international movement data, and 
memoranda of understanding, derogations and waivers. This request 
significantly exceeds the scope of this notice and is not necessary in 
order to evaluate whether the fees have been calculated correctly. In 
this regard, we are making all source data used to calculate the fees 
publicly available in tandem with this final notice.

Comments Regarding Specific Costs and Fees

    In our November 2024 notice, we indicated that factors leading to 
the increase of the fees included increased level of effort and 
expertise associated with providing different services. As an 
illustrative example, we indicated that export health certificates had 
historically been VS forms that allowed information to be presented in 
a standardized way. However, in recent years, many countries have 
changed their import requirements and now require country and species-
specific health certificates. We also noted that the certificates can 
now vary widely in terms of the information they contain, the 
requirements they cite, and the type of certificate that can be used. 
We provided further that all export health certificates must now be 
verified for each animal or shipment of product being exported. We 
noted that all of these factors had increased the level of effort 
needed to complete the work, and increased the need for subject matter 
expertise to ensure the work addresses the additional complexities now 
involved.
    Several commenters stated that endorsement of export health 
certificates for bovine germplasm had become more streamlined, rather 
than more complex, and argued that fees should have gone down, rather 
than risen, if based on the level of complexity.
    Endorsement of export health certificates for bovine germplasm 
falls within the larger category of endorsement of export health 
certificates for animal products and is not disaggregated from 
endorsements for export health certificates of other types of products, 
for which level of effort and complexity has increased.
    Additionally, we note that increased level of complexity was not 
the sole factor leading to the increased fees. Rather, the fees were 
set based on all cost components listed in the regulations, and all 
cost components associated with the fees have increased since they were 
last set.
    Several commenters stated that subject matter expertise was not 
specifically needed to endorse export health certificates for animal 
products.
    We disagree that subject matter expertise is not needed for the 
endorsement of export certificates for animal products. Some of the 
endorsements are lengthy in terms of documentation and highly complex. 
Moreover, many countries specifically require endorsement by 
individuals with a certain level of credentials, technical expertise, 
and/or experience. While APHIS does attempt to ensure these are 
actually required for the endorsements in question through trade 
negotiations and the development of export protocols, as noted 
previously, foreign countries are sovereign and may set their own 
import requirements.
    In our November 2024 notice, we stated that the total information 
technology (IT) costs included in the update were $6,461,071.38 for 
Import-Export to ensure funding is available as costs are actualized.
    A commenter asked us what IT improvements had been budgeted in this 
estimate, and how industry and APHIS would be able to use them.
    The costs include not only development of new IT and equipment 
costs, but also operation and maintenance costs, new information 
technology and equipment costs. With that being said, projected 
projects include:
     APHIS-VS Trade System Modernization design and 
development, including live animal exports and imports, animal import 
center reservations, and product import and export certificates and 
facility inspections.
     Further development of APHIS' EFile system, which handles 
APHIS' permitting processes.
     Further development and identified enhancements to APHIS' 
Veterinary Export Health Certification System, also known as VEHCS.
     Design and development of the User Fee invoicing system.
    A commenter asked why the fee for housing, care, feed, and handling 
of miniature horses while in import-related quarantine was increasing 
at a greater rate than the fee for similar services for non-miniature 
equines. They also inquired why there is not a depreciation of the fee 
for miniature horses for instances of prolonged care, as there is for 
non-miniature equines.
    As noted in the paragraphs below table B in the November 2024 
notice, this is because the fee for such services for miniature horses 
is based on an alternate fee structure for instances when there is no 
identifiable volume in the previous year, when the fee is rarely 
charged, or when APHIS cannot readily identify level of effort. In such 
instances, we will calculate the fee based on the last available 
historic data, including inflation, program, agency, department and 
support costs, imputed costs, and reserve.
    There is not a depreciation of the fee for instances of prolonged 
care for miniature horses, as there is for non-miniature equines, 
because there was not such a depreciation for miniature horses 
previously in the regulations, as there was for non-miniature equines. 
As noted previously, the August 2023 final rule did not amend the fee 
categories, but, rather, moved the current fee categories from the 
regulations to a website.
    In the November 2024 notice, we proposed to increase the fees for 
processing import permit applications.
    Several commenters stated that import permits for their class of 
animal or animal products and/or their exporting country were routine 
and processing fees should not have

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increased to the extent that we proposed.
    The processing of import permits is a service where disaggregation 
based on the class of animal or animal product or the exporting country 
in question is not possible. The fees were calculated based on the 
average level of effort to complete the issuance of import permits. 
Additionally, as a matter of transparency, we are making all cost data 
on which the fees were based available at www.aphis.usda.gov/business-services/vs-fees.
    Therefore, in accordance with Sec.  130.3(a), we are updating the 
fees as proposed and without modification.
    Authority: 5 U.S.C. 5542; 7 U.S.C. 1622 and 8301-8317; 21 U.S.C. 
136 and 136a; 31 U.S.C. 3701, 3716, 3717, 3719, and 3720A; 7 CFR 2.22, 
2.80, and 371.4.

    Done in Washington, DC, this 6th day of January 2025.
Donna Lalli,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 2025-00421 Filed 1-8-25; 8:45 am]
BILLING CODE 3410-34-P