FR Doc E7-11278

[Federal Register: June 12, 2007 (Volume 72, Number 112)]
[Proposed Rules]
[Page 32223-32230]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jn07-12]

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Proposed Rules
Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.

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[[Page 32223]]

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

7 CFR Part 354

[Docket No. APHIS-2006-0137]
RIN 0579-AC22

User Fees; Export Certification for Plants and Plant Products

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Proposed rule.

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SUMMARY: We are proposing to amend the user fee regulations by
adjusting the fees charged for export certification of plants and plant
products. We are proposing to increase these user fees for fiscal years
2007 through 2012 to reflect the anticipated costs associated with
providing these services during each year. We are also proposing to add
a new user fee for Federal export certificates for plants and plant
products that an exporter obtains from a State or county cooperator in
order to recover our administrative costs associated with that service.
Finally, we are proposing to make several nonsubstantive changes to the
regulations for clarity. These proposed changes would enable us to
properly recover the costs of providing export certification services
for plants and plant products.

DATES: We will consider all comments that we receive on or before
August 13, 2007.

ADDRESSES: You may submit comments by either of the following methods:
Federal eRulemaking Portal: Go to http://www.regulations.gov
, select ``Animal and Plant Health Inspection

Service'' from the agency drop-down menu, then click ``Submit.'' In the
Docket ID column, select APHIS-2006-0137 to submit or view public
comments and to view supporting and related materials available
electronically. Information on using Regulations.gov, including
instructions for accessing documents, submitting comments, and viewing
the docket after the close of the comment period, is available through
the site's ``User Tips'' link. Postal Mail/Commercial Delivery: Please
send four copies of your comment (an original and three copies) to
Docket No. APHIS-2006-0137, Regulatory Analysis and Development, PPD,
APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-
1238. Please state that your comment refers to Docket No. APHIS-2006-
0137.
Reading Room: You may read any comments that we receive on this
docket in our reading room. The reading room is located in room 1141 of
the USDA South Building, 14th Street and Independence Avenue SW.,
Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m.,
Monday through Friday, except holidays. To be sure someone is there to
help you, please call (202) 690-2817 before coming.
Other Information: Additional information about APHIS and its
programs is available on the Internet at http://www.aphis.usda.gov.

FOR FURTHER INFORMATION CONTACT: For information concerning program
operations, contact Ms. Karen Bedigian, Senior Export Specialist,
Phytosanitary Issues Management, PPQ, APHIS, 4700 River Road Unit 140,
Riverdale, MD 20737-1236; (301) 734-5712. For information concerning
rate development, contact Mrs. Kris Caraher, User Fee Section,
Financial Services Branch, Financial Management Division, MRPBS, APHIS,
4700 River Road Unit 54, Riverdale, MD 20737-1232, (301) 734-5901.

SUPPLEMENTARY INFORMATION:

Background

User fees for the issuance of export certificates for plants and
plant products are contained in 7 CFR 354.3 (referred to below as the
regulations). Export certificates are issued in accordance with the
regulations in 7 CFR part 353, and they certify agricultural products
as being considered free from plant pests, according to the
phytosanitary requirements of the foreign countries to which the plants
and plant products may be exported. Export certificates are also issued
to certify that reexported plants or plant products conform to the most
current phytosanitary requirements of the importing country and that,
during storage in the United States, the consignment has not been
subjected to risk of infestation or infection. These export
certificates must be issued in accordance with 7 CFR part 353 to be
accepted in international commerce.\1\
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\1\ These export certificates are not commercial documents; they
can be issued for noncommercial consignments.
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Regulations Proposed in This Document

We are proposing to amend the regulations in Sec. 354.3 to adjust
the user fees charged for export certification of plants and plant
products. The Animal and Plant Health Inspection Service (APHIS) has
not adjusted these particular user fees since the publication of a
final rule in the Federal Register on January 29, 1996 (61 FR 2660-
2665, Docket No. 94-074-2). That rule increased the user fees for
certification of plants and plant products to reflect the actual cost
of providing those services.
Given the routine increases in operating costs, the current user
fees for the certification of plants and plant products must be
adjusted in order for APHIS to recover the full cost of providing these
services. Therefore, we are proposing to adjust these fees.
Specifically, we are proposing to set the fees for fiscal years (FYs)
2007 through 2012 and beyond for each of the following categories of
service: (1) Certification for export or reexport of a commercial
shipment; (2) certification for export or reexport of a low-value
commercial or noncommercial shipment; and (3) replacement of any
certificate for export or reexport.
In addition, we are also proposing to add a new user fee for
exporters who will be obtaining Federal export certificates for plants
and plant products from State or county cooperators. State and county
cooperators can issue Federal export certificates and APHIS will print,
distribute, and track these State/county issued export certificates,
incurring administrative as well as associated overhead costs. In order
to cover the administrative costs APHIS incurs in connection with these
State and county operations, we are proposing to establish a new user
fee which would become effective in FY 2007. We are proposing to set
fees for FYs 2007 through 2012.

[[Page 32224]]

This administrative fee for a Federal export certificate issued by
State and county cooperators would be remitted by the exporter directly
to APHIS through the Phytosanitary Certificate Issuance and Tracking
System (PCIT),\2\ provided that the exporter has a PCIT account and
submits the application for the export certificate through the PCIT. If
the exporter does not have a PCIT account or if the State or county
creates export certificates independently using the PCIT or cannot or
will not use the system, then the burden of collecting the
administrative fee from the exporter and remitting it to APHIS would
fall directly on the State or county issuing the Federal export
certificate.
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\2\ While we are not currently accepting payments through the
PCIT, we anticipate that the payment collection system will become
fully operational in FY 2007, at which time, payment for
applications for, and issuance of, the other certificates referred
to above would also become possible through the PCIT.
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Under this proposal, the FY 2007 fees would become effective on the
date specified in the final rule, the FY 2008 through FY 2012 rates
would become effective on the first day of each of those fiscal years,
and the FY 2012 rates would remain in effect until new rates were
established. The user fee tables in this document, therefore, do not
specify an end date for fees that would become effective on October 1,
2011 (the beginning of FY 2012). Establishing the user fee changes 6
years in advance would allow users of APHIS' services to incorporate
the fees into their budget planning. APHIS would review the fees
annually and, if necessary, publish a proposal to amend them if the
published fees do not properly recover our costs.
Finally, this proposed rule would make several nonsubstantive
changes to the regulations for clarity. These changes are described
below under the section heading ``Miscellaneous.''

User Fee Accounting

In FY 1992, APHIS established accounting procedures to, among other
things, segregate export certification costs for plants and plant
products from all other costs. We maintain all export certification
user fees we collect in a distinct account, carefully monitor the
balance of this account, and only use these funds to pay for our actual
costs for providing export certification services.

Types of Program Costs

As part of our accounting procedures, we maintain separate
accounting codes to record costs that can be directly related to an
inspection activity. These are referred to as ``direct-charge costs.''
At the APHIS field level and below, we direct-charge the following
costs to the user fee account: Salaries and benefits, direct labor of
supervisors, such as officers-in-charge, and clerical staff; equipment
used only in connection with services subject to user fees; contracts;
large supply items such as uniforms; and systems costs, which include
supporting the PCIT, paper, paper distribution, etc.
Other program-delivery-related costs, at the APHIS field level and
below, that cannot be directly charged to individual accounts are
charged to ``distributable'' accounts established at the APHIS field
level and are referred to as ``distributable costs.'' The following
types of costs are charged to distributable accounts: Utilities, rent,
telephone, vehicles, office supplies, etc. The costs in these
distributable accounts are prorated (or distributed) among all the
activities, including export certification services, that benefit from
the expense, based on the ratio of the costs that are directly charged
to each activity divided by the total costs directly charged to each
account at the field level.
Export Program costs also include program direction and support
costs we incur at the regional and headquarters level. These are costs
related to the overall management of APHIS' Plant Protection and
Quarantine (PPQ) program. The PPQ program incurs these costs for
functions carried out by PPQ management support staff at headquarters
in Riverdale, MD, and by various staffs at APHIS' two regional hubs
located in Raleigh, NC, and Fort Collins, CO. The headquarters and
regional staffs perform program support activities such as budget
planning, formulation, justification, and execution specific to the PPQ
program; specialized agreement management; staff-year management;
program spending monitoring and projections; and liaison with higher-
level internal and external entities.
We also incur Agency-level support costs through activities that
support the Export Program, such as recruitment and development;
legislative and public affairs; regulation development; regulatory
enforcement; and budget, accounting, payroll, purchasing, billing, and
collection services.
Departmental charges are assessed for various program costs,
including Agency support staffs at the U.S. Department of Agriculture
(USDA) Department level, Federal telephone service, mail, processing of
payroll and money management, unemployment compensation, Office of
Workers Compensation Programs, and central supply depots for storing
and issuing commonly used supplies and forms.

Prior Year Cost Identification

As we have noted, the user fees supporting the Export Program have
not been adjusted since 1996. In order to properly identify actual
total program costs, we employed contractors from Kadix Systems in FY
2004 to develop and document an accurate cost-based analysis of the
nationwide Export Program. We also established an Export User Fee Work
Group to assist with technical and program expertise; provide financial
and budgetary advice; and perform data collection, regulatory analysis,
and management review for this project. The contracting project team
provided an export user fee report on their review of export
certificate issuance trends, direct labor costs, support costs for 5
fiscal years, and fluctuations in activity volumes.
Based on the analysis of the Kadix Systems study, we were able to
better identify our true export certification user fee costs. We then
added the pro-rata share of the distributable accounts at the APHIS
field level and appropriate amounts to recover regional, headquarters,
Agency, and departmental level costs, and other costs to identify our
full costs for providing export certification services.

Cost Projections for FY 2007 Through FY 2012

We used prior year costs and added inflationary factors and planned
new costs, such as new staffing and automation/information technology
initiatives, to project our costs for FY 2007 through FY 2012. We then
added a reasonable amount to contribute to a reserve in the Export
Program user fee accounts to identify our total anticipated costs for
those years. Those reserve funds provide us with a means to ensure that
we have sufficient operating funds in cases of fluctuations in activity
volumes or unanticipated events that could impact the program. We split
our total costs for each fiscal year into the certification categories.

Development of Estimated Spending Amounts

The estimated spending amounts for FY 2007 through FY 2012 are
based on data from FYs 2004 through 2006. The FY 2007 base costs
include the direct-charge and program-delivery costs described above.
We added our estimated pay cost increases during FY 2007 and our
estimated new costs, including new hires, training, and automation
initiatives. We next added

[[Page 32225]]

overhead expenses, including the program direction and support and
Agency-level support costs and Departmental charges as described above.
We then included rent and a reserve amount.

FY 2007 base cost $9,423,440
New Costs 4,718,753
Subtotal............................. 14,358,932
Rent Costs 299,064
Subtotal............................. 3,182,016
Reserve Component 932,301
FY 2007 Total $18,473,249

We evaluated our historic cost-distribution percentages and applied
them to the costs we identified and estimated for FYs 2007 through 2012
to split our projected costs among the export certificate categories
described earlier. The following table indicates the estimated spending
amounts for FY 2007 through FY 2012:

Table 1.--Total Projected Cost for Administering the Export Program, FY 2007-2012
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Certificate categories FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
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Commercial shipment..................................... $15,408,495 $15,763,411 $16,126,748 $16,498,975 $16,880,308 $17,261,762
Noncommercial and low-value shipments................... 477,026 488,014 499,262 510,786 522,591 534,401
Replacement............................................. 97,615 99,864 102,166 104,524 106,940 109,356
State or county issued.................................. 2,490,113 2,547,470 2,606,187 2,666,342 2,727,968 2,789,613
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Total............................................... 18,473,249 18,898,759 19,334,363 19,780,627 20,237,807 20,695,132
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Volumes

Once we identified our estimated costs for each of the export
certificate categories and estimated our costs in out years using
economic factors, we then divided our annual costs by the estimated
volumes for each export certification category to obtain our cost per
export certification category. We performed extensive volume analyses
to project volumes for each fee category in the out years. We reviewed
actual data for each service category for FYs 2004 through 2006 and
estimated our annual export certification volumes for FYs 2007 through
2012 by reviewing the Kadix Systems volume analysis and conducting
surveys of several work units with high volumes of export
certifications. The following table identifies volumes for export
certificates by service category for FY 2007 through FY 2012.

Table 2.--Projected Volumes by Service Category, FY 2007-2012
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Service categories FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
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Commercial shipment............... 155,565 157,121 158,692 160,279 161,882 163,501
Noncommercial and low-value 8,348 8,432 8,517 8,601 8,687 8,774
shipments........................
Replacement....................... 6,845 6,913 6,982 7,052 7,123 7,194
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APHIS subtotal................ 170,759 172,467 174,191 175,933 177,692 179,469
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State or county issued............ 155,206 156,758 158,326 159,909 161,508 163,123
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Grand total............... 325,965 329,225 332,517 335,482 339,200 342,592
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User Fees for Export Certification of Plants and Plant Products

Once we established the total annual costs to administer the Export
Program, including the amount necessary to maintain the account reserve
at a reasonable level for each of the service categories, we began the
calculation of our fees. In calculating the user fees, we divided the
sum of the costs of providing each service by the projected volumes
(i.e., numbers of export certificates issued), thereby arriving at
``raw'' fees. We then rounded up or down to the nearest whole dollar to
obtain the final fees and ensure adequate reserve funds. Also, unlike
the fees for international air passengers, where the service volumes
are so high, in the case of the export certification program, there
would be no impact from rounding these user fees to the nearest whole
dollar. Our current user fees for export certification of plants and
plant products and the user fees we are proposing to charge for these
services for each fiscal year from 2007 through 2012 are shown in table
3 below. The proposed user fees would be listed in Sec. 354.3, in a
new paragraph (g)(3).
The proposed user fees provide for the maintenance of a reasonable
reserve of up to 5 months' operating expenses in each of the export
certification accounts. We intend to monitor the reserve balances
closely and propose adjustments in our fees as necessary. If we
determine that any fees are too high and are contributing to
unreasonably high reserve levels, we will undertake rulemaking to lower
the fees as quickly as possible. Conversely, if it becomes necessary to
increase any fees because reserve levels are being drawn too low, we
will undertake rulemaking to increase the fees.

Table 3.--User Fees for Export or Reexport Certification of Plants and Plant Products
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Certificate categories FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
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Commercial shipment....................... $50 $99 $100 $102 $103 $104 $106
Noncommercial shipment.................... 23 57 58 59 59 60 61
Low value shipment........................ 23 57 58 59 59 60 61
Replacement............................... 7 14 14 15 15 15 15

[[Page 32226]]

State or county issued.................... ........ 16 16 17 17 17 17
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Miscellaneous

We are also proposing to make several changes to the regulations in
addition to those described above. These changes are needed for clarity
and to ensure that APHIS is fully compensated for all the export-
certification services it performs.
We have been allowing, and would continue to allow, exporters to
purchase prepaid ``blocks'' of certificates (we do not specify the
number of certificates in a block) for commercial shipments only. The
current regulations do not indicate clearly that only commercial
shipment certificates may be purchased this way. We would amend the
regulations in Sec. 354.3(g) to remove any ambiguity on this point.
We are also proposing to amend the regulations in Sec. 354.3(g) to
make clear that work necessary to issue an export certificate that must
be conducted outside of normal business hours is subject to our
reimbursable overtime rates (7 CFR 354.1), in addition to the
applicable user fee. This change is necessary to ensure that APHIS is
properly compensated for services provided outside of normal business
hours.
The current regulations in Sec. 354.3(g) do not clearly reflect
that we charge user fees for issuing reexport certificates for
noncommercial shipments in connection with the export of plants and
plant products. To eliminate confusion, we are proposing to add a
specific reference to this existing fee in Sec. 354.3(g).
We would make several changes to Sec. 354.3(h)(1), which currently
provides that a shipper who pays for a block of export certificates to
cover commercial shipments may obtain a refund or a credit against
future AQI user fees under the following circumstances:
If a certificate from the block is voided;
If a certificate from the block is returned unused;
If the shipper pays for inspection outside of normal
business hours (8 a.m. to 4:30 p.m.) under Sec. 354.1;
If a certificate from the block is used for a
noncommercial shipment; or
If a certificate from the block is used to reissue another
certificate.
We would amend Sec. 354.3(h)(1)(i) to indicate that the shipper
would be eligible for a refund only if an export certificate is voided
prior to its being signed by a certifying official. If APHIS issues a
certificate and the exporter then decides to void it, there should be
no refund because APHIS will have already performed the work of
processing and issuing the certificate and will have incurred the
associated costs.
We would also amend the paragraph to eliminate the reference to
obtaining credit against future AQI user fees. We do not offer such
credits.
We would amend Sec. 354.3(h)(1)(ii) to indicate that the shipper
would be eligible for a refund only if an unused export certificate is
returned in its original unused condition. This clarification is needed
because if a certificate is not in its original condition, i.e., if
anything has been written on it, it may no longer be used.
We would remove current paragraph (h)(1)(iii), pertaining to
inspection outside normal business hours, because a shipper would no
longer be eligible for a refund under the circumstances described in
the paragraph. Under proposed paragraph (g)(2), described above, work
necessary to issue an export certificate that is conducted outside of
normal business hours would be subject to both overtime rates and the
applicable user fee.
Current paragraph (h)(1)(iv), concerning refunds for export
certificates for noncommercial shipments, would be redesignated as
(h)(1)(iii) but would not undergo any substantive changes. Current
paragraph (h)(1)(v) provides that a shipper is eligible for a refund if
a certificate from the block is used to ``reissue'' another
certificate. Because the term ``reissue'' may be subject to different
interpretations, we are proposing to revise this provision to state
that a refund may be issued if a certificate from a block is used to
replace another certificate that has been lost or destroyed, provided
that the certificate is issued as a duplicate certificate, without
changes. This paragraph would be redesignated as (h)(1)(iv).
Current paragraph (h)(2) states that the amount of any refund or
credit will be the amount overcharged, less $7 to cover APHIS
administrative expenses. In order to make the paragraph consistent with
the changes to the fees that we are proposing elsewhere in this
proposed rule and to enable us to cover our costs, we would amend the
paragraph to indicate that the amount of any refund (we would also
remove the existing reference to a credit from this paragraph) for a
certificate issued by APHIS would be determined by APHIS based on the
difference between the cost of purchasing the certificate and the cost
that would be applicable to its actual use or disposition. For example,
if a commercial certificate were purchased as part of a block of
certificates for $99 and then applied to a noncommercial shipment, the
certificate for which could be purchased for $57, then the amount of
the refund would total $42. We would further state that, in the case of
a certificate issued on behalf of APHIS by a designated State or county
inspector, the amount of the proposed new administrative fee would be
withheld from any refund.
Section 354.3 lists definitions for terms, including the terms
export certificate for processed plant products, phytosanitary
certificates, and phytosanitary certificate for reexport. These
existing definitions add no useful information to the regulations and
are unnecessary, provided that we include a definition of certificate
in the regulations. Therefore, we are proposing to amend the
regulations by removing the definitions for the three types of
certificates and adding a definition of certificate to the regulations
to read as follows: ``Any certificate issued by or on behalf of APHIS
describing the phytosanitary condition of a shipment of plants or plant
products for export, including but not limited to, Phytosanitary
Certificate (PPQ Form 577), Export Certificate for Processed Plant
Products (PPQ Form 578), and Phytosanitary Certificate for Reexport
(PPQ Form 579).''

Executive Order 12866 and Regulatory Flexibility Act

This proposed rule has been reviewed under Executive Order 12866.
The rule has been determined to be significant for the purposes of
Executive Order 12866 and, therefore, has been reviewed by the Office
of Management and Budget.
For this proposed rule, we have prepared an economic analysis. The
economic analysis provides a cost-benefit analysis as required by
Executive Order 12866 and an initial regulatory flexibility analysis
that examines the potential economic effects on small entities as
required by section

[[Page 32227]]

603 of the Regulatory Flexibility Act. The economic analysis is
summarized below. Copies of the full analysis are available by
contacting the persons listed under FOR FURTHER INFORMATION CONTACT and
may be viewed on the Regulations.gov Web site (see ADDRESSES above for
instructions for accessing Regulations.gov).
This proposed rule would amend the user fees for certifying plants
and plant products for export (7 CFR 354.3(g)). This proposed rule
would also make several other changes to clarify the regulations. In
addition to updating and clarifying the current user fees, this
proposal would add an administrative user fee for each export
certificate issued on behalf of APHIS by a U.S. State or county in
order to recover administrative costs associated with providing that
service.\3\
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\3\ In California, county inspectors are authorized to issue
Federal export certificates under a memorandum of understanding
(MOU) between the California Department of Agriculture (CDFA) and 55
participating counties. This MOU mirrors the requirements set forth
between USDA and States.
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The adjusted and new fees proposed in this rule are designed to
recover our full costs for providing plant and plant product export
certification services and to allow for a reasonable reserve to ensure
that we have sufficient operating funds in cases of fluctuations in
activity volumes or unanticipated events that could impact the program.
The proposed fees are based on an analysis of our costs for providing
these services in FYs 2004 through 2006, as well as our best
projections of what it would cost us to provide these services in FYs
2007 through 2012. APHIS is updating these fees to take into account
the routine increases in the cost of doing business, such as inflation,
replacing equipment, maintaining databases, etc., as well as to
properly cover our costs for new hires, training, automation
initiatives, and rent, and to build a reserve balance in this account.
A wide variety of commodities are potentially eligible for
certification under the APHIS export certification program. Eligibility
requirements vary by commodity and in some cases by the degree of
processing or treatment that has occurred. The demand for certification
by exporters is driven by the phytosanitary requirements of importing
countries. Eligible commodities generally include live plants, fresh
and some dried fruits, vegetables and nuts, unroasted coffee, cereals,
milling products, oil seeds, raw sugar, tobacco, wood, and cotton. We
cannot place a specific value on the commodities that have been
certified for export. However, in 2004, exports of the covered
commodity categories were valued at nearly $41 billion.\4\ In addition,
products in these commodity categories valued at more than $1.5 billion
were reexported in 2004.
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\4\ These values may overstate the value of commodities
certified by APHIS, PPQ in these years. In order to have been
certified, a given commodity must have met the eligibility
requirements, and have been presented for certification. However,
these are the categories covering potentially eligible commodities,
and commodities within these general categories that are
categorically not eligible for certification, such as refined sugar
and frozen fruit and vegetables, are not included here.
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The export certification services covered in this proposal are
provided to U.S. exporters of plants and plant products. These
exporters include those entities shipping plant and plant products to
foreign destinations for commercial as well as noncommercial purposes.
These exporters would be the main affected entities of this proposal.
In addition, State and county governments would be affected by this
proposal.
Under this proposed rule, the user fee for the certification of a
commercial or reexport shipment would increase from $50 to $99 in FY
2007. Additional yearly increases would raise the fee to $106 by FY
2012. This proposed rule would also increase the user fee for low-value
commercial or reexport shipments and noncommercial shipments from $23
to $57 in FY 2007 and to $61 by FY 2012, with yearly increases. The
user fee for replacing any export certificate would rise from $7 to $14
in FY 2007 and to $15 by FY 2012. The proposed new administrative user
fee for each certificate issued on behalf of APHIS by a U.S. State or
county would be set at $16 in FY 2007 and ultimately rise to $17 by FY
2012.
Table 4 shows the projected collections under the user fees covered
in this proposal for FY 2007 through FY 2012. The increased revenues
would go to cover the projected costs of administering the program and
building a reserve to ensure that we have sufficient operating funds in
cases of fluctuations in activity volumes or unanticipated events that
could impact the program. The largest increase in collections would
occur in FY 2007.

Table 4.--Projected Revenue Collections From Proposed User Fees
[In millions of dollars]
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Collections from proposed user fees
Service -----------------------------------------------------------
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012
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Commercial shipment................................. $15.4 $15.7 $16.2 $16.5 $16.8 $17.3
Noncommercial and low-value shipments............... 0.5 0.5 0.5 0.5 0.5 0.5
Replacement......................................... 0.1 0.1 0.1 0.1 0.1 0.1
State or county issued.............................. 2.5 2.5 2.5 2.7 2.7 2.8
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Total........................................... 18.5 18.8 19.3 19.8 20.2 20.7
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To the extent that the proposed changes in user fees would impact
exporters' operational costs, any entity that utilizes APHIS' export
certification services that are subject to user fees could be affected
by this proposed change. The degree to which any entity may be affected
would depend on its market power (the ability to which costs can be
either absorbed or passed on to its buyers). While the lack of
information on profit margins and operational expenses of the affected
entities, or the supply responsiveness of the affected industry,\5\
prevents the precise prediction of the scale of impacts, some
conclusions on overall potential impacts on domestic and international
commerce can be drawn.
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\5\ The measurement of supply responsiveness would provide
information on the likely impact on an entity's production due to
changes in operating costs.
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The proposed percentage increases in user fees would be significant
primarily in the first year. In all cases, the increase over current
fees would be at least 98 percent in FY 2007. If the user fees

[[Page 32228]]

cannot be passed on, the profit margins of some entities may decline as
user fees are increased. If a user fee does not cover all associated
costs, those costs are shifted away from those receiving and
benefitting from the service and onto APHIS, and thus ultimately to the
taxpayer.
As noted above, this proposed rule would increase the user fee for
commercial export and reexport certification from $50 to $99 in FY 2007
and to $106 by FY 2012. In comparison with the current fees, these
adjusted fees could generate additional annual collections of $7.6
million in the first year of the proposal period and about $8.7 million
in FY 2012. This fee would increase by a total of 108 percent over its
current level during the period covered by the proposed rule. However,
the total impact of these changes should be small. The total dollar
value of the fee increases covered in this proposal, $56, would
represent a tiny fraction of the value of those shipments. To put these
fees in perspective, at the proposed level, this fee category is
projected to generate total collections of $15.4 million in FY 2007,
while exports and reexports of eligible commodities were valued at more
than $42 billion in 2004. The total collections would represent less
than 0.04 percent of the value of those shipments.
The Regulatory Flexibility Act requires that agencies specifically
consider the economic impact of their rules on small entities. As noted
earlier, exporters of plants and plant products would be the domestic
entities most affected by this proposed rule. The overwhelming majority
of these entities (at least 96 percent of each of the categories
described below) fall under the Small Business Administration's (SBA's)
definition of small entities.
Exporters of plants and plant products are part of the wholesale
trade sector of the U.S. economy. These entities either sell goods on
their own account (export merchants) or arrange for the sale of goods
owned by others (export agents and brokers). Exporters of wood fall
under the North American Industry Classification System (NAICS) code
423310, ``Lumber, plywood, millwork, and wood panel merchant
wholesalers.'' The average firm in this category had sales of $11.6
million in 2002. Exporters of Fruit and Vegetables fall under NAICS
code 424480, ``Fresh fruit and vegetable merchant wholesalers.'' The
average firm in this category had sales of $10 million in 2002.
Exporters of grains, such as corn, wheat, oats, barley, and unpolished
rice, as well as dry beans and soybeans, are under NAICS code 424510,
``Grain and field bean merchant wholesalers.'' The average firm in this
category had sales of $28 million in 2002. Exporters of leaf tobacco
are covered under NAICS code 4245902, ``Leaf tobacco merchant
wholesalers.'' The average firm in this category had sales of $8.1
million in 2002. Exporters of cotton are under NAICS code 4245904,
``Cotton merchant wholesalers.'' The average firm in this category had
sales of $35.3 million in 2002. Exporters of plant seeds and plant
bulbs are under NAICS code 424910, ``Farm supplies merchant
wholesalers.'' The average firm in this category had sales of $11
million. Exporters of flowers and nursery stock are under NAICS code
434930 ``Flower, nursery stock, and florists' supplies merchant
wholesalers.'' The average firm in this category had sales of $2.4
million in 2002. Exporters of various other farm product raw materials,
such as Christmas trees, fall under NAICS code 4249904, ``Other
nondurable goods merchant wholesalers.'' The average firm in this
category had sales of $2.2 million in 2002.
Based on the above, it can be seen that our proposed fee increases
would be very small relative to the revenues generated by exporters of
plants and plant products, the overwhelming majority of which are
small, according to SBA criteria. Thus, we expect that the impact of
the fee increases on small entities should be limited. We welcome any
additional information or comments from the public regarding the impact
of this proposed rule on small entities.
If a commercial export or reexport shipment is valued at less than
$1,250, the fee for certification in this proposal for FY 2007 would be
$57, an increase from $23. The new fee would represent at least 4.6
percent of the value of the shipment. This is not an insignificant
percentage. However, the impact of the fee increase may be mitigated to
the degree that individual low-value shipments can be consolidated into
single shipments for certification.
This proposed rule would increase the user fee for noncommercial
export and reexport certification from $23 to $57 in FY 2007, and to
$61 by FY 2012. Combined with the changes for low-value commercial
shipments, these changes could generate additional annual collections
of $284,000 in the first year of the proposal period, increasing to
about $333,000 in FY 2012. These fees would increase by a total of 161
percent over current levels during the period covered by the proposed
rule. However, it is estimated that only about 8,500 of these
certificates are issued annually.
This proposed rule would increase the user fee for replacing any
export certificate from $7 to $14 in FY 2007, and to $15 by FY 2012.
Compared with the current fees, these adjusted fees could generate
additional annual collections of $48,000 in the first year of the
proposal period and about $58,000 in FY 2012. While this increase is a
doubling of the fee, its impact should still be small.
There are administrative costs to APHIS associated with the running
of the export certification program nationwide, regardless of whether
APHIS or a State or county cooperator issues the certificate. The
proposed user fees for APHIS-issued certificates would recover these
administrative costs. This proposed rule would initiate an
administrative user fee for each export certificate issued on behalf of
APHIS by a State or county in order to recover the costs APHIS incurs
in supporting these State and county operations. The user fee for
State-or county-issued Federal export certificates would be set at $16
in FY 2007 and increase to $17 by FY 2012. These changes could generate
additional annual collections of $2.5 million in the first year of the
proposal period and about $2.8 million by FY 2012.
As noted earlier, the administrative fee for Federal export
certificates issued by State and county cooperators could be collected
directly from the exporter by APHIS through the PCIT; however, in
certain circumstances, such as when the exporter cannot or will not use
the PCIT, the burden of collecting this administrative fee and
remitting it to APHIS would fall directly on the State or county
issuing the Federal export certificate. As a result, States and
counties that do not utilize the PCIT would be likely to incur some
administrative and recordkeeping costs. However, additional costs
should be low because in most cases, alternative mechanisms are already
in place for collecting export certification fees. To the extent that a
State or county were to increase the fees it charges in order to
incorporate the new administrative fee and pass the increased
administrative and recordkeeping costs onto exporters, it would shift
the burden of the fee to the user.
Any fee charged for export services performed by a State or county
is determined by the individual State or county performing the service.
Currently, States/counties charge from $0 to $212 \6\ for a commercial
export

[[Page 32229]]

certificate, with an average of about $28; and from $0 to $50 for a
noncommercial certificate, with an average of about $19. States/
counties currently charge from $0 to $75, with an average of about $16
to replace a commercial certificate, and from $0 to $50, with an
average of about $15 to replace a noncommercial certificate. Thirty-
five States have charges for issuing certificates. Twelve States have
fee structures that duplicate APHIS' fee structure.\7\ These fees could
well change following the implementation of this rule to incorporate
the Federal administrative fee, thereby shifting the burden of the fee
to the users.
---------------------------------------------------------------------------

\6\ One county has a sliding scale based upon the commodity
being shipped that ranges from $22 to $212.
\7\ Kadix systems. United States Department of Agriculture,
Animal & Plant Heath Inspection Service, Plant Protection and
Quarantine; Analysis of the Export User Fee Program; Final Report.
December 2004.
---------------------------------------------------------------------------

About 70 percent of export certificates issued in California in
2003 were written in eight counties, six of which have rate structures
currently higher than those of the USDA. Only 10 States and 2
California counties do not have current legislative authority to charge
for these certificates. These 10 States and 2 counties account for
approximately one-tenth of the certificates issued by States/counties
in a given year.
In assessing the need for this proposed rule, we considered
alternatives to the chosen course of action. These alternatives are
discussed below.
One alternative to this proposed rule would be to leave the
regulations unchanged. In this case, the fees would remain unchanged.
However, these fees were last updated in 1996 and will no longer
recover the full cost of providing certification services. The existing
fees will not cover the routine increases in the cost of doing
business, such as inflation, replacing equipment, maintaining
databases, etc. If APHIS were to continue to collect user fees at the
current rates in FYs 2007 through 2012, total collections would be
about $63 million short of projected program costs over that period.
Therefore, this alternative was rejected.
Another alternative we considered was not adding the proposed
administrative user fee for each certificate issued on behalf of APHIS
by a U.S. State or county. However, APHIS' activities support these
State and county operations, as well as our nationwide export
certification functions. APHIS' costs for printing, distributing, and
tracking these State/county issued certificates, as well as associated
overhead costs, would not be recovered under the current user fees. The
users who obtain export certification issued by a State or county on
APHIS' behalf would only pay the costs that the State or county incurs
in issuing the certificate. Therefore, this alternative was rejected.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic
Assistance under No. 10.025 and is subject to Executive Order 12372,
which requires intergovernmental consultation with State and local
officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988,
Civil Justice Reform. If this proposed rule is adopted: (1) All State
and local laws and regulations that are inconsistent with this rule
will be preempted; (2) no retroactive effect will be given to this
rule; and (3) administrative proceedings will not be required before
parties may file suit in court challenging this rule.

Paperwork Reduction Act

This proposed rule contains no information collection or
recordkeeping requirements under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.).

List of Subjects in 7 CFR Part 354

Animal diseases, Exports, Government employees, Imports, Plant
diseases and pests, Quarantine, Reporting and recordkeeping
requirements, Travel and transportation expenses.

Accordingly, we propose to amend 7 CFR part 354 as follows:

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

1. The authority citation for part 354 would continue 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.

2. Section 354.3 would be amended as follows:
a. In paragraph (a), by removing the definitions of export
certificate for processed products, phytosanitary certificate, and
phytosanitary certificate for reexport, and adding a new definition of
certificate, in alphabetical order, to read as set forth below.
b. In paragraph (g), by removing paragraphs (g)(2) and (g)(5); by
redesignating paragraphs (g)(3) and (g)(4) as (g)(4) and (g)(5),
respectively; and by revising paragraph (g)(1) and adding new
paragraphs (g)(2) and (g)(3) to read as set forth below.
c. By revising paragraph (h) to read as set forth below.

Sec. 354.3 User fees for certain international services.

(a) * * *
* * * * *
Certificate. Any certificate issued by or on behalf of APHIS
describing the condition of a shipment of plants or plant products for
export, including but not limited to Phytosanitary Certificate (PPQ
Form 577), Export Certificate for Processed Plant Products (PPQ Form
578), and Phytosanitary Certificate for Reexport (PPQ Form 579).
* * * * *
(g) * * * (1) For each certificate issued by APHIS personnel, the
recipient must pay the applicable AQI user fee at the time and place
the certificate is issued, or, in the case of a prepaid block of
certificates (only certificates for commercial shipments may be
purchased in this way), at the time the certificates are given to the
shipper.
(2) When the work necessary for the issuance of a certificate is
performed by APHIS personnel on a Sunday or holiday, or at any other
time outside the regular tour of duty of the APHIS personnel issuing
the certificate, in addition to the applicable user fee, the recipient
must pay the applicable overtime rate in accordance with 7 CFR part
354.
(3)(i) Each exporter who receives an export or reexport certificate
issued on behalf of APHIS by a designated State or county inspector
must pay an AQI user fee, as shown in the following table. The AQI user
fee will be remitted by the exporter directly to APHIS through the
Phytosanitary Certificate Issuance and Tracking System (PCIT), provided
that the exporter has a PCIT account and submits the application for
the export certificate through the PCIT. If the PCIT is not used, the
State or county issuing the certificate is responsible for collecting
the fee and remitting it monthly to the U.S. Bank, United States
Department of Agriculture, APHIS, AQI, P.O. Box 979043, St. Louis, MO
63197-9000.

[[Page 32230]]

October 1, 2009, through September 30, 2010............. 17
October 1, 2010, through September 30, 2011............. 17
Beginning October 1, 2011............................... 17
------------------------------------------------------------------------

(ii) The AQI user fees for an export or reexport certificate for a
commercial shipment are shown in the following table.

------------------------------------------------------------------------
Amount per
Effective dates shipment
------------------------------------------------------------------------
[Effective date of final rule] through September 30, $99
2007...................................................
October 1, 2007, through September 30, 2008............. 100
October 1, 2008, through September 30, 2009............. 102
October 1, 2009, through September 30, 2010............. 103
October 1, 2010, through September 30, 2011............. 104
Beginning October 1, 2011............................... 106
------------------------------------------------------------------------

(iii) The AQI user fees for an export or reexport certificate for a
low-value commercial shipment are shown in the following table. A
commercial shipment is a low-value commercial shipment if the items
being shipped are identical to those identified on the certificate; the
shipment is accompanied by an invoice which states that the items being
shipped are worth less than $1,250; and the shipper requests that the
user fee charged be based on the low value of the shipment.

------------------------------------------------------------------------
Amount per
Effective dates shipment
------------------------------------------------------------------------
[Effective date of final rule] through September 30, $57
2007...................................................
October 1, 2007, through September 30, 2008............. 58
October 1, 2008, through September 30, 2009............. 59
October 1, 2009, through September 30, 2010............. 59
October 1, 2010, through September 30, 2011............. 60
Beginning October 1, 2011............................... 61
------------------------------------------------------------------------

(iv) The AQI user fees for an export or reexport certificate for a
noncommercial shipment are shown in the following table.

------------------------------------------------------------------------
Amount per
Effective dates shipment
------------------------------------------------------------------------
[Effective date of final rule] through September 30, $57
2007...................................................
October 1, 2007, through September 30, 2008............. 58
October 1, 2008, through September 30, 2009............. 59
October 1, 2009, through September 30, 2010............. 59
October 1, 2010, through September 30, 2011............. 60
Beginning October 1, 2011............................... 61
------------------------------------------------------------------------

(v) The AQI user fees for replacing any certificate are shown in
the following table.

------------------------------------------------------------------------
Amount per
Effective dates certificate
------------------------------------------------------------------------
[Effective date of final rule] through September 30, $14
2007...................................................
October 1, 2007, through September 30, 2008............. 14
October 1, 2008, through September 30, 2009............. 15
October 1, 2009, through September 30, 2010............. 15
October 1, 2010, through September 30, 2011............. 15
Beginning October 1, 2011............................... 15
------------------------------------------------------------------------

* * * * *
(h) Refunds of AQI user fees. (1) A shipper who pays for a block of
certificates to cover commercial shipments may obtain a refund under
the following circumstances:
(i) If a certificate from the block is voided prior to its being
signed by a certifying official;
(ii) If a certificate from the block is returned in its original,
unused condition;
(iii) If a certificate from the block is used for a noncommercial
shipment; or
(iv) If a certificate from a block is used to replace another
certificate that has been lost or destroyed, provided that the
certificate is issued as a duplicate certificate, without changes.
(2) The amount of any refund for a certificate issued by APHIS will
be determined by APHIS based on the difference between the cost of
purchasing the certificate and the cost that applies to its actual use
or disposition. In the case of a certificate issued on behalf of APHIS
by a designated State or county inspector, the amount listed in
paragraph (g)(3)(i) of this section will not be refunded.
* * * * *

Done in Washington, DC, this 6th day of June 2007.
Bruce Knight,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. E7-11278 Filed 6-11-07; 8:45 am]

BILLING CODE 3410-34-P