Increase In User Fees Likely To Be Proposed on Agricultural Products

On May 1 the U.S. Department of Agriculture’s Animal Plant Health Inspection Service (APHIS) announced to industry and transportation providers to expect anTruck Border Crossing increase in user fees in coming months for necessary inspections of international passengers and cargo at U.S. points of entry (known as the Agricultural Quarantine Inspection Program (AQI).  APHIS shares the mission of safeguarding U.S. agriculture and natural resources with the Department of Homeland Security’s Custom and Border Protection (CBP). Both APHIS and CBP adopt policies and regulations dealing with plant and animal products entering the U.S. , identifying invasive pests, training employees of the Custom and Border Protection Agricultural Division and conducting risk assessments on multiple products and shipping routes.  Their joint safeguarding mission ensures U.S. consumers an abundant, high-quality, safe variety of foods while strengthening the marketability of U.S. agriculture products both at home and abroad.

The announcement comes after the Government Accountability Office (GAO) released a follow-up report in March 2013 GAO Report March 2013 on the need to better align fee revenues with program costs.  In FY 2011 those total costs amounted to $861 million, while the fees collected were $534 million, a deficit of -$327 million.

Facing constricting budgets and the deficit in the AQI program, two years ago APHIS contemplated increasing user fees by as much as 10 percent.  But with the guidance of industry stakeholders APHIS held off and instead contracted with a leading consulting firm to conduct in-depth research of the AQI program and the distribution of costs among all categories in the program.  Their research found similar results as GAO. Here are the categorized results:

 AQI Total Program Cost FY 2010

$860.35 million

 APHIS Costs were $183.56 million, or 19 percent of the total, and

CBP Costs were $676.79 million, or 81 percent of the total.

 The breakdown of these costs include:

 Fee Service                         FY 2010 Cost                       FY 2010 Revenue

 (in million $)

Air Passengers                  $275.3                             $410.2

Commercial Aircraft        $171.7                             $  50

Commercial Truck            $  71.5                             $  13.9

Commercial Vessel          $113.4                             $  25.5

Commercial Rail                $    4.74                         $    7.9

TOTAL                        $860.35                            $507.45

 Using FY 2010 as the base, future estimates for AQI user fees were derived by calculating:

  • APHIS and CBP overhead and future initiatives,
  • APHIS and CBP costs by activities,
  • workload data,
  • pay inflation through FY 2016,
  • AQI fee authorities, and
  • Federal Accounting Standards Advisory Board guidance on full costs recovery.

The total AQI cost projections are as follows:

FY 2014:                $948.9 million, an increase of 10.29 percent from FY 2010

FY 2015:                $957.6 million, 1 percent increase from FY 2014

FY 2016:                $966.4 million, 1 percent increase from FY 2015

USDA-APHIS will brief the White House Office of Management and Budget on the results of their research in the ensuing weeks.  APHIS is expected to announce a Notice of Public Rulemaking by the end of the calendar year that will propose the new user fees.  APHIS has indicated that during the comment period of the Proposed Rule they will take into consideration new user fees.  GAO’s criteria to assess options will also be closely adhered to and include: efficiencies provided, equity in paying for what is used, revenue adequacy and administrative burdens.

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Tim Cansler