[Federal Register Volume 63, Number 147 (Friday, July 31, 1998)]
[Proposed Rules]
[Pages 40842-40843]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-20453]


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 Proposed Rules
                                                 Federal Register
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 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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  Federal Register / Vol. 63, No. 147 / Friday, July 31, 1998 / 
Proposed Rules  

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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 46

[Docket Number FV98-359]


Regulations Under the Perishable Agricultural Commodities Act 
(PACA); Renewal of License

AGENCY: Agricultural Marketing Service, USDA

ACTION: Proposed rule.

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SUMMARY: The Department of Agriculture (USDA) invites comments on 
proposed revisions to the PACA Regulations to provide for a three-year 
license renewal period for retailers and grocery wholesalers, and 
provide all other licensees the option of renewing their licenses on an 
annual, biennial, or triennial basis. The PACA Amendments of 1995 (1995 
Amendments) provided for the gradual elimination of license fees for 
retailers and grocery wholesalers over a three-year period ending 
November 14, 1998. The 1995 Amendments also gave the Secretary of 
Agriculture the authority to determine the interval for renewing 
licenses and asked the Secretary to take due account of savings to the 
program when determining the appropriate intervals for license 
renewals.

DATES: Comments must be received by September 14, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposal. Comments must be sent to Charles W. Parrott, 
Assistant Chief, PACA Branch, Fruit and Vegetable Division, AMS, USDA, 
Room 2095-So. Bldg., P.O. Box 96456, Washington, D.C. 20090-6456, 
E[email protected]. All comments should reference the 
docket number and the date and page number of this issue in the Federal 
Register and will be made available for public inspection in the PACA 
Branch during regular business hours.

FOR FURTHER INFORMATION CONTACT: Charles W. Parrott, Assistant Chief, 
PACA Branch, Room 2095-So. Bldg., Fruit and Vegetable Division, AMS, 
USDA, Washington, D.C. 20250, Phone (202) 720-4180, Email_
[email protected].

SUPPLEMENTARY INFORMATION: This proposal is issued under authority of 
section 15 of the PACA (7 U.S.C. 499o).

Background

    The Perishable Agricultural Commodities Act (PACA or Act) 
establishes a code of fair trading practices for the marketing of fresh 
and frozen fruits and vegetables in interstate and foreign commerce. 
The Act provides a forum to adjudicate private disputes that awards 
damages against licensees which fail to meet their contractual 
obligations in violation of the PACA. The Act also imposes a statutory 
trust on perishable agricultural commodities received but not yet paid 
for, products derived from those commodities, and any receivables or 
proceeds due from the sale of those commodities or products thereof for 
the benefit of unpaid suppliers or sellers. In these ways, the PACA 
protects growers, shippers, distributors, and retailers dealing in 
those commodities from unfair and fraudulent trade practices, and thus 
fosters an efficient nationwide distribution system for fresh and 
frozen fruits and vegetables, benefiting the whole marketing chain from 
farmer to consumer. USDA's Agricultural Marketing Service (AMS) 
administers and enforces the PACA.
    In accordance with the 1995 Amendments, retailers and grocery 
wholesalers will no longer pay a license fee under the PACA after 
November 14, 1998, but will still be required to maintain a valid 
license. The 1995 Amendments also authorized the Secretary of 
Agriculture to determine the interval for renewing licenses for all 
licensees, taking into account the likely savings to the program. The 
House of Representatives Committee on Agriculture, in it's report 
accompanying the 1995 Amendments, asked USDA to promptly examine the 
necessity for a yearly renewal requirement for retailers and grocery 
wholesalers in an effort to move toward multi-year licenses.
    The proposed rule will shift retailers and grocery wholesalers--who 
will no longer pay license fees after November 14, 1998--to a triennial 
license renewal interval beginning on the effective date of this rule. 
We estimate that this will save the program over $40,000 per year based 
on processing renewal applications from approximately 5,000 retailers 
and grocery wholesalers, at a cost of about $8 per renewal.
    Each of the remaining 10,000 licensees (commission merchants, 
brokers, wholesalers, processors, truckers, food service), all of which 
shall continue to pay license fees, will have the option of renewing 
their licenses on an annual, biennial, or triennial basis. The option 
will be available to both new license applicants and to existing 
licensees at the time of license renewal. By offering the multi-year 
renewal option to these licensees, we estimate savings to the PACA 
program could be as great as $81,000/year (10,000 businesses paying 
license fees x $8 cost to process renewal), depending on the number of 
fee-paying licensees that choose a multi-year renewal option.
    As reflected in the proposed regulations, beginning on the 
effective date of this rule, all new licenses issued to retailer and 
grocery wholesaler applicants will be issued with a triennial renewal 
term. Retailers and grocery wholesalers that are currently licensed 
will be gradually shifted to a triennial license renewal term over the 
next three-year period. They would be notified of the change in their 
license renewal period through the normal renewal process. Under the 
current process, AMS mails each licensee a license renewal application 
at least 30 days prior to its PACA license anniversary date and 
notifies each licensee of the requirement that the license must be 
renewed by its anniversary date.
    Staggering the new triennial renewal period for retailers and 
grocery wholesalers over a three-year period will guard against an 
inundation of renewal applications three years from now which would 
likely increase program administrative costs. The phase-in will be 
implemented as follows: During the first year of the phase-in period, 
retailers and grocery wholesalers holding current licenses ending in 
the digits ``0,'' ``3,'' ``6,'' or ``9,'' would renew their licenses on 
a triennial basis; retailers and grocery wholesalers holding licenses 
that end in

[[Page 40843]]

the digits ``1,'' ``4,'' or ``7,'' would renew their licenses this year 
for a 2-year term, and thereafter on a triennial basis; and retailers 
and grocery wholesalers holding licenses that end in the digits ``2,'' 
``5,'' or ``8,'' would renew their licenses after one year, and 
thereafter on a triennial basis.
    As proposed, the regulations will provide all remaining licensees 
with the option of renewing licenses on an annual, biennial, or 
triennial basis. By choosing the biennial or triennial renewal option, 
licensees would ``lock in'' the current license fee rate for a two or 
three-year period, thus guarding against paying any additional license 
fees resulting from a fee increase during that interval. The proposed 
regulations also provide for a refund of any unused annual license fees 
to those firms required to obtain a new license due to a change in 
legal status (e.g.: a partnership of two becomes a partnership of three 
individuals; a sole proprietor incorporates; or a firm re-
incorporates), and to those firms that cease business operations or 
whose license terminates because of bankruptcy. In those instances, 
USDA would issue refunds only for the full years remaining on the 
license. For example, a wholesaler that obtains a three year license 
and then ceases business operations within the first year of the 
license would be issued a refund of license fees for years two and 
three. However, to cover the administrative costs associated with 
processing the early termination of a license, USDA would assess the 
entity licensee a $100 processing fee.

Executive Orders 12866 and 12988

    This rule, issued under the Perishable Agricultural Commodities Act 
(7 U.S.C. 499 et. seq.), as amended, has been determined to be not 
significant for the purposes of Executive Order 12866.
    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This proposed rule is not intended to have 
retroactive effect. This proposed rule will not preempt any State or 
local laws, regulations, or policies, unless they present an 
irreconcilable conflict with this rule. There are no administrative 
procedures which must be exhausted prior to any judicial challenge to 
the provisions of this rule.

Effects on Small Businesses

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et. seq.), USDA has considered the economic 
impact of this proposed rule on small entities. The purpose of the RFA 
is to fit regulatory actions to the scale of businesses subject to such 
actions in order that small businesses will not be unduly or 
disproportionately burdened. Small agricultural service firms have been 
defined by the Small Business Administration (13 CFR 121.601) as those 
whose annual receipts are less than $5,000,000. The PACA requires all 
businesses that operate subject to its provisions maintain a license 
issued by USDA. There are approximately 15,700 PACA licensees, a 
majority of which may be classified as small entities.
    In accordance with the PACA Amendments of 1995, retailers and 
grocery wholesalers will no longer pay a fee to be licensed under the 
PACA after November 14, 1998. The proposed regulations would establish 
a 3-year renewal cycle for all retailers and grocery wholesalers 
licensed under the PACA. Given that those PACA licensees would renew 
their licenses on a triennial rather than an annual basis as is 
currently required, we anticipate that they would have lower 
administrative costs and a reduction in their record keeping and 
reporting burden.
    In addition, we project that the administrative costs and record 
keeping requirements for the remaining fee-paying licensees would, like 
the retailers and grocery wholesalers, be reduced if they choose the 
biennial or triennial renewal options. We believe that their greatest 
savings would result from choosing the triennial renewal option, with a 
lesser degree of savings resulting from the biennial renewal option.
    Finally, we project that all fee-paying licensees would indirectly 
benefit from the cost savings realized from the proposed revisions to 
the PACA program, which is funded through the fees paid by licensees. 
Any cost savings to the program would help delay the need for an 
increase in fees to fund the program.
    Accordingly, based on the information in the above discussion, USDA 
has determined that the provisions of this rule would not have a 
significant economic impact on a substantial number of small entities.

Paperwork Reduction Act

    In compliance with Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act of 1995 (Pub. L. 104-13), the information collection and record 
keeping requirements covered by this proposed rule were approved by OMB 
on April 1, 1998, and expire on April 30, 2001.

List of Subjects in 7 CFR Part 46

    Agricultural commodities, Brokers, Penalties, Reporting and record 
keeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 46 is 
proposed to be amended as follows:

PART 46--[AMENDED]

    1. The authority citation for part 46 continues to read as follows:

    Authority: Sec. 15, 46 Stat. 537; 7 U.S.C. 499o.

    2. In Sec. 46.9, paragraphs, (j), (k), and (l) would be added, as 
follows:


Sec. 46.9  Termination, suspension, revocation, cancellation of 
licenses; notices; renewal.

* * * * *
    (j) Beginning on [the effective date of the final rule] the renewal 
period for new licenses issued to retailers and grocery wholesalers is 
three years.
    (k) Beginning on [the effective date of the final rule] commission 
merchants, brokers, and dealers (other than grocery wholesalers and 
retailers) who are new or existing licensees, may choose to renew their 
licenses on an annual, biennial, or triennial basis. In the event that 
the holder of a multi-year license ceases business operations or 
undergoes a change in legal status that results in the issuance of a 
new license prior to the next license renewal date, a refund will be 
issued of any remaining full-year portion of advance fee paid, minus a 
$100 processing fee.
    (l) Retailers and grocery wholesalers who are existing licensees as 
of [the effective date of the final rule] will be phased into the three 
year renewal process during the succeeding one-year as follows:
    (1) Licenses held by retailers and grocery wholesalers ending in 
the digits ``0,'' ``3,'' ``6,'' or ``9,'' will be renewed on a 
triennial basis.
    (2) Licenses held by retailers and grocery wholesalers ending in 
the digits ``1,'' ``4,'' or ``7,'' will be renewed after two years and 
thereafter on a triennial basis.
    (3) Licenses held by retailers and grocery wholesalers ending in 
the digits ``2,'' ``5,'' or ``8,'' will renew their licenses after one 
year and thereafter on a triennial basis.

    Dated: July 27, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-20453 Filed 7-30-98; 8:45 am]
BILLING CODE 3410-02-P