[Federal Register Volume 70, Number 135 (Friday, July 15, 2005)]
[Proposed Rules]
[Pages 40921-40924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-13946]


 ========================================================================
 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. 70, No. 135 / Friday, July 15, 2005 / 
Proposed Rules  

[[Page 40921]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 97

[Doc.  ST-05-02]
RIN 0581-AC42


Plant Variety Protection Office, Fee Increase

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Agricultural Marketing Service (AMS) proposes to increase 
Plant Variety Protection (PVP) Office application, search, and 
certificate issuance fees by 20 percent. The last general fee increase 
in February 2003 is no longer adequate to cover current program 
obligations for administrative and information technology needs. The 
PVP Act of 1970 requires that reasonable fees be collected from 
applicants seeking certificates of protection in order to maintain the 
program. Also, a technical amendment would allow applicants to send 
voucher seed samples directly to the public repository.

DATES: Comments must be received on or before August 15, 2005.

ADDRESSES: Interested persons are invited to submit comments concerning 
this proposed rule. Comments should be sent in triplicate to Dr. Paul 
Zankowski, Commissioner, PVP Office, Room 401, NAL Building, 10301 
Baltimore Boulevard, Beltsville, MD 20705, telephone 301-504-5518, fax 
301-504-5291, [email protected], and should refer to the docket title 
and number located in the heading of this document. Comments received 
will be available for public inspection at the same location, between 
the hours of 10 a.m. and 4 p.m., Monday through Friday, except Federal 
holidays.

FOR FURTHER INFORMATION CONTACT: Janice M. Strachan, USDA, AMS, Science 
and Technology (S&T), PVP Office, NAL Building, Room 401, 10301 
Baltimore Avenue, Beltsville, MD 20705-2351, telephone 301-504-5518, 
fax 301-504-5291, and e-mail [email protected].

SUPPLEMENTARY INFORMATION: 

I. Executive Order 12866

    This proposed rule has been determined to be not significant for 
the purposes of Executive Order 12866, and therefore, was not reviewed 
by the Office of Management and Budget (OMB).

II. Regulatory Flexibility Act

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601 et seq.), the Agricultural Marketing Service 
(AMS) has considered the economic impact of this action on small 
business entities. There are more than 800 users of the PVP's variety 
protection service, of whom about 100 may file applications in a given 
year. Some of these users are small business entities under the 
criteria established by the Small Business Administration (13 CFR 
121.201). The AMS has determined that this action would not have a 
significant economic impact on a substantial number of these small 
business entities.
    The Plant Variety Protection (PVP) Office administers the PVP Act 
of 1970, as amended (7 U.S.C. 2321 et seq.), and issues Certificates of 
Protection that provide intellectual property rights to developers of 
new varieties of plants. A Certificate of Protection is awarded to an 
owner of a variety after examination indicates that it is new, distinct 
from other varieties, genetically uniform, and stable through 
successive generations. This action will raise the fees charged to 
users of plant variety protection. The AMS estimates that the rule will 
yield an additional $277,200 during fiscal year (FY) 2006. The costs to 
private and public business entities will be proportional to their use 
of the service, and shared equitably. The costs to individual users 
will increase by $816.00 per PVP Certificate issued or by 20 percent 
per application. Plant Variety Protection is a voluntary service.
    AMS regularly reviews its user fee financed programs to determine 
if fees are adequate. The most recent review determined that the 
existing fee schedule will not generate sufficient revenue to cover the 
program's operating costs, depleting the trust fund reserve balance. 
From 1995 and through 2005, federal salaries have increased 43 percent 
and inflation has increased the cost of supplies and services by 25 
percent. The net effect on the PVP Office is an increase in overall 
expenses of 41 percent since 1995, offset by fee increases of 10 
percent in September 2000 and 35 percent in February 2003. The income 
of the PVP Office is dependent mainly on the number of new applications 
filed, which fluctuated between 277 and 354 applications since FY 2000, 
while typical operating expenses remain fixed. During this period, 
additional funding was needed for continued technological improvements 
and office relocation. In FY 2001 through FY 2004, expenses have 
exceeded income each year, despite earlier fee increases. Program 
operations were maintained by using the trust fund reserves, thus 
reducing those reserves. The PVP Office needs to adjust fees to provide 
adequate revenue for current program operations and to rebuild an 
adequate trust fund reserve. Without a fee increase, FY 2006 revenues 
are projected at $1,496,000; costs are projected at $1,614,720 for a 
loss of $118,720. The trust fund reserve would be inadequate to satisfy 
Agency policy and prudent financial management by the end of fiscal 
year 2007.
    AMS calculated the new fee schedule by projecting FY 2007 revenues 
of $1,496,000 and program obligations of $1,705,662. This indicates a 
projected loss to the program of $209,662 for FY 2007. Without a fee 
increase, the reserve balance at the end of FY 2007 is projected to 
drop to $756,796, which corresponds to 5 months of operating funds in 
the reserve balance. With a fee increase of 20 percent, FY 2007 
revenues are projected to be $1,773,200 and the trust fund reserve 
balance is expected to be $1,867,018, which corresponds to 13 months of 
operating funds in the reserve balance. This level of trust fund 
maintenance satisfies Agency requirements.
    The proposed action also will amend regulations related to the 
voucher seed sample. The voucher seed sample is a supplement to the 
Exhibit C description of the variety and is kept for the life of the 
certificate. Currently, seed samples are submitted to the PVP Office, 
which

[[Page 40922]]

then ships the seed samples to the public repository at the ARS 
facility in Ft. Collins, CO. The proposal will permit voucher seed 
samples to be submitted directly to the public repository. A small seed 
sample (15-25 seeds), which may be needed for the examination of crops 
which have distinctive seed characteristics, may be required for some 
crops at the discretion of the examiner. Periodically, the germination 
rate of the voucher seed sample is tested to verify that it remains a 
viable sample for long-term storage. These tests use up the stored seed 
sample. A larger initial seed sample is needed to ensure that 
germination testing does not deplete the stored sample.
    A new section will be added to give stakeholders guidance in how, 
when, and where to make the seed deposit. Because the PVP Office was 
handling the seed deposit, these regulations were deemed unnecessary in 
the past. Now that applicants will be depositing seeds themselves, they 
will need additional guidance in how to package the seeds, where to 
send them, and when to deposit them in relation to the filing of a PVP 
applicant. This proposed section is based on similar regulatory 
language present in the U.S. Patent and Trademark Regulations (54 FR 
34880, August 22, 1989, effective January 1, 1990). The patent-related 
text has been adapted to fit the specific circumstances of the PVP 
Office.

III. Civil Justice Reform

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This action is not intended to have retroactive effect, 
nor will it preempt any state or local laws, regulations, or policies, 
unless they present an irreconcilable conflict with the proposed rule. 
There are no administrative procedures that must be exhausted prior to 
any judicial challenge to the provisions of the rule.

IV. Paperwork Reduction Act

    This rule does not contain any information collection or record 
keeping requirements that are subject to the Office of Management and 
Budget approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35).

Background Information

    The PVP Program is a voluntary, user fee-funded service, conducted 
under the Authority of the Plant Variety Protection Act (7 U.S.C. 2321 
et seq.). The Act authorizes the Secretary of Agriculture to provide 
intellectual property rights that facilitate marketing of new varieties 
of seed-propagated crops and tubers. The Act also requires that 
reasonable fees be collected from the users of the services to cover 
the costs of maintaining the program.
    In January 2003, AMS published a rule in the Federal Register (60 
FR 17188) that increased Plant Variety Protection Office fees and that 
became effective February 2003.
    In February 2004, the AMS Budget Office performed a fee analysis 
that indicated the need to increase the program fee schedule in order 
to recover the administrative and information technology costs and 
maintain an adequate program reserve balance. For FY 2006, user fee 
revenues and program obligations are projected to be $1,496,000 and 
$1,614,720, respectively, resulting in an estimated $118,720 program 
deficit. AMS estimates that this proposed rule would yield an 
additional $227,100 during FY 2006 that will offset increased program 
operating costs. With a fee increase, FY 2007 revenues and expenditures 
are projected to be $1,773,200 and $1,705,662, respectively.
    AMS used the fees currently charged as a base for calculating the 
new fee schedule for FY 2005. The fees set forth in Sec. 97.175 as of 
February 2003 would be increased. The supplemental fees that were 
established in May 2005 will not be increased, including the $250.00 
portion of the allowance and issuance fee that was implemented to 
recover the costs of improving the PVP program's electronic archiving 
capabilities. The application fee will be increased from $432 to $518, 
the search fee from $3,220 to $3,864, and the original issuance fee 
from $432 to $518. The fees for reviving an abandoned application, 
correcting or re-issuance of a certificate are increased from $432 to 
$518. The charge for granting an extension for responding to a request 
is increased from $74 to $89. The hourly charge for any other service 
not specified will increase from $89 to $107. The fee for appeal to the 
Secretary (refundable if appeal overturns the Commissioner's decision) 
is increased from $4,118 to $4,942. Reproduction of records, drawings, 
certificates, exhibits or printed materials, late payment, and 
replenishment of seeds will increase by 20 percent. These fee increases 
are necessary to recover the costs of this fee-funded program.
    At the March 2003 annual meeting, the Plant Variety Protection 
Advisory Board was informed of the anticipated FY 2005 cost increases 
for maintaining program operations and administration. We also 
consulted with the Board regarding potential increases to the basic fee 
schedule for FY 2005. They recommended that fees be increased. This 
rule makes the minimum changes in the regulations to implement the 
recommended increased fees to maintain the program as a fee-funded 
program.
    The Plant Variety Protection Board recommended that internal 
processes related to the handling of seed samples be streamlined. 
Section 97.6(d) was recently amended to provide that cell cultures for 
tuber-reproduced varieties need not be deposited until after the 
examination has been completed, rather than at the time the application 
is filed. A similar change was made for the establishment of plots of 
vegetative material for self-incompatible parents of hybrids. The 
requirement that 2,500 seeds of the basic variety must be submitted 
while the application was modified to allow waivers of this 
requirement. This proposed rule would further simplify this process by 
applying the same requirements to seeds and allowing the applicant to 
submit a declaration that the seed sample will be deposited, rather 
than requiring that the sample be submitted with the application. This 
would increase efficiencies in the PVP Office by removing the necessity 
for the Office to routinely handle the samples and forward them to the 
National Center for Genetic Resources Preservation (NCGRP) facility in 
Ft. Collins, Colorado. The NCGRP is the only public depository approved 
by the Commissioner at the present time.
    We also propose that a larger initial seed sample be deposited to 
ensure that germination testing does not deplete the stored sample. We 
propose addition of Section 97.7, which will provide guidance to 
applicants in how, when, and where to deposit their voucher seed 
samples.
    A 30-day comment period is provided to allow interested persons the 
opportunity to respond to the proposal, including any regulatory and 
informational impact of this action on small businesses. Thirty days is 
deemed appropriate because present fees are inadequate to properly 
cover program costs and additional revenues need to be generated to 
effectively operate the program.

List of Subjects in 7 CFR Part 97

    Plants, Seeds.

    For reasons set forth in the preamble, it is proposed that 7 CFR 
part 97 be amended as follows.

[[Page 40923]]

PART 97--PLANT VARIETY AND PROTECTION

    1. The authority citation for part 97 continues to read as follows:

    Authority: 7 U.S.C. 2321 et seq.

    2. Section 97.6(d)(1) is revised to read as follows:


Sec.  97.6  Application for certificate.

* * * * *
    (d) * * *
    (1) A declaration that at least 3,000 seeds of the viable basic 
seed required to reproduce the variety will be deposited in a public 
depository approved by the Commissioner and will be maintained for the 
duration of the certificate; or
* * * * *
    3. Section 97.7 is added to read as follows:


Sec.  97.7  Deposit of Voucher Specimen.

    (a) Voucher specimen types. As regards the deposit of voucher 
specimen material for purposes of plant variety protection applications 
under 7 U.S.C. 2321 et seq., the term voucher specimen shall include 
material that is capable of self-replication either directly or 
indirectly. Representative examples include seeds, plant tissue cells, 
cell lines, and plots of vegetative material of self-incompatible 
parental lines of hybrids. Seed samples should not be treated with 
chemicals or coatings.
    (b) Need to make a deposit. Applications for plant variety 
protection require deposit of a voucher specimen of the variety. The 
deposit shall be acceptable if made in accordance with these 
regulations. Sample packages shall meet the packaging and deposit 
requirements of the depository. Samples and correspondence about 
samples shall be identified, minimally, by:
    (1) The application number assigned by the Office;
    (2) The crop kind, genus and species, and variety denomination; and
    (3) The name and address of the depositor.
    (c) Acceptable depository. A deposit shall be recognized for the 
purposes of these regulations if made in:
    (1) The National Center for Genetic Resources Preservation, USDA, 
ARS, 1111 South Mason Street, Fort Collins, CO 80521-4500; or
    (2) Any other depository recognized to be suitable by the Office. 
Suitability will be determined by the Commissioner on the basis of the 
administrative and technical competence, and agreement of the 
depository to comply with the terms and conditions applicable to 
deposits for plant variety protection purposes. The Commissioner may 
seek the advice of impartial consultants on the suitability of a 
depository. The depository must:
    (i) Have a continuous existence;
    (ii) Exist independent of the control of the depositor;
    (iii) Possess the staff and facilities sufficient to examine the 
viability and quantity of a deposit, and store the deposit in a manner 
which ensures that it is kept viable and uncontaminated;
    (iv) Provide for sufficient safety measures to minimize the risk of 
losing biological material deposited with it;
    (v) Be impartial and objective;
    (vi) Refrain from distributing samples while the application is 
being examined and during the term of protection but, after control of 
the sample is transferred by the Office to the depository, furnish 
samples of the deposited material in an expeditious and proper manner;
    (vii) Have the capability to destroy samples or return samples to 
the Office when requested by the Office; and
    (viii) Promptly notify the Office of low viability or low quantity 
of the sample.
    (3) A depository seeking status under paragraph (c)(2) of this 
section must direct a communication to the Commissioner which shall:
    (i) Indicate the name and address of the depository to which the 
communication relates;
    (ii) Contain detailed information as to the capacity of the 
depository to comply with the requirements of paragraph (c)(2) of this 
section, including information on its legal status, scientific 
standing, staff, and facilities;
    (iii) Indicate that the depository intends to be available, for the 
purposes of deposit, to any depositor under these same conditions;
    (iv) Where the depository intends to accept for deposit only 
certain kinds of biological material, specify such kinds; and
    (v) Indicate the amount of any fees that the depository will, upon 
acquiring the status of suitable depository under paragraph (c)(2) of 
this section, charge for storage, viability statements and furnishings 
of samples of the deposit.
    (4) A depository having status under paragraph (c)(2) of this 
section limited to certain kinds of biological material may extend such 
status to additional kinds of biological material by directing a 
communication to the Commissioner in accordance with paragraph (c)(3) 
of this section. If a previous communication under paragraph (c)(3) of 
this section is of record, items in common with the previous 
communication may be incorporated by reference.
    (5) Once a depository is recognized to be suitable by the 
Commissioner or has defaulted or discontinued its performance under 
this section, notice thereof will be published in the Official Journal 
of the Plant Variety Protection Office or by other methods typically 
used for dissemination of information related to the procedures of the 
Office.
    (d) Time of making an original deposit. An original deposit of 
materials for seed-reproduced plants shall be made within three months 
of the filing date of the application or prior to issuance of the 
certificate, whichever occurs first. A waiver may be granted for good 
cause, such as delays in obtaining a phytosanitary certificate for the 
importation of voucher sample materials. When the original deposit is 
made, the applicant must promptly submit a statement from a person in a 
position to corroborate the fact, stating that the voucher specimen 
material which is deposited is the variety specifically identified in 
the application as filed. Such statement must be filed in the 
application and must contain the identifying information listed in 
paragraph (b) of this section and:
    (1) The name and address of the depository;
    (2) The date of deposit;
    (3) The accession number given by the depository; and
    (4) A statement that the deposit is capable of reproduction.
    (e) Replacement or supplement of deposit. If the depository 
possessing a deposit determines either that the sample viability is low 
or that the sample quantity is low, and if this finding is made during 
the pendency of an application or during the term of protection of the 
certificate, the Office shall notify the depositor of the need for 
making a replacement or supplemental deposit. Such deposits will be 
governed by the same considerations governing the need for making an 
original deposit under the provisions set forth in paragraph (d) of 
this section. Notification to the Office concerning deposit of the 
replacement or supplemental sample shall contain a statement from a 
person in a position to corroborate the fact, stating that the 
replacement or supplemental deposit is of a biological material which 
is identical to that originally deposited.
    (f) Term of deposit. A voucher specimen deposit made in support of 
an application for plant variety protection shall be made for a term of 
at least twenty (20) years. In any case, samples must be stored under 
agreements that would make them available to the Office

[[Page 40924]]

during the enforceable life of the certificate for which the deposit 
was made.
    (g) Viability of deposit. A deposit of biological material that is 
capable of self-replication either directly or indirectly must be 
viable at the time of deposit and during the term of deposit. Viability 
may be tested by the depository periodically. The test must conclude 
only that the deposited material is capable of reproduction. No 
evidence necessarily is required regarding the ability of the deposited 
material to perform any function described in the application. If a 
viability test indicates that the deposit is not viable upon receipt or 
that the quantity of material is insufficient, the examiner shall 
proceed as if no deposit was made. The examiner will accept the 
conclusion set forth in a viability statement issued by a depository 
recognized under paragraph (c) of this section.
    (h) Furnishing of samples. A deposit must be made under conditions 
that assure that:
    (1) Public access to the deposit will not be available during 
pendency of the application or during the term of protection; and
    (2) All restrictions on the availability to the public of the 
deposited material will be irrevocably removed upon the abandonment, 
cancellation, expiration, or withdrawal of the certificate.
    (i) Examination procedures. The examiner shall determine, prior to 
issuance of the certificate, in each application if a voucher sample 
deposit actually made is acceptable for plant variety protection 
purposes.
    4. Section 97.175 is revised to read as follows:


Sec.  97.175  Fees and charges.

    The following fees and charges apply to the services and actions 
specified below:
    (a) Filing the application and notifying the public of filing--
$518.00.
    (b) Search or examination--$3,864.00.
    (c) Submission of new application data, after notice of allowance, 
prior to issuance of certificate--$432.00.
    (d) Allowance and issuance of certificate and notifying public of 
issuance--$768.00.
    (e) Revive an abandoned application--$518.00.
    (f) Reproduction of records, drawings, certificates, exhibits, or 
printed material (cost per page of material)--$1.80.
    (g) Authentication (each page)--$1.80.
    (h) Correcting or re-issuance of a certificate--$518.00.
    (i) Recording an assignment, any revision of an assignment, or 
withdrawal or revocation of an assignment (per certificate or 
application)--$41.00.
    (j) Copies of 8 x 10 photographs in color--$41.00.
    (k) Additional fee for reconsideration--$518.00.
    (l) Additional fee for late payment--$41.00.
    (m) Fee for handling replenishment seed sample (applicable only for 
certificates issued after June 20, 2005)--$38.00.
    (n) Additional fee for late replenishment of seed--$41.00.
    (o) Filing a petition for protest proceeding--$4,118.00.
    (p) Appeal to Secretary (refundable if appeal overturns the 
Commissioner's decision)--$4,942.00.
    (q) Granting of extensions for responding to a request--$89.00.
    (r) Field inspections by a representative of the Plant Variety 
Protection Office, made at the request of the applicant, shall be 
reimbursable in full (including travel, per diem or subsistence, and 
salary) in accordance with Standardized Government Travel Regulation.
    (s) Any other service not covered above will be charged for at 
rates prescribed by the Commissioner, but in no event shall they exceed 
$107.00 per employee-hour.

    Dated: July 11, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-13946 Filed 7-14-05; 8:45 am]
BILLING CODE 3410-02-P