This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

20217 

Vol. 76, No. 70 

Tuesday, April 12, 2011 

1See, Paris Foods Corp. v. Foresite Foods, Inc., 

No. 1:05–cv–610–WSD, 2007 WL 568841 (N.D. Ga. 

Feb. 20, 2007); Bocchi Americas Assoc. v. 

Commerce Fresh Mktg., Inc., No. Civ. A. H0402411, 

2005 WL 3164240 (S.D. Tex. Nov. 28, 2005); 

American Banana Co. v. Republic Nat. Bank of 

N.Y., 362 F.3d 33 (2nd Cir. 2004); Patterson Frozen 

Foods, Inc. v. Crown Foods, Int’l, 307 F.3d 666, 667 

(7th Cir. 2002); Greg Orchards Produce, Inc. v. P. 

Roncone J., 180 F.3d 888, 892 (7th Cir. 1999); 

Idahoan Fresh v. Advantage Produce, Inc., 157F.3d 

197, 205 (3d Cir. 1998); In re Lombardo Fruit and 

Produce Co., 12 F.3d 806, 809 (8th Cir. 1993); and 

Hull v. Hauser’s Foods, Inc., 924 F.2d 777, 781–82 

(8th Cir. 1991). 

2See American Banana Co., 362 F.3d at 33; 

Patterson Frozen Foods, 307 F.3d at 669. 

3American Banana Co., 362 F.3d at 46. 

4See, e.g., In re Gotham Provision Co., Inc., 669 

F.2d 1000, 1007 (5th Cir. 1982). 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

[Document Number AMS–FV–09–0047] 

7 CFR Part 46 

Perishable Agricultural Commodities 

Act: Impact of Post-Default 

Agreements on Trust Protection 

Eligibility 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: The Department of 

Agriculture (USDA) is amending the 

regulations under the Perishable 

Agricultural Commodities Act (PACA) 

to allow, if there is a default in payment 

as defined in the regulations, a seller, 

supplier, or agent who has met the 

PACA trust eligibility requirements to 

enter into a scheduled agreement for 

payment of the past due amount 

without foregoing its trust eligibility. 

USDA is also amending 7 CFR 

46.46(e)(2) by adding the words ‘‘prior to 

the transaction.’’ This change clarifies 

that the 30-day maximum time period 

for payment to which a seller can agree 

and still qualify for coverage under the 

trust refers to pre-transaction 

agreements. 

DATES: Effective Date: April 13, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Phyllis L. Hall or Josephine E. Jenkins, 

Trade Practices Section, 202–720–6873. 

SUPPLEMENTARY INFORMATION: 

Background of PACA Trust Provisions 

Under the 1984 amendment, 

perishable agricultural commodities, 

inventories of food or other derivative 

products, and any receivables or 

proceeds from the sale of such 

commodities or products, are to be held 

in a non-segregated floating trust for the 

benefit of unpaid sellers. This trust is 

created by operation of law upon the 

purchase of such goods, and the 

produce buyer is the statutory trustee 

for the benefit of the produce seller. To 

preserve its trust benefits, the unpaid 

supplier, seller, or agent must give the 

buyer written notice of intent to 

preserve its rights under the trust within 

30 calendar days after payment was due. 

Alternatively, as provided in the 1995 

amendments to the PACA, a PACA 

licensee may provide notice of intent to 

preserve its trust rights by including 

specific language as part of its ordinary 

and usual billing or invoice statements. 

The trust is a non-segregated ‘‘floating 

trust’’ made up of all of a buyer’s 

commodity-related assets, under which 

there may be a commingling of trust 

assets. As each supplier gives 

ownership, possession, or control of 

perishable agricultural commodities to a 

buyer, and preserves its trust rights, that 

supplier becomes a participant in the 

trust. Thus, trust participants remain 

trust beneficiaries until they have been 

paid in full. 

Under current 7 CFR 46.46(e)(2), only 

transactions with payment terms of 30 

days from receipt and acceptance, or 

less, are eligible for trust protection. 

Section 46.46(e)(1) of the regulations (7 

CFR 46.46(e)(1)) requires that any 

payment terms beyond ‘‘prompt’’ 

payment as defined by the regulations, 

usually 10 days after receipt and 

acceptance in a customary purchase and 

sale transaction, must be expressly 

agreed to, and reduced to writing, before 

entering into the transaction. A copy of 

the agreement must be retained in the 

files of each party and the payment due 

date must be disclosed on the invoice or 

billing statement. 

Over the past few years, several 

federal courts have invalidated the trust 

rights of unpaid creditors because these 

creditors agreed in writing, and in some 

cases, by oral agreement, after default on 

payment, to accept payments over time 

from financially troubled buyers. In 

general, these courts have invalidated 

the seller’s previously perfected trust 

rights because the agreements were 

deemed to extend payment terms 

beyond 30 days.1

The court decisions at issue have held 

that any post-default agreement, 

whether oral or written, that extends the 

buyer’s obligation to pay the seller’s 

invoices beyond 30 days after receipt 

and acceptance of the produce abrogates 

the produce seller’s PACA trust rights. 

These decisions have held that (1) when 

a seller enters into the post-default 

agreement, the agreement modifies any 

valid payment agreement entered into 

prior to the transaction and therefore 

voids the trust protection,2 and (2) postdefault agreements that allow for 

installment payments exceeding 30 days 

from receipt of produce violate the 

PACA prompt-pay provisions.3

Many of the court decisions at issue 

have been based on an interpretation of 

§ 46.46(e) of the regulations (7 CFR 

46.46(e)). Section 46.46(e)(1) (7 CFR 

46.46(e)(1)) requires that parties who 

elect to use different times for payment 

must reduce their agreement to writing 

before entering into the transaction. 

Current § 46.46(e)(2) (7 CFR 46.46(e)(2)) 

states that the maximum time for 

payment for a shipment to which a 

seller can agree and still qualify for 

coverage under the trust is 30 days after 

receipt and acceptance of the 

commodities. It is our interpretation 

that § 46.46(e)(2), like paragraph (e)(1) of 

the regulations (7 CFR 46.46(e)(1) and 

(e)(2)), addresses pre-transaction 

agreements only. 

This interpretation of our regulations 

is consistent with the Secretary’s 

unwillingness to impute a waiver of 

trust rights as illustrated in the policies 

established by the Secretary and upheld 

by the courts in the context of the trust 

provisions of the Packers and 

Stockyards Act (7 U.S.C. 181 et seq.), 

after which the PACA trust provisions 

are largely modeled.4 In the context of 

the PACA trust, the right to make a 

claim against the trust are vested in the 

seller, supplier, or agent who has met 

the eligibility requirements of 

paragraphs (e)(1) and (2) of § 46.46 (7 


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20218 Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations 

5To view the proposed rule and the comments 

we received, go to http:/www.regulations/gov. 

CFR 46.46(e)(1) and (2)). The seller, 

supplier, or agent remains a beneficiary 

of the PACA trust until the debt owed 

is paid in full as stated in section 5(c)(4) 

of the statute. An agreement to pay the 

antecedent debt in installments is not 

considered payment in full. Thus, we do 

not believe that a post-default payment 

agreement should constitute a waiver of 

a seller’s previously perfected trust 

rights. 

Notice of Proposed Rulemaking 

In response to the Fruit and Vegetable 

Advisory Committee’s request that the 

Secretary of Agriculture address the 

impact of post-default payment 

agreement on PACA trust eligibility, a 

proposed rule to amend PACA 

regulations was published in the 

Federal Register on June 8, 2010, [75 FR 

32306].5 The proposal sought to amend 

Title 7, Part 46 to ensure that qualified 

PACA trust beneficiaries maintain their 

trust protection after entering into a 

post-default agreement. The comment 

period initially closed on August 9, 

2010. However, the comment period 

was reopened and extended an 

additional 30 days. The reopening of the 

comment period was published in the 

Federal Register on August 23, 2010, 

[75 FR 51693]. The comment period 

closed a second time on September 22, 

2010. 

The proposal sought to amend 7 CFR 

46.46(e)(2) by adding the words ‘‘prior to 

the transaction.’’ This change would 

clarify that the 30-day maximum time 

period for payment for a shipment to 

which a seller can agree and still qualify 

for coverage under the trust relates back 

to paragraph (e)(1) which refers to pretransaction agreements. 

The proposal also added a new 

paragraph (e)(3) to 7 CFR 46.46. The 

new paragraph provided that in 

circumstances of a default in payment 

as defined in § 46.46(a)(3), a seller, 

supplier, or agent who has met the 

eligibility requirements of § 46.46 

paragraphs (e)(1) and (2) could agree in 

writing to a schedule for payment of the 

past due amount and still remain 

eligible under the trust. The post-default 

payment agreement could not extend 

beyond 180 days from the default date. 

Comments 

AMS received 130 timely comments. 

The commenters substantially approved 

of the proposed rule, except in regard to 

the limits on the length of post-default 

payment agreements and on collection 

activities. They expressed concerns that 

the suggested wording in the proposed 

regulation may itself create the same 

confusion, uncertainty, and need for 

costly litigation that the new regulation 

aims to eliminate. Eighty-nine of the 130 

commenters offered alternative language 

for the amendment, four of which 

included the rationale for the suggested 

alternative language. These 89 

commenters favored the removal of the 

requirement of a written post-default 

agreement and recommended the 

deletion of the last three sentences of 

§ 46.46(e)(3) of the proposed rule which 

(1) set a 180-day limitation on postdefault agreements, (2) limited 

collection activities in cases of 

bankruptcy and civil actions, and 3) 

stated that the remaining unpaid 

amount under the scheduled payment 

agreement continued to qualify for trust 

protection. 

Twenty-three of the 130 comments 

raised legitimate concerns about the 

proposed changes to the regulations, 

stating: 

1. It is contrary to the law—only full 

payment ends a supplier’s trust rights. 

The commenters suggested that the 

proposed rule conflicts with the 

statutory language that a trust creditor 

remains eligible for trust benefits until 

it has received full payment. 

2. The regulation cements a postdefault waiver rule in the regulations. 

The commenters reason that if the 

Secretary acknowledges in the 

regulations that some post-default 

agreements can forfeit trust rights, this 

could be interpreted by the courts to 

prohibit all post-transaction agreements. 

3. The proposed regulation will result 

in more problems than currently exist. 

The comments noted that there is no 

problem in the industry with postdefault agreements to collect trust assets 

outside of litigation, so, no regulatory 

action is required over such agreements. 

4. Routine past due collection efforts 

will jeopardize trust rights. The 

language in the proposed rule would 

necessitate that every time there is a 

past due debt, sellers will have to 

consult a PACA lawyer. 

5. All claims in trust cases would be 

subject to extensive litigation about 

post-default collection efforts. 

Commenters noted that initially, 

produce suppliers try to resolve past 

due payments over the phone, thus, 

under the proposed rule, every 

subsequent trust claim will be the 

subject of the same expensive litigation 

to determine if there was a forfeiture 

due to an oral post default agreement. 

We recognize the serious nature of the 

concerns the comments raise: That the 

proposed regulation, as written, is 

contrary to the plain language of the 

statute that trust creditors remain 

eligible until fully paid; that the 

proposed regulation could be 

interpreted broadly to prohibit all posttransaction agreements; that it creates 

new problems; that routine collection 

activities could jeopardize trust rights 

and give rise to extensive litigation. 

Because we agree with these comments, 

we are revising the regulation. 

Twenty-eight of the 130 commenters 

specifically requested that the 180-day 

cap for post-default payment plans be 

stricken from the proposed rule, 

indicating that it may be unrealistic 

under a multitude of circumstances, and 

that the time limitation would create 

new challenges to the trust eligibility of 

a creditor who attempts to collect on a 

past due debt. We agree. 

In addition, we agree that Congress 

intended that the seller, supplier, or 

agent remains a beneficiary of the PACA 

trust until the debt owed is paid and, 

recognizing that a 180-day limitation 

would create a new time limitation and 

new opportunity for litigation and 

misinterpretation of the regulations. 

Therefore, we are removing the 180-day 

limitation of post default agreements 

from the final rule. 

Commenters noted that initially, 

produce suppliers try to resolve past 

due payments over the phone, thus, 

under the proposed rule, every 

subsequent trust claim will be the 

subject of the same expensive litigation 

to determine if there was a forfeiture 

due to an oral post default agreement. 

Because we agree with the comments 

that it is typical for produce suppliers 

to attempt to resolve past due payments 

over the telephone and, a requirement 

for a written post-default agreement 

would be burdensome and unnecessary, 

we are removing the requirement that a 

post-default agreement must be in 

writing from the final rule. 

It is our interpretation of the statute 

and regulations that post-default 

agreements are not an extension of the 

30-day maximum time period for pretransaction agreements that would 

result in a waiver of the seller’s trust 

rights; post-default payment agreements 

are an attempt to collect a debt that 

remains due until fully paid. The 

Secretary has long recognized a 

significant difference between the 

relative positions of buyers and sellers 

before a transaction, versus their 

positions after a buyer defaults on 

payment. The Secretary has observed 

that ‘‘produce sellers are not in an equal 

bargaining position with produce 

purchasers who are in possession of the 

produce seller’s perishable agricultural 


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Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations 20219 

6See In re: Scamcorp, Inc., 57 Agric. Dec. 527, 

563 (1998). 

commodities.’’ 6 After a buyer has 

defaulted on payment, the seller is at 

the buyer’s mercy since produce 

deteriorates rapidly, leaving no 

collateral. Any agreement reached after 

default is not an arm’s length 

transaction. The trust is intended to 

provide protection to the unpaid seller 

whose bargaining position has changed 

for the worse after delivering its 

produce to a buyer. We do not believe 

that a seller’s perfected trust rights 

should be lost because the seller enters 

into a payment arrangement, in an 

attempt to collect a debt, after the buyer 

has violated the PACA’s prompt 

payment requirement. 

We also agree with the comments 

from a California law firm that 

specializes in PACA law regarding the 

proposal to limit collection activities in 

cases of bankruptcy and civil actions. 

The commenter reminded us that limits 

on collection activities in cases of 

bankruptcy and civil actions are 

‘‘already amply controlled under 

existing laws and procedures 

administered by the United States 

district and bankruptcy courts* * *.’’ 

Because laws already exist to ensure 

that a buyer in bankruptcy and civil 

actions cannot continue to make 

preferential payments to select 

creditors, we are eliminating the third 

and fourth sentences in § 46.46, 

paragraph (e)(3) of the final rule. 

One commenter, a New Jersey based 

attorney specializing in PACA, 

recommended that the Secretary 

withdraw the proposed new regulation 

and solicit further suggestions for 

alternate language. USDA opted not to 

implement this recommendation. This 

commenter also included a suggestion 

for changes to § 46.46 (c)(1), 

§ 46.2(aa)(11). The commenter suggested 

a new paragraph in § 46.46 to address 

payment terms with a debtor who has 

entered into a post-default agreement. 

We do not adopt the suggestion, as it 

presents significant problems of 

implementation and interpretation by 

bringing separate, subsequent 

transactions into the analysis. USDA 

also opted not to adopt this suggestion 

because it is beyond the scope of the 

proposed rule. 

The courts have expressed concern 

that post-default agreements could 

undermine the enforcement of the 

prompt pay provisions of the PACA. No 

commenters echoed the courts’ 

concerns. When a buyer defaults on 

payment for produce, it has committed 

a violation of section 2(4) of the PACA 

(7 U.S.C. 499b(4)). The defaulting 

buyer’s license is then subject to 

suspension or revocation, or the buyer 

may be assessed a civil penalty for its 

violations of the PACA. Allowing a 

seller who has perfected its trust rights 

to enter into a post-default payment 

agreement with the defaulting buyer 

does not negate the buyer’s violations of 

the Act. The trust is a means to protect 

the seller’s right to payment for 

produce, not to enforce the prompt 

payment provisions of the Act. The 

Secretary can still initiate an 

enforcement action against the buyer to 

seek the appropriate sanction for 

violations of the Act without regard to 

any post-default agreement entered into 

between the unpaid seller and the buyer 

in default. 

Based on full consideration of 

comments received during the initial 

and reopened comment periods, USDA 

has determined that it is appropriate to 

simplify the language of the final rule in 

order to avoid creating any additional 

confusion, uncertainty, and 

unnecessarily protracted, costly 

litigation about post-default agreements 

and collection efforts. New § 46.46(3) 

will be amended to delete the last three 

sentences of the proposal, and permit 

post-default agreements made in any 

manner. Furthermore, accepting partial 

payments after default would not affect 

a seller’s trust rights. 

No comments addressed the proposal 

to amend § 46.46(e)(2) by adding the 

words ‘‘prior to the transaction.’’ This 

change would clarify that the 30-day 

maximum time period for payment for 

a shipment to which a seller can agree 

and still qualify for coverage under the 

trust relates back to paragraph (e)(1) 

which refers to pre-transaction 

agreements. Therefore, this change is 

finalized as proposed. 

Executive Orders 12866 and 12988 

This final rule has been determined to 

be not significant for the purposes of 

Executive Order 12866, and therefore, 

has not been reviewed by the Office of 

Management and Budget. This final rule 

has been reviewed under Executive 

Order 12988, Civil Justice Reform, and 

is not intended to have retroactive 

effect. This final 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 

that must be exhausted prior to any 

judicial challenge to the provisions of 

this final 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 

final 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. The Small Business 

Administration (SBA) has defined small 

agricultural service firms (13 CFR 

121.601) as those whose annual receipts 

are less than $7,000,000. There are 

approximately 14,400 firms licensed 

under the PACA, a majority of which 

could be classified as small entities. 

The final regulations would clarify 

that a trust beneficiary who has 

perfected its trust rights does not forfeit 

those rights by entering into a postdefault agreement to accept partial or 

installment payments on the amount 

past due. This language would provide 

companies of all sizes with clear 

regulatory guidance on this matter, 

thereby reducing the time and expense 

associated with litigating matters 

involving post-default agreements and 

trust right preservation under the PACA. 

Therefore, we believe that this final rule 

will not have a significant economic 

impact on a substantial number of small 

entities. 

Paperwork Reduction Act 

In accordance with OMB regulations 

(5 CFR part 1320) that implement the 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35), the information 

collection and recordkeeping 

requirements that are covered by this 

final rule are currently approved under 

OMB number 0581–0031. 

E-Government Act Compliance 

USDA is committed to complying 

with the E-Government Act, which 

requires Government agencies in general 

to provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. Forms are available on 

our PACA Web site at http:// 

www.ams.usda.gov/paca and can be 

printed, completed, and faxed. 

Currently, forms are transmitted by fax 

machine, postal delivery and can be 

accepted by e-mail. 

List of Subjects in 7 CFR Part 46 

Agricultural commodities, 

Definitions, Accounts and records, 

Duties of licensees, Statutory trust. 

For the reasons set forth in the 

preamble, 7 CFR part 46 is amended as 

follows: 

PART 46—[AMENDED] 

■ 1. The authority citation for part 46 

continues to read as follows: 


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20220 Federal Register / Vol. 76, No. 70 / Tuesday, April 12, 2011 / Rules and Regulations 

Authority: 7 U.S.C. 499a–499t. 

■ 2. In § 46.46, paragraph (e)(2) is 

revised, paragraphs (e)(3) and (4) are 

redesignated as paragraphs (e)(4) and 

(5), and a new paragraph (e)(3) is added 

as follows: 

§ 46.46 Statutory trust. 

* * * * * 

(e) * * * 

(2) The maximum time for payment 

for a shipment to which a seller, 

supplier, or agent can agree, prior to the 

transaction, and still be eligible for 

benefits under the trust is 30 days after 

receipt and acceptance of the 

commodities as defined in § 46.2(dd) 

and paragraph (a)(1) of this section. 

(3) If there is a default in payment as 

defined in § 46.46(a)(3), the seller, 

supplier, or agent who has met the 

eligibility requirements of paragraphs 

(e)(1) and (2) of this section will not 

forfeit eligibility under the trust by 

agreeing in any manner to a schedule for 

payment of the past due amount or by 

accepting a partial payment. 

* * * * * 

Dated: April 5, 2011. 

Ellen King, 

Acting Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2011–8718 Filed 4–11–11; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Food Safety and Inspection Service 

9 CFR Parts 391, 590, and 592 

[FDMS Docket Number FSIS–2006–0025] 

RIN 0583–AD40 

New Formulas for Calculating the 

Basetime, Overtime, Holiday, and 

Laboratory Services Rates; Rate 

Changes Based on the Formulas; and 

Increased Fees for the Accredited 

Laboratory Program. 

AGENCY: Food Safety and Inspection 

Service, USDA. 

ACTION: Final rule. 

SUMMARY: The Food Safety and 

Inspection Service (FSIS) is amending 

its regulations to establish formulas for 

calculating the rates that it charges meat 

and poultry establishments, egg 

products plants, and importers and 

exporters for providing voluntary, 

overtime, and holiday inspection, and 

identification, certification, and 

laboratory services. The 2011 basetime, 

overtime, holiday, and laboratory 

services rates in this final rule will be 

applied on the effective date. For future 

years, FSIS will use the formulas 

established to calculate the annual rates. 

FSIS will publish the rates annually in 

Federal Register notices prior to the 

start of each calendar year and will 

apply them on the first FSIS pay period 

at the beginning of the calendar year. 

The Agency is also increasing the 

codified flat annual fee for its 

Accredited Laboratory Program for FY 

2012 and FY 2013. 

DATES: This final rule is effective May 

22, 2011. 

FOR FURTHER INFORMATION CONTACT: For 

further information concerning policy 

issues contact Rachel Edelstein, 

Director, Policy Issuances Division, 

Office of Policy and Program 

Development, FSIS, U.S. Department of 

Agriculture, Room 6065 South Building, 

1400 Independence Ave., SW., 

Washington, DC 20250–3700; telephone 

(202) 720–0399, fax (202) 690–0486. 

For further information concerning 

fees contact Michele Torrusio, Director, 

Budget Division, Office of Management, 

FSIS, U.S. Department of Agriculture, 

Room 2159 South Building, 1400 

Independence Avenue, SW., 

Washington, DC 20250–3700; telephone 

(202) 720–8700, fax (202) 690–4155. 

SUPPLEMENTARY INFORMATION: 

Background 

The Federal Meat Inspection Act 

(FMIA) (21 U.S.C. 601 et seq.) and the 

Poultry Products Inspection Act (PPIA) 

(21 U.S.C. 451 et seq.) provide for 

mandatory Federal inspection of 

livestock and poultry slaughtered at 

official establishments and of meat and 

poultry processed at official 

establishments. The Egg Products 

Inspection Act (EPIA) (21 U.S.C. 1031 et 

seq.) provides for mandatory inspection 

of egg products processed at official 

plants. FSIS bears the cost of mandatory 

inspection provided during nonovertime and non-holiday hours of 

operation. Official establishments and 

official egg products plants pay for 

inspection services performed on 

holidays or on an overtime basis. 

Under the Agricultural Marketing Act 

of 1946 (AMA), as amended (7 U.S.C. 

1621 et seq.), FSIS provides a range of 

voluntary inspection, certification, and 

identification services to assist in the 

orderly marketing of various animal 

products and byproducts. These 

services include the certification of 

technical animal fats and the inspection 

of exotic animal products, such as 

antelope and elk products. The AMA 

provides that FSIS may assess and 

collect fees to recover the costs of the 

voluntary inspection, certification, and 

identification services it provides. 

Also under the AMA, FSIS provides 

certain voluntary laboratory services 

that establishments and others may 

request the Agency to perform. 

Laboratory services are provided for 

four types of analytic testing: 

Microbiological testing, residue 

chemistry tests, food composition tests, 

and pathology testing. Again, the AMA 

provides that FSIS may collect fees to 

recover the costs of providing these 

services. 

FSIS also accredits non-Federal 

analytical laboratories under its 

Accredited Laboratory Program. Such 

accreditation allows laboratories to 

conduct analyses of official meat and 

poultry samples. The Food, Agriculture, 

Conservation, and Trade Act of 1990, as 

amended, mandates that laboratory 

accreditation fees cover the costs of the 

Accredited Laboratory Program. This 

same Act mandates an annual payment 

of an accreditation fee on the 

anniversary date of each accreditation. 

Proposed Rule 

On October 8, 2009, FSIS published a 

proposed rule to amend its regulations 

to establish formulas for calculating the 

rates it charges meat and poultry 

establishments, egg products plants, and 

importers and exporters for providing 

voluntary, overtime, and holiday 

inspection, and identification, 

certification, and laboratory services (74 

FR 51800). FSIS also proposed to keep 

the annual fee for its Accredited 

Laboratory Program at $4,500 for FY 

2009, 2010 and 2011, and increase it to 

$5,000 for FY 2012 and FY 2013 (74 FR 

51802). 

As FSIS explained in the proposed 

rule, historically, the Agency amended 

its regulations annually to change the 

rates and fees. However, because the 

rulemaking process is lengthy, the fiscal 

year repeatedly would partially elapse 

before the Agency could publish a final 

rule to amend its rates and fees. As a 

result, the Agency was unable to recover 

the full cost of the services it provided. 

To address the delays in recovering 

the cost of services, in January 2006, 

FSIS amended its regulations to provide 

for multiple annual rate and fee 

increases in one action (71 FR 2135). 

With this rulemaking, the rates and fees 

for 2006–2008 were increased and FSIS 

established criteria for determining the 

rate and fee increases on a multi-year 

basis. While this solution enabled the 

Agency to increase rates and fees each 

year, estimates used to establish the 

annual rates and fees were imprecise 

and have left the Agency collecting too 

little, and thus, not fully recovering its 


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