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

43453

Vol. 62, No. 157

Thursday, August 14, 1997

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 46

[Docket Number FV96–351A]

RIN Number: 0581–AB48

Amendments to the Perishable

Agricultural Commodities Act (PACA)

AGENCY: Agricultural Marketing Service,

USDA.

ACTION: Final rule.

SUMMARY: The Department of

Agriculture (USDA) is revising the

Regulations (other than Rules of

Practice) Under the Perishable

Agricultural Commodities Act (PACA)

in order to implement legislative

changes signed into law by President

Clinton. Specifically, the legislative

changes phase retailers and grocery

wholesalers out of license fee payments

over a 3-year period; establish that

retailers and grocery wholesalers

making an initial application during the

3-year period pay no fee for the renewal

of the license for subsequent years;

establish a one-time administrative fee

for new retailers and grocery

wholesalers entering the program after

the 3-year phase-out period; and

increase license fees from $400 to $550

annually for all other licensees.

EFFECTIVE DATE: September 15, 1997.

FOR FURTHER INFORMATION CONTACT:

James R. Frazier, Chief, PACA Branch,

Room 2095-So. Bldg., Fruit and

Vegetable Division, AMS, USDA, 1400

Independence Avenue, S.W.,

Washington, DC 20250, Phone (202)

720–2272.

SUPPLEMENTARY INFORMATION:

Background

The PACA establishes a code of fair

trading practices covering the marketing

of fresh and frozen fruits and vegetables

in interstate and foreign commerce. The

PACA protects growers, shippers,

distributors, and retailers dealing in

those commodities by prohibiting unfair

and fraudulent practices. In this way,

the law 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.

The PACA was amended by the

Perishable Agricultural Commodities

Act Amendments of 1995 (P.L. 104–48).

The regulations implementing the

PACA (other than the Rules of Practice)

are published in the Code of Federal

Regulations at Title 7, Part 46 (7 CFR

part 46). On September 10, 1996, the

proposed revisions to the PACA

regulations implementing P.L. 104–48

were published in the Federal Register.

The finalized regulatory revisions

became effective on April 30, 1997, with

the exception of § 46.6, License Fees.

During the comment period on the

proposal, the Food Marketing Institute

(FMI), Food Distributors International

(FDI), and the National Grocers

Association (NGA), objected to the

proposed revisions to § 46.6. They wrote

that the proposed rule requiring that

certain retailers and grocery wholesalers

pay renewal fees was incorrect. They

referred to section 499c(b)(3) of the

statute designated, ‘‘One-Time Fee for

Retailers and Grocery Wholesalers that

are Dealers’’, which specifies the fees to

be paid by a retailer or a grocery

wholesaler making an initial application

during the phase-out period and after

such period ends. The commentors

emphasized the statutory language at

the end of section 499c(b)(3) which

states: ‘‘* * * a retailer or grocery

wholesaler paying a fee under this

paragraph shall not be required to pay

any fee for renewal of the license for

subsequent years.’’

Our interpretation of the statutory

language, as well as our understanding

of the agreement between the various

industry groups which preceded the

final legislation, was that all retailers

and grocery wholesalers would pay a

license renewal fee during the 3-year

phase-out period. After the end of the

phase-out period, no renewal fee would

be required. This interpretation treats all

retailers and grocery wholesalers

equally and does not discriminate

against those who had complied with

the licensing requirements prior to the

law’s enactment on November 15, 1995.

Since the commentors’ interpretation

of the legislative amendment was

substantially different from our view but

appeared plausible, we separated § 46.6

from the rest of the proposed

regulations, and addressed the issue

independently by reopening that part of

the proposed rule in order to allow

other interested parties to comment.

Since the publication of the reopening

of the comment period on March 31,

1997, we have collected renewal fees

from retailers and grocery wholesalers

which had received initial licenses

during the phase-out period. However,

in that document, we stated that in the

event a determination is made that the

law excludes those entities from paying

renewal fees during the 3-year phase-out

period, the collected renewal fees would

be refunded with interest.

Comments

USDA received 17 comments on this

reopened part of the proposed rule from

9 industry trade associations, 7 retailers,

one grocery wholesaler, and one

comment, signed by Congressman

Thomas Ewing, Chairman of the House

of Representatives’ Subcommittee on

Risk Management and Specialty Crops

and Congressman John Boehner. Three

of these comments were postmarked

after the comment period ended on

April 30, 1997, and are, therefore, not

addressed in this rule.

We received comments supporting the

proposed regulations (i.e., to charge all

retailers and grocery wholesalers a

renewal fee during the 3-year phase-out

period) from the American Farm Bureau

Federation, United Fresh Fruit and

Vegetable Association, Florida Fruit and

Vegetable Association, and Western

Growers Association. They reiterated

their support for the proposed

regulations as originally proposed, and

urge that we adopt them without

change. They argue that any change is

without basis because there is no

support in the statute nor in the

legislative history to indicate that

Congress chose to treat retailers and

grocery wholesalers that were licensed

after November 15, 1995, any more

favorably than those licensed prior to

that date. They point out that by

changing the proposed regulations,

retailers and grocery wholesalers would
43454 Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Rules and Regulations

pay different license fees based solely

upon whether they were licensed under

the PACA before or after November 15,

1995.

Two of these commentors state that

the retail and grocery wholesale

industries are incorrectly relying upon

the ‘‘plain meaning’’ of the 1995 PACA

Amendments; an assertion which the

Supreme Court has repeatedly ruled that

alone is not the sole consideration in

implementing a statute. The

commentors support their argument by

quoting a Supreme Court decision in

part: ‘‘The plain meaning of legislation

should be conclusive, except in ‘‘rare

cases [in which] the literal application

of a statute will produce a result

demonstrably at odds with the

intentions of its drafters.’’ In such cases,

the intention of the drafters, rather than

the strict language, controls.’’ (United

States v. Ron Pair Enterprises, Inc.,) 489

U.S. 235, 242 (1989), quoting, Griffin v.

Oceanic Contractors, Inc., 458 U.S. 564,

#571 (1982).

The two commentors also argue that

the correct reading of the Public Law

104–48 is clearly delineated in the

House of Representatives Report

accompanying H.R. 1103, the bill that

became the 1995 PACA Amendments

(H.R. Rep. No. 104–207, 104th Cong., 1st

Sess.). They emphasize the report

language which stated that the

legislation ‘‘* * * phases retailers and

grocery wholesalers out of license fee

payments in three years, [and]

establishes a one-time administrative fee

for new retailers and grocery

wholesalers entering the program after

the three-year phase-out. * * *’’

[emphasis added]. They point to other

report language which states: ‘‘During

the phase-out period, new retailer and

grocery wholesale applicants will pay

the specified fee established under the

phase-out year.’’ They maintain that the

language in the House Report clearly

describes two periods of time: the

phase-out period from November 15,

1995, to November 15, 1998, when new

retailers and grocery wholesalers will

pay the specified fee established for the

phase out year; and the period after

November 15, 1998, when no fee will be

required.

We received 11 comments objecting to

our original proposal that all licensees

pay renewal fees during the 3-year

phase-out of retailers and grocery

wholesalers. However, several of these

comments were nearly identical. In

addition to a comment from

Congressman Thomas W. Ewing,

Chairman of the Subcommittee on Risk

Management and Specialty Crops,

which was co-signed by Congressman

John Boehner, we received comments

from FMI, FDI, and NGA which

reiterated their original objections to our

proposal.

The commentors contend that the

statute explicitly provides that any

retailer or grocery wholesaler making an

initial application during those years

pays just one time and that no renewal

fee is required for any subsequent year.

Each of their arguments centers around

the statutory language in section

499c(b)(3), ‘‘One-Time Fee for Retailers

and Grocery Wholesalers that are

Dealers’’, which states: ‘‘In either case,

a retailer or grocery wholesaler paying

a fee under this paragraph shall not be

required to pay any fee for renewal of

the license for subsequent years.’’

One of the commentors contends that

by creating a statutory subsection for a

‘‘one-time fee’’ separate from section

499c(b)(4), the law is clear, both in title

and in substance, that first-time

licensees after November 15, 1995, pay

only one fee and that no renewal fee can

be imposed. The commentor asserts that

no other explanation exists for having a

separate section for initial licenses. The

commentor points out that the

subsection contains only three

sentences: the first applies to those who

make an initial application during each

3-year phase-out period; the second

applies to those who make an initial

application after November 14, 1998;

and the third sentence is explicit—‘‘In

either case, a retailer or grocery

wholesaler paying a fee under this

paragraph shall not be required to pay

any fee for renewal of the license for

subsequent years.’’

Another commentor presents a similar

analysis of the statutory language—that

there are two classes of license

applicants specifically identified in

section 499c(b)(3): a retailer or grocery

wholesaler making an initial application

for a license during the 3-year period

beginning on the date of enactment of

the 1995 PACA amendments; and a

retailer or grocery wholesaler making an

initial application for a license after the

end of the 3-year period. The

commentor emphasizes that the statute

goes on to remove the requirement for

license renewal fees by providing that

‘‘a retailer or grocery wholesaler paying

a fee under this paragraph shall not be

required to pay any fee for renewal of

the license for subsequent years.’’ The

commentor states that the plain

language of the phrase, ‘‘[i]n either

case,’’ must refer to the two classes of

license applicants noted in section

499c(b)(3), and as such, neither of these

two classes of entities can be held liable

for license renewal fees.

Both commentors insist that the

statute is explicit, clear, and leaves no

room for interpretation. Under the

circumstances, the commentors demand

that USDA implement the straightforward statutory language, issue

regulations which state that retailers

and wholesalers who were licensed

during the 3-year phase-out period shall

not pay any renewal fees, and refund

with interest license fees paid by

affected licensees.

In their joint comment, Congressmen

Ewing and Boehner state that the law

requires that retailers and grocery

wholesalers applying for a license

during the first three years following

enactment of P.L. 104–48 pay only the

fee in effect for that year, and nothing

in any subsequent year. With respect to

these initial applicants, the

Congressmen insist that subparagraph 3

of section 3(b) clearly states that the 3-

year phase-out period is just that—a

single period—and that whether the

initial application is made in year 1, 2,

or 3 of the phase-out period, the fee to

be paid is a one-time event. They state

that had Congress intended for retail

and grocery wholesale applicants to pay

the applicable fee in each year of the

phase-out period, they would have

written the first sentence of

subparagraph 3 to state ‘‘* * * the

license fee required under paragraphs

(A), (B) and (C) * * *’’ rather than

‘‘* * * the license fee required under

subparagraph (A), (B) or (C) * * *’’

They also stated that if Congress had

intended initial applicants to pay a fee

in each of the phase-out years, it would

have never included the last sentence of

subparagraph 3. The congressmen point

out that USDA’s interpretation of this

paragraph, as reflected in the proposed

rule, has the effect of ignoring this

sentence, which does not differentiate

between pre- or post-phase-out period

when it states that a retailer or

wholesaler shall not be required to pay

any fee for renewal in subsequent years.

Based on full consideration of the

comments received during the initial

and reopened comment periods, USDA

has determined that a change to the

proposed revisions to § 46.6 is

appropriate in order to harmonize the

implementing regulation with the

statutory language. Therefore, in the

final rule, USDA is amending the

regulatory language in § 46.6 to reflect

that retailers and grocery wholesalers

making an initial application during the

3-year phase-out period beginning on

November 15, 1995, shall not be

required to pay any fee for renewal of

their licenses in subsequent years.

Executive Orders 12866 and 12988

This final rule is issued under the

Perishable Agricultural Commodities
Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 / Rules and Regulations 43455

Act (7 U.S.C. 499 et seq.), as amended.

USDA is issuing this final rule in

conformance with Executive Order

12866.

This final rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. It is not intended to

have retroactive effect. The 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 which must be exhausted

prior to any judicial challenge to the

provisions of this rule.

Regulatory Flexibility Act

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

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 that wholesalers, processors,

food service companies, grocery

wholesalers, and truckers be considered

dealers and subject to a license when

they buy or sell more than 2,000 pounds

of fresh and/or frozen fruits and

vegetables in any given day. A retailer

is considered to be a dealer and subject

to license when the invoice cost of its

perishable agricultural commodities

exceeds $230,000 in a calendar year.

Brokers negotiating the sale of frozen

fruits and vegetables on behalf of the

seller are also exempt from licensing

when the invoice value of the

transactions is below $230,000 in any

calendar year.

There are approximately 15,700

PACA licensees. Separating licensees by

the nature of business, there are

approximately 6,000 wholesalers, 4,750

retailers, 2,100 brokers, 1,200

processors, 550 commission merchants,

450 food service businesses, 150 grocery

wholesalers, and 50 truckers licensed

under PACA. The license is effective for

1 year unless suspended or revoked by

USDA for valid reasons [7 CFR 46.9 (a)–

(h)], and must be renewed annually by

the licensee. Many of the licensees may

be classified as small entities.

Approximately 650 to 700 retailers

and grocery wholesalers who made an

initial license application after

November 15, 1995, and subsequently

paid a fee to renew their license, will be

affected by this rule. The renewal fees

collected by USDA from each of the

affected retailers and grocery

wholesalers ($300, plus $150 for each

branch in excess of nine) will be

refunded with interest.

Accordingly, based on the

information and the above discussion, it

is 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

recordkeeping requirements covered by

this proposed rule were approved by

OMB on October 31, 1996, and expire

on October 31, 1999.

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 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. Section 46.6 is revised to read as

follows:

§ 46.6 License fees.

(a) For retailers and grocery

wholesalers making an initial

application for license, the license fee is

as follows:

(1) During the period November 15,

1995 through November 14, 1996, the

license fee is $400 plus $200 dollars for

each branch or additional business

facility operated by the applicant in

excess of nine. In no case shall the

aggregate annual fees paid by any

retailer or grocery wholesaler during

such period exceed $4,000.

(2) The license fee during the period

November 15, 1996 through November

14, 1997, is $300 plus $150 for each

branch or additional business facility

operated by the retailer or grocery

wholesaler in excess of nine. In no case

shall the aggregate fees paid by any

retailer or grocery wholesaler during

such period exceed $3,000.

(3) The license fee during the period

November 15, 1997 through November

14, 1998, is $200 plus $100 for each

branch or additional business facility

operated by any retailer or grocery

wholesaler in excess of nine. In no case

shall the aggregate fees paid by any

retailer or grocery wholesaler during

such period exceed $2,000.

(4) Any retailer or grocery wholesaler

making an initial license application

during the 3-year phase-out period shall

pay no fee for renewal of the license for

subsequent years.

(5) A retailer or grocery wholesaler

that holds a license as of November 15,

1995, shall pay the license fee required

in paragraphs (a) (1), (2), and (3) of this

section for the renewal of the license

during the phase-out period.

(6) No license fee will be required

after November 14, 1998 for making an

initial application for, or for renewal of

a license by a retailer or grocery

wholesaler. However, a retailer or

grocery wholesaler making an initial

application for a license after November

14, 1998, shall pay a $100

administrative processing fee.

(b) For commission merchants,

brokers, and dealers (other than grocery

wholesalers and retailers) the annual

license fee is $550 plus $200 dollars for

each branch or additional business

facility in excess of nine. In no case

shall the aggregate annual fees paid by

any such applicant exceed $4,000.

(c) The Director may require that fees

be paid in the form of a money order,

bank draft, cashier’s check, or certified

check made payable to ‘‘USDA–AMS’’.

Authorized representatives of the

Division may accept fees and issue

receipts.

Dated: August 8, 1997.

Robert C. Keeney,

Director, Fruit and Vegetable Division.

[FR Doc. 97–21523 Filed 8–13–97; 8:45 am]

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection

Service

7 CFR Part 301

[Docket No. 97–023–2]

Pink Bollworm Regulated Areas

AGENCY: Animal and Plant Health

Inspection Service, USDA.

ACTION: Affirmation of interim rule as

final rule.

SUMMARY: We are adopting as a final

rule, without change, an interim rule

that amended the pink bollworm

regulations by removing all or portions

of previously regulated areas in Clay,

Crittenden, and Mississippi Counties in

Arkansas; Dunklin, New Madrid, and

Pemiscot Counties in Missouri; and

Dyer and Lauderdale Counties in