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

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REGISTER issue of each week.

Rules and Regulations Federal Register

51917 

Vol. 75, No. 163 

Tuesday, August 24, 2010 

1Public Law 104–48, 109 Stat. 427(1995). 

2 7 U.S.C. 499c(b)(2). 

3 Id. 4Sec. 203, Pub. L. 106–224. 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 46 

[Document No.: AMS–FV–08–0098] 

RIN 0581–AC92 

Perishable Agricultural Commodities 

Act: Increase in License Fees 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: The Department of 

Agriculture (USDA) is amending the 

regulations issued under the Perishable 

Agricultural Commodities Act (PACA or 

Act) to increase license fees. 

Specifically, annual license fees of $550 

are increased to $995. Fees for branch 

locations are increased from $200 for 

branch locations in excess of nine, to 

$600 for each branch location. The 

maximum amount a licensee will pay 

per year has increased from $4,000 to 

$8,000. Additionally, the regulations 

have been amended to remove the 

provisions to phase out license fees by 

retailers and grocery wholesalers and 

the provisions to phase in triennial 

license renewal for retailers and grocery 

wholesalers as these processes have 

been completed. Finally, the regulations 

have been amended to eliminate the 

multi-year license renewal option for 

commission merchants, brokers, and 

dealers. 

DATES: Effective Date: This rule is 

effective September 23, 2010, except for 

the amendment to § 46.6(b), which is 

effective on October 1, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey F. Davis, Office of the Chief, 

PACA Branch, Fruit and Vegetable 

Programs, AMS, USDA, 1400 

Independence Ave., SW., Room 2098–A 

South Bldg., Washington, DC 20250– 

0242. (202) 205–7847. E-mail— 

jeffrey.davis4@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: This rule 

is issued under authority of section 15 

of the PACA (7 U.S.C. 499o). 

The Perishable Agricultural 

Commodities Act (PACA or Act) of 1930 

establishes a code of fair trade 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 trade 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 Branch proactively works 

for the fruit and vegetable industry 

promoting interstate and foreign 

commerce through dispute resolution, 

licensing, and outreach programs 

facilitating fair trade practices. The 

PACA enforces federal regulations 

outside the civil court system by 

upholding contract requirements. The 

PACA also mandates full and prompt 

payment, removes unscrupulous 

individuals from the trade when 

needed, and provides expert advice on 

trust protection. 

The PACA Amendments of 1995 1

increased the annual license fee from 

$400 to $550 (up to a maximum annual 

fee of $4,000) for all licensees except 

retailers and grocery wholesalers.2 The 

1995 Amendments granted USDA the 

authority to increase fees through 

rulemaking after November 14, 1998, 

provided that the PACA program’s 

operating reserves fall below 25 percent 

of PACA’s projected annual program 

costs.3 Because of the loss of revenue to 

the Agency caused by the amendment’s 

requirement that fees for retailers and 

grocery wholesalers be phased out, 

PACA program budget projections for 

FY 2000 and 2001 indicated the 

program’s assets would have fallen 

below the required 25 percent of 

projected expenditures in FY 2001. 

However, on June 20, 2000, President 

Clinton signed Public Law 106–224 

which included $30.45 million to be 

deposited into USDA’s PACA reserve 

fund on October 1, 2000, in order to 

maintain PACA license and complaint 

filing fees at their 1995 levels.4 The onetime appropriation (expected to last a 

few years) has lasted almost 11 years 

through concentrated cost-cutting 

measures, including office restructuring 

and staff reductions. In FY 2006, the 

PACA Branch restructured its regional 

offices and consolidated nationwide 

licensing functions into one office, 

resulting in over $1 million in annual 

savings. In January 2000, the PACA 

Branch operated with 116 employees. 

As a result of gains in technology and 

office consolidations this program now 

employs approximately 80 full time staff 

members in three regional offices and 

Washington, DC. The 2007 U.S. 

Department of Commerce Bureau of 

Economic Analysis report indicates the 

total retail value of fruits and vegetables 

for at-home and away-from-home 

consumption was $80–$95 billion. The 

PACA Branch operating expenses in FY 

2008 were $10.6 million, constituting a 

sound value in cost-efficiency and 

productivity dedicated to the service of 

the fruit and vegetable industry. 

During the first quarter of FY 2011, 

the PACA Branch operating fund will 

fall below 25 percent of projected 

annual program costs. Without a fee 

increase in FY 2011, the program will 

exhaust its reserves by the second 

quarter of FY 2011, and would soon 

need to begin reducing its level of 

services to the industry. Therefore, 

USDA is increasing the current base 

annual license fee for commission 

merchants, brokers, and dealers from 

$550 to $995. USDA is also increasing 

the current $200 additional fee for 

branch locations in excess of nine, to 

$600 for each branch location starting 

from the first branch. USDA is also 

increasing the current aggregate fee 

maximum from $4,000 to $8,000. The 

new fees are effective October 1, 2010. 

The license fee increase will allow the 

PACA Branch to maintain its current 

level of services through FY 2015. 

USDA is also amending the 

regulations by removing sections of 

46.6(a) and 46.9(1) of the regulations 

(7 CFR 46.6 and 46.9(1)) that phased out 

license fees for retailers and grocery 

wholesalers and that phased in triennial 


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51918 Federal Register / Vol. 75, No. 163 / Tuesday, August 24, 2010 / Rules and Regulations 

license renewal for retailers and grocery 

wholesalers. And USDA is removing the 

multi-year license renewal option for 

commission merchants, dealers, and 

brokers in section 46.9(k) of the 

regulations (7 CFR 46.9(k)). 

Comments 

A proposed rule to amend PACA 

regulations was published in the 

Federal Register on March 11, 2010 (75 

FR 11472). The proposal sought to 

amend Title 7, Part 46 to increase 

license fees. The comment period closed 

on May 10, 2010. We received timely 

comments from Western Growers 

Association (WGA), Newport Beach, 

California; Produce Marketing 

Association (PMA), Newark, Delaware; 

Washington State Potato Commission 

(WSPC), Moses Lake, Washington; and 

three individuals. 

The WGA and PMA strongly 

supported the PACA Branch and the 

proposal. The PMA and the 3,000 

companies it represents—from growershippers and supermarket retailers to 

foodservice operators and importers— 

supports the proposed fee increases as 

outlined in the proposed rule. The WGA 

and its 2,500 members strongly support 

the proposed fee increase, but requested 

branch fees be waived on the first and 

second branch locations. The WGA felt 

reducing the current exemption from 

nine branches down to zero was too 

dramatic a change. 

In its unfavorable comment, Matt 

Harris, Director of Trade for the WSPC 

requested further economic analysis to 

identify the true impact to small 

business. The WPSC feels an 81% 

increase in fees is uncalled for. The 

WPSC cited 45 potato handlers in 

Washington State who need up to 12 

different licenses and audits totaling 

$9,125 yearly already; adding an 

additional $450 in PACA fees 

understates the incremental impact this 

federal increase means to the small 

business owner. In response, the PACA 

Branch has not raised license fees since 

1995. The 1995 amendments preclude 

PACA from increasing fees until the 

funds on hand as of the end of the fiscal 

year in which the increase will take 

effect will be less than 25 percent of the 

projected budget. The PACA Branch 

achieved tremendous success over the 

past fifteen years minimizing costs and 

improving service to the fruit and 

vegetable industry. Through the PACA 

Branch’s use of improved technology, 

strong centralized management, and 

aggressive cost-cutting methods 

(including the closing of two regional 

offices and consolidation of licensing 

functions), the one-time congressional 

appropriation of $30.45 million 

expected to last a few years has lasted 

for over ten years. These efforts delayed 

the need to request a license fee increase 

without curtailing services, another 

benefit to the fruit and vegetable 

industry. The criteria set forth in the 

statute have now been met, authorizing 

the fee increase. The amount of the 

increase is necessary to permit PACA to 

continue to provide services to the 

industry at current levels. Given the 

above discussion, the USDA is making 

no change to the final rule based on this 

comment. 

In his unfavorable comment, one 

commenter indicated he feels the fee 

increase is unfair, discriminately 

excessive, and monopolistically 

disproportionate. He feels the fee 

increase should have been proposed 

gradually over ten years. The 

commenter also feels licensees who use 

PACA services should bear more of the 

financial burden to pay for the fee 

increase. As outlined previously, PACA 

may only by law, institute a fee increase 

under certain circumstances. By being 

PACA licensed, all PACA licensees 

enjoy the same benefit of the federal 

protection of the Act. Since 2001, over 

20% of all licensees have filed an action 

with the PACA. Since 2004, PACA has 

resolved 7,660 complaints involving 

claims of over $155 million within four 

months 91% of the time. Currently 

14,508 PACA licensees have a total of 

5,365 branch locations. The increased 

branch fees will affect 1,102 licensees; 

10.6% of the largest firms will bear the 

greatest burden of the fee increase. 

Based on this discussion, the USDA will 

be making no changes to the final rule 

based on this comment. 

Another commenter requested that 

the fee remain the same for small 

entities. Small agricultural business 

firms are defined by the Small Business 

Administration (SBA) (13 CFR 121.601) 

as those whose annual receipts are less 

than $7,000,000. The majority of PACA 

licensees fall within this classification. 

The fee structure is designed so most 

firms would only see the annual license 

fee increase from $550 to $995. This 

$445 fee increase is believed to be a 

minor increase to operating costs for 

firms of all sizes. The USDA will be 

making no changes to the final rule 

based on this comment. 

Another commenter suggested the 

license fees are passed on to the 

consumer, the cost of commodities are 

too expensive now, and PACA is a 

burden to the people. No direct 

complaint against the proposed rule was 

provided, so the USDA will be making 

no changes to the final rule based on 

this comment. 

No comments were received on our 

proposal to remove sections of 46.6(a) of 

the regulations (7 CFR 46.6) that phased 

out license fees for retailers and grocery 

wholesalers, to remove section 46.9(1) 

(7 CFR 46.9(1)) that phased out triennial 

license renewal for retailers and grocery 

wholesalers, or to remove the multi-year 

license renewal option for commission 

merchants, dealers, and brokers in 

section 46.9(k) of the regulations (7 CFR 

46.9(k)). Therefore, these changes are 

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 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. 601–612), the Agricultural 

Marketing Service has considered the 

economic impact of this final rule on 

small entities, and accordingly has 

prepared this regulatory flexibility 

analysis. 

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 (SBA) (13 CFR 121.201) 

as those having annual receipts of less 

than $7,000,000. The PACA is enforced 

through a licensing system and is userfee financed primarily through a license 

fee. USDA’s Agricultural Marketing 

Service administers and enforces the 

PACA. 

As of May 21, 2010 there were 14,508 

PACA licensees, a majority of which 

may be classified as small entities. 

Retailers and grocery wholesalers 

represent 4,147 licensees. Internally, 

PACA refers to retailers and grocery 

wholesalers as ‘‘non-paying’’ licensees, 

and all other licensees as ‘‘paying.’’ 

Since November, 1998 retailers and 

grocery wholesalers pay a $100 

application processing fee. Their PACA 

license is effective for three years, 

renewed at no cost. Retailers accounted 


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Federal Register / Vol. 75, No. 163 / Tuesday, August 24, 2010 / Rules and Regulations 51919 

for about 35% of program revenue 

before their fees were phased out by the 

1995 Amendments to the Act. Today, 

retailers account for 28.6% of all PACA 

licensees. However, since only new 

applicants pay a processing fee, retailers 

contribute little to PACA’s annual 

operating revenue. The fee increase will 

have no impact on operating costs of 

retailers and grocery wholesalers. 

Therefore, retailers and grocery 

wholesalers will not be unduly 

burdened by the final rule. 

Wholesalers, processors, food service 

companies, commission merchants, 

dealers, brokers, and truckers are 

considered to be dealers and subject to 

license when they buy or sell more than 

2,000 pounds of fresh and/or frozen 

fruits and vegetables in any given day. 

This group represents the remaining 

10,361 active, ‘‘paying’’ PACA licensees 

and is the only group impacted by the 

fee increase. 

While the annual revenues of this 

group of agricultural service firms is 

unknown, we estimated a significant 

percentage of these firms have annual 

receipts less than $7,000,000. Therefore, 

the businesses are ‘‘small businesses’’ 

within the meaning of that term in the 

RFA. A large number of these small 

agricultural service firms will be 

impacted by the PACA license fee 

increase. While the maximum amount 

of the PACA license fee is to be $8,000, 

this increase will impact a small 

number of larger firms with multiple 

branches. Currently, only 56 licensees 

(or 0.0039%) of all PACA licensees 

would pay the $8,000 maximum. The 

fee structure in the final rule was 

designed so most firms would only see 

the annual fee increase from $550 per 

year to $995. This $445 fee increase is 

believed to be a minor increase in 

operating costs to these firms and is 

more than offset by the protection 

provided to these firms under the 

PACA. Larger firms operating at 

multiple branch locations would face 

larger fee increases. As the renewal of 

PACA licenses has become highly 

automated and renewal notices are sent 

to all licensees well before the renewal 

date, elimination of the option biennial 

or triennial licenses should not impose 

a substantial burden upon small 

businesses holding such licenses. 

All fruit and vegetable traders that 

handle less than 2,000 pounds of fresh 

and/or frozen fruits and vegetables are 

exempt from the PACA license 

requirement and would not be subject to 

this fee increase. These firms would be 

considered very small and handle a 

relatively minor volume of total fresh 

and/or frozen fruits and/or vegetables 

marketed. 

On February 24, 2009 the USDA Fruit 

and Vegetable Industry Advisory 

Committee unanimously recommended 

to the Secretary of Agriculture their 

approval of the proposed license fee 

increase. 

Paperwork Reduction Act 

In accordance with Office of 

Management and Budget (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 are 

currently approved under OMB number 

0581–0031. The forms covered under 

this information collection require the 

minimum information necessary to 

effectively carry out the requirements of 

the order, and their use is necessary to 

fulfill the intent of the PACA as 

expressed in the order, and the rules 

and regulations issued under the order. 

E-Government Act Compliance 

AMS 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. License application 

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 and postal delivery. The 

PACA Branch is working towards 

furthering the availability of online 

forms. 

List of Subjects in 7 CFR Part 46 

Agricultural commodities, Brokers, 

Penalties, Reporting and recordkeeping 

requirements. 

■ For reasons set forth in the preamble, 

7 CFR part 46 is amended as follows: 

PART 46—[AMENDED] 

■ 1. The authority citation for part 46 is 

revised to read as follows: 

Authority: 7 U.S.C. 499a–499t. 

■ 2. In § 46.6, paragraphs (a) and (b) are 

revised to read as follows: 

§ 46.6 License fees. 

(a) Retailers and grocery wholesalers 

making an initial application for license 

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 $995 plus $600 for each 

branch or additional business facility. In 

no case shall the aggregate annual fees 

paid by any such applicant exceed 

$8,000. 

* * * * * 

■ 3. In § 46.9, paragraph (k) is revised 

and paragraph (l) is removed to read as 

follows: 

§ 46.9 Termination, suspension, 

revocation, cancellation of licenses; 

notices; renewal. 

* * * * * 

(k) Only a commission merchant, 

broker, or dealer holding a multi-year 

license, prior to phase out of this option, 

will receive a refund if business 

operations cease or a change in legal 

status occurs that requires issuance of a 

new license prior to the next license 

renewal date. If a refund is due, it will 

be issued for any remaining full-year 

portion of advance fee paid, minus a 

$100 processing fee. 

Dated: August 17, 2010. 

Rayne Pegg, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. 2010–20978 Filed 8–23–10; 8:45 am] 

BILLING CODE 3410–02–P 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 205 

[Document Number AMS–NOP–10–0051; 

NOP–10–04IR] 

RIN 0581–AD04 

National Organic Program; 

Amendment to the National List of 

Allowed and Prohibited Substances 

(Livestock) 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Interim rule with request for 

comments. 

SUMMARY: This interim rule amends the 

U.S. Department of Agriculture’s 

(USDA) National List of Allowed and 

Prohibited Substances (National List) to 

incorporate a recommendation 

submitted to the Secretary of 

Agriculture (Secretary) by the National 

Organic Standards Board (NOSB) on 

April 29, 2010. Consistent with the 

recommendation from the NOSB, this 

interim rule revises the annotation of 

one substance on the National List, 

methionine, to extend its use in organic 

poultry production until October 1, 

2012, at the following maximum levels 

of synthetic methionine per ton of feed: 

Laying chickens—4 pounds; broiler 

chickens—5 pounds; turkeys and all 


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