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.

Proposed Rules Federal Register

40842

Vol. 63, No. 147

Friday, July 31, 1998

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 46

[Docket Number FV98–359]

Regulations Under the Perishable

Agricultural Commodities Act (PACA);

Renewal of License

AGENCY: Agricultural Marketing Service,

USDA

ACTION: Proposed rule.

SUMMARY: The Department of

Agriculture (USDA) invites comments

on proposed revisions to the PACA

Regulations to provide for a three-year

license renewal period for retailers and

grocery wholesalers, and provide all

other licensees the option of renewing

their licenses on an annual, biennial, or

triennial basis. The PACA Amendments

of 1995 (1995 Amendments) provided

for the gradual elimination of license

fees for retailers and grocery

wholesalers over a three-year period

ending November 14, 1998. The 1995

Amendments also gave the Secretary of

Agriculture the authority to determine

the interval for renewing licenses and

asked the Secretary to take due account

of savings to the program when

determining the appropriate intervals

for license renewals.

DATES: Comments must be received by

September 14, 1998.

ADDRESSES: Interested persons are

invited to submit written comments

concerning this proposal. Comments

must be sent to Charles W. Parrott,

Assistant Chief, PACA Branch, Fruit

and Vegetable Division, AMS, USDA,

Room 2095–So. Bldg., P.O. Box 96456,

Washington, D.C. 20090–6456, Email—

charleslwlparrott@usda.gov. All

comments should reference the docket

number and the date and page number

of this issue in the Federal Register and

will be made available for public

inspection in the PACA Branch during

regular business hours.

FOR FURTHER INFORMATION CONTACT:

Charles W. Parrott, Assistant Chief,

PACA Branch, Room 2095–So. Bldg.,

Fruit and Vegetable Division, AMS,

USDA, Washington, D.C. 20250, Phone

(202) 720–4180, Email—

charleslwlparrott@usda.gov.

SUPPLEMENTARY INFORMATION: This

proposal is issued under authority of

section 15 of the PACA (7 U.S.C. 499o).

Background

The Perishable Agricultural

Commodities Act (PACA or Act)

establishes a code of fair trading

practices for the marketing of fresh and

frozen fruits and vegetables in interstate

and foreign commerce. The Act

provides a forum to adjudicate private

disputes that awards damages against

licensees which fail to meet their

contractual obligations in violation of

the PACA. The Act also imposes a

statutory trust on perishable agricultural

commodities received but not yet paid

for, products derived from those

commodities, and any receivables or

proceeds due from the sale of those

commodities or products thereof for the

benefit of unpaid suppliers or sellers. In

these ways, the PACA protects growers,

shippers, distributors, and retailers

dealing in those commodities from

unfair and fraudulent trade practices,

and thus fosters an efficient nationwide

distribution system for fresh and frozen

fruits and vegetables, benefiting the

whole marketing chain from farmer to

consumer. USDA’s Agricultural

Marketing Service (AMS) administers

and enforces the PACA.

In accordance with the 1995

Amendments, retailers and grocery

wholesalers will no longer pay a license

fee under the PACA after November 14,

1998, but will still be required to

maintain a valid license. The 1995

Amendments also authorized the

Secretary of Agriculture to determine

the interval for renewing licenses for all

licensees, taking into account the likely

savings to the program. The House of

Representatives Committee on

Agriculture, in it’s report accompanying

the 1995 Amendments, asked USDA to

promptly examine the necessity for a

yearly renewal requirement for retailers

and grocery wholesalers in an effort to

move toward multi-year licenses.

The proposed rule will shift retailers

and grocery wholesalers—who will no

longer pay license fees after November

14, 1998—to a triennial license renewal

interval beginning on the effective date

of this rule. We estimate that this will

save the program over $40,000 per year

based on processing renewal

applications from approximately 5,000

retailers and grocery wholesalers, at a

cost of about $8 per renewal.

Each of the remaining 10,000

licensees (commission merchants,

brokers, wholesalers, processors,

truckers, food service), all of which

shall continue to pay license fees, will

have the option of renewing their

licenses on an annual, biennial, or

triennial basis. The option will be

available to both new license applicants

and to existing licensees at the time of

license renewal. By offering the multiyear renewal option to these licensees,

we estimate savings to the PACA

program could be as great as $81,000/

year (10,000 businesses paying license

fees x $8 cost to process renewal),

depending on the number of fee-paying

licensees that choose a multi-year

renewal option.

As reflected in the proposed

regulations, beginning on the effective

date of this rule, all new licenses issued

to retailer and grocery wholesaler

applicants will be issued with a

triennial renewal term. Retailers and

grocery wholesalers that are currently

licensed will be gradually shifted to a

triennial license renewal term over the

next three-year period. They would be

notified of the change in their license

renewal period through the normal

renewal process. Under the current

process, AMS mails each licensee a

license renewal application at least 30

days prior to its PACA license

anniversary date and notifies each

licensee of the requirement that the

license must be renewed by its

anniversary date.

Staggering the new triennial renewal

period for retailers and grocery

wholesalers over a three-year period

will guard against an inundation of

renewal applications three years from

now which would likely increase

program administrative costs. The

phase-in will be implemented as

follows: During the first year of the

phase-in period, retailers and grocery

wholesalers holding current licenses

ending in the digits ‘‘0,’’ ‘‘3,’’ ‘‘6,’’ or

‘‘9,’’ would renew their licenses on a

triennial basis; retailers and grocery

wholesalers holding licenses that end in
Federal Register / Vol. 63, No. 147 / Friday, July 31, 1998 / Proposed Rules 40843

the digits ‘‘1,’’ ‘‘4,’’ or ‘‘7,’’ would renew

their licenses this year for a 2-year term,

and thereafter on a triennial basis; and

retailers and grocery wholesalers

holding licenses that end in the digits

‘‘2,’’ ‘‘5,’’ or ‘‘8,’’ would renew their

licenses after one year, and thereafter on

a triennial basis.

As proposed, the regulations will

provide all remaining licensees with the

option of renewing licenses on an

annual, biennial, or triennial basis. By

choosing the biennial or triennial

renewal option, licensees would ‘‘lock

in’’ the current license fee rate for a two

or three-year period, thus guarding

against paying any additional license

fees resulting from a fee increase during

that interval. The proposed regulations

also provide for a refund of any unused

annual license fees to those firms

required to obtain a new license due to

a change in legal status (e.g.: a

partnership of two becomes a

partnership of three individuals; a sole

proprietor incorporates; or a firm reincorporates), and to those firms that

cease business operations or whose

license terminates because of

bankruptcy. In those instances, USDA

would issue refunds only for the full

years remaining on the license. For

example, a wholesaler that obtains a

three year license and then ceases

business operations within the first year

of the license would be issued a refund

of license fees for years two and three.

However, to cover the administrative

costs associated with processing the

early termination of a license, USDA

would assess the entity licensee a $100

processing fee.

Executive Orders 12866 and 12988

This rule, issued under the Perishable

Agricultural Commodities Act (7 U.S.C.

499 et. seq.), as amended, has been

determined to be not significant for the

purposes of Executive Order 12866.

This proposed rule has been reviewed

under Executive Order 12988, Civil

Justice Reform. This proposed rule is

not intended to have retroactive effect.

This proposed rule will not preempt any

State or local laws, regulations, or

policies, unless they present an

irreconcilable conflict with this rule.

There are no administrative procedures

which must be exhausted prior to any

judicial challenge to the provisions of

this rule.

Effects on Small Businesses

Pursuant to requirements set forth in

the Regulatory Flexibility Act (RFA) (5

U.S.C. 601 et. seq.), USDA has

considered the economic impact of this

proposed rule on small entities. The

purpose of the RFA is to fit regulatory

actions to the scale of businesses subject

to such actions in order that small

businesses will not be unduly or

disproportionately burdened. Small

agricultural service firms have been

defined by the Small Business

Administration (13 CFR 121.601) as

those whose annual receipts are less

than $5,000,000. The PACA requires all

businesses that operate subject to its

provisions maintain a license issued by

USDA. There are approximately 15,700

PACA licensees, a majority of which

may be classified as small entities.

In accordance with the PACA

Amendments of 1995, retailers and

grocery wholesalers will no longer pay

a fee to be licensed under the PACA

after November 14, 1998. The proposed

regulations would establish a 3-year

renewal cycle for all retailers and

grocery wholesalers licensed under the

PACA. Given that those PACA licensees

would renew their licenses on a

triennial rather than an annual basis as

is currently required, we anticipate that

they would have lower administrative

costs and a reduction in their record

keeping and reporting burden.

In addition, we project that the

administrative costs and record keeping

requirements for the remaining feepaying licensees would, like the

retailers and grocery wholesalers, be

reduced if they choose the biennial or

triennial renewal options. We believe

that their greatest savings would result

from choosing the triennial renewal

option, with a lesser degree of savings

resulting from the biennial renewal

option.

Finally, we project that all fee-paying

licensees would indirectly benefit from

the cost savings realized from the

proposed revisions to the PACA

program, which is funded through the

fees paid by licensees. Any cost savings

to the program would help delay the

need for an increase in fees to fund the

program.

Accordingly, based on the

information in the above discussion,

USDA has determined that the

provisions of this rule would not have

a significant economic impact on a

substantial number of small entities.

Paperwork Reduction Act

In compliance with Office of

Management and Budget (OMB)

regulations (5 CFR part 1320) which

implement the Paperwork Reduction

Act of 1995 (Pub. L. 104–13), the

information collection and record

keeping requirements covered by this

proposed rule were approved by OMB

on April 1, 1998, and expire on April

30, 2001.

List of Subjects in 7 CFR Part 46

Agricultural commodities, Brokers,

Penalties, Reporting and record keeping

requirements.

For the reasons set forth in the

preamble, 7 CFR part 46 is proposed to

be amended as follows:

PART 46—[AMENDED]

1. The authority citation for part 46

continues to read as follows:

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

499o.

2. In § 46.9, paragraphs, (j), (k), and (l)

would be added, as follows:

§ 46.9 Termination, suspension,

revocation, cancellation of licenses;

notices; renewal.

* * * * *

(j) Beginning on [the effective date of

the final rule] the renewal period for

new licenses issued to retailers and

grocery wholesalers is three years.

(k) Beginning on [the effective date of

the final rule] commission merchants,

brokers, and dealers (other than grocery

wholesalers and retailers) who are new

or existing licensees, may choose to

renew their licenses on an annual,

biennial, or triennial basis. In the event

that the holder of a multi-year license

ceases business operations or undergoes

a change in legal status that results in

the issuance of a new license prior to

the next license renewal date, a refund

will be issued of any remaining full-year

portion of advance fee paid, minus a

$100 processing fee.

(l) Retailers and grocery wholesalers

who are existing licensees as of [the

effective date of the final rule] will be

phased into the three year renewal

process during the succeeding one-year

as follows:

(1) Licenses held by retailers and

grocery wholesalers ending in the digits

‘‘0,’’ ‘‘3,’’ ‘‘6,’’ or ‘‘9,’’ will be renewed

on a triennial basis.

(2) Licenses held by retailers and

grocery wholesalers ending in the digits

‘‘1,’’ ‘‘4,’’ or ‘‘7,’’ will be renewed after

two years and thereafter on a triennial

basis.

(3) Licenses held by retailers and

grocery wholesalers ending in the digits

‘‘2,’’ ‘‘5,’’ or ‘‘8,’’ will renew their

licenses after one year and thereafter on

a triennial basis.

Dated: July 27, 1998.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable

Programs.

[FR Doc. 98–20453 Filed 7–30–98; 8:45 am]

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