[Federal Register Volume 62, Number 157 (Thursday, August 14, 1997)]
[Rules and Regulations]
[Pages 43453-43455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21523]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 62, No. 157 / Thursday, August 14, 1997 /
Rules and Regulations
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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.
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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
Sec. 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 Sec. 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 Sec. 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
[[Page 43454]]
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 straight-forward 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 Sec. 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 Sec. 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
[[Page 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:
Sec. 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
