PACA fee increases - final rule

From the May 30 Federal Register, a final rule about PACA fee increases. Follow the link for comments about the rule.

Amendments to Rules of Practice Regulations Under the Perishable Agricultural Commodities Act (PACA) To Increase Reparation Complaint Filing and Handling Fees

AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
Summary: The Department of Agriculture (USDA) is amending the Rules of Practice under the Perishable Agricultural Commodities Act (PACA) to increase from $60 to $100 the fee for filing an informal complaint;
and to increase from $300 to $500 the fee for handling a formal complaint.

DATES: Effective Date: June 30, 2008.

FOR FURTHER INFORMATION CONTACT: John Koller, Director, Dispute Resolution Section, 202-720-1442.

SUPPLEMENTARY INFORMATION: This final rule is issued under authority of Section 15 of the PACA (7 U.S.C. 499o). The Perishable Agricultural Commodities Act (PACA or Act) 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 anf 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 program is financed by license and user fees and has an annual operating budget of approximately $10 million. Currently, annual expenses exceed revenue by $3 million, a disparity that is projected to increase each year by another 3 to 5 percent. Greater than half oft he program's expenditures are payroll and related expenses, followed at a distant second by the cost of maintaining office space through rent, communications, and utility expenses. The PACA license and complaint filing fees have remained unchanged since 1995, in part due to a one-time Congressional appropriation of $30.45 million deposited into the
PACA reserve fund on October 1, 2000.
One of the most important functions of the Act is to require that PACA licensees fulfill their contractual obligations, and the Act provides a forum, before the Secretary, where firms that buy and sell fruits and vegetables can settle commercial disputes outside of the civil court system and recover damages for losses they have suffered. These cases are called ``reparation cases.'' In 1995, Section 6 of the PACA (7 U.S.C. 499f) was amended to require a $60 filing fee for filing an informal reparation complaint and a $300 handling fee for filing a formal reparation complaint with USDA under the PACA. Section 6 of the PACA also authorized the Secretary of Agriculture to alter the filing and handling fees by rulemaking. During its January 2007 meeting, the Fruit and Vegetable Industry Advisory Committee (Committee) recommended to the Secretary that the fee for filing an informal reparation complaint be increased to $100, and the handling fee for filing a formal reparation complaint be increased to $500. The Secretary accepted the Committee's recommendation. This final rule implements the recommendation by increasing from $60 to $100 the fee for filing an informal reparation complaint; and increasing from $300 to $500 the fee for handling a formal reparation complaint.
PACA Rules of Practice applicable to reparation complaint proceedings inform the industry of USDA's procedures and requirements for the handling of informal and formal complaints under the Act (7 CFR
part 47). Section 47.3(a) of the current Rules of Practice (7 CFR 47.3(a)) requires that a $60 filing fee accompany any written correspondence and related documents pertaining to the transaction(s)
involved in the dispute before AMS can process and open an informal reparation complaint on behalf of the complainant. When an informal reparation complaint is filed, AMS makes every effort to assist the parties in reaching a settlement of their dispute while gathering documents as part of its investigation. Mediation
services are also offered to the parties throughout the informal handling of the complaint. If an informal settlement cannot be reached, however, the complainant is given the opportunity to file a formal reparation complaint. Section 47.6(c) of the current Rules of Practice (7 CFR 47.6(c)) requires that a complainant filing a formal reparation complaint pay a $300 handling fee to AMS to initiate formal complaint proceedings. Under formal complaint procedures, USDA's Judicial Officer issues a binding decision in the case. In Fiscal Year 2007, there were 1575 informal reparation complaints and 347 formal reparation complaints filed with AMS under the PACA. Over 91 percent of the informal complaints filed under the Act were resolved informally within 4 months. These complaints involved produce transactions valued at over $18.4 million. USDA issued formal decision and orders in 347 cases involving award amounts totaling approximately $5.8 million. The largest award issued by USDA in Fiscal Year 2007 ordered payment of over $257,000 to a fruit and vegetable dealer.
In Fiscal Year 2006, AMS received 1483 informal reparation complaints of which 92 percent were resolved informally within a 4- month timeframe. In Fiscal Year 2006, informal settlements exceeded $18.7 million. There were 300 formal reparation complaints filed under the Act that year. AMS does not expect this final rule to raise a significant amount of revenue for the PACA program (estimated at $144,000 annually), but
by increasing the fees for filing informal and formal reparationcomplaints, AMS believes that the burden for financing the PACA program will be shifted more towards those who benefit directly from using PACA
program services.