AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

Comments are invited on proposed revisions to the regulations, fees for services, and procedures established under the Plant Variety Protection Act. The proposed revisions are needed to conform with recent amendments to the Plant Variety Protection Act, which added authority for the Plant Variety Protection Office to issue certificates of protection for varieties of plants that are reproduced asexually. The proposed rule would add references to the term “asexual reproduction” to the regulations established under the Act. The proposed rule would also modernize the regulations by simplifying the fee schedule for PVPO services and updating the regulations relating to administrative procedures to reflect current business practices.

DATES:

Comments on the proposed rule must be received by September 10, 2019.

ADDRESSES:

Interested persons are invited to submit written comments concerning this proposed rule. All comments must be submitted through the Federal e-rulemaking portal at http://www.regulations.gov and should reference the document number and the date and page number of this issue of the Federal Register. All comments submitted in response to this proposed rule will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting comments will be made public on the internet at the address provided above.

FOR FURTHER INFORMATION CONTACT:

Jeffery Haynes, Deputy Commissioner, Plant Variety Protection Office, AMS Science and Technology Program, USDA; 1400 Independence Avenue SW, Room 4512-S, Stop 0274, Washington, DC 20250-0002; telephone: (202) 260-8983; email: Jeffery.Haynes@ams.usda.gov.

SUPPLEMENTARY INFORMATION:

Section 10108 of the Agriculture Improvement Act of 2018 (Pub. L. 115-334) (2018 Farm Bill) amended the Plant Variety Protection Act of 1970, as amended (7 U.S.C. 2321-2582) (Act), by adding a definition for the term “asexually reproduced” as it pertains to plant propagation and adding authority to offer intellectual property protection to breeders of new varieties of plants developed through asexual reproduction. This rule proposes corresponding changes to the plant variety protection regulations established under the Act. The Plant Variety Protection regulations at 7 CFR part 97 (regulations) are administered by the Plant Variety Protection Office (PVPO), under the Agricultural Marketing Service's (AMS) Science and Technology Program.

Background Information

The Act authorizes the PVPO to provide intellectual property protection to breeders of new plant varieties to facilitate the marketing of those new varieties. Currently, breeders can apply for and receive certificates that protect new varieties of seed and tuber propagated plants for 20 years, or 25 years for seed propagated vines and trees. A Certificate of Protection is awarded to an owner of a variety after examination by PVPO indicates that it is new, distinct from other varieties, genetically uniform, and stable through successive generations. PVPO-issued certificates are recognized worldwide and facilitate filing for plant variety protection in other countries. Certificate owners have the right to exclude others from marketing and selling protected varieties, manage the use of their varieties by other breeders, and enjoy legal protection of their work.

Asexually reproduced varieties are those derived using vegetative material, other than seed, from a single parent including cuttings, grafting, tissue culture, and propagation by root division. These varieties are a significant and growing portion of the industry. Developers of asexually reproduced varieties desire intellectual property rights recognized internationally that can only be obtained through PVPO-issued certificates.

Proposed Provisions

AMS proposes to revise the Plant Variety Protection regulations by adding references to asexual plant reproduction as appropriate to the current regulations that apply to the protection of seed and tubers. This proposed rule would revise § 97.1 to extend the protection breeders can obtain from PVPO to plants propagated through asexual means. As with other plants covered by the Act, plant breeders would receive certificates that would protect asexually reproduced plant varieties for 20 years, or 25 years for trees and vines. Proposed revisions to the definition of the term sale for other than seed purposes in § 97.2 would add “propagating material” to that term as used in the regulations. Proposed revisions to § 97.6 would require that with an application for plant variety protection of an asexually propagated variety, a deposit of propagating material must be made to a public depository approved by the Commissioner and maintained for the duration of the certificate.

A proposed revision to § 97.7(d) would specify that original deposits of materials for tuber- or asexually reproduced plants must be made within three months of the notice of certificate issuance. Tuber-reproduced plants are currently eligible for plant variety protection under the Act and regulations. Addition of the reference to tuber-reproduced plants in § 97.7(d) is proposed at this time to correct inadvertent omission of that reference in previous revisions to the regulations. Revised § 97.7(d) would also address situations—as suggested by stakeholder feedback—in which it is technically infeasible to deposit or store propagating materials for certain asexually reproduced plants. In such situations, applicants would be allowed to request delay waivers, and would need to agree to provide a specimen, when one is needed, within three months of PVPO's request. PVPO would consider a certificate abandoned if the applicant failed to provide the requested specimen within the three-month timeframe.

A proposed revision to § 97.19(c) would replace the reference to “name of the kind of seed,” which appears on PVPO posts about pending applications, with the more generic reference to “name of the crop,” to accommodate all types of plant material that could be protected, including asexual reproduction material. The proposed rule would replace references to seed deposits in § 97.104 with references to seed and propagating material deposits made in the application and certification processes. Currently, § 97.141 of the regulations allows owners of plant varieties for which certificates have been issued to prohibit unauthorized multiplication of the seed of those varieties. Proposed revisions to § 97.141 would extend that protection to prohibit the unauthorized multiplication of propagating material of those varieties. Similarly, proposed revisions to § 97.142 would allow owners of protected plant varieties to prohibit unauthorized increases of all propagating material released for testing or increase. Currently, § 97.142 only specifies such prohibition for seed and reproducible plant material released for testing or increase.

The proposed rule would also modernize the regulations to reflect current industry and government practices. The current regulations were most recently revised in 2005 and contain obsolete or incomplete references to processes that have changed over the years. For instance, when color is a distinguishing characteristic of a plant variety, the color can be described according to any recognized color charts used in the industry for that purpose. Section 97.9 currently provides one example of a named color chart—the Nickerson Color Fan, which has long been in use. The proposed rule would expand the list of examples in § 97.9 to identify two additional color charts that could be referenced, the Munsell Book of Color and the Royal Horticultural Society Colour Chart, as well as any other commonly recognized color charts.

Many of the proposed changes pertain to PVPO's application process, including the timing of different steps in the process. PVPO expects the proposed changes to simplify the requirements for applicants and to expedite the issuance of variety protection certificates, which would be a benefit to their customers. Currently, applicants pay fees associated with certain steps of the application process as they go through the process, but a proposed revision to § 97.6(c) would require the portions of the application fee for filing an application, for application examination by PVPO, and for certificate issuance to all be paid at the time of application. Corresponding revisions are proposed to §§ 97.103(a) and 97.104(a) and (c). A proposed revision to § 97.20(a) would specify that, subject to certain exceptions, filing and examination fees would not be refundable after an application is deemed by PVPO to be abandoned. A proposed revision to § 97.23(c) would require payment of new filing and examination fees for reconsideration of an original application that had been withdrawn by the applicant. Currently, § 97.101—Notice of Allowance specifies that an applicant must pay the certificate fee within one month of the notice of allowance. The proposed rule would revise § 97.101 by requiring the applicant to verify the names of the plant variety and the owner and would give the applicant an opportunity to withdraw the application before the certificate is issued. After 30 days, a fee for delayed response would be charged to the applicant. Proposed revisions to § 97.178 would remove references to searches and search fees and would specify that the examination fee could be refunded if an application is either voluntarily withdrawn or abandoned before the examination has begun. Section 97.178 would be further revised to provide that the certificate issuance fee would be refunded if an application is voluntarily withdrawn or abandoned after an examination, but before a certificate is issued.

This proposed rule would reorganize and simplify the schedule of fees and charges for PVPO services in § 97.175. The proposed revisions would consolidate and simplify the fee schedule to reflect the proposed revisions described above. Fee amounts for filing an application, examination, certificate issuance, application reconsideration, revival of abandoned applications, and filing appeals with the Commissioner or the Secretary would not change from the current fee schedule. However, fees for PVPO services like reproducing records, authentication, and correction or reissuance of a certificate would no longer be specified separately in the fee schedule in the regulations and would be charged at rates prescribed by the Commissioner, not to exceed $97 per employee hour. Currently those services are estimated to average $107 per employee hour. Office automation and other process improvements make the proposed decreases feasible. One such improvement is the ability to process fee payments through electronic payment methods. The proposed revision to § 97.177 would specify that payments could be made through the Plant Variety Protection system or through pay.gov, although payments by check or money order would still be allowed.

The proposed rule would replace obsolete references in the regulations to the Official Journal of the Plant Variety Protection Office with references to the PVPO website, which is the current business portal used by PVPO to provide service to its customers. Another revision would add a reference to the PVPO website to the section. Such changes are proposed for §§ 97.5(c), 97.7(c)(5), 97.14(d), 97.19, 97.403(d), and 97.800. Such changes would also be made to what are currently paragraphs (b) and (d) of § 97.104, but which would be redesignated paragraphs (a) and (c) through other revisions to the section. A further proposed revision to § 97.5(c) would provide that applicants could request forms and information at a PVPO email address. A proposed revision for § 97.12 would clarify that PVPO could use mail or email to notify applicants of the filing number and effective filing date of applications received by PVPO. Section 97.23(c) would be revised to specify that refiling a voluntarily withdrawn original application must be accompanied by payment of a new filing and examination fee, while § 97.23(d) would be removed altogether, as it contains obsolete references to applications pending on April 4, 1995. An additional revision to § 97.104 (a) would remove reference to the return of seed samples deposited with applications since that is no longer the practice of PVPO and would provide that samples of seed and propagating material associated with abandoned applications and certificates would be retained or destroyed by the depository. Finally, the proposed rule would correct the reference in § 97.500 to the U.S. Court of Appeals for the Federal Circuit, to whom applicants may appeal if they are dissatisfied with decisions of the Secretary related to plant variety protection issues.

Regulatory Flexibility Act

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small business entities. The affected industry falls under the North American Industry Classification System (NAICS) as code 54171—Research and development in the physical, engineering, and life sciences. This classification includes firms that are not plant breeders/plant research; however no detailed industry data was available for the analysis.

Table 1 shows the most recent descriptive data for the industry, obtained from the County Business Pattern 2016 survey. This data set provides information on the number of establishments, number of employees and total annual payroll.

The Small Business Administration (SBA) determines firm size for this industry by number of employees, but on a per firm basis, with small firms defined as having fewer than 1,000 employees and 1,000 or more employees per firm classified as large. Because firms may own more than one establishment, and the County Business Patterns data are compiled on an establishment rather than a firm basis, we must use the Economic Census data to determine the number of small and large firms for the industry.

Table 2 shows the most recent data available on the breakdown between small (<1,000 employees) and large (1,000 or more employees) firms in this industry, according to the SBA's guidance.^[2] The data are from the 2002 Economic Census, with monetary values converted to 2016 dollars. More recent Economic Census data is not available at this level of detail for this industry.

The 2002 Economic Census reported that fewer than one percent of firms were considered large (79 of 10,279 firms, or 0.54 percent). The 10,279 firms at that time owned a total of 13,133 establishments, with 1,380 (nearly 11 percent) of these facilities owned by the 79 large firms.

The tables show the extent of growth in the industry over time. The number of establishments has grown from 13,133 in 2002 to 17,292 in 2016 (32 percent, or 2.3 percent per year). Total employment increased from 557,417 workers to 695,810 (25 percent, or 1.8 percent per year), and total annual payroll from $52,557,389 to $82,865,611 (58 percent, or 4 percent per year). These figures indicate that the industry has seen small to moderate growth, with a more highly paid work force over time. There do not appear significant changes in the structure of the industry between 2002 and 2016.

In reviewing PVPO's list of customers, AMS found evidence that the size distribution of the firms affected by this rule was consistent with data reported in the 2002 Economic Census. AMS estimates that most PVPO customers would be considered small business entities under the criteria established by SBA (13 CFR 121.201), while fewer than 5% of the plant breeders and plant research and development firms using PVPO services would be considered large businesses with 1,000 or more employees.

The PVP Office administers the PVP Act of 1970, as amended (7 U.S.C. 2321 et seq.), and issues Certificates of Protection that provide intellectual property rights to developers of new varieties of plants. A Certificate of Protection is awarded to an owner of a variety after examination indicates that it is new, distinct from other varieties, genetically uniform, and stable through successive generations. PVP is a voluntary service.

This proposed rule would amend the regulations to add application and certification procedures for asexually reproduced plants that mirror procedures currently in use for sexually reproduced and tuber propagated varieties. The proposed rule is intended to give breeders of new plant varieties additional tools for protecting new and emerging crops that were not previously available. This benefit would accrue to breeders of all sizes. As well, the proposed rule would simplify the fee schedule for services provided by the PVPO and would reduce fees for some services from $107.00 per hour to $97.00 per hour. The new fee schedule and rates would streamline the certification process and reduce the cost of maintaining a PVP Certificate of Protection and would apply to applicants of all sizes. Finally, proposed modernization of business processes under the regulations is intended to improve service delivery to PVPO customers of all sizes.

There are currently more than 800 users of the plant variety protection service, of whom about 95 file applications in a given year. Some of these users are small business entities under the criteria established by SBA (13 CFR 121.201). With this action, the number of users is expected to increase by roughly 40 firms. The new applicants are expected to submit an additional 50 new applications on a yearly basis.

PVP applicants are subject to an application fee of $5,150 per certificate. This proposed rule would allow firms that withdraw their applications to be reimbursed $768. Additional services are available from the PVPO at the request of the applicant. Applicants using these services are subject to fees as listed in the rule schedule (7 CFR 97.175), with the inclusion of the reduction in fees for specified services. It is expected that new applicants will also participate in the Germ Plasm Deposit, at a cost of $3,000 per applicant.

The burden on the new entrants is calculated by multiplying the cost of application, $5,150, by the number of expected new applicants (50), for an additional cost of $5,150 * 50 = $257,500. The cost to new applicants for the Germ Plasm Deposit is $3,000 * 50 = $150,000. In total this represents an additional cost to industry for this proposed rule of $407,500. The estimate is an upper boundary made without including the cost savings that result from the reduced hourly fee for additional services or the reimbursement for withdrawn applications, as these cost reductions are expected to be needed infrequently.

Due to the limited cost of the proposed rule expanding a voluntary program, AMS has determined that this action would not have a significant economic impact on a substantial number of these small business entities.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the information collection requirements for this program will be submitted as a new collection to OMB for approval and will be reported in the final rule.

This proposed rule would revise the list of plant varieties eligible for PVPO certification and protection to include asexually reproduced plants. This proposed rule would also simplify the fee schedule for applicants and would lower the fees for some services. Finally, this rule would modernize the PVPO regulations to reflect current industry and government business operations. Reports and forms used in PVPO operations are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

E-Gov

AMS is committed to complying with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Executive Orders 12866 and 13771

This proposed rule does not meet the definition of a significant regulatory action contained in section 3(f) of Executive Order 12866 and is not subject to review by the Office of Management and Budget (OMB). Additionally, because this proposed rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Costs' ” (February 2, 2017).

Executive Order 13175

This proposed rule has been reviewed under Executive Order 13175—Consultation and Coordination with Indian Tribal Governments. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on: (1) Policies that have tribal implication, including regulation, legislative comments, or proposed legislation; and (2) other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

AMS has assessed the impact of this proposed rule on Indian tribes and determined that this rule would not have tribal implications that require consultation under Executive Order 13175. AMS hosts a quarterly teleconference with tribal leaders where matters of mutual interest regarding the marketing of agricultural products are discussed. Information about the proposed changes to the regulations will be shared during an upcoming quarterly call, and tribal leaders will be informed about the proposed revisions to the regulation and the opportunity to submit comments. AMS will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided as needed with regards to the PVPO regulations.

Executive Order 12988

This rule has been reviewed under Executive Order 12988—Civil Justice Reform. This proposed action is not intended to have retroactive effect, nor would it preempt any state or local laws, regulations, or policies, unless they present an irreconcilable conflict with the proposed rule.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 63 of the Act, when an application for plant variety protection has been refused by the PVPO, the applicant may appeal to the Secretary. The Secretary must seek the advice of the Plant Variety Protection Board on all appeals before deciding an appeal. The Act provides that an applicant can appeal the Secretary's decision in the U.S. Court of Appeals for the Federal Circuit, or institute a civil action in the U.S. District Court, provided that such action is taken within 60 days of the Secretary's decision, or such further time as the Secretary allows.

List of Subjects in 7 CFR Part 97

• Plants
• Seeds

For the reasons set forth in the preamble, USDA proposes to amend 7 CFR part 97 as follows:

PART 97—PLANT VARIETY AND PROTECTION

1. The authority citation for part 97 continues to read as follows:

Authority: Plant Variety Protection Act, as amended, 7 U.S.C. 2321 et seq.

2. Revise § 97.1 to read as follows:

3. Amend § 97.2 by removing the definition for Official Journal and revising the definition for Sale for other than seed purposes to read as follows:

4. Amend § 97.5 by revising paragraph (c) to read as follows:

5. Amend § 97.6 by revising paragraphs (c) and (d)(3) and adding paragraph (d)(4) to read as follows:

6. Amend § 97.7 by revising paragraphs (c)(5) and (d) to read as follows:

7. Amend § 97.9 by revising paragraphs (b) and (c) to read as follows:

8. Amend § 97.12 by revising paragraph (a) to read as follows:

9. Amend § 97.14 by revising paragraph (d) to read as follows:

10. Amend § 97.19 by revising the introductory text and paragraph (c) to read as follows:

11. Amend § 97. 20 by revising paragraph (a) to read as follows:

12. Amend § 97.23 by revising paragraph (c) to read as follows, and by removing paragraph (d).

13. Revise § 97. 101 to read as follows:

14. Amend § 97.103 by revising paragraph (a) to read as follows:

15. Amend § 97.104 by removing paragraph (a), redesignating paragraphs (b) through (d) as paragraphs (a) through (c), and revising redesignated paragraphs (a) through (c) to read as follows:

16. Revise § 97.141 to read as follows:

17. Revise § 97.142 to read as follows:

18. Revise § 97.175 to read as follows:

19. Revise § 97. 177 to read as follows:

20. Revise § 97.178 to read as follows:

21. Amend § 97.403 by revising paragraph (d) to read as follows:

22. Revise § 97.500 to read as follows:

23. Revise § 97.800 to read as follows:

Footnotes