E7-4095. Calculating Interest on Reparation Awards Under the Packers and Stockyards Act

AGENCY:

Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION:

Notice.

SUMMARY:

The Department of Agriculture (USDA) has changed the method used to calculate interest on reparation awards under the Packers and Stockyards Act, 1921 (P&S Act). The P&S Act calculation will be consistent with interest awarded on monetary judgments in Federal courts.

EFFECTIVE DATE:

March 7, 2007.

FOR FURTHER INFORMATION CONTACT:

S. Brett Offutt, Director, Policy and Litigation Division, USDA GIPSA, by telephone at [phone], or e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

The Grain Inspection, Packers and Stockyards Administration (GIPSA) administers and enforces the Packers and Stockyards Act, 1921 (P&S Act). The P&S Act prohibits unfair, deceptive, and fraudulent practices by livestock market agencies, dealers, stockyard owners, meat packers, swine contractors, and live poultry dealers in the livestock, poultry, and meatpacking industries.

Section 308 of the P&S Act (7 U.S.C. 209) makes persons subject to the P&S Act liable to the person or persons injured, when the injury involves the purchase, sale or handling of livestock or the purchase or sale of poultry, or if the injury relates to a poultry growing arrangement or swine production contract, and is caused by violations of the P&S Act or the violation of an order of the Secretary under the P&S Act. Section 309 of the P&S Act (7 U.S.C. 210) sets out procedures for making reparation complaints to the Secretary for actions of stockyard owners, market agencies, or dealers in violation of sections 304, 305, 306, or 307 (7 U.S.C. 204, 205, 207 or 208), or an order of the Secretary under Title III of the P&S Act.

A person may file a reparation complaint with the Secretary under the P&S Act or pursue a claim for award of damages in any district court of the United States of competent jurisdiction. The decision of the Secretary can also be appealed to the Federal district courts.

How will the interest rate be determined?

GIPSA will follow the same procedural statute for assessing interest on money judgments as that used in civil cases recovered in Federal courts, which is found in 28 U.S.C. 1961. Accordingly, the interest rate on all reparation awards ordered under the P&S Act, subsequent to the publication of this notice, will be calculated using an interest rate equal to the weekly average 1-year constant maturity Treasury yield for the calendar week preceding the date of the Order, as published by the Board of Governors of the Federal Reserve System in the Federal Reserve Statistical Release (H.15) for Selected Interest Rates. The interest will be computed daily at that same rate, and compounded annually, until the full payment is received.

When will the interest begin accruing and how long will it continue to accrue?

The interest on a reparation award will accrue from the date payment or remittance would have been due under the P&S Act. The interest will continue accruing at the same rate, compounded annually, until full payment is made.

For example, if an Order issued October 2, 2006, awarded $800 for one transaction in which payment was due on June 30, 2006, then the Order would start interest accrual on the award as of June 30, 2006, and continue accruing the interest until the person subject to the Order makes full payment, including interest. The rate of interest used to calculate the accrual in this example would be 4.9 percent, since the weekly average 1-year constant maturity Treasury yield for the calendar week prior to October 2, 2006, reported by the Federal Reserve as of September 29, 2006, was 4.9 percent.

If the reparation involves more than one transaction, the interest on the reparation award will accrue from the date payment or remittance is due under the P&S Act for the last transaction on which the award is calculated. The interest will continue accruing at the same rate, compounded annually, until the person subject to the Order makes full payment.

For example, if an Order issued October 2, 2006, awarded $1500 for three transactions in which payment was due on June 15, June 30, and July 15, 2006, respectively, the Order would start interest accrual on the award on July 15, 2006, and continue accruing the interest until full payment, including interest, is made. The rate of interest used to calculate the accrual in this instance would be 4.9 percent, since the weekly average 1-year constant maturity Treasury yield for the calendar week prior to October 2, 2006, reported by the Federal Reserve as of September 29, 2006, was 4.9 percent.

Beginning interest accrual when payment is due under the P&S Act accomplishes several goals. It consistently enforces the payment requirements of the P&S Act and regulations and it discourages violations of the P&S Act that are subject to the reparations process. It also encourages the parties to resolve complaints early in the reparations process, and compensates the injured party for delays in payment from the date payments were originally due.

Authority: 7 U.S.C. 228.

James E. Link,

Administrator, Grain Inspection, Packers and Stockyards Administration.