E7-7041. Rules of Practice Governing Proceedings Under the Packers and Stockyards Act

AGENCY:

Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION:

Final rule.

SUMMARY:

This document amends Chapter 2 of Title 9 CFR to provide Supplemental Rules of Practice that will provide a mechanism for settling cases without the institution of formal proceedings.

EFFECTIVE DATE:

April 17, 2007.

FOR FURTHER INFORMATION CONTACT:

S. Brett Offutt, Director, Policy and Litigation Division, P&SP, GIPSA, 1400 Independence Ave., SW., Washington, DC 20250, [phone], [e-mail].

SUPPLEMENTARY INFORMATION:

Background

The Grain Inspection, Packers and Stockyards Administration (GIPSA) of the U.S. Department of Agriculture (USDA) administers the Packers and Stockyards Act of 1921, as amended and supplemented (7 U.S.C. 181-229) (P&S Act). The P&S Act is a statute that provides comprehensive regulation of the marketing of livestock, meat and poultry in interstate commerce. Its principal purposes are to enforce fair trade practices and financial protections, and to take action against certain anticompetitive practices in the livestock, meat and poultry industries.

Under the Administrative Regulations of the Department of Agriculture (7 CFR Part 1), any hearing to assess a civil penalty for violations of the P&S Act must be conducted in accordance with the “Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary of Agriculture Under Various Statutes” as contained in Subpart H of Part 1, Subtitle A, 7 CFR.

Chapter 2, Title 9 CFR contains regulations issued pursuant to the P&S Act. This document adds new sections to Part 202 to provide Supplemental Rules of Practice to provide a mechanism for settling cases without the institution of formal proceedings.

Under the existing rules of practice, persons alleged to be in violation of the P&S Act may be served with an administrative complaint and may ultimately be required to appear in a hearing before a United States Department of Agriculture Administrative Law Judge. Legal fees and other expenses related to this administrative process, and suspensions and/or civil penalties that may result from a finding of violation of the P&S Act, may be costly. This rule provides supplemental rules of practice to allow both GIPSA and the violator to resolve proceedings in a more timely and less costly manner.

Executive Order 12866 and Regulatory Flexibility Act

The Office of Management and Budget (OMB) designated this rule as not significant for the purposes of Executive Order 12866. This final rule implements additional Supplemental Rules of Practice relating to circumstances arising in connection with proceedings under the P&S Act. These new Supplemental Rules of Practice provide a mechanism for settling cases without the institution of formal administrative proceedings. The rule allows the Administrator discretion to enter into stipulation agreements with persons believed to be in violation of the P&S Act. The stipulations will occur before a formal administrative complaint is issued and will include payment of a civil penalty. Agreeing to the stipulation will be voluntary on the violator's part. If the violator does not agree, the Administrator retains the right to proceed through formal administrative proceedings.

For example, if our investigation reveals a person to be inaccurately weighing livestock in violation of the P&S Act, we will provide notice of the violation and opportunity for a hearing. The notice will also give the violator the option to settle the case by paying a specified penalty. If the case were to go through the formal adjudicatory procedures, we could ask the administrative law judge to impose a penalty of $11,000 per violation. By entering a stipulation agreement, the alleged violator would pay a discounted civil penalty that is substantially less and would save the expense of litigation. The government would also save the expense of litigation. If the violator elects not to accept the stipulation, we would still have opportunity to pursue enforcement through the formal adjudicatory process.

To ensure that stipulations remain an effective tool for achieving compliance with the P&S Act, we will adopt internal procedures that generally do not allow repeat violators an opportunity to agree to stipulated monetary penalties. In most cases, repeat violators and those violators whose conduct results in substantial economic harm to other persons will not be offered stipulations, but would be subject to having a formal administrative complaint filed against them. Our procedures to use stipulations for less serious violations will ensure that these stipulations will promote efficiency and cost savings while still providing an additional deterrent against violations of the P&S Act.

This rule is not a rule as defined by the Regulatory Flexibility Act (5 U.S.C. 601-612). Therefore, this rule is exempt from the requirements of that Act.

Executive Order 12988

This rule has been reviewed under E.O. 12988, Civil Justice Reform. This action is not intended to have retroactive effect. This rule will not pre-empt State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule. There are no administrative procedures that must be exhausted prior to any judicial challenge to the provisions of this rule.

Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) does not apply to this rule because the rule does not seek answers to identical questions or impose reporting, recordkeeping, or third party disclosure requirements on 10 or more persons, and the information collected is not used for general statistical purposes.

E-Government Act Compliance

We are 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.

Effective Date

This rule (1) relates to internal agency management, and (2) improves the administration of programs regulated by the Packers and Stockyards Act because it affords more timely and less costly resolution of cases brought by USDA. No useful purpose would be served by delaying the effective date of implementing the use of stipulation agreements. Therefore, as allowed in 5 U.S.C. 553, it is found upon good cause that notice and other public procedure with respect to this rule change are impracticable and contrary to the public interest, and good cause is found for making this rule effective less than 30 days after publication in the Federal Register.

List of Subjects in 9 CFR Part 202

• Administrative practice and procedure
• Stockyards

For the reasons set forth in the preamble, GIPSA amends 9 CFR part 202 as follows:

PART 202—RULES OF PRACTICE GOVERNING PROCEEDINGS UNDER THE PACKERS AND STOCKYARDS ACT

1. Revise the authority citation for part 202 to read as follows:

Authority: 7 U.S.C. 228(a); 7 CFR 2.22 and 2.81.

2. Immediately following § 202.123 add a new undesignated center heading and §§ 202.200 and 202.210 to read as set forth below:

Rules of Practice Applicable to All Other Proceedings

§ 202.200

Scope and applicability of rules of practice.

The Uniform Rules of Practice for the Department of Agriculture promulgated in Subpart H of Part 1, Subtitle A, Title 7, Code of Federal Regulations, are the Rules of Practice applicable to adjudicatory, administrative proceedings under the Packers and Stockyards Act, as amended (7 U.S.C. 181 et seq.). In addition, the Supplemental Rules of Practice set forth in this part shall be applicable to such proceedings.

§ 202.210

Stipulations.

(a) The Administrator may enter into a stipulation with any person operating subject to the Packers and Stockyards Act, as amended (P&S Act), prior to issuing a complaint that seeks a civil penalty against that person.

(1) The Administrator will give the person notice of an alleged violation of the P&S Act or regulations and provide an opportunity for a hearing;

(2) The person has the option to expressly waive the opportunity for a hearing and agree to pay a specified civil penalty within a designated time;

(3) The Administrator will agree to settle the matter by accepting payment of the specified civil penalty within a designated time;

(4) If the person does not agree to the stipulation, or does not pay the penalty within the specified time, the Administrator may issue an administrative complaint citing the alleged violation; and

(5) The civil penalty that the Administrator proposed in a stipulation agreement has no bearing on the civil penalty amount that may be sought in a formal administrative proceeding against the same person for the same alleged violation.

(b) [Reserved].

James E. Link,

Administrator, Grain Inspection, Packers and Stockyards Administration.