[Federal Register Volume 60, Number 127 (Monday, July 3, 1995)]
[Proposed Rules]
[Pages 34474-34476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15817]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 60, No. 127 / Monday, July 3, 1995 / Proposed
Rules
[[Page 34474]]
DEPARTMENT OF AGRICULTURE
Office of the Secretary
7 CFR Parts 1 and 47
Rules of Practice
AGENCY: Office of the Secretary of Agriculture, USDA.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: We are proposing to amend the Rules of Practice Governing
Formal Adjudicatory Proceedings Instituted by the Secretary Under
Various Statutes and the Rules of Practice Under the Perishable
Agricultural Commodities Act. The purpose of the proposal is to provide
that the adjudication, under the Perishable Agricultural Commodities
Act, of whether an individual is ``responsibly connected'' with a
particular commission merchant, dealer, or broker will be joined with
any related disciplinary proceedings against the same commission
merchant, dealer, or broker; and to provide that any adjudications of
such status be made by Administrative Law Judge of the Department of
Agriculture.
DATES: Consideration will be given only to comments received on or
before August 2, 1995.
ADDRESSES: Please send an original and three copies of your comments to
Barbara S. Good, Trial Attorney, Office of the General Counsel, USDA,
Room 2446, South Building, 14th Street and Independence Avenue, S.W.,
Washington, DC 20250-1400. Comments received may be inspected at USDA,
Room 2446, South Building, 14th Street and Independence Avenue S.W.,
Washington, DC 20250-1400, between 9:00 a.m. and 5:30 p.m., Monday
through Friday, except holidays. Persons wishing to inspect comments
are encouraged to call (202) 720-7357 in advance to make arrangements.
FOR FURTHER INFORMATION CONTACT:
Mary Hobbie, Assistant General Counsel, Trade Practices Division,
Office of the General Counsel, USDA, Room 2446 South Building, 14th
Street and Independence Avenue, S.W., Washington, DC 20250-1400. (202)
720-5293.
SUPPLEMENTARY INFORMATION: Disciplinary Proceedings. Section 2 of the
Perishable Agricultural Commodities Act (PACA), 7 U.S.C. 499b,
proscribes as unfair various conduct on the part of commission
merchants, dealers, or brokers. The PACA provides redress for such
unlawful conduct in the form of suspension or revocation of required
licenses, and to a limited extent, civil penalties. The Agricultural
Marketing Service (AMS) of the U.S. Department of Agriculture (USDA)
enforces Sec. 2 of the PACA, in part, through administrative
proceedings adjudicated by Administrative Law Judges.
While the PACA is the substantive law governing these
administrative disciplinary proceedings, The Rules of Practice
Governing Formal Adjudicatory Proceedings Instituted by the Secretary
Under Various Statutes (Rules of Practice), at 7 CFR 1.130 et seq.,
provide their procedural framework. Disciplinary proceedings are
instituted by filling a formal complaint with the Hearing Clerk. The
respondent is given the opportunity to file an answer to the complaint.
An Administrative Law Judge determines the issues and makes a decision
after opportunity for a full evidentiary hearing. Both parties may
request testimonial and documentary subpoenas. Any decision of the
Administrative Law Judge may be appealed to the Judicial Officer,
acting for the Secretary. An appeal from a decision of the Judicial
Officer may be taken to the appropriate U.S. Circuit Court of Appeals.
Proceedings to determine responsibly connected status. In addition
to the proscription against unfair conduct embodied in Sec. 2,
Sec. 8(b) of the PACA (7 U.S.C. 499h(b)) forbids a licensee from
employing a person who is or has been ``responsibly connected'' with a
firm or person whose license has been revoked or is under suspension by
the Secretary, a person who has been found to have committed any
flagrant or repeated violation of Sec. 2, or against whom there is an
unpaid reparation award. Such employment violations subject the
employing firm or individual to license suspension or revocation.
The PACA, in Sec. 1(9) (7 U.S.C. 499a), defines ``responsibly
connected'' to mean ``affiliated or connected with a commission
merchant, dealer, or broker as (A) partner in a partnership, or (B)
officer, director, or holder of more than 10 per centum of the
outstanding stock of a corporation or association.''
Prior to 1975, the determination as to responsibly connected status
was made without the benefit of an oral hearing. After the decision of
the U.S. Court of Appeals for the District of Columbia in Quinn v.
Butz, 510 F.2d 743 (D.C. Cir. 1975), USDA instituted a procedure
governed by regulations published at 7 CFR 47.47 et seq. giving any
person finally determined by the PACA Branch of AMS to have been
responsibly connected to a firm subject to license revocation or
suspension the opportunity for an oral hearing before a presiding
officer appointed by AMS.
Currently, determinations as to whether an individual is
responsibly connected to a particular commission merchant, dealer, or
broker are made independently of any related disciplinary proceeding
against the commission merchant, dealer, or broker. Although typically
the two proceedings involve a common fact nucleus, currently no
mechanism exists for joining the procedures to achieve a more efficient
use of resources. In addition, in those cases where the individual
requests oral hearing, responsibly connected proceedings frequently are
not concluded until the sanction in the related disciplinary proceeding
has been in effect for a year or more. Thus, although an offending
entity's license may have been revoked for as much as a year, those
individuals responsible for the violations may nevertheless continue to
be employed in the industry pending a determination of responsibly
connected status.
The rules currently governing determination of responsibly
connected status are set out at 7 CFR 47.47 et seq. In brief, these
rules provide for a preliminary determination by the Perishable
Agricultural Commodities Branch (PACA Branch), AMS, as to the status of
a person who is potentially responsibly connected, notification of the
preliminary determination, and an opportunity to respond and furnish
evidence to the Chief, PACA Branch. If the Chief, PACA Branch, sustains
the preliminary determination that the
[[Page 34475]]
individual is responsibly connected, the individual is then entitled to
file a petition with the Administrator of AMS for a review proceeding
and final decision and to request an oral hearing. If an oral hearing
is requested, it is held before a hearing officer appointed by the
Administrator. Appeals of adverse decisions of the Administrator lie to
the U.S. Circuit Courts of Appeal. In any event, no employment sanction
begins to run until one of the following three conditions set forth in
Sec. 8(b) of the PACA exists: (1) the license of the firm with which
the responsible connection exists has been suspended or revoked; (2)
there is a finding that the firm has committed a flagrant or repeated
violation of Sec. 2 of the PACA; or (3) the firm has failed to pay a
reparation award under Sec. 7 of the PACA.
Proposed rules to combine disciplinary proceedings with
determinations of responsibly connected status. We propose to modify
the procedures for determining responsibly connected status to
accomplish two objectives: (1) To consolidate, where the possibility
exists, hearings in disciplinary cases and related determinations of
responsibly connected status; and (2) to provide for review by an
Administrative Law Judge of the final determination of the Chief, PACA
Branch that an individual is responsibly connected. Because the issues
in both types of proceedings are based upon identical or closely-
related facts, and because the sanctions are related, such a procedure
eliminates the need for duplicative litigation. It also offers the
advantage of insuring that the sanctions against the licensee and the
individuals responsibly connected with it will commence concurrently.
Instead of filing a petition for review with the Administrator of
AMS, under the proposed procedures, the individual contesting the final
determination by the Chief, PACA Branch, that he or she is responsibly
connected will file a petition for review with the Office of the
Hearing Clerk, and the petition will be decided by an Administrative
Law Judge, after opportunity for oral hearing. Any hearing on a
responsibly connected determination will be consolidated with the
hearing, if any, on the disciplinary matters out of which the issue of
responsibly connected status arose. Likewise, all responsibly connected
hearings arising out of the relationship between more than one
individual and one particular PACA licensee will be consolidated.
To illustrate by hypothetical, assume that PACA Branch, AMS,
institutes a disciplinary proceeding against the Acme Produce Company,
of which the officers, directors, and shareholders of greater than 10
percent of the stock consist of Able, Jones, and Smith. Under the
proposal, all issues arising out of the disciplinary infractions
charged against Acme and all employment sanctions arising out of the
relationships between Acme on the one hand and Able, Jones, and Smith
on the other hand will be consolidated for hearing to the extent that
the employment sanctions originate from Acme's alleged disciplinary
violations. If for any reason there is no hearing on the issues
involving Acme, but Able, Jones, and Smith file petitions for review of
their status as responsibly connected individuals and request hearings,
those hearings will be consolidated in one proceeding before an
Administrative Law Judge.
To the extent that no disciplinary proceeding has been instituted
against Acme and the proposed employment sanctions against Able, Jones
and Smith arise under PACA Sec. 8(B)(3) solely from Acme's failure to
pay one or more reparation awards under PACA Sec. 7, all hearings on
petitions for review will be consolidated in one proceeding before an
Administrative Law Judge. The vehicle used to achieve this
consolidation will be a mandatory joinder under the Rules of Practice
as amended.
USDA believes that the proposed procedures, by reducing the
incidence of multiple hearings, will facilitate speedy enforcement of
the PACA and will result in savings in employee time and travel
expense. They will also abolish the need for AMS to employ individuals
to act as presiding officers at responsibly connected proceedings. In
1994, presiding officers were paid $26,866, a large portion of which
would be saved under the proposed new regulation.
Executive Order 12866 and Regulatory Flexibility Act
The Secretary has determined that, if adopted, this proposed rule
would not have a significant economic impact on a substantial number of
small entities. While small entities will continue to be subject to
identical substantive requirements under the revised procedures, the
new procedures will not result in any new burdens. The new rule merely
changes the form of the hearing utilized to determine responsibly
connected status.
This proposed rule has been determined not significant for purpose
of Executive Order 12866 and, therefore, has not been reviewed by the
Office of Management and Budget.
Executive Order 12778
This proposed rule has been reviewed under Executive Order 12778,
Civil Justice Reform. If this rule is adopted: (1) All State and local
laws and regulations that are in conflict with this rule will be
preempted; (2) no retroactive effect will be given to this rule; and
(3) administrative proceedings will not be required before parties may
file suit in court challenging this rule.
Paperwork Reduction Act
The Paperwork Reduction Act of 1980 does not apply to this proposed
rule since the proposed rule does not seek answers to identical
questions or impose reporting or recordkeeping requirements on 10 or
more persons, and the information collected is not used for general
statistical purposes.
List of Subjects
7 CFR Part 1
Administrative practice and procedure, Agriculture, Antitrust,
Blind, Claims, Concessions, Cooperatives, Equal access to justice,
Federal buildings and facilities, Freedom of information, Lawyers,
Privacy.
7 CFR Part 47
Administrative practice and procedure, Agricultural commodities,
Brokers.
For the reasons, set out in the preamble 7 CFR chapter I is
proposed to be amended as follows:
PART 1--ADMINISTRATIVE REGULATIONS
1. The authority citation for part 1, subpart H, would continue to
read as follows:
Authority: 5 U.S.C. 301; 7 U.S.C. 61, 87e, 149, 150gg, 162, 163,
164, 228, 268, 490o, 608c(14), 1592, 1624(b), 2151, 2621, 2714,
2908, 3812, 4610, 4815, 4910; 15 U.S.C. 1828; 16 U.S.C. 620d,
1540(f), 3373; 21 U.S.C. 104, 111, 117, 120, 122, 127, 134e, 134f,
1135a, 154, 463(b), 621, 1043; 43 U.S.C. 1740; 7 CFR 2.35, 2.41.
Sec. 1.131 [Amended]
2. Section 1.131 would be amended as follows:
a. In paragraph (a), by adding ``1(9),'' immediately after
``Perishable Agricultural Commodities Act, 1930, sections'' and
immediately before ``3(c)''.
3. Section 1.133 would be amended as follows:
a. In paragraph (b), by adding after ``Filing of complaint'' the
words ``or petition for review''.
b. In paragraph (b), by redesignating paragraph (b)(2) as paragraph
(b)(3), and
[[Page 34476]]
by adding the following new paragraph (b)(2):
Sec. 1.133 Institution of proceedings.
* * * * *
(b) * * *
(2) Any person determined by the Chief, PACA Branch, pursuant to 7
CFR 47.47 et seq. to have been responsibly connected within the meaning
of 7 U.S.C. 499a(9) to a licensee who is subject or potentially subject
to license suspension or revocation as the result of an alleged
violation of 7 U.S.C. 499b or as provided in 7 U.S.C. 499g(d) shall be
entitled to institute a proceeding under this section by filing with
the Hearing Clerk a petition for review of such determination
* * * * *
4. Section 1.135 would be amended as follows:
a. In the section heading, by adding the words ``or petition for
review'' after the word ``complaint'' and before the period.
b. By designating the text of current Sec. 1.135 as paragraph (a),
and by adding the paragraph heading ``Complaint.'' immediately after
the designation of paragraph (a).
c. By adding the follow paragraph (b):
Sec. 1.135 Contents of complaint.
* * * * *
(b) Petition for Review. The Petition for Review of responsibly
connected status shall describe briefly and clearly the determination
sought to be reviewed and shall include a brief statement of the
factual and legal matters that the petitioner believes warrant the
reversal of the determination
Sec. 1.136 [Amended]
5. Section 1.136 would be amended as follows:
In paragraph (a), by adding after the last sentence the words ``As
response to a petition for review of responsibly connected status, the
Chief, PACA Branch, shall within ten days after service by the Hearing
Clerk of a petition for review, file with the Hearing Clerk a certified
copy of the agency record upon which the Chief, PACA Branch, made the
determination that the individual was responsibly connected to a
licensee under the perishable Agricultural Commodities Act, 7 U.S.C.
499a et seq., and such agency record shall become part of the record in
the review proceeding.''
6. Section 1.137 would be revised to read as follows:
Sec. 1.137. Amendment of complaint, petition for review, or answer;
joinder of related matters.
(a) Amendment. At any time prior to the filing of a motion for
hearing, the complaint, petition for review, answer, or response to
petition for review may be amended. Thereafter, such an amendment may
be made with consent of the parties, or as authorized by the Judge upon
a showing of good cause.
(b) Joinder. Upon application of the Administrator made at any
time, the judge shall consolidate for hearing with any proceeding
brought to suspend or revoke a license granted under the Perishable
Agricultural Commodities Act, 7 U.S.C. 499a et seq., any petitions for
review of determination of status by the Chief, PACA Branch, that
individuals are responsibly connected, within the meaning of 7 U.S.C.
499a(9), to the licensee during the period of the alleged violations.
In any case in which there is no pending proceeding to suspend or
revoke the license of a licensee issued under the Perishable
Agricultural Commodities Act, 7 U.S.C. 499a et seq., but there have
been filed more than one petition for review of determination of
responsible connection to the same licensee, such petitions for review
shall be consolidated for hearing upon motion by the Administrator.
7. Section 1.141 would be amended as follows:
a. By adding after the first sentence of paragraph (a) the
following additional sentence: ``A petition for review shall be deemed
a request for a hearing.''
b. By designating the text of current paragraph (e) as paragraph
(e)(1), and by adding the following new paragraph (e)(2):
Sec. 1.1411 Procedure for hearing.
* * * * *
(e) * * *
(2) If the petitioner in the case of a Petition for Review of a
determination of responsibly connected status within the meaning of 7
U.S.C. 499a(9), having been duly notified, fails to appear at the
hearing without good cause, such petitioner shall be deemed to have
waived his right to a hearing and to have voluntary withdrawn his
petition for review.
* * * * *
PART 47--RULES OF PRACTICE UNDER THE PERISHABLE AGRICULTURAL
COMMODITIES ACT
8. The authority citation for part 47 would continue to read
follows:
Authority: 7 U.S.C. 499o; 7 CFR 2.17(a)(8)(xiii), 2.50
(a)(8)(xiii).
9. Section 47.47 would be revised to read as follows:
Sec. 47.47 Additional definitions.
The following definitions, which are in addition to those in 7 CFR
47.2 (a) through (h), shall be applicable to proceedings under 7 CFR
47.47 through 47.49.
(a) Chief means the Chief of the PACA Branch, or any officer or
employee to whom authority has heretofore lawfully been delegated or to
whom authority may hereafter lawfully be delegated by the Chief, to act
in such capacity.
(b) PACA Branch means the PACA Branch of the Division.
(c) Petition for review means the document filed requesting review
by an Administrative Law Judge of the Chief's determination.
Sec. 47.49 [Amended]
10. Section 47.49 would be amended as follows:
a. The words ``Regulatory Branch'' would be removed each time they
occur and the words ``PACA Branch'' would be added in their place.
b. Paragraph (d) of Sec. 47.49 would be amended by removing all
words appearing after ``may file'' and adding in their place the words
``with the Hearing Clerk, pursuant to Sec. 1.130 et seq. of this
chapter, a petition for review of the determination.''
c. Paragraphs (e) and (f) would be removed.
Sec. 47.50 through 47.68 [Removed]
11. Sections 47.50 through 47.68 would be removed.
Done in Washington, D.C. this 20th day of June, 1995.
Dan Glickman,
Secretary of Agriculture.
[FR Doc. 95-15817 Filed 6-30-95; 8:45 am]
BILLING CODE 3410-01-M
