[Federal Register: February 9, 2010 (Volume 75, Number 26)]
[Rules and Regulations]
[Page 6299-6301]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09fe10-1]
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Rules and Regulations
Federal Register
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[[Page 6299]]
DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and Stockyards Administration
9 CFR Part 201
RIN 0580-AB03
Registration, Five-Year Terms
AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA
ACTION: Final rule.
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SUMMARY: The Department of Agriculture's (USDA) Grain Inspection,
Packers and Stockyards Administration (GIPSA) is amending the
regulations under the Packers and Stockyards Act, 1921, as amended and
supplemented (P&S Act), regarding the registration of market agencies
and dealers. Under the current regulations, there is no expiration date
or renewal process for the registration of a market agency or dealer
under the P&S Act. Under this final rule, a market agency or dealer's
registration will not expire, provided that the market agency or dealer
timely files its annual reports with GIPSA. This action will further
assist USDA in regulating the business operations of market agencies
and dealers through the effective enforcement of the P&S Act.
DATES: Effective Date: March 11, 2010.
FOR FURTHER INFORMATION CONTACT: S. Brett Offutt, Director, Policy and
Litigation Division, P&SP, GIPSA, 1400 Independence Ave., SW.,
Washington, DC 20250, (202) 720-7363, s.brett.offutt@usda.gov.
SUPPLEMENTARY INFORMATION:
Background
The Grain Inspection, Packers and Stockyards Administration (GIPSA)
administers and enforces the P&S Act. Under authority delegated to
GIPSA by the Secretary of Agriculture in section 407(a) of the P&S Act
(7 U.S.C. 228), we are authorized to write regulations necessary to
carry out the provisions of the P&S Act.
Section 303 of the P&S Act (7 U.S.C. 203) requires that market
agencies and dealers register with USDA. Section 201.10 of the
regulations (9 CFR 201.10) currently requires that any person operating
or desiring to operate as a market agency or dealer must apply for
registration (Form P&SP 1000). When applying for a registration, the
applicant must certify that its financial condition meets the P&S Act's
requirements, list its type of business organization, state whether it
will operate on a calendar year or fiscal year basis, identify the
character of its business, and name the species of livestock it will
handle. If registration is granted, a market agency or dealer receives
an acceptance letter from GIPSA, which includes the registration number
and the registration's effective date.
Under current Sec. 201.10(b) of the P&S Act regulations (9 CFR
210.10(b)), GIPSA's Administrator may deny a registration if the
Administrator believes that the applicant is unfit to engage in the
business of a market agency and/or dealer. If a registration is denied,
however, the applicant may request a formal hearing before a USDA
administrative law judge who decides if the Administrator's decision
should be overturned. Once issued by GIPSA, however, the registration
does not expire.\1\ After a registration is granted, the registration
becomes inactive if the registrant notifies GIPSA that it has ceased
business operations. Otherwise, a registration is effective
indefinitely.
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\1\ However, GIPSA may suspend a registration for cause.
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We have found that many market agencies and dealers registered
under the P&S Act do not provide GIPSA with updates of information
about their business operations. Without a registrant's current and
accurate business information, we found that GIPSA could not adequately
investigate complaints received from livestock sellers about a
registrant's business practices, and therefore could not effectively
enforce the P&S Act. As a result, GIPSA issued a notice of proposed
rulemaking in the Federal Register on December 15, 2008 (73 FR 242),
seeking comment on amending the regulations under the P&S Act to
establish a 5-year time period for registrations, as well as renewal
procedures. We also proposed a requirement that regulated entities file
applications for registration and renewal in the geographic area where
their primary place of business is located. The comment period ended on
February 17, 2009.
Discussion of Comments and Final Action
GIPSA received one comment from a trade organization representing
over 800 livestock auctions, dealers and related business members of
the regulated industry. After reviewing the issues raised in this
comment, we have determined that we will modify the proposed amendments
in the final rule as noted below:
The commenter asserted that the annual reports required under
section 201.97 of the P&S Act regulations (9 CFR 201.97) provide
sufficient information on registrants' business operations. The
commenter suggested that if there is additional information GIPSA
needs, GIPSA should redesign the annual report to gather the necessary
information. Upon reconsideration, GIPSA agrees with the commenter and
will not impose any additional burden on entities by requiring a 5-year
registration period. Instead, registrations will continue in effect
indefinitely and only expire if a registered entity fails to timely
file the annual report required under section 201.97 of the P&S Act
regulations (9 CFR 201.97). GIPSA will therefore issue a final rule
that does not establish a 5-year term for registrations.
The commenter also concluded that GIPSA's data management system is
outdated and badly managed, after finding inconsistencies between its
membership records and those of GIPSA. The commenter suggested that
GIPSA improve its data management system as an alternative to requiring
a 5-year registration term. Independent of this comment, GIPSA has
already implemented an improved data management system that allows for
better tracking and uniform oversight of regulated entities. This
system consolidates information about registrants into one database,
and includes registration information, annual report information, and
records regarding compliance and violations. In addition, GIPSA created
a new work unit whose sole function is to
[[Page 6300]]
administer the annual reporting requirements under the P&S Act and
regulations.
The commenter further suggested that rather than require
registrants to renew their registrations every 5 years, GIPSA could
require that registrants provide notification when they plan to cease
operating. GIPSA's objective in proposing to amend the registration
requirements is to better account for those entities actively operating
as dealers or market agencies. Relying on registrants to notify GIPSA
when they cease operating would not provide complete and accurate
information. GIPSA now believes that it would be able to maintain
accurate records of entities currently operating subject to the P&S
Act, without imposing new and additional burdens on registrants,
provided that they file their annual reports timely.
The commenter also stated that the new requirements would not
improve enforcement of the P&S Act; they would only interfere in the
business of those who are already in compliance with the P&S Act. We
disagree with the commenter's assertions that having registered
entities provide information regarding their business is a new burden
on registered entities. Persons operating subject to the P&S Act are
required to report certain information about their current business
operations. This issue, however, is now moot since we are not
implementing the proposed requirement to renew registrations every 5
years.
The commenter also requested that a timeframe be established for
GIPSA to process applications to ensure that registrations do not
expire while waiting for agency action. This issue, however, is also
now moot since we are not implementing the proposed requirement to
renew registrations every 5 years. Again, registrations would continue
in effect indefinitely, and only expire if a registered entity fails to
timely file the annual report required under section 201.97 of the P&S
Act regulations (9 CFR 201.97).
Finally, the commenter stated that if a registration is denied,
GIPSA should fully describe the reasons for the denial. By not
implementing the proposed requirement to renew registrations every 5
years, GIPSA will not be routinely considering whether to approve or
deny registration renewal applications. Registrants, whose
registrations expire because the required annual report is not filed
within the time period allowed, will be required to file a new
application for registration in order to continue in business. In cases
of new registrations where the Administrator has reason to believe an
applicant is unfit to conduct business under the P&S Act, the applicant
will have an opportunity for a hearing, as the regulations currently
allow, in which the applicant can show cause why its application should
not be denied.
Based on the comment discussed above, we are therefore modifying
proposed 201.10(e) (9 CFR 201.10(e)) in this final rule to provide that
registrations continue indefinitely provided that the annual report is
timely filed as required under section 201.97 of the P&S Act
regulations (9 CFR 201.97). Failure to file an annual report by the
date required in section 201.97 of the P&S Act regulations (9 CFR
201.97) will result in the issuance of a default notice. Thirty days
after receipt of the default notice, a registrant's registration will
expire if GIPSA does not receive the required annual report. If the
Administrator has reason to believe that an applicant is unfit to
engage in the activity for which the applicant seeks registration, a
proceeding such as described in existing paragraph 201.10(b) (9 CFR
201.10(b)) shall be promptly initiated. This includes cases of new
applications for registration as well as those filed by applicants
whose registrations expired due to untimely filing of an annual report.
The one comment received did not address the other amendments to
Sec. 201.10 contained in the proposed rule. Therefore, the proposed
amendments to Sec. 201.10(a)-(d), and new paragraph (f) are finalized
without change.
Executive Order 12866 and Regulatory Flexibility Act
The Office of Management and Budget (OMB) has designated this final
rule as not significant for the purposes of Executive Order 12866.
We have determined that this final rule will not have a significant
economic impact on a substantial number of small entities as defined in
the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.). Most of
the entities to which this rule applies do meet the applicable size
standard for small entities in the Small Business Administration (SBA)
regulations (13 CFR 121.201). For the North American Industry
Classification System, codes that apply to animal production (subsector
112), the SBA size standard is $750,000 in average annual receipts.
Based on the information that we have on bonded registrants, about 75
percent of the approximately 5,400 entities to which this final rule
applies have annual receipts of less than $750,000. While the proposed
rule would have imposed a burden of 30 minutes of effort to complete
the application to renew registration every 5 years, GIPSA has
determined that this final rule will impose no new burden since
registrants must already submit up-to-date business information on
their annual reports, which is covered under the currently approved OMB
information collection 0580-0015. Only if a new application is filed
after a registration expires due to untimely filing of an annual report
will the estimated 30 minutes of effort to complete a registration
application be necessary. Therefore, we have determined that this final
rule will not have a significant economic impact on a substantial
number of small entities.
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. These actions are not intended to have
retroactive effect. This final 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 final rule.
Paperwork Reduction Act
In accordance with Office of Management and Budget regulations (5
CFR part 1320) that implement the Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35), the information collection and recordkeeping
requirements that are covered by this final rule were approved under
OMB number 0580-0015 on February 21, 2008, and expire on February 28,
2011.
E-Government Act Compliance
GIPSA 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.
List of Subjects in 9 CFR Part 201
Reporting and recordkeeping requirements.
0
For the reasons set forth in the preamble, we are amending 9 CFR part
201.10 as follows:
0
1. The authority citation for Part 201 continues to read as follows:
Authority: 7 U.S.C. 181-229c.
0
2. Section 201.10 is amended to revise paragraphs (a) through (d) and
to add paragraphs (e) and (f) to read as follows:
[[Page 6301]]
Sec. 201.10 Requirements and Procedures.
(a) Every person operating or desiring to operate as a market
agency or dealer as defined in section 301 of the Act (7 U.S.C. 201)
must apply for registration. To apply, such persons must file a
properly executed application for registration on a form furnished by
the Agency. Each applicant must file an application for registration
with the regional office for the region where the applicant has his or
her primary place of business, and file and maintain a bond as required
in Sec. Sec. 201.27 through 201.34 (9 CFR 201.27 through 201.34).
(b) If, upon review of an application, the Administrator has reason
to believe the applicant is unfit to engage in the activity for which
application has been made, a proceeding shall be instituted promptly
affording the applicant the opportunity for a full hearing, in
accordance with the Department's Rule of Practice Governing Formal
Adjudicatory Proceedings (7 CFR Subpart H), to show cause why the
application for registration should not be denied. If after the hearing
the application is denied, as soon as the issue(s) that formed the
basis of the denial have been remedied, the applicant may file a new
application for registration.
(c) Any person regularly employed on salary, or other comparable
method of compensation, by a packer to buy livestock for such packer is
subject to the regulation requirements of this section. Such person
must be registered as a dealer to purchase livestock for slaughter on
behalf of the packer.
(d) Every person clearing or desiring to clear the buying
operations of other registrants must apply for registration as a market
agency providing clearing services by filing a properly executed
application on a form furnished by the Agency, and file and maintain a
bond as required in Sec. Sec. 201.27 through 201.34.
(e) If an application for registration is granted, a market agency
or dealer receives an acceptance letter from the Agency that issues the
registration number and the effective date of the registration. Each
registration issued in accordance with this section will not expire,
provided that the registrant timely files its annual report with the
Agency as required in section 201.97. Failure of a registrant to file
an annual report by the date required in section 201.97 will result in
the issuance of a default notice. Thirty days after receipt of the
default notice, the registration will expire if the Agency does not
receive an annual report from the registrant. A registrant who fails to
renew its registration in a timely manner, and continues to operate,
will be engaged in business subject to the Act without a valid
registration in violation of section 303 of the Act (7 U.S.C. 203).
(f) Registrations that expire during a period of suspension imposed
as a result of an order or injunction may be renewed, but the renewal
will not be effective until the specified suspension period terminates.
J. Dudley Butler,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. 2010-2845 Filed 2-8-10; 8:45 am]
BILLING CODE 3410-KD-P