Registration, Five-Year Terms, 6299-6301 [2010-2845]

Agencies

• DEPARTMENT OF AGRICULTURE
• Grain Inspection, Packers and Stockyards Administration

[Federal Register Volume 75, Number 26 (Tuesday, February 9, 2010)]
[Rules and Regulations]
[Pages 6299-6301]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-2845]



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Federal Register / Vol. 75, No. 26 / Tuesday, February 9, 2010 / 
Rules and Regulations

[[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