[Federal Register Volume 59, Number 99 (Tuesday, May 24, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12588]


[[Page Unknown]]

[Federal Register: May 24, 1994]


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DEPARTMENT OF AGRICULTURE
Packers and Stockyards Administration

9 CFR Part 201

RIN 0590-AA08

 

Regulations and Statements of General Policy Issued Under the 
Packers and Stockyards Act: Definitions, Industry Rules, Schedules of 
Rates and Charges, Proceeds of Sales, Accounts and Records, Trade 
Practices, Stockyards Services, Brand Inspection, and Buyers Expenses

AGENCY: Packers and Stockyards Administration, Agriculture.

ACTION: Proposed rule.

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SUMMARY: The Agency is currently reviewing all regulations and 
statements of general policy issued under the provisions of the Packers 
and Stockyards (P&S) Act. Review of 20 regulations and statements of 
general policy, which have been identified as Group 1, has been 
completed. As a result of the review, this document proposes to remove 
2 regulations, amend 1 trade practice regulation, and retain 14 
regulations and 3 statements of general policy in their present form.

DATES: Comments must be submitted on or before July 25, 1994.

ADDRESSES: Comments may be mailed to the Administrator, Packers and 
Stockyards Administration, room 3039, South Building, U. S. Department 
of Agriculture, Washington, D.C. 20250-2800. Comments received may be 
inspected during normal business hours in the Office of the 
Administrator.

FOR FURTHER INFORMATION CONTACT: Tommy Morris, Acting Director, 
Livestock Marketing Division (202) 720-6951, or Kenneth Stricklin, 
Director, Packer and Poultry Division (202) 720-7363.

SUPPLEMENTARY INFORMATION: Advance Notice of Proposed Rulemaking was 
published in the Federal Register (57 FR 42515) on September 15, 1992. 
Comments were solicited, at that time, concerning the relevance and 
importance of each regulation and statement of general policy to 
today's livestock, meat, and poultry industries, and which sections 
should be retained, modified or removed. To complete the review 
process, the rules covered by the Advance Notice of Proposed Rulemaking 
have been divided into three groups and this document relates to those 
rules identified as Group l.
    In response to the request for comments in the Advance Notice of 
Proposed Rulemaking, the Agency received a total of 1,419 comments 
relating to the rules in Group 1. Comments were received from 1,307 
individuals not identified as producers or as members of any 
organization, 78 individuals identified as livestock producers, 15 
livestock producer and trade associations, 8 animal welfare groups, 3 
individuals representing livestock marketing interests, 3 attorneys, 1 
association of veterinarians, 1 bank, 2 law enforcement associations, 
and 1 State Department of Agriculture.
    No comments were received regarding Sec. 201.5, which pertains to 
Agency procedures on posting a stockyard, or Sec. 201.6, concerning 
Agency deposting procedures. Both of these regulations involve internal 
procedures taken by the Agency in posting and deposting stockyards and 
are merely expository of the explicit statutory requirements and not 
necessary for carrying out the P&S Act. Neither provision affects 
members of the public. Therefore, this document proposes to remove 
Secs. 201.5 and 201.6. Removal of these sections will not change the 
current posting and deposting procedures.
    Two commenters recommended modifications to Sec. 201.61(a). That 
subsection prohibits market agencies selling on commission from 
entering into arrangements with dealers and other buyers that would 
lessen their loyalty to their consignors or impair their selling 
services. In addition, the subsection specifically prohibits a market 
agency selling on commission from providing clearing services for an 
independent dealer purchasing livestock from consignments made to that 
market agency. Both commenters, a trade association and an agricultural 
cooperative, recommended deleting the specific prohibition in 
Sec. 201.61(a) against a market agency selling on commission providing 
clearing services to an independent dealer who purchases livestock from 
the selling agency's consignments.
    P&SA agrees with the recommendations. The purpose of Sec. 201.61(a) 
is to protect the integrity of the relationship between the consignor 
and the consignee market agency. Retention of the general prohibition 
against arrangements tending to undermine the loyalty of the market 
agency or to impair the quality of selling services achieves this 
purpose without the necessity of specifically prohibiting the 
furnishing of clearing services by a market agency selling on 
commission. P&SA has determined that the loyalty of the market agency 
is not likely to be impaired by the mere furnishing of clearing 
services to buyers, and so proposes to amend Sec. 201.61(a) by 
modifying the last sentence of the subsection to permit market agencies 
selling on commission to provide clearing services to independent 
dealers that purchase livestock from consignments to such market 
agencies selling on commission, provided that full disclosure of the 
clearing arrangement is noted on the accounting to the consignor. Full 
disclosure of the clearing arrangement will protect livestock 
consignors without unnecessarily restricting purchases from 
consignments and will allow market agencies selling on commission 
greater flexibility in representing the interests of livestock sellers.
    Finally, in view of amendments to Sec. 201.56(b), published in the 
Federal Register on October 13, 1993, at 58 FR 52884, the proposed 
modifications to subsection (a) are logically consistent and 
appropriate.
    A review of the following regulations and statements of general 
policy has been completed and the Agency proposes to retain each in its 
present form:

Sec.
201.1  Meaning of words.
201.2  Terms defined.
201.3  Authority.
201.4  Bylaws, rules and regulations, and requirements of exchanges, 
associations, or other organizations; applicability, establishment.
201.17  Requirements for filing tariffs.
201.39  Payment to be made to consignor or shipper by market 
agencies; exceptions.
201.44  Market agencies to render prompt accounting for purchases on 
order.
201.45  Market agencies to make records available for inspection by 
owners, consignors and purchasers.
201.81  Suspended registrants.
201.82  Care and promptness in weighing and handling livestock and 
live poultry.
201.86  Brand inspection: Application for authorization, 
registration and filing of schedules, reciprocal arrangements, and 
maintenance of identity of consignments.
201.94  Information as to business; furnishing of by packers, live 
poultry dealers, stockyards owners, market agencies, and dealers.
201.95  Inspection of business records and facilities.
201.96  Unauthorized disclosure of business information prohibited.
203.5  Statement with respect to market agencies paying the expenses 
of livestock buyers.
203.12  Statement with respect to providing services and facilities 
at stockyards on a reasonable and nondiscriminatory basis.
203.17  Statement of general policy with respect to rates and 
charges at posted stockyards.

    In the process of reviewing these regulations, it was determined 
that they were necessary to the efficient and effective enforcement of 
the P&S Act and to the orderly conduct of the marketing system. The 
absence of any of the regulations would be detrimental to the industry 
and could result in increased litigation.
    Comments received pursuant to the Advance Notice of Proposed 
Rulemaking concerning Secs. 201.17, 201.45, 201.81, 201.95 and 203.17 
were generally in support of retaining each in its present form. No 
comments were received concerning Secs. 201.1, 201.3, 201.39, 201.44, 
and 203.12.
    Two comments were received concerning modification of Sec. 201.2. 
This regulation defines certain unique terms used in the P&S Act and 
regulations. Both comments came from livestock producer associations 
and recommended that video and other forms of electronic marketing be 
defined. All forms of electronic marketing generally operate as market 
agencies selling on commission and are subject to all requirements of 
the P&S Act and regulations relating to such entities. Therefore, it 
has been determined that further definition is unnecessary at this 
time.
    One thousand three hundred and thirty-three (1,333) comments were 
received concerning Sec. 201.82. This regulation requires reasonable 
care and prompt handling of livestock and live poultry to prevent 
excessive shrink, injury, death or other avoidable loss. Comments were 
received from 1,306 individuals not identified as producers or as 
members of any organization, 8 animal welfare groups, 11 livestock 
producer and trade associations, 5 livestock producers, 1 individual 
representing livestock marketing interests, 1 association of 
veterinarians and 1 State Department of Agriculture. More than 1,300 
comments recommended amending this regulation to prohibit the sale of 
downed animals at stockyards, 26 proposed amending it to require 
stockyards to humanely euthanize downed animals, 1 recommended that the 
Agency issue a policy statement with guidelines on care and handling of 
livestock, 12 supported this regulation in its present form, 1 opposed 
placing regulation of care and handling of downed livestock under 
Agency authority and another recommended that the regulation be amended 
to clarify that its purpose is to prevent economic loss to livestock 
sellers and not to further animal welfare interests. Ten other comments 
generally supported broader authority over the care and handling of 
livestock.
    The Agency has considered all of the comments concerning 
Sec. 201.82 and determined that concerns about the care and handling of 
livestock at stockyards can be addressed more effectively in a separate 
rulemaking. Therefore, this document proposes to retain Sec. 201.82 in 
its present form. The Agency will propose an additional rule, which is 
currently being drafted, concerning the care and handling of livestock 
to be published in a separate docket.
    Eighty-five comments were received concerning Sec. 201.86. This 
regulation sets forth procedures for authorizations to charge and 
collect fees for inspection of brands. Comments were received from 73 
livestock producers, 4 livestock producer associations, 3 attorneys, 2 
individuals not identified as members of any organization, 2 law 
enforcement associations, and 1 bank. Eighty-four comments supported 
the regulation in its present form. One comment expressed concern that 
Section 317 of the P&S Act (7 U.S.C. 217a) limits collection of brand 
inspection fees at stockyards to livestock originating within the State 
and recommended Sec. 201.86 be amended to allow inspection of all 
livestock sold within the State be done in accordance with the State 
law where the livestock are sold.
    This document proposes to retain Sec. 201.86 in its present form 
because neither the P&S Act nor Sec. 201.86 of the regulations 
authorize or restrict the inspection of brands. Section 201.86 provides 
the mechanism for collecting fees authorized by the P&S Act for 
inspecting brands at stockyards. Restrictions on the collection of fees 
are imposed by the statute and not the regulation and it is not 
permissible to change by regulation that which is prohibited by 
statute.
    Three comments concerning Sec. 201.94 were received from livestock 
producer associations. This regulation requires those persons subject 
to the P&S Act, upon proper request and within a reasonable time, to 
provide business information to authorized representatives of the 
Secretary, in writing or otherwise and under oath. Two comments 
recommended the regulation be amended to require that businesses over a 
certain size be required to provide to the Agency certain contract and 
other business information. One comment supported the regulation in its 
present form. The Agency has concluded that the current requirements of 
Sec. 201.94, coupled with the provisions of the P&S Act, are adequate 
to provide sufficient access, at this time, to business information of 
larger firms.
    Three comments were received concerning Sec. 201.96. This 
regulation provides assurances to persons under investigation that 
their business records will be treated confidentially and employees of 
the United States cannot make unauthorized disclosures of those 
records. Comments were received from a livestock producer association, 
a trade association, and an individual representing livestock marketing 
interests. Two comments recommended amending this regulation to provide 
for a penalty. One comment supported the regulation in its present 
form. Section 10 of the Federal Trade Commission Act, which has been 
made a part of the P&S Act by incorporation (7 U.S.C. 222), provides 
penalties for unauthorized disclosures. In addition, P&SA considers the 
criminal penalties provided by the Trade Secrets Act, 18 U.S.C. 205, 
adequate deterrent to the unauthorized disclosure of business records 
and, therefore, no changes are proposed.
    Three comments were received concerning Sec. 203.5. This statement 
of general policy informs market agencies selling on commission that 
P&SA regards the payment of business expenses of buyers attending their 
livestock sales as violative of the P&S Act. Comments were received 
from a livestock producer association, a trade association, and an 
individual representing livestock marketing interests. Two comments 
recommended that practices addressed in this statement be prohibited 
only when they result in anticompetitive behavior. One comment 
supported the statement in its present form. P&SA believes that this 
statement reflects the correct formulation of its policy toward such 
activities and the legal effect of that policy and that, therefore, no 
changes are appropriate.
    The proposed change in Sec. 201.61 does not impose or change any 
recordkeeping or information collection requirements. Existing 
requirements in this regulation have been previously approved by OMB 
under control number 0590-0001.
    As provided by the Regulatory Flexibility Act, it is hereby 
certified that this proposed amended rule will not have a significant 
economic impact on a substantial number of small entities and a 
statement explaining the reasons for the certification is set forth in 
the following paragraph and is being provided to the Chief Counsel for 
Advocacy of the Small Business Administration.
    While this proposed amended rule impacts small entities, it will 
not have a significant economic impact on any entity, large or small. 
The primary effect of this rule is to remove restrictions on purchases 
by dealers from consignments of a market agency that provides clearing 
services to that dealer.
    This rule has been determined to be not significant for purposes of 
E.O. 12866 and therefore has not been reviewed by OMB.
    This amendment does not impose any new paperwork requirement and 
does not have Federalism implications under the criteria of E.O. 12612.
    This proposed amendment has been reviewed under E.O. 12778, Civil 
Justice Reform, and is not intended to have retroactive effect. This 
amendment will not preempt State or local laws, regulations, or 
policies unless they present an irreconcilable conflict with this 
amendment. Prior to judicial challenge of the amendment to rule, a 
party must first be found by the Secretary to be in violation of the 
P&S Act and in violation of the accompanying regulation. Second, the 
party must appeal that finding and the validity of the regulation to 
the Secretary in the course of the administrative proceeding. Only 
after taking these steps, may the party challenge the regulation in a 
court of competent jurisdiction.

List of Subjects in 9 CFR Part 201

    Accounts and records, Brand inspection, Buyers expenses, 
Definitions, Industry rules, Jurisdiction, Purchases from consignment, 
Proceeds of sale, Rates and charges, Stockyard services, Tariffs, Trade 
practices.

    Done at Washington, DC this 17th day of May 1994.
Calvin W. Watkins,
Acting Administrator, Packers and Stockyards Administration.
    For the reasons set forth in the preamble, the Packers and 
Stockyards Administration proposes to amend 9 CFR part 201 as follows:
    1. The authority citation for part 201 continues to read as 
follows:

    Authority: 7 U.S.C. 204, 228; 7 CFR 2.17(e), 2.56.

    2. Remove Sec. 201.5.
    3. Remove Sec. 201.6.
    4. Revise Sec. 201.61(a) to read as follows:


Sec. 201.61  Market agencies selling or purchasing livestock on 
commission; relationships with dealers.

    (a) Market agencies selling on commission. No market agency selling 
consigned livestock shall enter into any agreement, relationship or 
association with dealers or other buyers which has a tendency to lessen 
the loyalty of the market agency to its consignors or impair the 
quality of the market agency's selling services. No market agency 
selling livestock on commission shall provide clearing services for any 
independent dealer who purchases livestock from consignment to such 
market agency without disclosing, on the account of sale to the 
consignor, the name of the buyer and the nature of the financial 
relationship between the buyer and the market agency.
* * * * *
(Approved by the Office of Management and Budget under control 
number 0590-0001.)

[FR Doc. 94-12588 Filed 5-23-94; 8:45 am]
BILLING CODE 3410-KD-P