[Federal Register Volume 64, Number 144 (Wednesday, July 28, 1999)]
[Rules and Regulations]
[Pages 40736-40738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19290]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 57

[Docket No. PY-99-003]


Rules of Practice Governing Proceedings Under the Egg Products 
Inspection Act

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Agricultural Marketing Service (AMS) is revising its 
regulations governing the mandatory shell egg surveillance program to 
add that the Administrator may enter into a stipulation, prior to the 
issuance of a complaint, with any person to resolve violation cases 
arising under the Egg Products Inspection Act (EPIA) or the 
regulations, without resort to formal disciplinary proceedings. In 
December 1998, regulations in 7 CFR part 59 administered by AMS were 
redesignated as a new part 57. AMS is amending 7 CFR part 57 to add 
regulations previously proposed to expedite the resolution of 
violations under the shell egg surveillance program.

EFFECTIVE DATE: August 27, 1999.

FOR FURTHER INFORMATION CONTACT: Douglas C. Bailey, Chief, 
Standardization Branch, 202/720-3506.

SUPPLEMENTARY INFORMATION: This rule has been determined to be not 
significant for purposes of Executive Order 12866, and therefore, has 
not been reviewed by the Office of Management and Budget (OMB). In 
addition, pursuant to requirements set forth in the Regulatory 
Flexibility Act (RFA) (5 U.S.C. 601 et seq.), the AMS has considered 
the economic impact of this rule on small entities and has determined 
that its provisions would not have a significant economic impact on a 
substantial number of small entities.
    The purpose of the RFA is to fit regulatory actions to the scale of

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businesses subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. The Small Business 
Administration (SBA) (13 CFR 121.601) defines small entities that 
produce and process chicken eggs as those whose annual receipts are 
less than $9,000,000. Approximately 550,000 egg laying hens are needed 
to produce enough eggs to gross $9,000,000.
    The Egg Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.), 
enacted in 1970, authorizes the mandatory inspection of egg products 
operations and the mandatory surveillance of the disposition of shell 
eggs that are undesirable for human consumption. The EPIA regulations 
require that shell egg handlers and hatcheries register with the United 
States Department of Agriculture. The EPIA further authorizes 
inspections at least once each calendar quarter of egg packers that 
have 3,000 or more laying hens and pack eggs for the ultimate consumer. 
There are about 700 shell egg processors registered with the Department 
that have 3,000 or more laying hens. Of these 700 registered shell egg 
processors, we believe approximately 500 meet the definition of a small 
business.
    The implementing regulations for the EPIA were originally contained 
in 7 CFR part 59. Congress added provisions for imposing civil 
penalties for certain EPIA violations as part of the Food, Agriculture, 
Conservation and Trade Act Amendments of 1991. To implement these 1991 
EPIA amendments, the AMS proposed changes to 7 CFR part 59. Before AMS 
published a final rule, however, the Department consolidated food 
safety issues into FSIS. Egg products inspection functions in the EPIA 
were delegated to FSIS, while shell egg surveillance functions 
continued to be administered by AMS. In August 1998, FSIS promulgated a 
final rule to revise the regulations in 7 CFR part 59. In December 
1998, those portions of part 59 pertinent to shell egg surveillance 
were redesignated as a new part 57. AMS is now revising the regulations 
in 7 CFR part 57 to set forth procedures for resolving compliance cases 
with civil penalties as provided in the 1991 EPIA amendments.
    These regulations provide that USDA's uniform rules of practice 
will be applicable to formal administrative proceeding for civil 
penalties. These regulations also set forth procedures for expediting 
the resolution of violations before institution of formal 
administrative proceeding under the shell egg surveillance program 
through the use of stipulation agreements. Use of these procedures by 
alleged violators is optional. These regulations impose no new 
requirements on businesses.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. This 
rule will not preempt any 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.

Background

    The Egg Products Inspection Act (EPIA) authorizes the mandatory 
inspection of egg products operations and the mandatory surveillance of 
the disposition of shell eggs that are undesirable for human 
consumption. From its enactment in 1970, AMS administered the EPIA and 
its regulations in 7 CFR part 59.
    Congress amended the EPIA as part of the Food, Agriculture, 
Conservation and Trade Act Amendments of 1991 (Pub. L. 102-237) 
(hereafter referred to as ``the 1991 EPIA amendments''). The 1991 EPIA 
amendments provided that civil penalties may be imposed for certain 
violations of the mandatory inspection regulations. These amendments 
become effective 12 months after promulgation of final regulations (21 
U.S.C. 1034 note).
    To implement the 1991 EPIA amendments, the AMS proposed changes to 
7 CFR parts 56 and 59 (57 FR 48569, October 27, 1992). One proposed 
change added that the Administrator may enter into a stipulation, prior 
to the issuance of an administrative complaint, with any person to 
resolve violation cases arising under the EPIA or the regulations, 
without resorting to formal disciplinary proceedings. Before AMS 
published a final rule, however, the Department consolidated food 
safety issues into FSIS following enactment of the Federal Crop 
Insurance Reform and Department of Agriculture Reorganization Act of 
1994 (Pub. L. 103-354; 7 U.S.C. 2204e). This included delegating 
responsibility for the EPIA egg products inspection functions to FSIS, 
while the shell egg surveillance functions remained with AMS. FSIS 
promulgated a final rule that implemented the 1991 EPIA amendments by 
revising 7 CFR part 59 (63 FR 45663, August 27, 1998; effective August 
27, 1999).
    To complete the Department reorganization, other regulatory changes 
have occurred to ensure that AMS and FSIS have the appropriate 
regulations they need to carry out their responsibilities. The AMS 
promulgated a final rule to duplicate and redesignate those portions of 
7 CFR part 59 pertinent to shell egg inspection as a new 7 CFR part 57 
(63 FR 69968, December 17, 1998; effective December 18, 1998). FSIS 
promulgated a final rule to redesignate the remaining portions of 7 CFR 
part 59 and transfer them to 9 CFR part 590 (63 FR 72351, December 31, 
1998; effective December 31, 1998). AMS is now revising the regulations 
in 7 CFR part 57 to provide for the settlement of cases where civil 
penalties apply through a stipulation procedure, before instituting a 
formal disciplinary proceeding.

Stipulation Procedure for Assessing Penalties

    The amended EPIA includes provisions for imposing civil penalties 
for certain violations of the mandatory inspection regulations. These 
penalty provisions are applicable to the egg and egg products 
inspection programs, with the exception of violations occurring in 
official egg products plants and violations for which criminal 
penalties have already been imposed. The Secretary of Agriculture has 
the authority under the Act to impose civil penalties through formal 
administrative proceedings. However, these regulations permit the AMS 
Administrator, prior to initiating a formal administrative proceeding, 
to enter into a written agreement or stipulation with a violator who 
agrees to waive a hearing and pay a civil penalty.
    Under these stipulation procedures, the AMS Administrator would 
give the violator notice of the alleged violation and an opportunity 
for a hearing. The violator would have the option to waive the hearing 
and agree to pay a specified civil penalty within a prescribed period 
of time. In turn, the Administrator would agree to accept the civil 
penalty in settlement of the particular matter involved if the penalty 
is paid within the specified time. If, however, the violator does not 
pay the civil penalty within that period of time, the Department would 
institute a formal administrative proceeding. A civil penalty offered 
in a stipulation would have no bearing on the civil penalty that the 
Department might seek in a formal administrative proceeding.
    A formal disciplinary proceeding can take a relatively long period 
of time to resolve, and can be costly for both the Department and the 
violator. The Department is implementing the use of stipulation 
agreements, where appropriate, to improve compliance with the EPIA. 
Accordingly, AMS is amending the regulations by adding a

[[Page 40738]]

subpart on stipulation procedures. This procedure would enable AMS to 
better enforce the Act and regulations by expediting the resolution of 
compliance cases.

List of Subjects in 7 CFR Part 57

    Eggs and egg products, Exports, Food grades and standards, Food 
labeling, Reporting and recordkeeping requirements.

    For reasons set forth in the preamble, 7 CFR part 57 is amended as 
follows:

PART 57--INSPECTION OF EGGS (EGG PRODUCTS INSPECTION ACT)

    1. The authority citation for part 57 continues to read as follows:

    Authority: 21 U.S.C. 1031-1056.

    2. Sections 57.1 through 57.970 are designated as subpart A and the 
heading of subpart A is added to read as follows:

Subpart A--Regulations Governing the Inspection of Eggs

* * * * *
    3. A new subpart B is added to read as follows:

Subpart B--Rules of Practice Governing Proceedings Under the Egg 
Products Inspection Act

Scope and Applicability of Rules of Practice


Sec. 57.1000  Administrative proceedings.

    (a) 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 
adjudicating administrative proceedings under section 12(c) of the Egg 
Products Inspection Act (21 U.S.C. 1041).
    (b) In addition to the proceedings set forth in paragraph (a) of 
this section, the Administrator, in his discretion, at any time prior 
to the issuance of a complaint seeking a civil penalty under the Act 
may enter into a stipulation with any person, in accordance with the 
following prescribed conditions:
    (1) The Administrator gives notice of an apparent violation of the 
Act or the regulations issued thereunder by such person and affords 
such person an opportunity for a hearing regarding the matter as 
provided by the Act;
    (2) Such person expressly waives hearing and agrees to a specified 
order including an agreement to pay a specified civil penalty within a 
designated time; and
    (3) The Administrator agrees to accept the specified civil penalty 
in settlement of the particular matter involved if it is paid within 
the designated time.
    (4) If the specified penalty is not paid within the time designated 
in such stipulation, the amount of the stipulated penalty shall not be 
relevant in any respect to the penalty that may be assessed after the 
institution of a formal administrative proceeding pursuant to the 
Uniform Rules of Practice, Subpart H, Part 1, Title 7, Code of Federal 
Regulations.

    Dated: July 22, 1999.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 99-19290 Filed 7-27-99; 8:45 am]
BILLING CODE 3410-02-U