[Federal Register Volume 73, Number 242 (Tuesday, December 16, 2008)]
[Proposed Rules]
[Pages 76288-76291]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-29652]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 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.
 
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 

  Federal Register / Vol. 73, No. 242 / Tuesday, December 16, 2008 / 
Proposed Rules  

[[Page 76288]]



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: Proposed rule.

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SUMMARY: The Department of Agriculture's (USDA) Grain Inspection, 
Packers and Stockyards Administration (GIPSA) is proposing to amend the 
regulations under the Packers and Stockyards Act, 1921 as amended (7 
U.S.C. 181 et seq.) (P&S Act or 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 Act. The proposed amendment would establish 
a 5-year term for registrations and renewal procedures. This action 
would assist USDA in regulating the business operations of market 
agencies and dealers through the effective enforcement of the P&S Act.

DATES: Written or electronic comments received by February 17, 2009 
will be considered prior to issuance of a final rule.

ADDRESSES: You may submit written or electronic comments to:
     Written: Mail to the attention of Tess Butler, GIPSA, 
USDA, 1400 Independence Avenue, SW., Room 1643-S, Washington, DC 20250-
3604.
     Fax: (202) 690-2173.
     Internet: Go to http://www.regulations.gov and follow the 
on-line instruction for submitting comments.
    Comments should be identified as ``P&SA, Registration, 5-Year Term 
Comments,'' and should make reference to the date and page number of 
this issue of the Federal Register. All comments will become a matter 
of public record and available for public inspection at the above 
address during regular business hours (7 CFR 1.27(b)). Please call the 
GIPSA Management Support Staff at (202) 720-7486 for an appointment to 
view the comments.

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, [email protected].

SUPPLEMENTARY INFORMATION:

Background

    The Grain Inspection, Packers and Stockyards Administration (GIPSA) 
administers and enforces the Packers and Stockyards Act of 1921 (7 
U.S.C. 181-229) (P&S Act or 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 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 Act's 
requirements, list its type of business organization, whether it will 
operate on a calendar year or fiscal year basis, indentify the 
character of its business and 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 will decide 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 us 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 us with updates of information about 
their business operations. Without a registrant's current and accurate 
business information, we cannot adequately investigate complaints 
received from livestock sellers about a registrant's business 
practices, and we therefore cannot effectively enforce the Act. Also, 
as a part of GIPSA's oversight of the livestock industry, we conduct 
periodic onsite compliance reviews of the business operations of 
registrants. Requiring registrants to renew their registration would 
require applicants to inform GIPSA periodically whether the entities 
are still operating and the type of operation being conducted. GIPSA 
would then be able to focus its oversight activities on actively 
operating businesses and better manage the pool of regulated entities 
that would be scheduled for compliance investigations over a 5-year 
period.
    Because no provision for expiration of a registration currently 
exists in the P&S Act or regulations, a registration can only be 
suspended or be considered inactive. However, if a registration is not 
renewed as required by this proposal, the registration would expire. A 
market agency or dealer that wants to resume operating after its 
registration has expired would have to file a new application for 
registration. The proposed renewal process would give GIPSA's 
Administrator the ability to consider whether a current or former 
registrant continues to be fit to engage in business subject to the 
Act.
    In 2007, a total of 6,931 entities were registered with GIPSA as 
market agencies and/or dealers. Most of these entities, approximately 
5,400, have been registered for more than 5 years. Therefore, in order 
to comply with the proposed regulation, these registrants would have to 
file an application for renewal of registration during the first year 
the proposal became effective. If these registrants failed to renew 
their registration timely, their registrations

[[Page 76289]]

would expire. If all 5,400 registrants filed renewal applications in 1 
year, GIPSA's regional offices would be overwhelmed with applications, 
and it would likely take 6 months for all the registrations to be 
renewed. In the interim, a registrant would either operate without 
being registered in violation of the Act, or suspend its business 
operations until it received its renewed registration. We would need to 
phase-in the implementation of the new renewal requirement so that 
GIPSA could process the renewal applications in an efficient and 
effective way. This would provide registered entities with sufficient 
notice of the renewal requirement and also provide them a grace period 
in which to renew while continuing operations.

Description of Proposed Changes to the Regulations

    Section 201.10 of the regulations (9 CFR 201.10) establishes the 
requirements and procedures for the registration of a market agency 
and/or dealer. Our proposed amendments to Sec.  201.10 would add two 
paragraphs regarding the expiration of registrations. New paragraph (e) 
would change the time period for which a registration is valid from an 
indefinite period to a 5-year period. A registration that is not 
renewed timely would expire automatically after 5 years. New paragraph 
(e) also establishes the phased-in renewal process. The renewal process 
would give us the ability to review a market agency and/or a dealer's 
business information to determine if it continues to be fit to engage 
in business subject to the Act. New paragraph (f) would specify that 
GIPSA would renew registrations for applicants whose registration is 
suspended under Sec.  201.11 (9 CFR 201.11, Suspended registrants; 
officers, agents and employees) but the registration would not be 
effective until the suspension period terminates.
    Because some firms operate in multiple regions, we are also 
proposing to amend paragraph (a) of Sec.  201.10 (9 CFR 201.10) to 
require that firms file applications for registration (and registration 
renewals) with the GIPSA regional office located in the geographic area 
where their primary place of business is located, rather than the area 
where they propose to operate. If we have questions about a firm's 
registration or its business records, the regional office would contact 
the firm's primary place of business. This would also make Sec.  
201.10(a) consistent with Sec.  201.28 of the regulation (9 CFR 201.28) 
that requires that duplicates of bonds be filed with the GIPSA regional 
office covering the area where the registrant is located.
    We also propose to make minor changes to the existing paragraphs in 
this section to make the regulation clearer. This proposal would not 
change the registration form that applicants complete or the 
information required of the applicants on the form. We would, however, 
add a new ``renewal'' check box in the section of the form to be 
completed by GIPSA personnel.

Proposed Phased Implementation of Final Rule

    We would implement the proposed 5-year registration amendment over 
a 5-year period, starting with the date that the final rule becomes 
effective. We would require that 20 percent of existing registrations 
be renewed in the first year after the rule becomes effective, with 20 
percent renewed in each of the 4 subsequent years. During that first 
year, registrants whose registration numbers end in the digit ``0'' or 
``5'' would be required to renew. We propose that the renewal be 
submitted at the same time as the annual report that is required by 
Sec.  201.97 of the regulations. For example, registrations issued in 
the year 2000 and assigned a number ending in the digit ``0'' or ``5'' 
would be required to be renewed no later than April 15, 2009; or, if 
the registrant's records are kept on a fiscal year basis, no later than 
90 days after the close of the registrant's 2008 fiscal year.
    The implementation of the proposed regulatory amendment would be 
scheduled according to the last digit of each registrant's registration 
number as follows:
     Registration number ending in the digit ``0'' or ``5'': 
April 15, 2009, or 90 days after the close of the 2008 fiscal year.
     Registration number ending in the digit ``1'' or ``6'': 
April 15, 2010, or 90 days after the close of the 2009 fiscal year.
     Registration number ending in the digit ``2'' or ``7'': 
April 15, 2011, or 90 days after the close of the 2010 fiscal year.
     Registration number ending in the digit ``3'' or ``8'': 
April 16, 2012, or 90 days after the close of the 2011 fiscal year.
     Registration number ending in the digit ``4'' or ``9'': 
April 15, 2013, or 90 days after the close of the 2012 fiscal year.
    Following this 5-year phased-in implementation period, registration 
renewals would be due 5 years after the registration was last renewed, 
rather than the last digit of the registration number. For example, the 
registrants who renewed their registrations by April 15, 2009, would be 
required to renew again by April 15, 2014. Registrants would keep the 
same registration number for subsequent renewals.
    On or about the first business day of each new calendar year, GIPSA 
regional offices would mail to each registrant in its respective 
regional territory whose registration would expire in the succeeding 
year a copy of the previously filed registration application and a 
blank renewal application. The registrant would then be required to 
complete the renewal application with its current business information 
and return it to the appropriate GIPSA regional office at the same time 
the registrant's annual report is due, as specified in the regulations 
(9 CFR 201.97). That would mean the renewal application would be due by 
April 15th of the following calendar year or no later than 90 days 
after the end of the fiscal year. If a registration is not renewed and 
expires, we would provide a registrant a 2-week grace period to submit 
a renewal application to us before notifying it by mail that its 
registration had expired. In our letter, we would also notify the 
registrant that operating without a valid and effective registration is 
a violation of the P&S Act.
    We do not need to phase-in implementation of the proposed amendment 
concerning suspended registrations. That proposed amendment would take 
effect on the effective date of the final rule (proposed 9 CFR 
201.10(f)).

Options Considered

    We considered several different alternatives to these proposed 
regulatory changes. For the 5-year registration renewal, these 
alternatives included issuing policy guidance to GIPSA employees and 
making a public announcement regarding the importance that market 
agencies and/or dealers submit to GIPSA accurate and current business 
information. We do not believe that either of these options would 
ensure that we have accurate and current information on registered 
entities.

Executive Order 12866 and Regulatory Flexibility Act

    The Office of Management and Budget (OMB) has designated this rule 
as not significant for the purposes of Executive Order 12866.
    We have determined that this proposed rule will not have a 
significant economic impact on a substantial number of small entities 
as defined in

[[Page 76290]]

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 rule applies 
have annual receipts of less than $750,000. The proposed rule will 
impose a burden of 30 minutes of effort to complete the application to 
renew registration every 5 years. Thirty minutes (.5 hours) is the 
current burden estimate for the registration application form under the 
currently approved OMB information collection 0580-0015. We have 
determined, however, that this does not represent a significant 
economic impact.
    In accordance with the RFA, we are not required to provide an 
initial regulatory flexibility analysis because this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Because it would impose a small burden on a substantial 
number of small entities, we did consider alternatives to reduce that 
burden. One alternative would be to exempt small businesses from this 
proposed rule. That alternative, however, would not meet our 
responsibility to enforce the registration requirements of the P&S Act, 
which apply to all market agencies and dealers. We considered whether 
an electronic online form would reduce the burden on small entities. 
Since small entities may not have reliable online Internet access, and 
the form would take as long to fill out online as on paper, this would 
not reduce the burden on small entities. Of all the feasible 
alternatives considered, we have determined that the proposed approach 
to require the renewal of registration every 5 years represents the 
least burden on small entities.
    For new registrants, the burden would remain the same as under the 
current regulation given that we are not changing the application form.
    We have considered the effects of this rulemaking action under the 
RFA and we believe that it will not have a significant impact on a 
substantial number of small entities. We welcome comments on the cost 
of compliance with this rule, and particularly on the impact of this 
proposed rule on small entities. We also welcome comments on 
alternatives to the proposed rule that would achieve the same purpose 
with less cost to, or burden upon, registrants.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. These actions are not intended to have 
retroactive effect. This rule would 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 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 record keeping 
requirements that are covered by this proposed 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.

    For the reasons set forth in the preamble, we propose to amend 9 
CFR part 201 as follows:

PART 201--REGULATIONS UNDER THE PACKERS AND STOCKYARDS ACT

    1. The authority citation continues to read as follows:

    Authority: 7 U.S.C. 203, 204, 207, 217a, 222, and 228.

    2. Section 201.10 is amended to revise paragraphs (a) through (d) 
and to add paragraphs (e) and (f) to read as follows:


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 expires 5 years 
after the year of issuance. If a registrant intends to continue to 
operate in a manner described in paragraph (a), (c) or (d) of this 
section, its registration must be renewed by filing an application for 
renewal of registration as prescribed in paragraph (a) of this section 
that includes any applicable updated information. 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).
    (1) Between (INSERT EFFECTIVE DATE OF THE FINAL RULE) and December 
31, 2013, applications for renewal of registration must be filed in 
accordance with the chart below:

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      Last digit of Registration No.             Year of renewal                  Next renewal due date
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0 or 5...................................  2009, by April 15 \1\......  2014, by April 15.\1\ \2\
1 or 6...................................  2010, by April 15..........  2015, by April 15.
2 or 7...................................  2011, by April 15..........  2016, by April 15.
3 or 8...................................  2012, by April 15..........  2017, by April 15.
4 or 9...................................  2013, by April 15..........  2018, by April 15.
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\1\ However, if records are kept on a fiscal year basis, renewal is due by 90 days after the close of the fiscal
  year.
\2\ For all dates in this column, due date for renewal application is without regard to last digit of
  registration number.

    (2) Beginning January 14, 2014, all registrations must be renewed 
every 5 years by April 15 of the calendar year in which registration 
expires. (See notes 1 and 2 above.)
    (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.
* * * * *

Terry D. Van Doren,
Administrator, Grain Inspection, Packers and Stockyards Administration.
[FR Doc. E8-29652 Filed 12-15-08; 8:45 am]
BILLING CODE 3410-KD-P