UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

 

In re:

 

 

 

 

 

 

Michael B. “Brent” Wagner,

P&S Docket No. 24-J-0006

 

 

 

 

Respondent.

 

DECISION AND ORDER WITHOUT HEARING BY REASON OF DEFAULT

Appearances:

Michelle McMurtray, Esq., Office of the General Counsel, United States Department of Agriculture, Washington, DC, for the Complainant, Acting Deputy Administrator, Fair Trade Practices Program, Agricultural Marketing Service (“AMS”)

Respondent XXXXX, pro se

This is a proceeding under the Packers and Stockyards Act, 1921, as amended and supplemented (7 U.S.C. §§ 181 et seq.) (“Act”); the regulations promulgated thereunder (9 C.F.R. §§ 201.1 et seq.); and the Rules of Practice Governing Formal Adjudicatory Proceedings Instituted by the Secretary Under Various Statutes (7 C.F.R. §§ 1.130 through 1.151) (“Rules of Practice”).

The Acting Deputy Administrator, Fair Trade Practices Program, Agricultural Marketing Service, United States Department of Agriculture (“Complainant”), initiated this proceeding by filing a complaint against XXXXX (“Respondent”) on October 19, 2023. The Complaint alleges that Respondent violated 7 U.S.C. § 204, 7 U.S.C. § 213(a), and 9 C.F.R. § 201.29(a) by continuing to engage in the business of buying livestock in commerce on commission without maintaining an adequate bond or bond equivalent between April and September 2020.[1] The Complaint requests:

1.      That unless Respondent fails to file an answer in the time allowed, or files an answer admitting the material allegations of this complaint, this proceeding be set for oral hearing in accordance with the Rules of Practice; and

 

2.      That such orders are issued as are authorized by the Act and warranted under the circumstances, including an order:

 

a.       Requiring Respondent to cease and desist from violating the Act and the Regulations, as stated, inter alia, in the complaint . . .;

 

b.      Requiring that Respondent not engage in operations subject to the Act unless or until adequately bonded as required by 7 U.S.C. § 204 of the Act, and assessing such civil penalty as authorized by the Act and warranted by the facts and circumstances of this case; [and]

 

c.       Granting relief as may be appropriate and warranted under the Act and in the circumstances of the case.

 

Complaint at 4-5 (emphasis added).

Respondent was duly served with a copy of the Complaint and did not file an answer within the twenty-day period as prescribed by section 1.136 of the Rules of Practice (7 C.F.R. § 1.136).[2]  

On January 11, 2024, Complainant filed a motion for decision without hearing by reason of default (“Motion for Default”) and proposed decision and order without hearing by reason of default (“Proposed Decision”) pursuant to section 1.139 of the Rules of Practice (7 C.F.R. § 1.139). Complainant now requests I assess a $6,500 civil penalty against Respondent.[3]

Respondent did not file timely objections to Complainant’s Motion for Default or Proposed Decision.[4] However, on February 15, 2024, Respondent filed an email with the Hearing Clerk’s Office stating, in full: “This is my response to ‘motion for decision without hearing by reason of default’, I will b[e] appealing the decision. Still waiting on more news from Michelle McMurtray, OGC. PLEASE let me know this email was received.”[5] This “response” was filed a day late and contains no meritorious objections to Complainant’s Motion for Default.[6] Moreover, it fails to provide any explanation as to why an answer has not been filed.

            Failure to file a timely answer or failure to deny or otherwise respond to allegations in the Complaint shall be deemed, for purposes of this proceeding, an admission of the allegations in the Complaint, unless the parties have agreed to a consent decision.[7] Other than a consent decision, the Rules of Practice do not provide for exceptions to the regulatory consequences of an untimely answer where, as in the present case, no meritorious objections have been filed.[8]

Civil Penalty

Complainant requests that Respondent be assessed a civil penalty of $6,500 for his violations of the Act and Regulations, as set forth in the Findings of Fact and Conclusions below.

The Act authorizes the Secretary to assess a civil penalty of up to $10,000 per violation,[9] or either $28,061 or $29,270 per violation when adjusted for inflation.[10] When determining civil penalties, the Secretary is required to “consider the gravity of the offense, the size of the business involved, and the effect of the penalty on the person’s ability to continue in business.”[11]

Complainant states that, by failing to obtain the required bond, Respondent committed a serious violation of the Act and Regulations.[12] I agree. As Complainant explained:

When regulated entities fail to pay, or when the businesses fail, livestock farmers and producers may suffer large financial losses as a result, unless the protection of the required bond, in an appropriate amount to cover those losses, is in place. The Packers and Stockyards Program considers the bonding provisions of the Act vital to the effective enforcement of the Act and for the protection of livestock producers.

 

Motion for Default at 3-4 (citing Porter, 47 Agric. Dec. 656, 670 (U.S.D.A. 1988); Travelers Indemnity Co v. Manley Cattle Co., 553 F.2d 943, 945 (5th Cir. 1977)). Further, Complainant states that it considered whether the proposed penalty is so large that it would affect Respondent’s ability to continue to stay in business.

The agency has examined Respondent’s last and most recently filed annual report (filed September 8, 2020, pursuant to section 201.97 of the regulations issued under the Act; 9 C.F.R. § 201.97), and analyzed Respondent’s self-reported volume of business; Respondent made livestock purchases in excess of $2.2 million dollars in that reported year, and bought and sold livestock on at least 175 calendar days throughout the reporting period. The agency has determined that given Respondent’s size and business volume, a penalty of $6,500.00 would not prevent Respondent from maintaining his operations as a dealer and market agency.

 

Motion for Default at 4. I agree with Complainant that “[c]onsidering the gravity of Respondent’s violation, the size of Respondent’s business, and that the requested penalty is roughly less than 1% of the statutorily allowed maximum amount and 15% of Respondent’s required bond amount of $40,000, this is a reasonable penalty under these circumstances.”[13]

Having considered the statutory factors as described above, and in accordance with the Department’s sanction policy,[14] I find Complainant’s sanction recommendation to be reasonable and appropriate under the facts and circumstances of this case.

            As Respondent failed to file an answer to the Complaint, and upon Complainant’s motion for the issuance of a decision without hearing, this Decision and Order is issued without further procedure or hearing pursuant to section 1.139 of the Rules of Practice (7 C.F.R. § 1.139).

Findings of Fact

1.      Respondent XXXXX is an individual whose principal mailing address is or was in the State of XXXXX.

2.      Respondent is, and at all times material herein, was:

a.       Engaged in the business of a dealer buying livestock in commerce and as a market agency buying livestock on a commission basis; and

b.      Registered with the Secretary of Agriculture as a dealer to buy and sell livestock for his own account and as a market agency buying livestock on commission.

3.      On March 12, 2019, the United States Department of Agriculture (“USDA”), Agricultural Marketing Service (“AMS”), Packers & Stockyards Division (“PSD”) sent Respondent a “Letter of Credit Expiration” notifying Respondent that his Letter of Credit was set to expire on April 12, 2019, and that Respondent had an obligation to secure a new Letter of Credit, bond, or bond equivalent.

4.      On November 7, 2019, PSD sent Respondent a Notice of Default Registration/Bonding and informed Respondent that PSD had not received evidence that Respondent has increased his bond to $40,000 as required.

5.      The Notice of Default also informed Respondent that engaging in any business without a bond or bond equivalent is a violation of the Act and Regulations and may be subject to disciplinary action.

6.      Respondent did not obtain a new letter of credit.

7.      Notwithstanding the November Notice of Default, Respondent continued to engage in the business of a dealer and market agency between April 2020 and September 2020, and purchased 581 head of livestock for $364,506.98 without the required $40,000 bond.

Conclusions

1.      The Secretary of Agriculture has jurisdiction in this matter.

2.      By reason of the facts above, Respondent XXXXX has willfully violated 7 U.S.C. § 204, 7 U.S.C. § 213(a), and 9 C.F.R. § 201.29(a).

ORDER

1.      Complainant’s Motion for Default is GRANTED.

2.      Respondent XXXXX, his agents, and employees, directly or through any corporate or other device, in connection with operations subject to the Packers and Stockyards Act, shall cease and desist from engaging in operations subject to the Packers and Stockyards Act without being adequately bonded.

3.      Respondent is assessed a civil penalty of $6,500.00, to be paid immediately upon the final and effective date of this Order. Respondent shall send a certified check or money order and reference on each the designation “P&S Docket No. 24-J-0006,” made payable to U.S. Treasury and mailed to USDA, Fair Trade Practices Program, Packers and Stockyards Division, XXXXX, XXXXX, XXXXX.

            This Decision and Order shall be final and effective without further proceedings thirty-five (35) days after service, unless an appeal to the Judicial Officer is filed with the Hearing Clerk within thirty (30) days after service as provided in sections 1.139 and 1.145 of the Rules of Practice (7 C.F.R. §§ 1.139 and 1.145).

Copies of this Decision and Order shall be served upon the parties and counsel by the Hearing Clerk.

Done at Washington, D.C.

this 28th day of February 2024

 

 

______________________________________

Channing D. Strother

Chief Administrative Law Judge

                                   

 

 

 

 

 

 

Hearing Clerk’s Office

United States Department of Agriculture

Stop 9203, South Building, Room 1031

1400 Independence Avenue, SW

Washington, DC 20250-9203

Tel:      202-720-4443

Fax:     844-325-6940

SM.OHA.HearingClerks@USDA.GOV


[1] See Complaint at 1-3.

[2] United States Postal Service records reflect that the Complaint was sent to Respondent via certified mail and delivered on October 31, 2023. Respondent had twenty days from the date of service to file a response. 7 C.F.R. § 1.136(a). Weekends and federal holidays shall be included in the count; however, if the due date falls on a Saturday, Sunday, or federal holiday, the last day for timely filing shall be the following work day. 7 C.F.R. § 1.147(h). In this case, Respondent’s answer was due on or before November 20, 2023. Respondent has not filed an answer.

[3] Motion for Default at 2.

[4] United States Postal Service records reflect that Complainant’s Motion for Default and Proposed Decision were sent to Respondent via certified mail and delivered on January 25, 2024. Respondent had twenty days from the date of service to file objections thereto. 7 C.F.R. § 1.139. Weekends and federal holidays shall be included in the count; however, if the due date falls on a Saturday, Sunday, or federal holiday, the last day for timely filing shall be the following work day. 7 C.F.R. § 1.147(h). In this case, Respondent’s objections were due on or before February 14, 2024. Respondent filed his “response” on February 15, 2024.

[5] Response at 1.

[6] See supra note 4.

[7] 7 C.F.R. § 1.136(c).

[8] See supra notes 4, 6, and accompanying text.

[9] 7 U.S.C. § 193(b).

[10] In this case, the violations occurred on multiple dates from April 1, 2020 through September 23, 2020. See Complaint at 2-5. For violations occurring between April 1, 2020 and June 16, 2020, the maximum civil penalty was $28,061 per violation. 7 C.F.R. § 3.91(b)(1)(lvi) (Mar. 14, 2018). For violations occurring between June 17, 2020 and September 23, 2020, the maximum civil penalty was $29,270 per violation. 7 C.F.R. § 3.91(b)(1)(lvi) (June 17, 2020).

[11] 7 U.S.C. § 193(b).

[12] Motion for Default at 3 (citing Cobb, 48 Agric. Dec. 234, 269 (U.S.D.A. 1989); Robertson, 47 Agric. Dec. 879, 884 (U.S.D.A. 1988)).

[13] Motion for Default at 4.

[14] See S.S. Farms Linn Cnty., Inc., 50 Agric. Dec. 476, 497 (U.S.D.A. 1991) (Decision as to James Joseph Hickey & Shannon Hansen), aff'd, 991 F.2d 803, 1993 WL 128889 (9th Cir. 1993) (not to be cited as precedent under the 9th Circuit Rule 36-3)) (“[T]he sanction in each case will be determined by examining the nature of the violations in relation to the remedial purposes of the regulatory statute involved, along with all relevant circumstances, always giving appropriate weight to the recommendations of administrative officials charged with the responsibility for achieving the congressional purpose.”).