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Authority of Judgment Officers to Hear Cases

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Commodity Futures Trading Commission.


Final rule.


The Commodity Futures Trading Commission (“Commission”) is amending its regulations to authorize any Commission Judgment Officer to conduct formal decisional proceedings. This action will promote the efficient use of the Commission's budget and personnel resources.


Effective Date: October 12, 2011.

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Laura Richards, Office of the General Counsel, U.S. Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. Telephone: 202-418-5126. E-mail:

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I. Background

Section 14(b) of the Commodity Exchange Act, 7 U.S.C. 18(b), authorizes the Commodity Futures Trading Commission to promulgate rules, regulations, and orders as it deems necessary or appropriate for the efficient and expeditious administration of its reparations program. Pursuant to Section 14(b), the Commission is amending Rule 12.26(c) to authorize any Commission Judgment Officer to conduct formal decisional proceedings under Subpart E of the Part 12 Rules. Rule 12.26(c) currently provides that formal decisional proceedings are to be conducted by an Administrative Law Judge (“ALJ”). A formal decisional proceeding is held when the amount claimed in damages exceeds $30,000 and the parties have not elected a voluntary decisional proceeding under Subpart C. Voluntary decisional proceedings are heard by a Judgment Officer without regard to the amount in controversy. See Rule 12.26(a). Cases where the amount is controversy is less than $30,000 are conducted as summary decisional proceedings by a Judgment Officer under Subpart D. See Rule 12.26(b).

From time to time, the Commission has raised the ceiling for claims eligible to be heard as summary proceedings, most recently from $10,000 to $30,000.[1] Currently, most reparations cases filed involve amounts less than $30,000 and are assigned to the Judgment Officer. Based on its experience with the reparations program, the Commission has determined that the current limit of $30,000 on the claims that may be assigned to a Judgment Officer is no longer necessary or appropriate. The Commission also has concluded that its Judgment Officer will not be overburdened if reparations cases eligible to be heard as formal decisional proceedings are added to his docket. If necessary, the Commission may designate additional staff as decisional employees assigned to hear reparations cases. See Rule 12.2 (defining “Commission decisional employee” to mean, inter alia, “[a] Judgment Officer * * * and other Commission employees who may be assigned to hear or to participate in the decision of a particular matter”).

There will be no change to the procedures applicable to formal decisional proceedings and, therefore, no impact on any complainant or respondent. Parties filing or defending claims exceeding $30,000 will have the same procedural safeguards and face the same obligations as before, and the Judgment Officer will exercise all the authority previously held by Commission ALJs and be subject to the same obligations.

II. Related Matters

A. No Notice Required Under 5 U.S.C. 553

The Commission has determined that this rule is exempt from the provisions of the Administrative Procedure Act, 5 U.S.C. 553, which generally requires notice of proposed rulemaking and provides other opportunities for public participation. In accordance with the exemptive language of 5 U.S.C. 553, this rule pertains to “rules of agency organization, procedure or practice,” as to which there exists agency discretion not to provide notice. If made effective immediately, this rule will promote efficiency and facilitate the Commission's core mission without imposing a new burden. Thus, the Commission has determined to make the rule effective immediately. For the above reasons, the notice requirements under 5 U.S.C. 553 are inapplicable.

B. Regulatory Flexibility Act

The Regulatory Flexibility Act (“RFA”), 5 U.S.C. 601 et seq., requires agencies with rulemaking authority to consider the impact those rules will have on small businesses. The RFA defines the term “rule” to mean “any rule for which the agency publishes a general notice of proposed rulemaking pursuant to section 553(b) of this title * * * for which the agency provides an opportunity for notice and public comment.” 5 U.S.C. 601(2). Since this rule is not being issued pursuant to section 553(b), it does not qualify as a “rule” as defined in the RFA, and the analysis and the certification process in that section do not apply.

C. Paperwork Reduction Act

The Paperwork Reduction Act of 1980 (“PRA”), 44 U.S.C. 3501 et seq., imposes certain requirements on Federal agencies, including the Commission, in connection with conducting or sponsoring any collection of information as defined by the PRA. Amended Rule 12.26(c) is not associated with an information collection as defined by the PRA. Accordingly, the Commission certifies that, for the purposes of the PRA, this new Start Printed Page 63188delegation of authority does not impose a burden within the meaning of the PRA.

D. Cost-Benefit Analysis

Section 15(a) of the Commodity Exchange Act (“Act”), 7 U.S.C. 19(a), requires the Commission to consider the costs and benefits of its action before issuing new regulations under the Act. Section 15(a) does not require the Commission to quantify the costs and benefits of a new regulation or to determine whether the benefits of the regulation outweigh its costs. Nor does it require that each rule be analyzed in isolation when that rule is a component of a larger package of rules or rule revisions. Rather, section 15(a) requires the Commission to “consider the costs and benefits” of the subject regulation in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may, in its discretion, determine that notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions, or accomplish any of the purposes, of the Act.

The Commission considered the costs and benefits of this rule and has determined that amended Rule 12.26(c) will enhance efficiency by aligning the Commission's staff more closely with its workload.

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List of Subjects in 17 CFR Part 12

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Accordingly, 17 CFR Part 12 is amended as follows:

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1. The authority citation for part 12 continues to read as follows:

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Authority: 7 U.S.C. 2(a)(12), 12a(5) and 18.

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2. Revise § 12.26(c) to read as follows:

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Commencement of a reparation proceeding.
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(c) Commencement of formal decisional proceeding. Where the amount claimed as damages in the complaint or as counterclaims exceeds $30,000, exclusive of interest and costs, and either a complainant or a respondent in the complaint, answer or reply, has elected the formal decisional procedure pursuant to subpart E of this part, and has paid the filing fee required by § 12.25, the Director of the Office of Proceedings shall, if in his opinion the facts warrant taking such action, forward the pleadings and the materials of record to the Proceedings Clerk for a proceeding to be conducted in accordance with subpart E of this part. The Proceedings Clerk shall forthwith notify the parties of such action. Such notification shall be accompanied by an order issued by the Proceedings Clerk requiring the parties to complete all discovery, as provided in subpart B of this part, within 50 days thereafter. A formal decisional proceeding commences upon service of such notification and order. As soon as practicable after service of such notification, the Proceedings Clerk shall assign the case to a Judgment Officer. All provisions of this part that refer to and grant authority to or impose obligations upon an Administrative Law Judge shall be read as referring to and granting authority to and imposing obligations upon the Judgment Officer.

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Issued in Washington, DC, on September 21, 2011, by the Commission.

David A. Stawick,

Secretary of the Commission.

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1.  Rules Relating to Reparation Proceedings, 59 FR 9631, 9633 (Mar. 1, 1994) (Final Rule) (increasing the ceiling to $30,000 and otherwise amending Part 12).

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[FR Doc. 2011-25898 Filed 10-11-11; 8:45 am]