Appendix — Mountainside Butter & Egg Co. v. United States Department of Agriculture

8

Supreme Court of The United "States: Ts

OCTOBER TERM, 1983 JAN 13 1984

NO

ALEXANDER L. STEVAS.

CLERK

IN RE: MOUNTAINSIDE BUTTER & EGG COMPANY,

Petitioner

Appendix to Petition for Writ

of Certiorari To the

United States Court of Appeals

for the Third Circuit

Justin P. Walder, Esq.

WALDER, SONDAK, BERKELEY & BROGAN, P.A.

Attorneys for Petitioner

5 Becker Farm Road

Roseland, New Jersey 07068

(201) 992-5300

a SR A

Print Masters, Route 22, Union, New jersey 07083 (201) 964-7766

Ign

TABLE OF CONTENTS

Page

- Judgement Order of the United States

Court of Appeals for the Third Circuit......... la

- Opinion of the United States District

Court - District of New Jersey............... 2a

- Order of the United States District Court -

CUORICL OT UOWEOTOOY 6 on vice tcc te wedvwecs. 8a

- Decision and Order of the United States

Department of Agriculture .............005. 9a

Reissuance of Decision and Order of the

United States Departmeni of Agriculture ..... 28a

- Stipulation and Consent Order............. 31a

2 CT as <coe Sear ekne wc hes chiaWed a

- U.S. Constitution and U.S. Regulations ...... 39a

APPENDIX A

Judgement Order of The

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

No. 82-5788

(Filed — September 20, 1983)

After consideration of all contentions raised by

appellant, it is

ADJUDGED AND ORDERED that the judgment of

the district court be and is hereby affirmed.

Costs taxed against appellant.

Witness, the Honorable Judge,

Joseph F. Weis, Jr.,

Circuit Judge

Attest:

Sally Mrvos, Clerk,

United States Court of Appeals

for the Third Circuit.

la

APPENDIX B

Opinion of The

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

No. 80-3898

(Filed — June 23, 1982)

FISHER, Chief Judge.

Mountainside Butter & Egg Company (Mountainside)

seeks judicial review of a final agency action by the

Judicial Officer of the United States Department of

Agriculture (USDA) pursuant to section 701 et seq. of the

Administrative Procedure Act, 5 U.S.C. §701, et seq.

Mountainside also moves to expand the record below.

USDA cross moves for summary judgment. For the

reasons stated herein, the Government's motion for

summary judgment is granted.

Mountainside operates an egg-products processing

plant subject to the terms and provisions of the Egg

Product Inspection Act, 21 U.S.C. §§ 1031-1056 (the Act),

and the regulations thereunder, 7 C.F.R. §2859. The

statutory criteria of the Act require the Secretary of

Agriculture to “cause continuous inspection to be

made” of egg-processing plants “for the purpose of

preventing the entry into or flow or movement in com-

merce of, or the burdening of commerce by, any egg pro-

duct which is...misbranded or adulterated.” 21 U.S.C.

§1034(a). The Secretary has the authority to retain or

segregate eggs and egg products as he deems

necessary, 21 U.S.C. §1034(b), to condemn or destroy

adulterated eggs or egg products, 21 U.S.C. §1034(c), or

to refuse inspection of any plant which fails “to meet the

requirements of this section.” 21 U.S.C. §1035(b). Uniess

the eggs and egg products are inspected, their sale and

transportation in commerce is prohibited. 21 U.S.C.

2a

§1037(b). Persons violating section 1037 may be pro

secuted pursuant to 21 U.S.C. §1041. Thus, an

administrative action denying an egg processor inspec-

tion services prevents that processor from marketing its

eggs or egg products.

Mountainside processes eggs by breaking their

shells and then pasteurizing and cooling the contents,

which is sold in thirty-pound cans to bakeries and other

commercial outlets. The fresh eggs which it processes

are normally not of a quality suitable for sale in their

shells. Typically, plaintiff purchases eggs of the type

defined in the Act as “restricted eggs,” being “checks”

with cracked or broken shells or “dirty eggs” with dirt or

other foreign material adhered to the shells. 21 U.S.C.

§1033.

Mountainside accomplished the breaking of shell

eggs for processing by two methods-automatic egg-

breaking machines or hand-breaking stations. At the

hand-breaking machines employees would use knives

to break the shells over trays into which the contents

would be dropped and from whence it flowed into metal

buckets. Because of the nature and source of the egg

stock commonly used by Mountainside, it is most im-

portant that all steps in the process be conducted with

care to avoid the possibility of harmful adulteration:

The major functions in an egg-processing plant may

be described as inspection, regulation, cleansing, break-

ing, pasteurization and packaging. The nature of the pro-

duct and the functions involved in its processing afford

ample opportunity for the contamination prohibited by

the Act.

On January 3, 1977, USDA filed an administrative

complaint alleging that Mountainside had violated

various regulations relating to the processing of egg

products. Subsequent to the filing of the complaint,

Mountainside and USDA entered into a stipulation, on

January 7, 1977, leading to the issuance of a consent

order, under the terms of which inspection services were

to be withdrawn from Mountainside for twelve months

if, within one year from January 14, 1977, it failed to com-

ply with any provisions of the order or committed

substantial violations which would be a basis for

withdrawal of inspection services as currently specified

in 7 C.F.R. §5960(f) (1). Thereafter, USDA moved to im-

pose sanctions pursuant to the consent order, charging

Mountainside with commission of various violations

during the period of February through May 1977.

There were two extensive evidentiary hearings in

which the administrative law judge (ALJ) produced a

lengthy record of eleven volumes. The ALJ heard the

testimony of four different inspectors, assessed their

credibility and ultimately determined that in fact Moun-

tainside had committed substantial violations of the

regulations and had violated the consent decree.

Accordingly, he withrew inspection services for twelve

months.

The issue in this case is whether or not the ALJ’s find-

ings were supported by substantial evidence. Substan-

tial evidence is something less than the weight of the

evidence; the possibility of drawing two inconsistent

conclusions from the evidence does not render the

evidence insubstantial. Consolo v. Federa/ Maritime

Comm’n., 383 U.S. 607, 620 (1966). It is enough that the

evidence adduced before an agency is such as a

reasonable mind might accept as adequate to support

the conclusion under review. Universal Camera Corp. v.

Labor Bd., 340 U.S. 474, 477 (1951); National Council, etc.

v. Subversive Activities Cont. Bd., 322 F.2d 375, 388 (D.C.

Cir. 1963). The Supreme Court reiterated this when it

stated,

we have consistently expressed the view that or-

dinarily review of an administrative decision is to be

confined to “consideration of the decision of the

4a

agency...and of the evidence on which it was

based.”..."{ T]he focal point for judicial review

should be the administrative record made initially in

the reviewing court.”...

FPC v. Transcontinental Gas Pipe Line Corp., 423 U.S.

326, 331 (1976) (citations omitted).

The record indicates that Mountainside repeatedly

and consistently engaged in at least three types of

regulatory violations which affect the quality of egg

products and cause a hazard to public health.

First, inspectors observed repeated failure to control

the segregation of shell egg breaking stock entering the

breaking room in violation of 7 C.F.R. §2859. USDA in-

spectors testified that they observed 883 instances of

dirty-looking or moldy shell eggs entering the breaking

room on conveyor lines. The percent of ineligible eggs

entering the breaking room on conveyor lines was in ex-

cess of 20 percent in 16 instances, 11 to 20 percent in 45

instances, 6 to 10 percent in 318 instances, and 1 to 5

percent in 504 instances. | am satisfied that those

percentages are substantial.

The second type of violation was Mountainside’s

failure to denature inedible eggs with a distinctively col-

ored dye to prevent the blending of inedible eggs and

edible and egg products as required by 7 C.F.R.

§2859.504(c). The record demonstrates that there was

Clear, convincing evidence that Mountainside had

repeatedly failed to properly denature its inedible eggs

and egg products. Inspectors observed 103 instances

when inedible eggs contained insufficient amounts of

dye in violation of the applicable regulations.

Mountainside’s third type of violation was its failure

to reexamine egg liquid for wholesomeness before

emptying it from the smaller hoiding tank into the large

general tank, as required by 7 C.F.R. §2859.22/f).

Evidence was presented at the administrative hearing

that, on at least 27 different occasions, inspectors noted

5a

that Mountainside permitted egg products to be

pumped directly into the holding tank without first

being collected for re-examination.

Mountainside argues that the finding of substantial

violations was unsupported by the evidence and at-

tempts to bolster this argument by demonstrating that

there was never a single instance during entire period

alleged in the compiaint that salmonella bacteria had

been reported from laboratory testing. Furthermore,

Mountainside contends that the record does not con-

tain any evidence to indicate that it had sold any of the

eggs that had been improperly denatured.

The essential purpose of the Act is to protect con-

sumers from adulterated eggs. See 21 U.S.C. § 1032, et

seq. In section 103%a) the Act specifies that the term

“adulterated” is applicable to any egg product

(3) if it consists in whole or in part of any filthy,

putrid, or decomposed substance, or if it is other-

wise unfit for human food;

(4) if it has been prepared, packaged, or heid

under unsanitary conditions whereby it may have

become contaminated with filth, or whereby it may

have become injurious to health.

21 U.S.C. §1033 (a) (3) & (4).

By definition then, pasteurization of an egg product,

even though the process destroys harmful bacteria such

as salmonella, does not preciude the product from be-

ing found to be adulterated. The presence of filth or the

product’s preparation under unsanitary conditions

renders an egg product adulterated within the meaning

of the Act. United States v. 1,200 cans, Pasteurized

Whole Eggs, Etc., 339 F. Supp. 131 (N.D. Ga. 1972); see

also, United States v. Wiesenfield Warehouse Co., 376

U.S. 86 (1964).

Mountainside asserts that the enforcement of regula-

tions against it was selective, biased and unfair and,

6a

therefore, Mountainside is being denied equal protec-

tion of the law as guaranteed under the fifth amend-

ment.

As | stated sbove, four different inspectors testified

and each recounted the same pattern of violations. The

ALJ found their testimony to be more reliable than that

given in Mountainside’s behalf. He also found that each

inspector conducted inspections at Mountainside’s

plant in a fair and reasonable manner consistent with in-

spections conducted at all other official plants.

Therefore, there is no basis for a finding of denial of

equal protection.

| find unsuported the argument of Mountainside that

Judge Palmer improperly considered prior violations in

his determination of substantial violations warranting

withdrawal of service for one year. The findings were

supported adequately by the evidence presented by the

four inspectors of violations which occurred during the

one-year period as set out in the consent order. | have

reviewed the record and | find it complete. There is

nothing in the record to indicate that the ALJ acted

erroneously or without justification.

The granting of the motion for summary judgment is

dispositive of the motion to expand the record. An order

accompanies this opinion. No costs.

June 23, 1982.

7a

APPENDIX C

Order of The

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

No. 80-3898

(Filed — June 23, 1982)

For the reasons set forth in the court's opinion filed this

date, it is on the 23rd day of June, 1982,

ORDERED that the motion of the Government for

summary judgment is granted. No costs.

Clarkson S. Fisher, Chief Judge

United States District Court

APPENDIX D

Decision and Order of The

UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

| & G Docket No. 64

(Dated — August 19, 1980)

This is an action under the Egg Products Inspection

Act (21 U.S.C. §§ 1031-1056) to withdraw egg products in-

spection services from respondent, a corporation which

operates an egg products processing plant, because of

respondent's alleged violations of a consent order filed

January 10, 1977. The consent order provides:

1. Egg Products Inspection Services are hereby

withdrawn from the respondent, its officers, agents, «

servants, employees, representatives, and all per-

sons in active concert or participation with it for a

period of twelve (12) months: Provided, however,

That such withdrawal shail be held in abeyance and

shall not become effective unless, within one (1)

year from the effective date of the Order, the

respondent or any officer, employee, agent, servant

or representative of respondent fails to comply with

any provisions of the Order or commits substantial

violations which would be a basis for withdrawal of

inspection services as currently specified in 7 CFR

59.160(f) (1). Such failure to comply or commission

of any such offense shall be deemed to have been

established only after opportunity for hearing and

final decision in a formal adjudicatory proceeding

before the Secretary with all rights of judicial review

exhausted. In such event, inspection services shall

be withdrawn for the full period of twelve (12)

months, and such withdrawal shall become effec-

tive immediately without further procedure.

Ya

After a hearing, Administrative Law Judge Victor W.

Palmer filed an initial decision and order on March 17,

1978, in which he found that during the period February

through May 1977 respondent committed numerous

and repeated “substantial violations of the regulations

which would be a basis for withdrawal of inspection ser-

vices under 7 CFR 2859. 160(f) (1)” (Initial Decision, at 10).

Accordingly, he concluded that the 12-month suspen-

sion provided for in the consent order should be effec-

tuated.

On June 30, 1978, respondent appealed to the Judicial

Officer, to whom final administrative authority to decide

the Department's cases subject to 5 U.S.C. §§556 and

557 has been delegated (7 C.F.R. §2.35).'

On October 27, 1978, the Judicial Officer remanded

the proceeding to the Administrative Law Judge for fur-

ther proceedings, 38 Agric. Dec. 789. Respondent's mo-

tion to reconsider the remand order was denied on

November 29, 1978, 38 Agric. Dec. 196. After further pro-

ceedings, Judge Paimer reissued his decision and order

on May 20, 1980, and respondent again appealed to the

Judicial Officer on July 15, 1980.

' The office of Judicial Officer is a career position

established pursuant to the Act of April 4, 1940 (7 U.S.C.

§§450c-450g), and Reorganization Plan No. 2 of 1953, 18

Fed. Reg. 3219 (1953), reprinted in 5 U.S.C. app., at 764

and in 67 Stat. 633 (1953). The present Judicial Officer

was appointed in January 1971, having been involved

with the Department's regulatory programs since 1949

(including 3 years’ trial litgation; 10 years’ appellate

litigation relating to appeals from the decisions of the

prior Judicial Officer, and 8 years as administrator of the

Packers and Stockyard Act regulatory program).

10a

Oral argument before the Judicial Officer, which is

discretionary (7 C.F.R. §1.145(d) ), was heard in connec-

tion with respondent's original appeal and is again re-

quested by respondent on this appeal. However, in-

asmuch as the issues have been thoroughly briefed and

further oral argument would not seem to be helpful in

deciding the case, respondent’s request for oral argu-

ment is denied.

After a careful consideration of the entire record in

this proceeding, Judge Palmer's initial decision and

order, as reissued, and his order reissuing his initial

decision, are adopted as the final decision and order in

this proceeding, Finding 8 of the initial decision is not

part of the final decision inasmuch as it was stricken by

Judge Palmer when he reissued his decision and order,

but it is included herein so that one reading this decision

will Know its contents. The prior orders by the Judicial

Officer in this proceeding are incorporated by reference

herein and made a part hereof. The order issued in this

decision is identical to the order issued by Judge Palmer

except that the effective date has been changed in view

of the appeal.

At the remand hearing, Judge Paimer permitted Leon

Goldsman to testify in the nature of an offer of proof (Tr.

268-293). This testimony was beyond the scope of the re-

mand order and, therefore, has not been considered as

evidence at this stage of the proceeding. However,

Judge Palmer very wisely permitted the testimony to be

included fully in the record so that if it were later deter-

mined that the testimoney should be received as

evidence, a second remand would not be required.

Even if the testimony of Leon Goldsman were con-

sidered as evidence, it would not change the result in

this proceeding. Mr. Goidsman testified as to his chang-

ed attitude and his present compliance with the regula-

tions. Respondent relies on this testimony in support of

its argument that the 12-month withdrawal of suspen-

lla

sion services provided for in the consent order is too

harsh. However, as previously explained in the remand

order, 38 Agric. Dec. at 799-800, the withdrawal of in-

spection services for 12 months is not a sanction impos-

ed because of the violations proven in this case but ©

because of the violations which formed the basis for the

consent order. The violations proven in this case merely

triggered the sanction agreed to by respondent, acting

with the advice of counsel, based on the violations

which formed the basis for the consent order. Accor-

dingly, there is no basis for considering what sanction

should be imposed in this case for the violations which

formed the basis for the consent order.

Moreover, even if we were to determine in this pro

ceeding the appropriate sanction to be imposed for pro-

ven violations, as stated in the remand order in this pro-

ceeding, “it has been consistently held that evidence of

current compliance with the Department's regulatory

programs is totally irrelevant in determining the sanc-

tion for past violations” (38 Agric. Dec. at 800).

ADMINISTRATIVE LAW JUDGE'S ORIGINAL DECISION

Preliminary Statement

This is a proceeding pursuant to the Egg Products

Inspection Act (21 U.S.C. 1031-1056, hereinafter referred

to as the “Act’’) and the regulations thereunder (7 CFR

Part 2859, designated prior to June 21, 1977, as 7 CFR

Part 59) to determine whether Egg Products Inspection

Service should be withdrawn from the respondent, a cor-

poration which operates an egg products processing

plant.

On January 10, 1977, a consent order was entered

against respondent under the terms of which inspection

service is to be withdrawn from respondent for 12

months, if, within one year from January 14, 1977,

12a

aon vs)

ot) Tan

+ aah

respondent “fails to comply with any provisions of this

order or commits substantial violations which would be

a basis for withdrawal of inspection services as current-

ly specified in 7 CFR 59.160/f) (i).”

Complainant filed a motion on April 27, 1977, which it

supplemented on June 3, 1977, charging respondent

with the commissicn of such sabstantial violations dur-

ing the period February through May 1977. The viola-

tions alleged are of three types.

1. Repeated failures to comply with the requirements

of 7 CFR 59.510 to properly sort out, in the transfer area

of the plant, inedible and other eggs ineligible for break-

ing thereby permitting such eggs to enter the breaking

room for processing into egg products.

2. | Repeated failures to comply with the requirements

of 7 CFR 59.522 to cause liquid egg to be held in a re

examination vat and to properly reexamine such liquid

egg before allowing it to enter the holding tanks for fur-

ther processing.

3. | Repeated failures to comply with the requirements

of 7 CFR §§59.504(c) and 59.522 to cause all inedible

eggs) to be properly denatured to prevent inedible egg

products from being biended into edible egg products.

Respondent's answer denies the alleged violations

and asserts that the employees of the USDA interpreted

the Act and the regulations “in an arbitrary and discrimi-

manner So as to make such laws and regulations

unconstitutional and to deprive the respondent of its

property and property rights without compensation or

due |process of law....”

Following a prehearing conference on July 7, 1977,

oral) hearing was held before me on August 23-26 and

ember 7-8, 1977, in Newark, New Jersey. Complain-

ant |was represented at the hearing by Mr. Thomas R.

Clark and Mr. Daniel W. Wentzell, both of the Office of

the| General Counsel, United States Department of

Agriculture. Mr. Bernard Chazen of Englewood, New

13a

Te:

oe

Jersey, represented respondent. In addition, Mr. Althear

Lester appeared on behalf of the limited intervenor,

United Trades Independent Union, Local 18. Briefing

was completed on February 27, 1978.

Findings

1. Respondent, Mountainside Butter and Egg Com-

pany is a New Jersey corporation which has its principal

place of business at 706 Trumbull Street, Elizabeth, New

Jersey 07206, where it operates an “official plant,” as

defined in 21 U.S.C. 1033 (q), where egg products are pro-

cessed under inspection by the Department of

Agriculture. Respondent's official plant designation is

No. 1366 and has received official egg products inspec-

tion since July 26, 1971. Mr. Leon Goldsman is President

of the respondent corporation and his brother, Seymour

Goldsman, is its Vice-President.

2. Respondent processes eggs by breaking and

removing their shells and then pasteurizing and cooling

their contents which it packages and sells in 30 pound

cans to bakeries and other commercial outlets. The

fresh eggs it So processes are normally not of a quality

suitable for sale in their shells to consumers. Typically,

respondent purchases eggs of the type defined in the

Act as “restricted eggs,” being “checks” with cracked or

broken shells, or “dirty eggs” with dirt or other foreign

material adhered to the shells (21 U.S.C. §1033). The Act

prohibits the use of restricted eggs in the preparation of

human food for commerce except as authorized by the

regulations prescribed by the Secretary of Agriculture

(21 U.S.C. §1037(a) ).

3. During the months of February, March, April and

May 1977, respondent accomplished the breaking of

shell eggs for processing either by two automatic egg

breaking machines (a Henningson Maxima breaker

without an egg washer and a Seymour 102 breaking

14a

machine with a washer) or at four handbreaking stations

where employees would use knives to break shells over

trays, known as the Canadian-type, into which the egg

yolk and white would be dropped before flowing into

metal buckets. All breaking equipment was located in a

portion of the plant designated as the breaking room.

Before reaching this room, the eggs passed through an

adjacent room designated as the transfer room where *

the eggs were either placed on the conveyors that took

them directly into the breaking room through an opening

in a wall common to both rooms or were placed in hand-

breaking baskets to be washed, sanitized and

segregated. In addition to the types of restricted eggs

purchased by respondent, handling in the transfer room

could cause “leakers” and “loss eggs.”

4. During the period of February through May 1977,

inspection at respondent's plant was performed daily by

two egg products inspectors. Five different inspectors

were assigned to respondent's plant during this period:

Irene Salt, R. Botelho, Robert Poggio, Thomas Thompson

and Thomas Zaccone. Ms. Salt and Mr. Zaccone were

assigned to Mountainside for a greater proportion of

this time period than the other inspectors. Mr. Boteiho

spent only two weeks in the plant during February 1977.

In accordance with the provisions of the regulations the

inspectors performed sanitation checks of respondent's

equipment and plant facility before and during each

day’s processing operations and checked the operating

procedures used by respondent in all phases of the egg

products processing operation. In addition, the inspec-

tors prepared daily inspection tours, and noting any ad-

ditional observations pertinent to respondent's corm-

pliance with required operating procedures.

5. A. Section 2859.510 of the regulations (7 CFR

2859.510) provides in pertinent part:

(a) The shell eggs shall be sorted and classified in-

to, the following categories in a manner approved by

15a

the National Supervisor.

(1) Eggs listed in paragraph (d) of this section.

(2) Dirty.

(3) Leakers as described in paragraph (c) (2) of this

section.

65) Other eggs — satisfactory for use as breaking

stock.

(c) Shell eggs, when presented for breaking, shall

be of edible interior quality and the shell shall be

sound and free of adhering dirt and foreign

material, except that:

(1) Checks and eggs with a portion of the shell

missing may be used when the shell is free of

adhering dirt and foreign material and the shell

membranes are not ruptured.

(2) Eggs with clean shells which are damaged in

candling and/or transfer and have a portion of the

shell and shell membranes missing may be used

only when the yolk is unbroken and the contents of

the egg are not exuding over the outside shell. Such

eggs shall be placed in leaker trays and broken

promptly.

(3) Eggs with meat or blood spots may be used if

the spots are removed in an acceptable manner.

(d) All loss or inedible eggs shall be placed in a

designated container and be handied as required in

section 2859.504(c). Inedible and loss eggs for the

purpose of this section and in section 2859.522 are

defined to inciude black rots, white rots, mixed rots,

green whites, eggs with diffused blood in the

albumen or on the yolk, crusted yolks, stuck yolks,

developed embryos at or beyond the blood ring

state, moldy eggs, sour eggs, any eggs that are

adulterated as such term is defined pursuant to this

part, and any other filthy and decomposed eggs....

16a

B. The National Supervisor's approved manner for

segregating shell eggs is set forth in the Egg Products

Inspector Handbook, which is an official document

published by the USDA and is available to egg products

inspectors and official plant operators. Section 5 of the

handbook specifies in pertinent part:

A. Shell Eggs

1. All shell eggs entering or located in the official

plant are subject to the regulations.

Shell eggs are to be checked for loss, leakers,

dirties, odors, and eggs other than those of the

domesticated chicken and segregated prior to

entering the breaking rooms....

2. a. Clean Egg — The shell egg is free of adher-

ing dirt or foreign material. Only clean shell eggs

are satisfactory for breaking.

b. Leaker — An egg that has a broken shell

and shell membrane ruptured to the extent that

the egg contents are exuding or free to exude

through the shell.

Leakers made prior to transfer or candling (case

leakers) and leakers resulting from shell egg

washing (other than by thermal expansion) may

not be used for breaking. These are classified as

loss. Shell eggs damaged in transfer or candling

may be used for breaking only when the yolk is un-

broken, the shel! is clean, and the outside of the

shell is essentially free of egg meat. These eggs

must be properly segregated, placed in clean

leaker trays, and broken promptly by specially

trained personnel.

4. a. Checks which have evidence of mold shall

be discarded as inedible.

b. Sound shel! eggs which contain spots of

solid moid growth on the shell or other extreme

17a

moldy conditions are to be discarded as inedible.

(Exhibit 17, Sec. 5, Ill,, pp. 5-6).

C. During the period of February through May 1977,

the inspectors observed the repeated failure of respon-

dent to control the segregation of shell egg breaking

stock entering the breaking room. They observed and

noted 883 instances of dirty, leaking or moldy shell eggs

being allowed to enter the breaking room for processing

on the conveyor lines feeding the automatic breaking

machines. The percentage of ineligible eggs observed

to have entered the breaking room was in excess of 20

percent in 16 instances; 11 to 20 percent in 45 instances;

6 to 10 percent in 318 instances; and 1 to 5 percent in 504

of the instances. Overall, 379 (43 percent) of these 883 in-

stances involved the presenting of over 5 percent ineligi-

ble eggs in the breaking room. Additionally, the inspec-

tors noted 68 instances in which eggs which should

have been totally discarded were placed in trays and

sent to the breaking room.

6. A. Section 2859.504(c) of the regulations (7 CFR

2859.504(c) provides as follows:

(c) All loss and inedible eggs or egg products shall

be placed in a container clearly labeled ‘inedible’

and containing a sufficient amount of approved

denaturant or decharacterant, such as FD&C

brown, blue, black, or green colors, meat and fish

by-products, grain and milling by-products, or any

other substance, as approved by the Administrator,

that will accomplish the purposes of this section.

Sheil eggs shall be crushed and the substance

shall be dispersed through the product in amounts

sufficient to give the product a distinctive ap-

pearance or odor...

B. At respondent's plant facility, denaturing is ac-

complished through the use of blue dye which is to be

poured into continers at the beginning of each day and

during the course of operations in sufficient quantity to

18a

give the inedible eggs and egg products a distinctive

color not resembling edible egg products. Proper

denaturing has been achieved when the inedible prod-

uct takes on a greenish tint or color. One small container

for loss and inedible eggs and egg products was located

in the breaking room and seven larger containers were

kept in the transfer room for that purpose.

C. During the period of February through May 1977,

the inspectors observed the repeated failure by respon-

dent to properly denature loss and inedible eggs and

egg products. In particular, they observed and noted 103

occasions on which the inedible egg and egg products

collected in the containers contained an insufficient

amount of dye.

7. A. Section 2859.522 of the regulations (7 CFR

2859.522) provides, in pertinent part, as follows:

(f) Each shell shall be broken in a satisfactory and

sanitary manner and inspected for wholesomeness

by smelling the shell or the egg meat and by visual

examination at the time of breaking. All egg meat

shall be reexamined by a person qualified to per-

form such functions before being emptied into the

tank or churn, except as otherwise approved by the

National Supervisor.

(aa)...

(2)..All liquid egg pumped directly from egg

breaking machines shall be reexamined, except as

otherwise prescribed and approved by the

Ac ninistrator.

B. Respondent’s automatic breaking machines are

connected to two “reexamination” or “sniff’ tanks

which are to be used for the purpose of organoleptic

reexamination of the liquid egg pumped directly from

the breaking machines. The tanks are designed so that

one can be filled while the other is drained. Likewise, the

valves can be adjusted so that egg products are not ac-

19a

cumulated in either tank and are pumped directly into

the larger holding tank. Proper operation of these re

examination tanks results when the egg products are

always accumulated in one tank or the other for pur-

poses of reexamination. Alternatively, improper opera-

tion of the reexamination tanks results from the direct

pumping of egg products into respondents holding tank

or churn without being held for reexamination. Egg prod-

ucts processors may not direct pump egg products

without reexamination unless they have received prior

approval from the USDA. Respondent has received no

such approval.

C. During the period of February through May 1977,

the inspectors observed respondent to permit, on at

least 27 occasions, egg products to be pumped directly

into its holding tank or churn without first being col-

lected in a reexamination tank and without being re

examined. This failure to reexamine resulted from

failure to properly adjust the appropriate drain valve.

8. A copy of the daily inspection report prepared by

each inspector during the relevant period was provided

to respondent's management by one of the inspectors

near the end of each day of operation. In addition, the in-

spectors were available during and at the end of each

day to discuss with respondent's management any

notations or entries on the inspection reports, or any

problems with the operating procedures encountered by

the inspectors. Mr. Hoerning, the supervisory egg prod-

ucts inspector with responsibility for inspection at

respondent's plant, made supervisory inspection visits

to respondent's plant on March 15, 17 and 25, April 26

and May 10, 1977. Except for discussions with the in-

spectors or Mr. Hoerning during his supervisory visits

during the relevant period, respondent did not register

with the USDA any formal or informal complaints or ap-

peals for the review of the inspectors’ reports.

Conclusions

The use by respondent of unauthorized operating

practices and procedures during the relevant period, as

set forth in the Findings, constitutes substantial viola-

tions of the regulations which would be a basis for

withdrawal of inspection services under 7 CFR

2859. 160(f) (1). The record does not establish that the in-

spectors or any of their superiors acted in an arbitrary

and discriminatory manner in interpreting and applying

the Act and regulations to respondent's egg products

processing operation.

The appropriate sanction is a 12 month suspension of

Egg Products Inspection Service in accordance with the

terms of the consent order entered on January 10, 1977.

Although respondent was permitted to present evidence

that would establish such “extraordinary cir-

scumstances,” within the meaning of /n re Indiana

Slaughtering Company, 35 Agri. Dec. 1822, 1827 (1976),

as would warrant the agreement's overturn, it has failed

to do so. Nor has respondent otherwise presented con-

vincing evidence that would lead the Secretary and

those delegated to act in his place, to reconsider the

sanction specified by the consent order.

When the parties moved for the entry of the consent

order, they stipulated to the accuracy of the following

facts. Respondent’s inspection service had been

suspended on October 1 through 3, 1975, and on March

29 through 30, 1976, for alleged use of operating prac-

tices and procedures which were not in accordance with

the regulations; those suspensions were terminated on

the basis of assurances of future compliance with the

regulations; and, on April 20, 1976, respondent con-

sented to the issuance of an injunction by the United

States District Court for the District of New Jersey (Civil

No. 76-699) enjoining it from processing egg products

without complying with the regulations.

21a

On January 3, 1977, the underlying complaint was

filed charging respondent with violating the regulations

during May through December 17, 1976, by the same

three types of operating practices which are now charg-

ed to have occurred subsequent to the effective date of

the consent order. Furthermore, the measures specified

in the affirmative action letter which respondent submit-

ted on January 25, 1977 (Cx 31), pursuant to the consent

order, were specifically designed to prevent these three

types of practices. The entry of the consent order on

January 10, 1977, terminated a suspension of inspection

services which had commenced on December 28, 1976,

for the alleged May through December 17, 1976 viola-

tions.

Inasmuch as the violations which occurred during

February through May 1977 were identical in kind to

those underlying the consent order, they necessarily are

“substantial violations” of the regulations calling for a

12 month withdrawal of inspection services under its

terms. Respondent's various arguments to the contrary

have been considered and found to be without merit.

Respondent contends that since the product it pro-

cesses is pasteurized, the condition of the egg ingre-

dient is not of substantial importance and that the con-

dition of the egg shells is wholly meaningless since they

are discarded along with any dirt adhered to them.

Respondent next asserts that it has been picked on by

inspectors who are trying to impress their supervisor,

are too strict and fussy, are aggressive to the point of

belligerence, are anti-Semitic, and have otherwise not

administered inspection services in a fair and

reasonable manner.

Four different inspectors testified and each re

counted the same pattern of violations. Their testimony

is found to be more credible and reliable than that given

in respondent's behalf. Each inspector is found to have

conducted inspections at respondent's pliant in a fair

and reasonable manner consistent with inspections

conducted at all other official plants.

Central to this proceeding is the protection of con-

sumers from adulterated egg products. That is the

essential purpose of the Act; the very reason why

Congress made inspection of egg processing plants

mandatory. See 21 U.S.C. §1032.

The Act specifies that the term “adulterated” is ap-

plicable to any egg or egg product:

(3)if it consists in whole or in part of any filthy,

putrid, or decomposed substance, or if it is other-

wise unfit for human food;

(4)if it has been prepared, packaged, or held under

unsanitary conditions whereby it may have become

contaminated with filth, or whereby it may have

become injurious to health. (21 U.S.C §103%a) ).

By defination then, pasteurization of an egg product,

even though the process destroys harmful bacteria such

as those causing salmonella, does not preclude the

product from being found to be adulterated. The

presence of filth or the product’s preparation under in-

sanitary conditions renders an egg _ product

“adulterated” within the meaning of the Act. See United

States v. 1,200 Cans, Pasteurized Whole Eggs, Etc., 339

F. Supp. 131 (D.C. Ga. 1972); United States v. Wiesenfeld

Warehouse Co., 376 U.S. 86 (1964).

Respondent customarily purchases eggs that are

“checks” or “dirties” for its processing operations. The

Act permits such eggs to be bought by any business in

commerce only as authorized by Department of

Agriculture regulations. (21 U.S.C. §1037(a) ).

Section 2859.510 of those regulations establishes the

standards to be observed for sorting out shell eggs

which may not enter, except that “checked eggs” and

“transfer leakers”' may also be presented for breaking

under certain circumstances. Eggs ineligible for break-

ing are prohibited from entering the breaking room to

preserve its sanitary condition which must be in a dust-

free, clean condition (7 CFR 2859.522).

The claims of fussiness, prejudice, and arbitrary and

capricious rulings by the various inspectors largely stem

from the refusal on the part of the Goldsmans to accept

the fact that the regulations do not permit eggs with cer-

tain types of defects to ever be salvaged and that before

a dirty egg with a sound shell may be broken, it must be

so thoroughly washed that no dirt remains. The

Goldsmans believe tolerances should be allowed and

often engaged in debates with the inspectors as to

whether or not an individual egg was correctly determin-

ed to be ineligible for breaking. In particular, respondent

contends that a spot of dirt on a shell does not result in

adulterated egg product, ignoring the fact that the dirt

may be dislodged upon breaking and fall into the liquid

egg being collected. In any event, there are no

tolerances for filth under the Act as written. See 338 Car-

tons v. United States, 165 F.2d 728, 731 (4th Cir. 1947).

And, even so, the inspectors did not report minor

defects.

' A transfer leaker is an egg with a clean shell that was

cracked while being transferred from the egg case and

which has unbroken yolk and no albumen exuding to the

outside shell. It may be handbroken only by special per-

sonnel after being removed in the transfer room and

placed on special trays.

* ia ae ai >

.

;

The disputative attitude of the Goldsmans towards

the inspectors apparently affected the employees in the

transfer room who continued to allow ineligible eggs to

be conveyed to the breaking room. Attempts to correct

such practices were always short-lived and never per-

manent.

The Goidsmans failed to establish clear chains of

responsibility for the various procedures required to

safeguard the public from adulterated egg products.

The regulations require that a denaturant, such as

dye, must be mixed into the containers where rotten,

moldy or other types of inedible eggs are deposited, in

an amount sufficient to clearly identify the contents and

preciude such adulterated eggs from later finding their

way, accidentally or by design, to those who would use

them to prepare food for human consumption. This

responsibility was shared by nearly everyone

associated with the plant and, as a result, was often per-

formed by no one.

Requisite sniffing of eggs and egg products prior to

pasteurization to detect the presence of rotten eggs was

a matter of happenstance at best. The inspectors have

reported that valves which had to be closed for such ex-

aminations to be made were repeatedly left open allow-

ing the eggs broken by the machines to flow through

unexamined.

For these reasons, therefore, the following order shall

be issued.

ADMINISTRATIVE LAW JUDGE'S REISSUANCE OF

DECISION

On March 17, 1978, | issued a decision and order in

which | found that, during the period February through

May 1977, respondent, a corporation which operates an

egg products processing plant, committed numerous,

repeated and substantial violations of applicable regula-

25a

tions which would be a basis for withdrawal of egg prod-

ucts inspection services from respondent's plant under

7 CFR 2859.160(f\1). It was concluded that a 12-month

suspension, required under such circumstances by a

prior consent order of January 10, 1977, should therefore

be effectuated.

On October 27, 1978, the Judicial Officer remanded

this case for further proceedings to allow respondent’s

counsel to cross-examine the inspectors complainant

had called as witnesses in respect to various memoran-

da not provided respondent until after the hearing had

concluded. The remand order would also allow newly

discovered evidence to be introduced concerning the

reasons why respondent failed to appeal inspectors’

reports as specified in Finding 8.

On April 29-30, 1980, subsequent to the conclusion of

a lengthy investigation of charges lodged by respondent

against complainant's personnel and subsequent to the

granting of time to respondent to obtain new counsel

after Messrs. McDonald and George each struck his ap-

pearance, the remand hearing was held in Newark, New

Jersey. At its opening, the remand order was reviewed

with counsel and | advised that in my opinion, Finding 8

was not material to the essential issue in this pro-

ceeding of whether respondent violated the terms of the

consent order.

Counsel for respondent was then permitted wide

scope in cross-examining each of the inspectors who

had previously testified respecting their attitudes

towards the Goldsmans and whether it affected their in-

spection activities. William Botelho, an inspector who

had been to respondent's plant on an intermittent basis

as a relief man during the period in question and who

neither complainant nor respondent had called at the

original hearing, was also examined by respondent’s

counsel who was permitted to inquire into Mr. Botelho’s

observations of the attitude of the other inspectors

26a

respecting the Goldsmans. Mr. Leon Goldsman was

also permitted to testify about inspector attitude.

Having observed each of the inspectors undergo

cross-examination for a second time by another trained

and skillful trial attorney, | am, if anything, even more

convinced that each inspector is credible and that each,

under most trying and difficult circumstances, faithfully

performed his or her duties and responsibilities. Their

testimony that they observed repeated and numerous

violations of the regulations of the sort that are substan-

tial under the terms of the consent order is therefore ac-

cepted as being true and trustworthy.

Accordingly, except for the deletion of Finding 8, the

decision of March 17, 1978, is herewith re-issued without

modification and the following order will be entered.

ORDER

Egg Products Inspection Services under the Egg

Products Inspection Act are hereby withdrawn from

respondent, its officers, agents, servants, employees,

rep-resentatives, and all persons in active concert or par-

ticipation with it for a period of twelve (12) months.

This Decision and Order shall beome effective thirty-

five (35) days after service upon the respondent.

Done at Washington, D.C.

August 19, 1980

Donald A. Campbell

Judicial Officer

Office of the Secretary

APPENDIX E

Re-issuance of Decision and Order of The

UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

| & G Docket No. 64

(Dated — May 20, 1980)

on March 17, 1978, | issued a decision and order in

which | found that, during the period February through

May 1977, respondent, a corporation which operates an

egg products processing plant, committed numerous,

repeated and substantial violations of applicable regula-

tions which would be a basis for withdrawal of egg prod-

ucts inspection services from respondent’s plant under

7 CFR 2859.160(f\1). It was concluded that a 12-month

suspension, required under such circumstances by a

prior consent order of January 10, 1977, should therefore

be effectuated.

On October 27, 1978, the Judicial Officer remanded

this case for further proceedings to allow respondent's

counsel to cross-examine the inspectors complainant

had called as witnesses in respect to various memoran-

da not provided respondent until after the hearing had

concluded. The remand order would also allow newly

discovered evidence to be introduced concerning the

reasons why respondent failed to appeal inspectors’

reports as specified in Finding 8.

On April 29-30, 1980, subsequent to the conclusion of

a lengthy investigatiog.of charges lodged by respondent

against complainant's personnel and subsequent to the

granting of time to respondent to obtain new counsel

after Messrs. McDonald and George each struck his ap-

pearance, the remand hearing was held in Newark, New

Jersey. At its opening, the remand order was reviewed

with counsel and | advised that in my opinion, Finding 8

28a

was not material to the essential issue in this pro-

ceeding of whether respondent violated the terms of the

consent order. '

Counsel for respondent was then permitted wide

scope in cross-examining each of the inspectors who

had previously testified respecting their attitudes

towards the Goldsmans and whether it affected their in-

spection activities. William Botelho, an inspector who

had been to respondent's plant on an intermittent basis

as a relief man during the period in question and who

neither complianant nor respondent had called at the

original hearing, was also examined by respondent's

counsel who was permitted to inquire into Mr. Botelho's

observations of the attitude of the other inspectors

respecting the Goldsmasns. Mr. Leon Goldsman was

also permitted to testify about inspector attitude.

Having observed each of the inspectors undergo

cross-examination for a second time by another trained

and skillful trial attorney, | am, if anything, even more

convinced that each inspector is credible and that each,

under most trying and difficult circumstances, faithfully

performed his or her duties and responsibilities. Their

testimony that they observed repeated and numerous

violations of the regulations of the sort that are substan-

tial under the terms of the consent order is therefore ac-

cepted as being true and trustworthy.

Accordingly, except for the deletion of Finding 8, the

decision of March 17, 1978, is herewith re-issued without

modification and the foliowing order will be entered.

ORDER

Egg Products Inspection Services under the Egg

Products Inspection Act are hereby withdrawn from

respondent, its officers, agents, servants, employees,

representatives, and all persons in active concert or par-

ticipation with it for a period of twelve (12) months.

29a

This Decision and Order shall become final and effec-

tive thirty-five (35) days after service upon the respon-

dent unless appealed to the Judicial Officer within

thirty (30) days of service pursuant to section 1.145 of the

rules of practice.

Copies hereof shall be served upon the parties.

Done at Washington, D.C.

this 20th day of May 1980

Victor W. Palmer

Administrative Law Judge

APPENDIX F

Stipulation and Consent Order and Motion For

Insurance of the Order of The

UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

In re: MOUNTAINSIDE BUTTER & EGG COMPANY

| & G Docket No. 64

(Dated — January 7, 1977)

These are proceedings under the Egg Products In-

spection Act (21 U.S.C. 1031 et. seq), and regulations

promulgated thereunder (7 CFR Part 59) to withdraw

Federal egg products inspection services from the

respondent. The proceedings were commenced by a

complaint issued by H. Connor Kennett, Jr., Director of

the Poultry Division, Agricultural Marketing Service

(AMS), United States Department of Agriculture (USDA),

alleging that respondent has repeatedly used operating

practices or procedures which are not in accordance

with the regulations and that respondent failed to take

corrective action within a specified period of time.

Respondent's egg products inspection was suspended

by the Director effective December 28, 1976, and respon-

dent was granted through December 30, 1976, to take

corrective action to insure that proper operating prac-

tices and procedures as specified in the regulations will

be followed at its plant on a continuing basis. The

parties have determined that these proceedings should

be terminated by a Stipulation and Consent Order.

IT IS HEREBY STIPULATED, by and between the

respondent by its duly authorized officer and attorney,

and the Director, Poultry Division, AMS, and USDA

counsel that:

1. Respondent, Mountainside Butter and Egg

Company is a New Jersey corporation with its principal

place of business located at 706 Trumball Street,

31a

Elizabeth, New Jersey 07206, operating an official egg

products processing plant (defined 21 U.S.C. 1033 (q) ).

Pursuant to an application filed with the USDA by

respondent, egg products inspection service was in-

stituted on July 26, 1971, and has continued to date, ex-

cept that said service is presently suspended pursuant

to 7 CFR 59.160(f).

2. Only for purposes of this Stipulation and Consent

Order, the respondent admits all of the jurisdictional

allegations set forth in the Complaint and waives:

(a) Any further procedural steps;

(b) Any requirement that the final decision in

these proceedings contain findings and conclusions

with respect to all material issues of fact, law or discre-

tion, as well as the reasons or bases therefor, and

(c) All rights to seek judicial review or otherwise

to challenge or contest the validity of the Order entered

pursuant to this Stipulation and Motion.

3. This Stipulation and Consent Order and Motion is

for settlement purposes in these proceedings only and

does not constitute an admission or denial by the

resoondent that it has violated any of the regulations or

Statutes involved.

4. Respondent's inspection service has been

suspended in the past (October 1 through 3, 1975, and

March 29 through 30, 1976) based on allegations that it

used operating practices and procedures which were

not in accordance with the regulations. Respondent

consistently denies the allegations upon which these

suspensions were based, but does admit that the

suspensions were terminated by the USDA as a result of

assurances, both verbal and written, by respondent that

it would operate its plant in compliance with the re

quirements of the regulations in the future.

5. That on April 20, 1976, respondent consented to

the issuance of an injunction against it by the Federal

District Court for the District of New Jersey (Civil No.

32a

76-699), which enjoined and restrained respondent in

part, from processing egg products without complying

with the operating practices and procedures required by

the regulations.

6. That egg products inspection service at respon-

dents processing plant has been, and will continue to

be, administered in a fair and reasonable manner con-

sistent with the administration of the egg products in-

spection service at all other official plants subject to

such inspection.

7. The parties hereby move that the following Con-

sent Order be issued as the final disposition of these

proceedings:

Consent Order

1. Egg products inspection services are hereby

withdrawn from the respondent, its officers, agents, ser-

vants, employees representatives, and all persons in ac-

tive concert or participation with it, for a period fo twelve

(12) months: Provided, however, That such withdrawal

shail be held in abeyance and shall not become effec-

tive unless, within one (1) year from the effective date of

this Order, the respondent or any officer, employee,

agent, servant, or representative of the respondent fails

to comply with any provisions of this Order, or commits

substantial violations which would be a basis for

withdrawal of inspection services as currently specified

in 7 CFR Part 59.160(f1). Such failure to comply or com-

mission of any such offense shall be deemed to have

been established only after opportunity for hearing and

final decision in a formal adjudicatory proceeding

before the Secretary with all rights of judicial review ex-

hausted. In such event, inspection services shall be

withdrawn for the full period of twelve (12) months, and

such withdrawal shall become effective immediately

without further procedure.

33a

2. Within 15 days from the effective date of this

Order, the respondent shall submit to the Director,

Poultry Division, AMS, a written statement of measures

it will take, hereafter referred to as an affirmative action

program, to insure that at all times in the future it will

operate its egg products processing plant in com-

pliance with the requirements of the regulations. Among

other things, the written statement shall provide:

(a) Assurances that respondent will operate its

plant in accordance with the regulations;

(b) An outline of proposed equipment and per-

sonnel changes that respondent will make at its plant;

and

(c) An outline of instruction for respondent's

employees concerning the proper operating practices

and procedures set forth in the regulations that shall be

followed at all times during egg products processing.

The affirmative action program set up by respondent

should be fully instituted within the 15-day time period

provided for above, except as to equipment changes

and modifications which should be completed by

respondent as soon as practicable. Respondent shall

provide a timetable for completion of such equipment

changes and modifications.

3. The provisions of this Order shall be applicable to

the respondent and its officers, directors, partners,

agents, subsidiaries, or any business entity which,

directly or through any corporate or other device, suc-

ceeds to the business of the respondent or is assigned

that business: Provided, however, That this Order shail

not be applicable to a successor or assign which does

not have any officer or director or substantial investor

who is now or was prior to the effective date of this

Order connected with the respondent.

4. This Order shall not be construed to prevent the in-

stitution of action to withdraw egg products inspection

services for any cause not covered in this Order.

5. This Order shall become effective upon service

upon the respondent.

Leon Goidsman, Pres. H. Connor Kennett, Jr.

Mountainside Butter Director,

and Egg Poultry Division, AMS

Irving Tobin Thomas R. Clark

Attorney for Respondent Attorney for Petitioner

APPENDIX G

Consent Order of The

UNITED STATES DEPARTMENT OF AGRICULTURE

BEFORE THE SECRETARY OF AGRICULTURE

in re: MOUNTAINSIDE BUTTER & EGG COMPANY

| & G Docket No. 64

(Dated — January 10, 1977)

This is a proceeding under the Egg Products Inspec-

tion Act (21 U.S.C. 1031 et seq., hereinafter referred to as

the “Act”) and the regulations thereunder (7 CFR Part 59)

to withdraw Federal Egg Products Inspection Service

from respondent. A formal complaint, signed by the

Director, Poultry Division, Agricultural Marketing Ser-

vice, was mailed to respondent by the Hearing Clerk on

January 5, 1977, setting forth the allegations which con-

stitute the grounds for this administrative proceeding

and availing respondent the opportunity to answer said

allegations.

It being deemed desirable to the parties in this action

to settle these matters, pursuant to section 50.21(b) a

stipulation and the terms of the following consent order

were agreed to by the parties, and a document entitled

Stipulation and Consent Order and Motion for Issuance

of the Order was signed by the parties and filed on

January 7, 1977. A copy of that document is attached

hereto and made a part hereof.

In these circumstances, and consistent with the

agreement of the parties:

IT iS ORDERED THAT:

1. Egg Products Inspection Services are hereby

withdrawn from the respondent, its officers, agents, ser-

vants, employees, representatives, and all persons in ac-

tive concert or participation with it for a period of twelve

(12) months: Provided, however, That such withdrawal

shall be held in abeyance and shail not become effec-

36a

tive unless, within one (1) year from the effective date of

this Order, the respondent or any officer, employee,

agent, servant, or representative of respondent fails to

comply with any provisions of this Order or commits

substantial violations which would be a basis for

withdrawal of inspection services as currently specified

in 7 CFR 59.160(fX1). Such failure to comply or commis-

sion of any such offense shall be deemed to have been

established only after opportunity for hearing and final

decision in a formal adjudicatory proceeding before the

Secretary with all rights of judicial review exhausted. In

such event, inspection services shall be withdrawn for

the full period of twelve (12) months, and such

withdrawal shall become effective immediately without

further procedure.

2. Within fifteen (15) days from the effective date of

this Order, the respondent shall submit to the Director,

Poultry Division, AMS, a written statement of measures

it will take, hereafter referred to as an affirmative action

program, to insure that at all times in the future it will

operate its egg products processing plant in com-

pliance with the requirements of the regulations. Among

other things, the written statement shall provide:

(a) Assurances that respondent will operate its

plant in accordance with the regulations;

(b) An outline of proposed equipment and per-

sonnel changes that respondent will make at its plant;

and

(c) An outline of instruction for respondent's

employees concerning the proper operating practices

and procedures set forth in the regulations that shall be

followed at all times during egg products processing.

The affirmative action program set up by respondent

should be fully instituted within the 15-day time period

provided for above, except as to equipment changes

and modification which should be completed by respon-

dent as soon as practicable. Respondent shall provide a

37a

time-table for completion of such equipment changes

and modifications.

3. The provisions of this Order shall be applicable to

the respondent and its officers, directors, partners,

agents, subsidiaries, or any business entity which,

directly or through any corporate or other device, suc-

ceeds to the business of the respondent or is assigned

that business: Provided, however, That this Order shall

not be applicable to a successor or assign which does

not have any officer or director or substantial investor

who is now or was prior to the effective date of this

Order connected with the respondent.

4. This order shall not be construed to prevent the in-

Stitution of action to withdraw egg products inspection

services for any cause not covered in this order.

5. This Order shall become effective upon service on

respondent. A copy of this Order shall be served on the

complainant and respondent.

Done at Washington, D.C.

January 10, 1977

Donaid A. Campbell

Administrative Law Judge

APPENDIX H

UNITED STATES CONSTITUTION AND

UNITED STATES REGULATIONS

UNITED STATES CONSTITUTION

AMENDMENT V — CAPITAL CRIMES; DOUBLE

JEOPARDY; SELF-INCRIMINATION; DUE PROCESS;

JUST COMPENSATION FOR PROPERTY

No person shail be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

indictment of a Grand Jury, except in cases arising in

the land or naval forces, or in the Militia, when in actual

service in time of War or public danger, nor shall any per-

son be subject for the same offense to be twice put in

jeopardy of life or limb: nor shall be compelled in any

criminal case to be a witness against himself, nor be

deprived of life, liberty, or property, without due process

of law; nor shall private property be taken for public use,

without just compensation.

U.S. REGULATIONS

7 CFR §59.160(fX1)

REFUSAL, SUSPENSION,

OR WITHDRAWAL OF SERVICE

(f} Suspension of plant approval and withdrawal

of service.

(1) Any plant approval given pursuant to these

regulations may be suspended by the Administrator for

(i) failure to maintain premises, facilities and equipment

in a satisfactory state of repair, (ii) the use of operating

procedures or practices which are not in accordance

with the regulations; (iii) the alterations of buildings,

39a

facilities, or equipment which have not been approved in

accordance with the regulations; or (iv) assaulting, in-

timidating, impending, obstructing, or interfering with

any person engaged in or on account of the perfor-

mance of his official duties.

7 CFR §504(c)

GENERAL OPERATING PROCEDURES

(c) All loss and inedible eggs or egg products

shall be placed in a container clearly labeled “inedible”

and containing a sufficient amount of approved

denaturant or decharacterant, such as FD&C brown,

biue, black, or green colors, meat and fish by-products,

grain and milling by-products, or any other substance,

as approved by the Administrator, that will accomplish

the purposes of this section. Shell eggs shall be crushed

and the substance shall be dispersed through the prod-

uct in amounts sufficient to:give the product a distinc-

tive appearance or odor. Notwithstanding the foregoing,

and upon permission of the Inspector, the applicant

may hold inedible product in containers clearly labeled

inedible which do not contain a denaturant if such inedi-

ble product is denatured or decharacterized prior to

shipment from the official plant: Provided, That such

product is properly packaged, labeled, segregated, and

inventory controls are maintained. In additon, product

shipped from the official plant for industrial use or

animal food need not be denatured or decharacterized if

it is shipped under Government seal and is received by

an inspector or grader as defined in this part.

7 CFR §59.510

CLASSIFICATION OF SHELL EGGS USED

IN THE PROCESSING OF EGG PRODUCTS

(a) The shell eggs shall be sorted and classified

into the following categories in a manner approved by

the National Supervisor.

(1) Eggs listed in paragraph (d) of this section.

(2) Dirty.

(3) Leakers as described in paragraph (c) (2) of this

section.

(4) Eggs from other than chicken; duck, turkey,

guinea, and goose eggs.

(5) Other eggs - satisfactory for use as breaking

stock. :

(b) Shell eggs having strong odors or eggs

received in cases having strong odors shall be candied

and broken separately to determine their acceptability.

(c) Shell eggs, when presented for breaking,

shall be of edible interior quality and the shell shall be

sound and free of adhering dirt and foreign material, ex-

cept that:

(1) Checks and eggs with a portion of the shell

missing may be used when the shell is free of

adhering dirt and foreign material and the shell

membranes are not ruptured.

(2) Eggs with clean shells which are damaged in

candling and/or transfer and have a portion of the

shell and shell membranes missing may be used

only when the yolk is unbroken and the contents of

the egg are not exuding over the outside shell. Such

eggs shall be placed in leaker trays and be broken

promptly.

(3) Eggs with meat or blood spots may be used if

the spots are removed in an acceptable manner.

(d) All loss or inedible eggs shall be placed in a

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designated container and be handled as required in

§59.504(c). Inedible and loss eggs for the purpose of this

section and §59.522 are defined to include biack rots,

white rots, mixed rots, green whites, eggs with diffused

blood in the albumen or on the yolk, crusted yolks, stuck

yolks, developed embryos at or beyond the blood ring

state, moldy eggs, sour eggs, any eggs that are

adulterated as such term is defined pursuant io this

part, and any other filthy and decomposed eggs in-

cluding the following:

(1) Any egg with visible foreign matter other than

removable biood and meat spots in the egg meat.

(2) Any egg with a portion of the shell and shell mem-

branes missing and with egg meat adhering to or in con-

tact with the outside of the shell.

(3) Any egg with dirt or foreign matter adhering to the

shell and with cracks in the shell and shell membranes.

(4) Liquid egg recovered from shell egg containers and

leaker trays.

(5) Open leakers made in the washing operation.

(6) Any egg which shows evidence that the contents are

or have been exuded prior to tranfer from the case.

(e) Incubator reject eggs shall not be brought in-

to the official plant.

7 CFR §59.522

BREAKING ROOM OPERATIONS

(a) The breaking room shall be kept in a dust-

free clean condition and free from flies, insects, and

rodents. The floor shall be kept clean and reasonably dry

during breaking operations and free of egg meat and

shells.

(b) All breaking room personnel shall wash their

hands thoroughly with odorless soap and water each

time they enter the breaking room and prior to receiving

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clean equipment after breaking an inedible egg.

(c) Paper towels or tissues shall be used at

breaking tables, and shall not be reused. Cloth towels

are not permitted.

- (d) Breakers shall use a complete set of clean

equipment when starting work and after lunch periods.

All table equipment shall be rotated with clean equip

ment every 22 hours.

(e) Cups shall not be filled to overflowing.

(f) Each shell egg shall be broken in a satisfac-

tory and sanitary manner and inspected for

wholesomeness by smelling the shell or the egg meat

and by visual examination at the time of breaking. All

egg meat shall be reexamined by a person qualified to

perform such functions before being emptied into the

tank or churn, except as otherwise approved by the

National Supervisor.

(g) Shell particles, meat and blood spots, and

other foreign material accidentally falling into the cups

or trays shall be removed with a spoon or other approved

instrument.

(h) Whenever an inedible egg is broken, the af-

fected breaking equipment shall be cleaned and sani-

tized.

(i) Inedible and loss eggs as defined in §59.510

apply to this section.

(j) The contents of any cup or other liquid egg

receptacle containing one or more inedible or loss eggs

shall be rejected.

(k) Contents of drip trays shall be emptied into a

cup and smelled carefuly before pouring into liquid egg

bucket. Drip trays shall be emptied at least once for

each 15 dozen eggs or every 15 minutes.

(I) Edible leakers as defined in §59.510(cX2f and

checks which are liable to be smashed in the breaking

operation shall be broken at a separate station by

specially trained personnel.

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(m) Ingredients and additives used in, or for, pro-

cessing egg products, shall be handled in a clean and

Sanitary manner.

(n) Liquid egg containers shall not pass through

the candling room.

(o) Test kits shall be provided and used to deter-

mine the strength of the sanitizing solution. (See

§§59.515(aX9) and 59.552.)

(p) Leaker trays shall be washed and sanitized

whenever they become soiled and at the end of each

shift.

(q) Shell egg containers whenever dirty shall be

cleaned and drained; and shall be cleaned, sanitized,

and drained at the end of each shift.

(rf) Belt-type shell egg conveyors shall be clean-

ed and sanitized approximately every 4 hours in addition

to continuous cleaning during operation. When not in

use, belts shall be raised to permit air drying.

(s) Cups, knives, racks, separators, trays,

spoons, liquid egg pails, and other breaking equipment,

except for mechanical egg breaking equipment, shall be

cleaned and sanitized at least every 22 hours. This

equipment shall be cleaned at the end of each shift and

shall be clean and sanitized immediately prior to use.

(t) Utensils and dismantied equipment shall be

drained and air dried on approved self-draining metal

racks and shall not be nested.

(u) Dump tanks, drawoff tanks, and churns shall

be cleaned approximately every 4 hours. All such equip-

ment and ail other liquid handling equipment, unless

cleaned by acceptable cleaned in-place methods, shall

be dismantied and cleaned after each shift. Pasteuriza-

tion equipment shall be cleaned at the end of each day's

use or more often if necessary. All such equipment shail

be clean and shail be sanitized prior to piacing in use.

(v) Strainers, clarifiers, filtering and other

devices used for removal of shell particles and other

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foreign material shall be cleaned and sanitized each

time it is necessary to change such equipment, but at

least once every 4 hours of operation.

(w) Breaking room processing equipment shail

not be stored on the floor.

(x) Metal containers and lids for other than dried

products shall be thoroughly washed, rinsed, sanitized

and drained immediately prior to filling. The foregoing

sequence shail not be required if equally effective

measures approved by the National Supervisor in

writing are followed to assure clean and sanitary con-

tainers at the time of filling.

(y) Liquid egg holding vats and containers (in-

cluding tank trucks) used for transporting liquid eggs

shall be cleaned after each use. Such equipment shall

be clean and sanitized immediately prior tc placing in

use.

(z) Tables, shell conveyors, and containers for

inedible egg product shall be cleaned at the end of each

shift.

(aa) Mechanical egg breaking machines shall

be operated at a rate to maintain complete control and

accurately inspect and segregate each egg to insure the

removal of all loss and inedible eggs. The machine shall

be operated in a sanitary manner.

(1) When an inedible egg is encountered on

mechanical egg breaking equipment, the inedible egg

and contaminated liquid shall be removed. The machine

shall be cleaned and sanitized, or contaminated parts

replaced with clean ones in a manner prescribed by the

Administrator for the type of inedible egg encountered

and the kind of egg breaking machine.

(2) Systems for pumping egg liquid directly from

egg breaking machines shall be of approved sanitary

design and contruction, and designed to minimize the

entrance of shells into the systern and be disconnected

when inedible eggs are encountered. The pipelines of

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the pumping system shall be cleaned or flushed as

often as needed to maintain them in a sanitary condi-

tion, and they shall be cleaned and sanitized at the end

of each shift. Other pumping system equipment shall be

cleaned and sanitized approximately every 4 hours or as

often as needed to maintain it in a sanitary condition. All

liquid egg pumped directly from egg breaking machines

shall be reexamined, except as otherwise prescribed

and approved by the Administrator.

(3) Mechanical egg breaking equipment shall be

Clean and sanitized prior to use, and during operations

the machines shall be cleaned and sanitized approx-

amtely every 4 hours or more often if needed to maintain

them in a sanitary condition. This equipment shall be

cleaned at the end of each shift.