By Samantha Capaldo and Nicole Cook
This article is not a substitute for legal advice. See here for the site’s reposting policy.
The United States Department of Agriculture (“USDA”) finalized three rules under the Biden administration amending the Packers and Stockyards Act.
The first rule, Transparency in Poultry Grower Contracting and Tournaments, was published in November 2023, and went into effect on February 12, 2024. This rule added new disclosure requirements for poultry integrators. The purpose of the rule, as described by the Agriculture Marketing Service (“AMS”), is to “set forth enforceable transparency requirements…that will secure a more level playing field for the growers and foster a marketplace with fairer contracts and the fairer operation of those contracts under the contract production model.”[1] An overview of the rule when it was proposed in 2022 was discussed in a prior blog. Many of the provisions added in the proposed rule were retained in the final rule, but there are some notable differences. First, the final rule requires the integrator to provide a copy of the broiler grower arrangement and a “Live Poultry Dealer Disclosure” in three specified scenarios. The final rule also outlines what information integrators must include in the “Live Poultry Dealer Disclosure,” including, among others, a summary of any litigation or bankruptcy filings within the last five years for both the integrator and any of their broiler growers, the integrator’s policies and procedures regarding a potential sale of the grower’s farm, the integrator’s policies and procedures related to lay-out time, the integrator’s broiler grower turnover rates, and required financial disclosures. Additionally, the final rule provides an exemption for small integrators, which slaughter fewer than 104 million live pounds of broilers annually. Lastly, the final rule requires integrators that utilize a tournament system, to provide additional disclosures to growers. USDA hosted a webinar and published fact sheets on the final rule.
The second rule, Inclusive Competition and Market Integrity Under the Packers and Stockyards Act, was published in March 2024, and went into effect on May 6, 2024. This rule prohibits discrimination and retaliation by packers, swine contractors, and poultry integrators. Specifically, the rule prohibits packers, swine contractors, and poultry integrators from discriminating against livestock producers and poultry growers based on race, color, religion, national origin, sex, disability, marital status, age, or status as a cooperative. Additionally, the rule prohibits retaliation by packers, swine contractors, and poultry integrators for a grower participating in a specified list of protected activities. Lastly, the rule prohibits a packer, swine contractor, or poultry integrator from “employing false or misleading statements or omissions of material information in contract formation, performance, and termination.”[2] USDA also hosted a webinar and published fact sheets on this final rule.
The third rule, Poultry Grower Payment Systems and Capital Improvement Systems, was published on January 16, 2025, and is scheduled to go into effect July 1, 2026. This rule amends how poultry integrators may utilize a tournament system. First, the rule would prohibit integrators from utilizing the tournament system to lower payments to growers. Integrators may only utilize a tournament system to provide bonuses to growers. The rule will also require poultry integrators to ensure fair comparisons are used in their tournament systems. The rule gives USDA a list of criteria that will be considered to determine if the comparisons are fair, including the distribution of inputs, time periods used, production practices, and any factors that may make the comparisons impractical or inappropriate. Lastly, if an integrator will require a grower to make an additional capital investment, the final rule will require integrators to provide the grower with a “Capital Improvement Disclosure Document.” USDA hosted a webinar and published a fact sheet on this final rule.
But stay tuned because the third rule was finalized so late in the previous administration that it could be subject to the Congressional Review Act. The Congressional Review Act is utilized by Congress to overturn regulations finalized in the waning days of an outgoing administration. If a rule is finalized by an agency and submitted to Congress less than sixty days before the adjournment of the legislative session, the Congressional Review Act includes a “lookback” period, which allows Congress to submit a joint resolution of disapproval during the next legislative session. This “lookback” period is utilized most frequently when there is an administration change. The Congressional Research Service estimated that final rules submitted to Congress after August 1, 2024, would be subject to the Congressional Review Act “lookback” period and potential nullification. Due to the timing of the Poultry Grower Payment Systems and Capital Improvement Systems rule, the Congressional Review Act “lookback” period may be implicated, and Congress may submit a joint resolution of disapproval during the current legislative session.
[1] Transparency in Poultry Grower Contracting and Tournaments, 88 Fed. Reg. 83,210, 83,210 (Nov. 28, 2023).
[2] Inclusive Competition and Market Integrity Under the Packers and Stockyards Act, 89 Fed. Reg. 16,092, 16,092 (Mar. 6, 2024).
Comments