Fair and Competitive Livestock and Poultry Markets

DEPARTMENT OF AGRICULTURE <SUBAGY>Agricultural Marketing Service</SUBAGY> <CFR>9 CFR Part 201</CFR> <DEPDOC>[Doc. No. AMS-FTPP-21-0046]</DEPDOC> <RIN>RIN 0581-AE04</RIN> <SUBJECT>Fair and Competitive Livestock and Poultry Markets</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Agricultural Marketing Service, Department of Agriculture. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The United States Department of Agriculture's (USDA or Department) Agricultural Marketing Service (AMS) proposes to amend the regulations under the Packers and Stockyards Act of 1921 (the P&S Act or the Act) to clarify the unfair practices that the P&S Act prohibits. The proposed rule would define unfair practices as conduct that harms market participants and conduct that harms the market. Combined, these comprehensively define the contours of “unfair practices” under the P&S Act. The purpose of this proposed rule is to promote fair and competitive markets in the livestock, meats, poultry, and live poultry markets. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received by August 27, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments must be submitted through the Federal e-rulemaking portal at <E T="03">https://www.regulations.gov</E> and should reference the document number and the date and page number of this issue of the <E T="04">Federal Register</E> . AMS strongly prefers comments be submitted electronically. However, written comments may be submitted ( <E T="03">i.e.,</E> postmarked) via mail to Docket No. AMS-FTPP-21-0046, S. Brett Offutt, Chief Legal Officer, Packers and Stockyards Division, USDA, AMS, FTPP; Room 2097-S, Mail Stop 3601, 1400 Independence Ave. SW, Washington, DC 20250-3601. All comments submitted in response to this proposed rule will be included in the record and will be made available to the public. Please be advised that the identity of individuals or entities submitting comments will be made public on the internet at the address provided above. Parties who wish to comment anonymously may do so by entering “N/A” in the fields that would identify the commenter. Pursuant to 5 U.S.C. 553(b)(4), a plain language summary of this proposed rule is available on <E T="03">https://www.regulations.gov</E> in the docket for this rulemaking. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> S. Brett Offutt, Chief Legal Officer/Policy Advisor, Packers and Stockyards Division, USDA AMS Fair Trade Practices Program, 1400 Independence Ave. SW, Washington, DC 20250; Phone: (202) 690-4355; or email: <E T="03">S.Brett.Offutt@usda.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Table of Contents</HD> <EXTRACT> <FP SOURCE="FP-2">I. Authority</FP> <FP SOURCE="FP-2">II. Purpose of This Rulemaking</FP> <FP SOURCE="FP1-2">A. Unfair Practices and Prior Rulemakings</FP> <FP SOURCE="FP1-2">B. Statutory Language of the Act</FP> <FP SOURCE="FP1-2">C. Legislative History of the Act</FP> <FP SOURCE="FP1-2">D. Court Decisions</FP> <FP SOURCE="FP-2">III. The Proposed Rule</FP> <FP SOURCE="FP1-2">A. Proposed § 201.308(a) and (b)</FP> <FP SOURCE="FP1-2">B. Evaluation of Potential Injury to Market Participants</FP> <FP SOURCE="FP1-2">C. Proposed § 201.308(c) and (d)</FP> <FP SOURCE="FP1-2">D. Evaluation of Potential Injury to the Market</FP> <FP SOURCE="FP1-2">E. Contracts</FP> <FP SOURCE="FP1-2">F. Protected Parties</FP> <FP SOURCE="FP-2">IV. Severability</FP> <FP SOURCE="FP-2">V. Request for Comments</FP> <FP SOURCE="FP-2">VI. Regulatory Analysis</FP> <FP SOURCE="FP1-2">A. Paperwork Reduction Act</FP> <FP SOURCE="FP1-2">B. Executive Orders 12866, 13563, and 14094</FP> <FP SOURCE="FP1-2">C. Regulatory Impact Analysis</FP> <FP SOURCE="FP1-2">D. Regulatory Flexibility Analysis</FP> <FP SOURCE="FP1-2">E. Executive Order 13175—Consultation and Coordination With Indian Tribal Governments</FP> <FP SOURCE="FP1-2">F. Executive Order 12988—Civil Justice Reform</FP> <FP SOURCE="FP1-2">G. Civil Rights Impact Analysis</FP> <FP SOURCE="FP1-2">H. E-Government Act</FP> <FP SOURCE="FP1-2">I. Unfunded Mandates Reform Act</FP> </EXTRACT> <HD SOURCE="HD1">I. Authority</HD> Section 407 of the Act (7 U.S.C. 228) provides that the Secretary “may make such rules, regulations, and orders as may be necessary to carry out the provisions of this Act.” The Secretary has delegated the responsibility for administering the P&S Act to AMS. Within AMS, the Packers and Stockyards Division (PSD) of the Fair-Trade Practices Program has responsibility for the day-to-day administration of the Act. The current regulations implementing the Act are found in title 9, part 201, of the Code of Federal Regulations (CFR). Based on the authority Congress delegated to the Secretary to administer the P&S Act, AMS is proposing this rule to amend 9 CFR part 201 to specify the practices that are unfair and in violation of the P&S Act. Prior to this rulemaking, the decisions of USDA's Judicial Officer, <SU>1</SU> <FTREF/> acting for the Secretary, have comprised the bulk of USDA's interpretation of the meaning of “unfair” under the P&S Act, and the Judicial Officer's final decisions have the same force as regulation. <SU>2</SU> <FTREF/> Those decisions make clear that “harm to competition can be proven by showing harm to competitors; . . . the Packers and Stockyards Act does not require that the person harmed be a direct competitor of the person causing the harm, viz., it would be a violation of the Packers and Stockyards Act if it were shown that a packer caused harm, which the Packers and Stockyards Act is designed to prevent . . . .”  <SU>3</SU> <FTREF/> Although, the Federal courts have not expressly rejected the Judicial Officer's overall interpretation of the Packers and Stockyards Act, courts have inconsistently applied the Judicial Officer's decisions. As a result, AMS proposes this regulation to provide a clear interpretation and promote consistency and predictability in its application of the law. <FTNT> <SU>1</SU>  The position of Judicial Officer was established pursuant to the Act of April 4, 1940 (7 U.S.C. 450c-450g); Reorganization Plan No. 2 of 1953, 18 FR 3219 (1953), reprinted in 5 U.S.C. app. at 1490 (1994); and sec. 212(a)(1) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(a)(1)). </FTNT> <FTNT> <SU>2</SU>   <E T="03">See, e.g., City of Arlington, Tex.</E> v. <E T="03">F.C.C.,</E> 668 F.3d 229, 240 (5th Cir. 2012), aff'd, 569 U.S. 290 (2013) (“It is well-established that agencies can choose to announce new rules through adjudication rather than rulemaking.” ( <E T="03">citing NLRB</E> v. <E T="03">Bell Aerospace Co.,</E> 416 U.S. 267, 294 (1974))); <E T="03">Mobil Exploration & Producing N. Am., Inc.</E> v. <E T="03">FERC,</E> 881 F.2d 193, 198 (5th Cir.1989); <E T="03">see also Sec. & Exch. Comm'n</E> v. <E T="03">Chenery Corp.,</E> 332 U.S. 194, 207 (1947) (“The scope of our review of an administrative order wherein a new principle is announced and applied is no different from that which pertains to ordinary administrative action.”). </FTNT> <FTNT> <SU>3</SU>   <E T="03">In re: IBP, Inc.,</E> 57 Agric. Dec. 1353 (U.S.D.A. July 31, 1998). </FTNT> <HD SOURCE="HD1">II. Purpose of This Rulemaking</HD> Congress enacted the P&S Act, 7 U.S.C. 181 <E T="03">et seq.,</E> to promote fairness, reasonableness, and transparency in the livestock, meat, and poultry marketplace by prohibiting practices contrary to these goals. Enacted in 1921 “to comprehensively regulate packers, stockyards, marketing agents and dealers,”  <SU>4</SU> <FTREF/> the Act, among other things, prohibits actions that hinder integrity and competition in the livestock, meat, and poultry markets. Section 202(a) of the Act states that it is unlawful for any packer, swine contractor, or live poultry dealer to “[e]ngage in or use any unfair, unjustly discriminatory, or deceptive practice or device.”  <SU>5</SU> <FTREF/> <FTNT> <SU>4</SU>   <E T="03">Hays Livestock Comm'n Co.</E> v. <E T="03">Maly Livestock Comm'n Co.,</E> 498 F.2d 925, 927 (10th Cir. 1974). </FTNT> <FTNT> <SU>5</SU>  7 U.S.C. 192(a). </FTNT> Congress granted rulemaking and enforcement authority to USDA to ensure that appropriate competitive and fair trade and market protections are afforded to those participating in agricultural activities pertaining to livestock, meat, and poultry. <SU>6</SU> <FTREF/> To date, USDA has largely left these determinations to a case-by-case analysis. Court decisions interpreting this statute, however, have not been consistent with respect to the evidence needed to establish, and the legal standard that applies to, unlawful unfair practices under section 202(a) of the Act, particularly as to whether competitive injury is a requirement and what the term “unfair practice or device” means. This proposed rule, therefore, seeks to clarify what falls under the scope of unfair practice or device. <FTNT> <SU>6</SU>  See section 407 (7 U.S.C. 228(a)): “The Secretary may make such rules, regulations, and orders as may be necessary to carry out the provisions of this chapter. . .”. Congress understood it was giving the Secretary “the power to prevent packers, stockyards, companies, and all persons in the stockyards from engaging in unfair, unjustly discriminatory or deceptive practices or devices.” Report of the House Committee on Agriculture, H.R. Rep. No. 77 67th Congress, 1st session at pg. 2 (May 18, 1921). When amending the statute in 1987, this authority with respect to live poultry dealers was explained: “the Packers and Stockyards Administration will retain jurisdiction as the act currently provides. These transactions include things like weighing practices and contract compliance.” 1 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 209k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━