US Codex
Bill
Notes

Title II — Amendments to Packers and Stockyards Act, 1921

S. 3221 · 116th Congress · Jan 21, 2020 · Lineage

II Amendments to Packers and Stockyards Act, 1921

Sec. 201 Definitions

Section 2(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 182(a)) is amended—
(1)
in paragraph (8), by striking “for slaughter” and all that follows through “of such poultry” and inserting “under a poultry growing arrangement, regardless of whether the poultry is owned by that person or another person”;
(2)
in paragraph (9), by striking “and cares for live poultry for delivery, in accord with another's instructions, for slaughter” and inserting “or cares for live poultry in accordance with the instructions of another person”;
(3)
in each of paragraphs (1) through (9), by striking the semicolon at the end and inserting a period;
(4)
in paragraph (10)—
(A)
by striking “for the purpose of either slaughtering it or selling it for slaughter by another”; and
(B)
by striking “; and” at the end and inserting a period; and
(5)
by adding at the end the following:

“(15) Formula price

“(A) In general—The term formula price means any price term that establishes a base from which a purchase price is calculated on the basis of a price that will not be determined or reported until a date that is after the date on which the forward price is established.

“(B) Exclusion—The term formula price does not include—

“(i) any price term that establishes a base from which a purchase price is calculated on the basis of a futures market price; or

“(ii) any adjustment to the base for quality, grade, or other factors relating to the value of livestock or livestock products that are readily verifiable market factors and are outside the control of the packer.

“(16) Forward contract—The term forward contract means an oral or written contract for the purchase of livestock that provides for the delivery of the livestock to a packer at a date that is more than 7 days after the date on which the contract is entered into, without regard to whether the contract is for—

“(A) a specified lot of livestock; or

“(B) a specified number of livestock over a certain period of time.”

Sec. 202 Unlawful practices

(a)
In general— Section 202 of the Packers and Stockyards Act, 1921 (7 U.S.C. 192) is amended—
(1)
by redesignating subsections (a) through (f) and (g) as paragraphs (1) through (6) and (10), respectively, and indenting appropriately;
(2)
by striking the section designation and all that follows through “It shall be” in the matter preceding paragraph (1) (as so redesignated) and inserting the following:

“202. Unlawful acts

“(a) In general—It shall be”

(3)
in subsection (a)—
(A)
in the matter preceding paragraph (1) (as so redesignated), by striking “to:” and inserting “to do any of the following:”;
(B)
in each of paragraphs (1) through (6) (as so redesignated), by striking “; or” each place it appears and inserting a period;
(C)
in paragraph (6) (as so redesignated)—
(i)
by striking “(1)” and inserting “(A)”;
(ii)
by striking “(2)” and inserting “(B)”; and
(iii)
by striking “(3)” and inserting “(C)”;
(D)
by inserting after paragraph (6) the following:

“(7) Use, in effectuating any sale of livestock, a forward contract that—

“(A) does not contain a firm base price that may be equated to a fixed dollar amount on the date on which the forward contract is entered into;

“(B) is not offered for bid in an open, public manner under which—

“(i) buyers and sellers have the opportunity to participate in the bid;

“(ii) more than 1 blind bid is solicited; and

“(iii) buyers and sellers may witness bids that are made and accepted;

“(C) is based on a formula price; or

“(D) provides for the sale of livestock in a quantity in excess of—

“(i) in the case of cattle, 40 cattle;

“(ii) in the case of swine, 30 swine; and

“(iii) in the case of another type of livestock, a comparable quantity of that type of livestock, as determined by the Secretary.

“(8) Own or feed livestock directly, through a subsidiary, or through an arrangement that gives a packer operational, managerial, or supervisory control over the livestock, or over the farming operation that produces the livestock, to such an extent that the producer of the livestock is not materially participating in the management of the operation with respect to the production of the livestock, except that this paragraph shall not apply to—

“(A) an arrangement entered into not more than 7 business days before slaughter of the livestock by a packer, a person acting through the packer, or a person that directly or indirectly controls, or is controlled by or under common control with, the packer;

“(B) a cooperative or entity owned by a cooperative, if a majority of the ownership interest in the cooperative is held by active cooperative members that—

“(i) own, feed, or control the livestock; and

“(ii) provide the livestock to the cooperative for slaughter;

“(C) a packer that is not required to report to the Secretary on each reporting day (as defined in section 212 of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635a)) information on the price and quantity of livestock purchased by the packer; or

“(D) a packer that owns only 1 livestock processing plant.

“(9) Take any action that adversely affects or is likely to adversely affect competition, regardless of whether there is a business justification for the action.”

(E)
in paragraph (10) (as so redesignated), by striking “subdivision (a), (b), (c), (d), or (e)” and inserting “paragraphs (1) through (9)”; and
(4)
by adding at the end the following:

“(b) Unfair, discriminatory, and deceptive practices and devices—Acts by a packer, swine contractor, or live poultry dealer that violate subsection (a)(1) include the following:

“(1) Refusal to provide, on the request of a livestock producer, swine production contract grower, or poultry grower with which the packer, swine contractor, or live poultry dealer has a marketing or delivery contract, the relevant statistical information and data used to determine the compensation paid to the livestock producer, swine production contract grower, or poultry grower, as applicable, under the contract, including—

“(A) feed conversion rates by house, lot, or pen;

“(B) feed analysis;

“(C) breeder history;

“(D) quality grade;

“(E) yield grade; and

“(F) delivery volume for any certified branding program (such as programs for angus beef or certified grassfed or Berkshire pork).

“(2) Conduct or action that limits or attempts to limit by contract the legal rights and remedies of a livestock producer, swine production contract grower, or poultry grower, including the right—

“(A) to a trial by jury, unless the livestock producer, swine production contract grower, or poultry grower, as applicable, is voluntarily bound by an arbitration provision in a contract;

“(B) to pursue all damages available under applicable law; and

“(C) to seek an award of attorneys' fees, if available under applicable law.

“(3) Termination of a poultry growing arrangement or swine production contract with no basis other than an allegation that the poultry grower or swine production contract grower failed to comply with an applicable law, rule, or regulation.

“(4) A representation, omission, or practice that is likely to mislead a livestock producer, swine production contract grower, or poultry grower regarding a material condition or term in a contract or business transaction.

“(c) Undue or unreasonable preferences, advantages, prejudices, and disadvantages

“(1) In general—Acts by a packer, swine contractor, or live poultry dealer that violate subsection (a)(2) include the following:

“(A) A retaliatory action (including coercion or intimidation) or the threat of retaliatory action—

“(i) in connection with the execution, termination, extension, or renewal of a contract or agreement with a livestock producer, swine production contract grower, or poultry grower aimed to discourage the exercise of the rights of the livestock producer, swine production contract grower, or poultry grower under this Act or any other law; and

“(ii) in response to lawful communication (including as described in paragraph (2)), association, or assertion of rights by a livestock producer, swine production contract grower, or poultry grower.

“(B) Use of the tournament system for poultry as described in paragraph (3).

“(2) Lawful communication described—A lawful communication referred to in paragraph (1)(A)(ii) includes—

“(A) a communication with officials of a Federal agency or Members of Congress;

“(B) any lawful disclosure that demonstrates a reasonable belief of a violation of this Act or any other law; and

“(C) any other communication that assists in carrying out the purposes of this Act.

“(3) Use of tournament system for poultry

“(A) In general—Subject to subparagraph (B), a live poultry dealer shall be in violation of subsection (a)(2) if the live poultry dealer determines the formula for calculating the pay of a poultry grower in a tournament group by comparing the performance of the birds of other poultry growers in the group using factors outside the control of the poultry grower and within the control of the live poultry dealer.

“(B) Exception—Under subparagraph (A), a live poultry dealer shall not be found in violation of subsection (a)(2) if the live poultry dealer demonstrates through clear and convincing evidence that the inputs and services described in subparagraph (C) that were used in the comparative evaluation were substantially the same in quality, quantity, and timing, as applicable, for all poultry growers in the tournament group.

“(C) Inputs and services described—The inputs and services referred to in subparagraph (B) include, with respect to poultry growers in the same tournament group—

“(i) the quantity, breed, sex, and age of chicks delivered to each poultry grower;

“(ii) the breed and age of the breeder flock from which chicks are drawn for each poultry grower;

“(iii) the quality, type (such as starter feed), and quantity of feed delivered to each poultry grower;

“(iv) the quality of and access to medications for the birds of each poultry grower;

“(v) the number of birds in a flock delivered to each poultry grower;

“(vi) the timing of the pick-up of birds for processing (including the age of the birds and the number of days that the birds are in the care of the poultry grower) for each poultry grower;

“(vii) the death loss of birds during pick-up, transport, and time spent at the processing plant for each poultry grower;

“(viii) condemnations of parts of birds due to actions in processing for each poultry grower;

“(ix) condemnations of whole birds due to the fault of the poultry grower;

“(x) the death loss of birds due to the fault of the poultry grower;

“(xi) the stated reasons for the cause of the death losses and condemnations described in clauses (vii) through (x);

“(xii) the type and classification of each poultry grower; and

“(xiii) any other input or service that may have an impact on feed conversion to weight gain efficiency or the life span of the birds of each poultry grower.

“(d) Harm to competition not required—In determining whether an act, device, or conduct is a violation under paragraph (1) or (2) of subsection (a), a finding that the act, device, or conduct adversely affected or is likely to adversely affect competition is not required.”

(b)
Effective date—
(1)
In general— Subject to paragraph (2), paragraph (8) of section 202(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 192) (as designated by subsection (a)(2)) shall take effect on the date of enactment of this Act.
(2)
Transition rules— In the case of a packer that, on the date of enactment of this Act, owns, feeds, or controls livestock intended for slaughter in violation of paragraph (8) of section 202(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 192) (as designated by subsection (a)(2)), that paragraph shall take effect—
(A)
in the case of a packer of swine, beginning on the date that is 18 months after the date of enactment of this Act; and
(B)
in the case of a packer of any other type of livestock, beginning not later than 180 days after the date of enactment of this Act, as determined by the Secretary.

Sec. 203 Spot market purchases of livestock by packers

The Packers and Stockyards Act, 1921, is amended by inserting after section 202 (7 U.S.C. 192) the following:

“202A. Spot market purchases of livestock by packers

“(a) Definitions—In this section:

“(1) Covered packer

“(A) In general—The term covered packer means a packer that is required under subtitle B of the Agricultural Marketing Act of 1946 (7 U.S.C. 1635 et seq.) to report to the Secretary each reporting day information on the price and quantity of livestock purchased by the packer.

“(B) Exclusion—The term covered packer does not include a packer that owns only 1 livestock processing plant.

“(2) Nonaffiliated producer—The term nonaffiliated producer means a producer of livestock—

“(A) that sells livestock to a packer;

“(B) that has less than 1 percent equity interest in the packer;

“(C) that has no officers, directors, employees, or owners that are officers, directors, employees, or owners of the packer;

“(D) that has no fiduciary responsibility to the packer; and

“(E) in which the packer has no equity interest.

“(3) Spot market sale

“(A) In general—The term spot market sale means a purchase and sale of livestock by a packer from a producer—

“(i) under an agreement that specifies a firm base price that may be equated with a fixed dollar amount on the date the agreement is entered into;

“(ii) under which the livestock are slaughtered not more than 7 days after the date on which the agreement is entered into; and

“(iii) under circumstances in which a reasonable competitive bidding opportunity exists on the date on which the agreement is entered into.

“(B) Reasonable competitive bidding opportunity—For the purposes of subparagraph (A)(iii), a reasonable competitive bidding opportunity shall be considered to exist if—

“(i) no written or oral agreement precludes the producer from soliciting or receiving bids from other packers; and

“(ii) no circumstance, custom, or practice exists that—

“(I) establishes the existence of an implied contract (as determined in accordance with the Uniform Commercial Code); and

“(II) precludes the producer from soliciting or receiving bids from other packers.

“(b) General rule—Of the quantity of livestock that is slaughtered by a covered packer during each reporting day in each plant, the covered packer shall slaughter not less than the applicable percentage specified in subsection (c) of the quantity through spot market sales from nonaffiliated producers.

“(c) Applicable percentages

“(1) In general—Except as provided in paragraph (2), the applicable percentage shall be 50 percent.

“(2) Exceptions—In the case of a covered packer that reported to the Secretary in the 2018 annual report that more than 60 percent of the livestock of the covered packer were committed procurement livestock, the applicable percentage shall be the greater of—

“(A) the difference between the percentage of committed procurement so reported and 100 percent; and

“(B)

“(i) during each of calendar years 2020 and 2021, 20 percent;

“(ii) during each of calendar years 2022 and 2023, 30 percent; and

“(iii) during calendar year 2024 and each calendar year thereafter, 50 percent.

“(d) Nonpreemption—This section does not preempt any requirement of a State or political subdivision of a State that requires a covered packer to purchase on the spot market a greater percentage of the livestock purchased by the covered packer than is required under this section.”

Sec. 204 Investigation of live poultry dealers

(a)
Administrative enforcement authority over live poultry dealers— Sections 203, 204, and 205 of the Packers and Stockyards Act, 1921 (7 U.S.C. 193, 194, 195) are amended by inserting “, live poultry dealer,” after “packer” each place it appears.
(b)
Authority To request temporary injunction or restraining order— Section 408(a) of the Packers and Stockyards Act, 1921 (7 U.S.C. 228a(a)) is amended by inserting “or poultry care” after “on account of poultry”.
(c)
Violations by live poultry dealers— Section 411 of the Packers and Stockyards Act, 1921 (7 U.S.C. 228b–2) is amended—
(1)
in subsection (a), in the first sentence, by striking “any provision of section 207 or section 410 of”; and
(2)
in subsection (b), in the first sentence, by striking “any provisions of section 207 or section 410” and inserting “any provision”.

Sec. 205 Award of attorney fees

Section 204 of the Packers and Stockyards Act, 1921 (7 U.S.C. 194) is amended by adding at the end the following:

“(i) Attorney's fee—The court shall award a reasonable attorney’s fee as part of the costs to a prevailing plaintiff in a civil action under this section.”

Sec. 206 Technical amendments

(a)
Section 203 of the Packers and Stockyards Act, 1921 (7 U.S.C. 193) is amended—
(1)
in subsection (a), in the first sentence—
(A)
by striking “he shall cause” and inserting “the Secretary shall cause”; and
(B)
by striking “his charges” and inserting “the charges”;
(2)
in subsection (b), in the first sentence, by striking “he shall make a report in writing in which he shall state his findings” and inserting “the Secretary shall make a report in writing in which the Secretary shall state the findings of the Secretary”; and
(3)
in subsection (c), by striking “he” and inserting “the Secretary”.
(b)
Section 204 of the Packers and Stockyards Act, 1921 (7 U.S.C. 194) is amended—
(1)
in subsection (a), by striking “he has his” and inserting “the packer, live poultry dealer, or swine contractor has the”;
(2)
in subsection (c), by striking “his officers, directors, agents, and employees” and inserting “the officers, directors, agents, and employees of the packer, live poultry dealer, or swine packer”;
(3)
in subsection (f), in the second sentence—
(A)
by striking “his findings” and inserting “the findings of the Secretary”; and
(B)
by striking “he” and inserting “the Secretary”; and
(4)
in subsection (g), by striking “his officers, directors, agents, and employees” and inserting “the officers, directors, agents, and employees of the packer, live poultry dealer, or swine packer”.