The USDA’s Agricultural Marketing Service (AMS) issued a final rule amending Packers and Stockyards Act (PSA) regulations to prohibit “undue prejudice” and “unjust discrimination” by regulated entities, including packers and swine contractors, against individuals based on specific characteristics. It also identifies prohibited retaliatory and deceptive practices and increases recordkeeping requirements to comply with the rule, the National Pork Producers Council (NPPC) reports in Capital Update. The final rule is set to take effect May 6.
What does this mean for pork producers?
“Pork producers rely on enforcement of the PSA, which was enacted to protect competition in the meat and poultry industries, ensuring fair markets and competitive pricing opportunities. Because regulated entities include packers and swine contractors, independent producers utilizing production contracts may also be subject to increased risk of litigation under the new regulations,” NPPC wrote.
The regulation, known as the “Inclusive Competition and Market Integrity under the Packers and Stockyards Act,” prohibits actions that would inhibit market access or are “materially adverse” against producers on the basis of race, color, national origin, sex, disability, marital status, age, or because of a producer’s status as a cooperative. That list replaces AMS’s original proposal of protecting a broad and undefined group of “market vulnerable individuals.”
Not only does the rule prohibit regulated entities from retaliating or taking adverse action against covered producers for communicating with government officials or businesses and choosing to form or join an association, it also prohibits the use of “false or misleading statements or omissions of material information” during contract formation, performance, termination, as well as in situations where regulated entities refuse to form a contract.
While the PSA already prohibits unjust discrimination and undue prejudices or preferences that have an anticompetitive effect, NPPC explains that the new rule implies that for actions prohibited under the rule, AMS does not believe proof of anticompetitive harm is necessary to establish a violation of the PSA.
In comments submitted to AMS in January 2023, NPPC said the Inclusive Competition and Market Integrity rule “does not appear to address any specific existing issue” and “the definitions and regulations … are vague and overbroad, creating unnecessary uncertainty that would make it difficult for regulated entities to demonstrate compliance and result in burdensome and costly litigation.”
NPPC also noted the primary components of the rule already are prohibited under existing laws, including the PSA, and pointed out that many of the new rule’s provisions “fall outside the scope of the PSA.”
“Most significantly, AMS removed the broad ‘market vulnerable individual’ language and adopted a specific list of prohibited bases for discrimination based in part on NPPC’s comments,” NPPC wrote.
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