Poultry Grower Ranking Systems; Withdrawal of Proposed Rule

CourtAgricultural Marketing Service
Citation86 FR 60779
Record Number2021-23945
Published date04 November 2021
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Proposed Rules Federal Register
60779
Vol. 86, No. 211
Thursday, November 4, 2021
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
9 CFR Part 201
[Doc. No. AMS–FTPP–21–0052]
RIN 0580–AB26
Poultry Grower Ranking Systems;
Withdrawal of Proposed Rule
AGENCY
: Agricultural Marketing Service,
USDA.
ACTION
: Proposed rule; withdrawal.
SUMMARY
: The United States Department
of Agriculture’s (USDA) Agricultural
Marketing Service (AMS) is
withdrawing a proposed rule published
in the Federal Register on December 20,
2016. The proposed rule would have
identified criteria that the Secretary of
Agriculture (Secretary) could consider
when determining whether a live
poultry dealer’s use of a system for
ranking poultry growers for settlement
purposes is unfair, unjustly
discriminatory, or deceptive or gives an
undue or unreasonable preference,
advantage, prejudice, or disadvantage.
Proposed amendments would also have
clarified that, absent demonstration of a
legitimate business justification, failing
to use a poultry grower ranking system
in a fair manner after applying the
identified criteria is unfair, unjustly
discriminatory, or deceptive and a
violation of the Packers and Stockyards
Act, regardless of whether it harms or is
likely to harm competition. The
Secretary has determined to withdraw
the 2016 proposed rule and develop
revised proposals pertaining to poultry
grower ranking systems.
DATES
: The proposed rule published at
81 FR 92723 on December 20, 2016, is
withdrawn as of November 4, 2021.
FOR FURTHER INFORMATION CONTACT
: 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:
s.brett.offutt@usda.gov.
SUPPLEMENTARY INFORMATION
: A
proposed rule published at 81 FR 92723
on December 20, 2016, would have
identified criteria the Secretary could
consider when determining whether a
live poultry dealer’s use of a poultry
grower ranking system for ranking
poultry growers for settlement purposes
is unfair, unjustly discriminatory, or
deceptive or gives an undue or
unreasonable preference, advantage,
prejudice, or disadvantage. Further, the
2016 proposed rule would have
amended regulations under the Packers
and Stockyards Act (regulations) to
clarify that, absent demonstration of a
legitimate business justification, failure
to use a poultry grower ranking system
in a fair manner after applying the
identified criteria is unfair, unjustly
discriminatory, or deceptive and a
violation of section 202(a) of the Packers
and Stockyards Act, 1921, as amended
and supplemented (Act), regardless of
whether it harms or is likely to harm
competition.
The December 2016 proposed rule
published by USDA’s former Grain
Inspection, Packers and Stockyards
Administration (GIPSA) was a
modification to an earlier GIPSA
proposed rule (75 FR 35338; June 22,
2010) that included requirements
regarding a live poultry dealer’s use of
a poultry grower ranking system when
determining payment for grower
services. The 2010 proposed rule would
have required live poultry dealers
paying growers on a tournament system
to pay growers raising the same type
and kind of poultry the same base pay
and would have required that growers
be settled in groups with other growers
with like house types. Upon review of
public comments received both in
writing and through public meetings
held during the comment period in
2010, GIPSA elected not to finalize the
2010 proposed rule, and instead
modified the earlier proposal, published
the modification in the December 2016
proposed rule, and requested further
public comment.
The comment period for the
December 2016 proposed rule was
originally scheduled to close on
February 21, 2017. GIPSA extended the
comment period until March 24, 2017
(82 FR 9533; February 7, 2017),
consistent with the memorandum of
January 20, 2017, to heads of executive
departments and agencies from the
Assistant to the President and Chief of
Staff entitled ‘‘Regulatory Freeze
Pending Review.’’ In total, GIPSA
received 239 comment submissions on
the December 2016 proposed rule. A
number of submissions included lists of
signatories or multiple copies of
identical form letters signed by different
individuals.
In November 2017, responsibility for
GIPSA activities was transferred to
AMS, which now administers the
Packers and Stockyards Act and
regulations, and which has assumed
responsibility for this rulemaking.
Comments submitted on the
December 2016 proposed rule, as well
as comments submitted in response to a
related Packers and Stockyards
proposed rule (85 FR 1771; January 13,
2020) and input from the industry,
reflected both support for and
opposition to the December 2016
proposals.
Comments on the December 2016 rule
were submitted by individual poultry
growers and processors, associations
representing poultry growers and
processors, other livestock producers
and producer associations, individual
consumers and consumer advocacy
groups, and other interested entities.
Many grower and consumer
commenters supported proposals,
saying the criteria in proposed § 201.214
offered tools with which poultry
growers and family farms could protect
themselves from severe economic losses
under potentially unfair contract terms.
Commenters further suggested adoption
of the proposed rule and its grower
protections would strengthen rural
economies and the U.S. poultry
industry’s position in the global
marketplace. Some commenters said
that provisions of the proposed rule
would help level the playing field
between poultry growers and processors
by giving growers greater contracting
power. Other commenters said the
proposed criteria for evaluating contract
terms would ensure farmers can
continue to operate with basic
protections under the law. A comment
from an animal welfare organization
supported the proposed rule because
they believe its provisions would
protect growers who speak out about
inhumane practices from retaliation.
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Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Proposed Rules
1
Executive Order 13771—Reducing Regulation
and Controlling Regulatory Costs (January 30,
2017)—has since been rescinded by Executive
Order 13992—Revocation of Certain Executive
Orders Concerning Federal Regulation (January 20,
2021).
Some commenters expected the rule
to make changes they would have
considered more favorable to growers,
such as the abolition of grower ranking
systems. According to one commenter,
‘‘a tournament system is itself an undue
preference in any case where the
farmer’s pay is penalized based on input
factors that affect farmer performance
beyond their control.’’ Other
commenters supported the proposed
rule, but asked USDA to provide a
codified list of behaviors that in and of
themselves would be violations of the
Act, including clear examples of actions
that may be unfair, discriminatory, or
deceptive; a non-exhaustive list of
Section 202(a) violations; or provisions
clarifying that failing to comply with 9
CFR 201.100 is inherently unfair,
unjustly discriminatory, or a deceptive
practice. Several commenters also
recommended requiring live poultry
dealers to disclose critical information
regarding acquiring, handling,
processing, and quality of poultry to all
producers in the tournament if such
information is disclosed to one.
Commenters suggested this type of
information would allow growers to
make better-informed decisions about
entering into production contracts.
Many commenters, while supportive
of the proposed rule generally, opposed
inclusion of the criterion (proposed
§ 201.214(d)) that would have allowed
the Secretary of Agriculture to consider
whether a live poultry dealer has
demonstrated a legitimate business
justification for use of a poultry grower
ranking system that might otherwise be
unfair, unjustly discriminatory, or
deceptive; give an undue or
unreasonable preference or advantage to
any poultry grower; or subject any
poultry grower to an undue or
unreasonable prejudice or advantage.
Commenters asserted that this criterion
could offer live poultry dealers a
‘‘loophole’’ through which they could
justify actions that otherwise might be
considered violations of the Act. These
commenters recommended this criterion
be eliminated from the proposed rule.
Several commenters further speculated
that the vagueness of the term
‘‘legitimate business justification’’ could
lead to increased litigation and expense
as courts attempt to interpret its
meaning, and further that every judge or
jury could interpret the term differently.
One commenter wrote that the use of
the ‘‘legitimate business justification’’ is
a recognized ‘‘monopoly defense’’ that
is unfounded and misplaced in the
proposed rule. According to the
commenter, Sections 202(a) and (b) of
the Act were designed by Congress to
address wrongful and unlawful acts
‘‘not of the anti-trust variety.’’ The
commenter asserted the defense should
not be included in the proposed rule
because the term ‘‘monopoly’’ does not
appear in Sections 202(a) and (b) of the
Act, whereas Sections 202(c) through (e)
clearly address anti-trust related
unlawful practices. The commenter
cited examples of ‘‘unfair practices’’
under the Act where proof of
competitive injury is not required, such
as failure to pay livestock sellers ‘‘before
the close of the next business day’’
following livestock purchases (see Sec.
409), or late payments to a poultry
grower (see Sec. 410). The commenter
argued that the Secretary has no
authority to effectively amend the Act
by proposing to inject the monopoly
defense into the regulations. According
to the commenter, such inclusion
exceeds the legal authority granted the
Secretary under the Act, violates the
separation of powers as established by
the United States Constitution, defies
Congressional intent, and practically
guarantees litigation against the
Secretary for violation of the
Administrative Procedures Act. Further,
the commenter claimed that use of the
‘‘legitimate business justification’’
defense would embolden poultry
integrators to ‘‘wrench away what few
rights growers have left.’’
A number of poultry grower
commenters opposed the December
2016 proposed rule entirely, some
saying the rule is simply unnecessary.
Others asked that USDA not force
changes on the poultry grower ranking
system they claimed has worked well
for decades. Commenters contended
changing the system could eliminate
growers’ incentive to maximize
efficiency and adopt innovative
production practices, and that such
changes would unfairly reward
mediocre performers who do not invest
effort and capital into continuously
improving production.
A number of commenters stated that
proposed criteria were too vague, citing
for example the terms ‘‘fair manner’’ in
proposed § 201.210(b)(10), ‘‘pattern or
practice’’ in the introductory paragraph
of proposed § 201.214, and ‘‘sufficient
business information’’ and ‘‘informed
business decisions’’ in proposed
§ 201.214(a). Commenters asked USDA
instead to identify specific behaviors
that would be considered violations of
the Act to eliminate confusion for
contracting parties.
Comments from several poultry
processors and associations representing
poultry and other meat and food
processing industries opposed the
proposed rule for various economic and
legal reasons. A number of commenters
said the rule ‘‘ran afoul’’ of Executive
Order 13771
1
regarding regulatory
reform in that GIPSA’s impact analysis
predicted administering and litigating
the rule would be costly, although
GIPSA did not quantify benefits of the
rule. Some commenters speculated that
actual costs of litigating the rule could
be much higher than GIPSA’s estimates
because the inclusion of vague
regulatory terminology would increase
uncertainty for contracting parties and
invite further litigation. Commenters
asserted the proposed rule was unsound
because it was premised on the ‘‘fatally
flawed’’ interim final rule titled ‘‘Scope
of Sections 202(a) and (b) of the Packers
and Stockyards Act’’ (81 FR 92566,
December 20, 2016) that was published
by GIPSA on the same date as the
proposed Poultry Grower Ranking
Systems rule. Commenters claimed the
‘‘Scope’’ rule erroneously asserted that
claimants do not need to demonstrate
injury to competition to establish a
violation of Sections 202(a) and (b) of
the Act.
A number of commenters said the
proposed rule was arbitrary and
capricious in that GIPSA failed to
provide investigative data or evidence of
any actual problems with the current
grower ranking systems or of any need
for regulatory intervention, basing its
proposed actions rather on anecdotal
complaints.
A few commenters objected to
GIPSA’s use of an example in the rule’s
preamble that processors might supply
non-comparable inputs to growers.
Commenters pointed out that in the
rule’s economic impact analysis GIPSA
stated it had no evidence processors
have done this. Other commenters
warned that USDA should not base the
proposed criteria on the assumption that
processors intentionally provide non-
comparable inputs to growers. Those
commenters explained it is in the best
interest of processors that all their
poultry growers receive high quality
inputs (animals, feed, veterinary
medicines) to ensure a reliable flow of
high-quality poultry to plants. For that
reason, according to these commenters,
processors are unlikely to intentionally
target and sabotage their growers, as
suggested by other commenters.
Several commenters suggested that
GIPSA incorrectly assumed in its impact
analysis that growers carry most of the
risk related to poultry production.
According to commenters, processors
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Federal Register / Vol. 86, No. 211 / Thursday, November 4, 2021 / Proposed Rules
2
Some commenters asserted that the Act protects
individual growers from the effects of competitive
harm, while other argued that a violation of Section
202(a) or (b) has not occurred unless there is harm
to multiple individuals in the market. One
commenter argued that the Act provides clear
authority to USDA to clarify terms and interpret the
Act’s intent.
3
Provisions of Title XI of the Food, Conservation,
and Energy Act of 2008 (2008 Farm Bill; Pub. L.
110–234) require the Secretary of Agriculture to
establish criteria to consider when determining
whether the Packers and Stockyards Act has been
violated.
carry a greater proportion of the risk
because they supply most of the
production inputs. Further, these
commenters asserted that vertically
integrated processors are in a better
position than growers to assume most of
the risk because those processors can
operate on a more efficient scale than
growers.
According to the comment from an
association of chicken production and
processing companies, GIPSA’s
regulatory impact analysis projected
decreased certainty for regulated entities
and increased risk of litigation due to
the proposed rule. This commenter
suggested the regulation should instead
increase certainty for regulated entities
and decrease risk of wasteful litigation.
Some commenters maintained that
the provisions of the proposed rule
would establish an ‘‘unprecedented
level of government intervention’’ that
would have negative ramifications for
the industry and consumers. Others
insisted that the rule contradicted the
Packers and Stockyards Act’s provisions
and intent,
2
exceeded the Congressional
mandate of the 2008 Farm Bill,
3
and/or
conflicted with court precedence with
respect to competitive harm.
A comment from a federation of
turkey producers opposed the proposed
rule. The commenter asserted that the
proposed rule failed to recognize
important distinctions between broiler
chicken and turkey production in
matters such as breeder diversity,
production cycle length, gender
segregation, and farm and facility size.
The commenter said proposed
requirements intended to address
broiler production issues would not
always be applicable to turkey
production models and could prove to
be injurious to the turkey industry. The
commenter recommended that USDA
rescind the proposed rule and pay
significant attention to the effects on
turkey production in future rulemaking
attempts.
Several commenters, although
purportedly responding to the proposed
rule, submitted comments that were
outside the scope of this particular
rulemaking. For example, commenters
offered suggestions about alternative
contract production and pay methods
the industry could adopt or discussed
issues related to cattle production and
marketing. Several commenters
criticized GIPSA for disregarding public
input about systematic abuses suffered
by contract poultry growers. According
to commenters, such abuses were
described by participants in a May 2010
USDA/Department of Justice-sponsored
workshop held to better understand
industry concerns. Other commenters
addressed provisions of the two other
rules GIPSA published on December 20,
2016, including the previously
mentioned ‘‘Scope of Sections 202(a)
and (b) of the Packers and Stockyards
Act,’’ and the proposed rule titled
‘‘Unfair Practices and Undue
Preferences in Violation of the Packers
and Stockyards Act’’ (81 FR 92703).
AMS values the input of all
commenters. AMS finds that many of
the comments on the proposed rule—
both supportive and opposed—
identified reasonable concerns regarding
the proposed regulation’s structure and
language. These concerns included
uncertainties about USDA’s method for
applying criteria and vague criteria
language. AMS recognizes that
differences in broiler and turkey
production systems need fair
consideration. Moreover, the proposed
rule may not have adequately addressed
information imbalances between
contracting parties. In light of these
comments, AMS prefers to reexamine
regulatory requirements, specific
potential violations, general criteria, and
recordkeeping aspects, as well as the
structure, of a rule regarding poultry
production contracts.
Because of the breadth of this
reexamination, AMS concludes that this
proposed rulemaking is unable to
address many of the commenters’
concerns without material changes.
AMS intends to consider further the
issues raised by the commenters, as well
as study any developments since
publication of the proposed rule.
Following those activities, we plan to
issue and solicit comments on a new
regulatory proposal pertaining to
poultry grower ranking systems.
Therefore, we are withdrawing the
December 2016 proposed rule.
Authority: 7 U.S.C. 181–229c.
Erin Morris,
Associate Administrator, Agricultural
Marketing Service.
[FR Doc. 2021–23945 Filed 11–3–21; 8:45 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Docket No. FAA–2021–0924; Airspace
Docket No. 21–ANM–48]
RIN 2120–AA66
Proposed Establishment of Class E
airspace; Monticello Airport, UT
AGENCY
: Federal Aviation
Administration (FAA), DOT.
ACTION
: Notice of proposed rulemaking
(NPRM).
SUMMARY
: This action proposes to
establish Class E airspace at Monticello
Airport, Monticello, UT. The
establishment of airspace supports the
airport’s transition from visual flight
rules to instrument flight rule (IFR)
operations. This action would ensure
the safety and management of IFR
operations at the airport.
DATES
: Comments must be received on
or before December 20, 2021.
ADDRESSES
: Send comments on this
proposal to the U.S. Department of
Transportation, Docket Operations, 1200
New Jersey Avenue SE, West Building
Ground Floor, Room W12–140,
Washington, DC 20590; telephone: 1–
800–647–5527, or (202) 366–9826. You
must identify FAA Docket No. FAA–
2021–0924; Airspace Docket No. 21–
ANM–48, at the beginning of your
comments. You may also submit
comments through the internet at
https://www.regulations.gov.
FAA Order JO 7400.11F, Airspace
Designations and Reporting Points, and
subsequent amendments can be viewed
online at https://www.faa.gov/air_
traffic/publications/. For further
information, you can contact the
Airspace Policy Group, Federal Aviation
Administration, 800 Independence
Avenue SW, Washington, DC 20591;
telephone: (202) 267–8783. FAA Order
JO 7400.11 is also available for
inspection at the National Archives and
Records Administration (NARA). For
information on the availability of FAA
Order JO 7400.11F at NARA, email
fr.inspection@nara.gov or go to https://
www.archives.gov/federal-register/cfr/
ibr-locations.html.
FOR FURTHER INFORMATION CONTACT
:
Matthew Van Der Wal, Federal Aviation
Administration, Western Service Center,
Operations Support Group, 2200 S
216th Street, Des Moines, WA 98198;
telephone (206) 231–3695.
SUPPLEMENTARY INFORMATION
:
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